Foreign Aid and corruption.

HOW appropriate that on the day Britain won plaudits for being the only G8 country to increase its international aid budget EU auditors reported that £500million of European taxpayers’ money paid out to Egypt to fight corruption has, er, disappeared without trace.

Over the past 40 years Africa has received $400billion of aid from the developed world.

If it had achieved what it was supposed to achieve Africa would now be the richest continent outside Western Europe and North America. Instead, it is the poorest.

A generation ago sub-Saharan African countries were on a level of development with much of Asia. Yet after mountains of aid they have fallen badly behind. Between 1990 and 2010 World Bank figures reveal Kenya and Ghana were lavished with aid which, at its peak, accounted for 16.8 and 16.3 per cent of GDP respectively.

During that period their economies grew by an average of 3.1 per cent and 4 per cent.

China and Malaysia by contrast received minimal foreign aid, never accounting for more than 0.7 per cent of GDP in China’s case or 1.2 per cent in Malaysia’s case. Yet their economies outperformed those of Kenya and Ghana spectacularly, growing by an average of 11.6 per cent and 6.1 per cent a year respectively.

Long-term development aid fails because it damages the efforts of locals to grow their industries. To take a non-African example Haiti has been smothered with “kindness” over the years through donations of rice and clothing.

While this may have helped in the short term to feed and clothe people who might otherwise have gone hungry or cold, in the longer term it has undermined what should be two of Haiti’s main industries: agriculture and textiles.
While we imagine our money being used to save the poor, many British aid projects have the ring of the ground nut scheme, the farcical Forties attempt to establish peanut farms in what is now Tanzania.

Just why are we shelling out £27million towards improvements to the docks in Mombasa or £437,500 for the planting of biofuels in Mozambique?

Some are frivolous, such as the £600,000 we are spending on children’s TV in Kenya. Others are pet political projects in Britain which officials have decided to try to extend to the developing world.

We are for example paying £3.4million to a project to increase the participation of women in small and medium sized businesses in Nicaragua; £1.2million towards the privatisation of utilities in Nigeria and another £80,000 on a study of the link between gender equality and growth also in Nigeria.

Other projects are just plain hypocritical. We are paying £53million on a project aimed at increasing citizens’ participation in the political system in the Congo. What does a government which could not persuade more than 15 per cent of its electorate to turn out for police commissioner elections last November have to offer in advice in that field?

We are also paying £6million on a project to create a “sound financial system” in Kenya. Presumably Fred Goodwin will be leading that.
Much of our aid budget is doomed to be wasted because of the foolish way in which the Government has set its aid target.

It has hit on the idea of spending 0.7 per cent of GDP on international aid because there was a UN motion to this effect in 1970. No other country has subsequently made any serious effort to achieve this target – the US will spend 0.19 per cent of GDP this year, compared with 0.56 per cent in Britain – and for good reason.

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