The Hungry Horse

In November 2010 I submitted the essay below, exactly as I have published it here, as part my Masters degree in Africa and International Development. I believe it demonstrates an idealistic, pessimistic and slightly naive view of development aid and the so-called industry that surrounds it. One year on, in November 2011 I accepted a job offer with an International Development consultancy firm near London - in short, I became one of the Western constituents of aid that I criticise in this essay. Soon, I will write futher on how my perspective on aid and development has changed since taking up my new job, but for now, I present the original essay here. Comments and opinions welcome…

This paper seeks to confirm the statement by Van de Walle that aid’s real constituencies in the west are those involved in the so-called ‘aid industry’ (Van de Walle, 1999: 351). The claim in this paper is based primarily on definition of a constituency and the concepts that go with it: accountability, representation and benefit. A discussion of this idea will follow as well as an exploration of the claim that the western public could also form a constituency of aid given that they are, in a sense, represented by the projects that aid facilitates, can demand accountability and benefit from aid in a more selfless way than those in the aid industry (Maren, 1997:11). The public lack the selfish incentives against changes in aid policy that exist in the aid industry and as such are more likely to want aid to be used effectively. Public knowledge about aid is, however, limited and as such it is necessary to make information on development and aid more readily available, a programme of development education is also desirable in order to facilitate a more informed opinion by the public as to how aid money is spent.

In his paper ‘Aid’s Crisis of Legitimacy’, Van de Walle (1999) identifies, as the constituencies of aid in the west, the groups of people who live off aid’s resources. Van de Walle’s statement differentiates between aid as an entity (the money and the activities undertaken in the name of aid) and the people and organisations he calls the constituency of aid. As constituents these people benefit from aid via their salaries and opportunities for career advancement (Martens, 2005: 656) and are represented by it in the sense that such organisations and individuals are defined by aid’s existence. There is also an element of accountability: those who work in the aid industry undergo a process of evaluation, assessing aid constantly to measure effectiveness (Van de Walle, 1999: 342). The problem is that as a group these people have no incentive to change anything about the way aid works. As mediators between donor governments and recipients their position is tentative (Martens, 2005: 643-645) since more direct cooperation between donor and recipient would render the aid industry obsolete. In this sense, aid agencies can be thought of as service providers or as businesses. Indeed, in much of the literature about aid, the collection of agencies, NGOs, consultants and so on is referred to as the aid ‘industry’. Using such terms to describe aid agencies and associated bodies characterises them as organisations which are necessarily concerned with survival and of gaining a good market share (Therien & Lloyd, 2000: 31). Given this characterisation one might wonder about the legitimacy of numerous reports and assessments of aid that have been conducted by those in the industry over the years. There exists pressure from critics of aid to drastically change the way that it is implemented and some of these critics even advocate getting rid of aid altogether (Moyo, 2010: preface). Despite this pressure, and while many of reports by aid agencies concede that improvements need to be made, none would be so bold as to advocate getting rid of it, nor even drastically altering the way in which aid is implemented. Indeed, most use such reports as a way to cement their position in the aid process (Van de Walle, 1999: 342) and to argue that any changes in the way aid was delivered would require their continued presence (Ostrom et al, 2002: 44). This motivation for survival is what Van de Walle is referring to when he talks of a lack of incentives for change.

The World Bank report ‘Assessing Aid’ provides a good illustration of the point that aid agencies use such publications to legitimise their position. The report admits that while aid tends to be ineffective there is a correlation between aid and growth in countries with good policies. The recommendation of this report is that aid should be provided on a more selective basis (Morrissey, 2000: 371). While this report appears to be very critical of aid it also seeks to convey a positive message that aid can work (Morrissey, 2000: 373) and as such maintain a place for aid and it’s constituencies (Van de Walle, 1999: 342). In addition to and despite claims that selectivity (and, indeed, other strategies to improve aid effectiveness) will be implemented it is unlikely that they will do so. While not specifically about selectivity, a report by SIDA in 2002 on sustainability of aid projects offers an interesting insight as to the attitude of those in the aid industry. The authors admit that although they found a need for changes in the way SIDA implements and evaluates its projects in order to make them more sustainable it was unlikely that they would do so citing a lack of incentive as their reason. This lack of incentive stems from the fact that funding for aid agencies is secured, not for successful projects, but for activity in general (Ostrom et al, 2002: 43). In the case of selectivity the level of activity is likely to be less given that aid would only be transferred to countries with good policies. At an individual level too career progression depends on an impressive lending portfolio rather than success of individual projects (Ostrom et al, 2002: 17). In this way career minded individuals in the aid industry may choose to ignore recommendations for selectivity or any other proposed solutions for aid effectiveness since the current system gives them no incentive to do so.

It is important to acknowledge that aid also has constituencies in the developing world. Van de Walle (1999: 351-352) holds that calls for any real change to the way aid is delivered need to come from leaders in Africa, and the developing world in general, since there is no incentive for the west’s current constituencies to do so. The details of how and if this would happen are not up for discussion here, however. If ‘Aid’s real constituencies in the West are groups that live off aid resources’ (Van de Walle, 1999: 351 (emphasis added)) then it is implied that there are additional, possible constituencies in the West. The general public of Western countries represents the most likely possibility in this case. A discussion of this possibility and how the public might affect a change in the way aid works follows here.

That the Western public also counts as a constituency of aid is a statement that is easily demonstrated. As taxpayers whose money eventually goes on to fund aid efforts the public are ‘shareholders’ (Fransman & Solignac-Lecomte, 2004:2) in aid and as such there is an accountability of aid to the public. In addition, the public’s desire to contribute to development is represented via aid efforts in developing countries. It also appears that the public are not only represented by aid and able to hold it accountable but, as constituents of aid, they can also benefit from it. Evidence of this can be found in polls from the 1990s that show that the European public are in favour of development aid as well as, in some cases, being in favour of it being increased (Olsen, 2001: 646). In addition, when surveyed, people in OECD DAC member countries cited reasons such as ‘moral responsibility’, ‘protection of the global environment’ and as being ‘the right thing to do’ for supporting aid flows (Fransman & Solignac-Lecomte , 2004: 1). By contributing tax money and sending money directly to NGOs the Western public fulfil what they regard as their moral responsibility to contribute to development and as such should be considered as a constituency of aid. As constituents, the public should be better placed than others to give their opinion about changes to the way aid is delivered since they are free from the incentives against change that plague the aid industry.

It has already been mentioned that the aid industry, while a legitimate constituency of aid, may not have the interests of aid’s Southern constituencies in mind when reviewing aid effectiveness. Incentives such as gaining more funding, maintaining a good market share and individual career advancement have affected the ability of the aid industry to properly evaluate aid effectiveness (Van de Walle, 1999: 350-351). Van de Walle calls upon aid’s constituency in the South to facilitate change but it may be that there is a lack of incentive here too. In Moyo’s discussion about ending aid to Africa she acknowledges that while Africa should call for this change it is unlikely, in the case of some governments, that they will do so since such action would amount to giving up ‘free money’ (Moyo, 2010: 148). With a policy such as selectivity, as proposed in Assessing Aid, African governments would risk losing out on aid money since donor governments often cannot agree on what good governance or good policy environments are (Moyo, 2010: 55-56). The crucial question is whether or not recipient governments (especially those without good policy environments) would really call for this and risk losing out on aid money. With this in mind it may fall on the Western public to rally for changes to how aid works and how it should be handled. It has been said that aid alleviates the moral conscience of the public by contributing to what those in the West see as the ‘right thing to do’ (Rieff, 1997: 137). Thus the only incentive the public appears to have when they give their support for aid is that it fulfils their moral responsibility to contribute to the development of poorer states. It is from this more selfless standpoint that we might find a more legitimate assessment of aid; one free of incentives and self-serving goals.

The major hindrance to creating a constituency for aid in the Western public is a lack of knowledge. Public support of aid has often said to be ‘a mile wide and an inch deep’ (Smillie, 1999: 72) so despite admirable reasons for supporting continued aid flows the public are, for the most part, unaware of how aid money is spent. As a whole the public tend to lack understanding about development issues (Olsen, 2001: 670 ), are often unaware of current development initiatives such as the MDGs, and tend to overestimate their government’s contributions of ODA (Fransman and Solignac-Lecomte, 2004: 2-3). It would seem that there is a lack of effort by governments contribute to public awareness of aid. Smillie (1999: 73) even suggests that this may be deliberate. As well as being a disappointing state of affairs the public’s lack of involvement with development issues may mean a loss in political will to change ineffective aid policies. It also means that any public pressure to change aid policy can be easily dismissed as uninformed (Therien & Lloyd, 2000: 29). Olsen (2001) found that despite large scale, sustained support for aid, and in some cases, increasing aid there was no link between this public sentiment and changes to aid policy. In fact, in many cases where public support was strong the government actually reduced aid spending (Olsen 2001:670).

In order to create this particular constituency of aid public involvement must be encouraged. Reports published by the OECD state that legitimacy and efficiency of public policies are improved when citizens are involved in the creation of aid policy (Fransman & Solignac-Lecomte, 2004: 2). In order to encourage more public involvement a kind of ‘development education’ (Smillie, 1999: 73) is needed. Facilitating such education will involve many different modalities including governments, schools (Fransman & Solignac-Lecomte, 2004: 2), trade unions, NGOs, the media (Therien & Lloyd, 2000: 35) and even the private sector (Smillie, 1999: 73). Indeed, already, many governments and NGOs have collaborated to introduce development issues into school curricula, and, in addition the governments in Sweden, the Netherlands and Norway have developed strategies for increasing public awareness of these issues (Smillie, 1999: 73-74). The media also play an important role in communicating development issues to the public. In the UK, The Guardian newspaper has dedicated an entire section of its website to development issues: a project which has been made possible through collaboration with other development organisations. Despite this progress it would seem that such initiatives are not high on the agenda.

In the UK, DFID published a quarterly magazine, ‘Developments’, the purpose of which was to stimulate public discussion on international development. However, due to government budget cuts, the publication of this magazine ceased in September 2010 demonstrating the place that development education holds in government priorities. If improved development education programmes were in place then the public could be more informed. The more legitimate standpoint they would then hold would mean that policy makers and aid agencies could not dismiss public opinion on aid. The OECD recommends more systematic monitoring of public opinion when it comes to development policy issues thus one can hope that with further education and more systematic opinion polling (Fransman & Solignac-Lecomte, 2004: 4) the public, as a constituency of aid in the West, can influence aid policy for the better. On a positive note, there appears to be growing effort to convey information about the way aid is implemented to the public (Fransman & Solignac-Lecomte, 2004: 4). However, the fact that initiatives such as DFID’s ‘Developments’ magazine hold such a position in governments’ priorities illustrates that more needs to be done to raise the priority of development education, however, in order to allow the public, as legitimate constituents of aid, to properly engage in debates about aid effectiveness.

It is the case that the general public of western countries are legitimately a constituency of aid. This is in addition to the aid industry, previously identified by Van de Walle, as aid’s constituency in the west. As constituents of aid the public tend to have more incentive to see that aid money is effectively used. This is in contrast to the other constituencies in the west, as well as those identified as constituencies in the developing nations themselves, who may have other priorities and, as such, have limited incentive to affect change. It is proposed here that in order to engage the public in debate about aid effectiveness and thus affect policy change there must be more effort to provide so-called development education. Current efforts to facilitate an increase in knowledge about development issues in the general public are limited but are growing. It is hoped that public engagement in the debate about aid will lead to the adoption of more effective policies and better accountability.

Not too long ago, I jumped on a train and travelled back to my beloved Edinburgh in order to attend The People’s Debt Tribunal. The event, held at the Scottish Parliament, was created by Jubilee Scotland and was designed to demonstrate how Scotland can play an important role in arbitrating and cancelling third world debt.

The idea behind the Defuse The Debt Crisis campaign, of which The People’s Debt Tribunal is a vital part, is that Scotland can and should advertise itself as an appropriate location for the non-partisan discussion of, and resolution to, unjust debt.

The concept of unjust debt is a central part of Jubilee’s core beliefs, who centre their campaign around a fundametally moral debate. As such, there tend to be two main sides to the argument on debt relief. Firstly, there are the economic arguments which tend to focus on the potential for economic growth and development, if debts are cancelled. Secondly there are moral arguments, focussing on the idea that debt cancellation is more of a moral imperative than an economic one, especially given the manner in which developing country debt often originates - through corrupt officials, arms, or unsustainable projects.

The People’s Debt Tribunal aimed to highlight both these arguments, in a debate between economists, a World Bank official (played, very convincingly, by an actor), and a philosopher. As a philosophy graduate, I was naturally intrigued by the moral argument presented and was especially drawn in by the concept of responsibility which appeared to envelop the entire debate.

In the end, the World Bank’s argument seemed to boil down to one very specific point - that the indebted country had a responsibility to honour their contract - to pay their loans back. Of course, the standard line from the World Bank, in this case, is that encouraging countries to pay back their debts is part of the wider good governance agenda, implying that when governments embrace their responsibility to pay back loans they, in turn, embrace more transparent and accountable governance.

On the moral side of the argument, the responsibility lies, not with the indebted country government - who may, after all, have only inherited the debt - but with the creditors, who lent the money in the first place. Surely it is reasonable to assume that there is some moral requirement for the World Bank to ensure that it does not lend too much money to governments who are corrupt, or unable to effectively control their debts? And, where such a responsibility or mechanism does exist, shouldn’t there be some kind of downward accountability, by the World Bank and other creditors, to justify why this mechanism has failed?

Finally, to sum up - Yes - developing countries do have a responsibility to pay back their debts. However, some responsibilities trump others, especially - as the philosopher at the debt tribunal did -if we consider a more utilitarian mode of the thinking. Cancelling debt is likely to create more overall happiness and wellbeing for more of the population. As such, it is the morally correct thing to do. Further, in discussing the merits of honouring a contract (to repay debt) versus the responsibility not to lend to corrupt government officials, for example, surely the moral responsibility exists long before the contractual one?

In the end, I thought that Jubilee Scotland’s ‘People’s Debt Tribunal’ was a resounding success. Not because the audience voted unanimously in favour of cancelling debt (because, lets face it, the vote was probably slightly biased!), but because it offered the opportunity to present compelling arguments in an interesting and accessible way. I, for one, am very interested to see how the campaign will progress.

‘Dead Aid: Why aid is not working and how there is another way for Africa’ was published in 2009 and, almost immediately, sparked a huge debate about the future of development aid. This review, originally written as a piece of assessed coursework for my Master degree at The University of Edinburgh, was written this time last year, in 2010, and aimed to demonstrate the dialogue and debate that Moyo catalysed in writing Dead Aid. As it was my first, and one of my favourite, peices of coursework I thought it an ideal point from which to begin this blog.

THE BOOK

‘Dead Aid: Why aid is not working and how there is another way for Africa’, examines the controversial notion that development aid is harming Africa’s development. Zambian economist, Dambisa Moyo is well qualified to explore this notion having completed, among other things, a doctorate in Economics as well as spending two years working for the World Bank. Dead Aid tells us that not only is aid ineffective but that it is also part of the problem - only by stopping its flow will we see any economic prosperity for Africa. Moyo’s book is a call for change directed at the whole world. Her accessible writing style will ensure that it is read, not only, by African policymakers but also by the general public in Africa as well as in the West. In addition to her arguments against aid, Moyo offers an alternative strategy for financing development. The book calls for a change in the way we think about aid, but the success of this endeavour remains questionable. Moyo’s argument that aid feeds corruption may leave the reader wondering whether we should, instead, tackle corruption directly in order to make aid more effective rather than ridding ourselves of aid to make governance more effective. In addition Moyo’s rallying call to stop aid flows may not be compelling enough to stimulate the West into action.

MOYO’S ARGUMENT

Moyo aims to make us aware of the ‘myth of aid’. Despite massive flows of money from the West, Africa is still lagging behind. Even with impressive economic growth and political improvement in recent years it still remains the poorest region in the world and Moyo places the blame for this on governmental aid. She illustrates its’ evolution from the Marshall Plan in the 1950s to today’s focus on aid as the optimum solution for African development. She refers to this current trend as ‘glamour aid’ due to the prevalence of celebrities, like Bono and Bob Geldof, incessantly campaigning for more money for Africa. Moyo also discredits the main arguments for aid and acknowledges that while there are many reasons for poor growth in African counties these can be overcome. Moyo argues that aid leads to corruption which in turn leads to a viscious cycle: corruption (and the presence of aid itself) discourages investment and reduces economic growth leading to fewer jobs and thus more poverty. This leads to more aid being delivered, thus perpetuating the cycle. Not only is aid an easy source of income for African governments but it is also easily stolen. In addition, there is no real incentive for governments to let this money reach the poor since there are rarely any penalties for governments who misuse the money. Moyo suggests getting rid of aid altogether and finding alternative ways to fund development in Africa. Her strategy encourages ideas for gaining capital and encouraging growth, in particular - microfinance, foreign direct investment and trade. Her alternatives are both intriguing and empowering and Moyo asserts that countries that follow her strategy exactly will see increases in growth and more funds for development.

A CLOSER LOOK…

A central premise of Moyo’s argument is that aid is a cause of continued corruption in Africa and that corruption affects a country’s growth. This may be so but it is simply not clear that removing aid from the equation will eradicate corruption. The nature of corruption means that officials would simply find other ways to fill their pockets. Undoubtedly, Moyo’s response to this would be that her alternatives ensure that corrupt governments would be compelled to reform. Amongst other strategies Moyo recommends that governments should issue bonds as a means of raising capital. As well as avoiding aid dependency this strategy encourages foreign investment. Bonds are subject to stricter terms and as such would ensure a reduction in corrupt practices. Failure to reform would make it more difficult for governments to borrow again.

However, even if this is case such reform would take time. Following Moyo’s strategy means getting rid of aid altogether. So while a government tries to make itself more attractive to lenders the country is left with an ever declining purse. In addition, this idea relies on corrupt governments giving up easy money. That African governments would take steps towards ending aid flows seems unlikely and requires more radical action, something Moyo is aware of. She believes that African policymakers will be jolted into action if the West takes the initiative to steadily reduce aid flows over a period of 5 years, eventually stopping it altogether. However, if corruption is already embedded within the fabric of a nation’s government it may be just as likely that it will continue to squeeze every last penny out of the state with irresponsible budget cuts before they even consider reform. If this happens then the damage to the economy and infrastructure could be disastrous. A possibility that even Moyo considers:

“One would hope that any cutbacks would be on the non-essential, frivolous items (palaces, private jets and shopping trips to the Champs-Elysees in Paris), rather than schools, hospitals and infrastructure.” (Moyo, 2010: 146)

Moyo refers to the other limitations of aid in her book and as such the point above is not meant to be in its defence. The problem with this particular argument is the assumption that the removal of aid will stop corruption altogether. If corruption is not eradicated there is limited chance of success for Moyo’s development strategy.

An additional point can be made about the practicality of relying on the political resolve of the West to cut aid altogether. Aid is a business and this is the reason, by Moyo’s own admission, that countries with known corrupt governments still recieve this money. It has to go somewhere otherwise the existence of institutions such as the World Bank would be undermined. She estimates that there at least 500,000 people in the West whose livelihoods depend on the continuance of these institutions and as such the decision to cut aid altogether would not be taken lightly. One could also argue that the benefits for donors, gained from conditional aid, would also affect such a decision.

SUMMING UP…

As a whole the book’s purpose is to change the way we think about aid. In recent years we, in the West, have begun to think that it is the only way to solve Africa’s problems. This idea may not have been so ubiquitous had it not been for high profile celebrities telling us so. The idea that aid doesn’t work has been in the background for a while, but what Moyo aims to do is to make the public aware of it. Her ideas for development without aid include some solutions that are already proving successful in the developing world. In particular, the story of Grameen bank and its’ African counterparts, demonstrates an interesting microfinancing solution that empowers the poor and contributes to developing economies. Public support may be garnered for alternative development solutions but given the culture of ‘glamour aid’ that has been cultivated by high profile celebrities it seems unlikely that we will see the public switch from campaigning for more aid (through events like Live 8) to campaigning for and end to it. Aside from the embarrasment, of thinking that we have been supporting the wrong thing all along and perhaps have done more harm than good, the idea that corruption may not be eradicated by stopping aid may place doubt in the minds of readers who would otherwise support Dead Aid’s central argument.

Moyo has made it clear that aid does not work and that something must be changed in order to see Africa develop. As an attempt to gather support for alternative development strategies the book may succeed, but as a call to end aid flows it fails. Despite compelling arguments against aid it seems doubtful that it would be cut. As discussed above it is unlikely that this is something that the public would campaign for, even less likely that it is something donor governments and institutions would consider. If these institutions or the public need any justification for continuing aid flows as normal they need only look closer at the text. Moyo stresses following her advice exactlyto achieve results but without assurance that corruption can be eliminated there is no guarantee that any of her alternatives would lead to prosperity for Africa and its people.