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July 01, 2005

G8 Blogging 3 - Aid and Development

(Congratulations if you managed to wade through yesterday’s post on corruption! These posts are getting longer than I intended, and there is so much more to say. I’ll try and shorten them a bit, and then maybe come back to them later.)

More aid – while essential in the short term – is not the solution to Africa’s poverty. Changes in the trade system are more urgent. Christian Aid estimates that Africa has lost $1,440 billion to the rich world over the last three decades through unfair trade, debt servicing and bad investment policies.

But aid does have a role in poverty reduction and promoting social and economic development. The call from the Commission for Africa and from development agencies has been not only for a huge increase in aid, but also for better aid. They want an extra US$50 billion each year, a timetable to reach 0.7% of national income by 2010, strategies to ensure that aid works more effectively for poor people, and an end to the imposition of damaging economic conditions on poor countries.

Recently the EU agreed to double devopment aid to poorer countries, worth an extra $14 billion/year. Following suit today, George Bush announced a doubling of American aid to Africa over the next 5 years, on condition of good government and the rule of law. This would mean an increase from $ 4.3bn (£2.4bn) in 2004 to $8.6bn by 2010. Congress has not yet approved Mr Bush's proposed increase in aid, and the announcement has been met with the usual mix of “good start” and “not enough.”

Is aid worthwhile? Does it help? And how should it be given. I will start with a few Biblical perspectives on aid and development, and touch on some of the harmful and helpful approaches to aid in international development in looking at the question does aid work?.

Some Biblical perspectives

Some have used the verse where Jesus said “The poor you will always have with you…” to suggest that getting rid of poverty is futile. Yet Jesus is quoting from Deut 15:11 which says “There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land.” And so Jesus himself also continues “.. and you can help them any time you want.” (Mk 14:7). Jesus and his disciples had a purse, from which they helped the poor, and Jesus told his disciples to sell their possessions and give to the poor. Clearly, giving aid to the poor is on Jesus’ heart, as well as that of the disciples (Gal 2:10, 6:10).

1. Discipleship. The origins and problems of poverty, and therefore their solution, are not purely material or structural, but spiritual. Both from the perspective of self-destructive habits, wrong worldviews, and the selfishness, greed, and pride that result in injustice. The church therefore has a unique role in preaching the gospel, making disciples of both rich (eg. in their attitudes to and responsibility with riches) and poor (eg in destructive choices and habits), and prophetically calling leaders to justice.

2. Attitudes to wealth. Wealth is as much a spiritual danger – and therefore potential obstacle to Biblical human development - as poverty (see Prov 30:8). The love of money is the root of all kinds of evil – pride, greed, oppression, spiritual lukewarmth, robbery… Material wealth is neither a sign of God’s blessing, nor an end to be pursued for its own purpose. The riches of the earth are given for all. The goal of prosperity is for the good and blessing of all, not for personal enrichment. The wealthy therefore have responsibility to use their wealth for the good of all. We should choose lifestyles that reflect a Biblical attitude towards wealth, possessions, and the poor. We need to free ourselves from the love of money, and learn generosity. Generosity, of course, is not a question of how much we give, but of how much we hold back (Lk 21:1-4).

3. Development. Development is best understood from a holistic perspective. It not only, or even primarily, concerns wealth. Rather it is progress in personal, social and spiritual well-being. Economic progress is development inasmuch as it contributes to this – in the removal of suffering, the promotion of the capacity for healthy and wholesome lifestyle, the development of community, and spiritual growth.

4. Equality and freedom. All humans are of equal worth before God. This does not mean everyone becomes exactly the same, with the same income -although a removal of the extremes, where some suffer while others luxuriate, is necessary. But rather that each should have equal opportunity to pursue the development of their God-given capacity for the common good. This could mean for example the access to the means of development, such as equal participation in decision-making, better access to trade markets, and free education. Aid can be a part of facilitating this, but changes in unjust structures that hinder this are more important long-term.

5. Aid. Biblical injunctions to give are numerous. Such giving is with the purpose of helping others. Aid is therefore not only about hand-outs, but also about hand-ups – enabling people and communities to develop personally, socially, and spiritually. It is both to help the destitute, and also to promote development – and thus to enable others also not only to benefit, but to contribute. It seems to me that there are limitations on where aid is given. The focus seems to be to those who are unable to help themselves, and also to those who are willing to help themselves, but not to those who are able but unwilling (eg 2Thess 3:10)

6. God’s World. The earth is the Lord’s, and all who dwell in it. God’s interest in, and desire to bless the people of all nations comes through Scripture literally from Genesis to Revelation. Christians, of all people, should be the most internationalist. While we have clear responsibilities to our own family and nation, we are not to seek our own national prosperity at the expense of the poor, but rather seek to extend blessing to all.


Does Aid Work?

It has been shown often that well-directed aid works. Not only does it help in humanitarian relief, but also in promoting social and economic development. Badly managed aid however, can be harmful, and the positive and negative effects are sometimes difficult to separate.

The money given to Ethiopia from Live Aid and other giving 20 years ago is estimated to have halved the death toll there. Yet, some of the aid and NGO’s working there were criticised for having, by their action, helped maintain an oppressive and murderous regime. Their aid allowed the government to manipulate the situation in the pursuit of removal schemes that were the cause of huge numbers of deaths. This raises a terrible dilemma of whether it is right to give aid in a situation where, by saving lives, one may also be perpetuating a situation that destroys them.

We can look at harmful and helpful elements in approaches to aid that may hinder or facilitate its effectiveness:

Harmful Elements

Self-interest Often aid is not given with the primary goal of helping the recipient, but of using aid to extend one’s own national interest. This may include:
* Tied Aid: aid given on the condition that it is spent on products or services from the donor country – products and services that may not be the best or cheapest.
* Aid given to support friendly governments, even if irresponsible or corrupt. This was especially so during the Cold War, where aid and arms were given to pro-western countries, often in the process propping up oppressive dictatorships.
* Aid made conditional on unhelpful economic changes such as privatising services, cutting health and education spending, or opening up markets to competition.

Prestige projects. Often aid goes to prestige construction schemes that benefit the rich but do nothing to help the poor, nor the nation's development.

Corruption. Aid given without sufficient oversight and transparency, or through channels known to be corrupt.

Military content. Increasingly, military training and intelligence gathering are being funded from aid budgets.

Helpful Approaches

Aid given to help, if aimed at humanitarian relief and human development, will be given with the interests of the recipients at heart, and not with national self-interest. This will:
* Target the poorest, and focus on providing access to health and education.
* Be untied, enabling the recipient to decide how to use it best.
* End economic policy requirements.
* Remove military elements of aid.
* Support policies defined and owned by the recipients.
* Be delivered in a reliable and predictable way
* Be withheld from corrupt governments, and given to responsible ones.
* Where corrupt governments exist, by-pass governments and pass direct to local development groups.
* Use channels and monitoring that assure transparency to avoid diversion of funds.


How much?

Estimates say that providing universal primary education would cost just $10 billion a year. Young people who have completed primary education are less than half as likely to contract HIV as those missing an education. Universal primary education would prevent 700,000 cases of HIV each year, almost 30% of all new infections in this age group. Just for comparison, I understand the US military budget is $500 billion.

The internationally agreed target, established in 1970 has been set as 0.7% GNP, which would generate $120 billion. This guide of 0.7% is a useful guide to generosity (proportion of income), as compared with actual amounts. Larger sums should of course be required of the wealthier. Of the wealthy nations, only Norway, Denmark and the Netherlands have reached this target. None of the G8 have done so. The UK has been giving 0.3%. The US, while giving the most in actual dollars of official aid, actually gives the least as a percentage of GNP (0.1%) - although private giving is much higher.

Most development agencies estimate that an extra $50 billion/year is needed in aid. The Commission for Africa Report was asking for an extra $25 billion/year from now till 2010, with another $25 billion/year by 2015, subject to the money being well-spent. Tony Blair's office said Washington's pledge today, combined with commitments from the European Union, Japan and Canada, meant the G8 and EU would more than double aid to Africa by 2010, increasing it by $25 billion. If the money actually comes through, what remains is to ensure it is well spent and contributes towards the poverty alleviation and development.


Other articles in this series on:
1. Biblical attitude to the poor
2. Corruption
3. Aid and Development
4. Debt
5. Trade.

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Posted by Keith at July 1, 2005 03:07 PM

Comments

Thanks for taking the time to write this. It is quite helpful to me as I am woefully ignorant when it comes to matters of economics at this level.

Posted by: bill bean at July 12, 2005 01:30 AM