The Foreign Aid Fiasco

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The figures for worldwide poverty are shocking. About three billion people – just under half of the World’s population – live on less than $2.50 a day; 22,000 children a day – over eight million a year – die due to the effects poverty (malnutrition and disease); one in three children (640 million) live without adequate shelter; one in five children (400 million) don’t have access to safe water; one in seven children (270 million) don’t have access to healthcare.

Given these ghastly statistics you’d think that nobody with any humanity could oppose increasing the amount of foreign aid we should give to those so much less fortunate than ourselves.

When most people think of foreign aid, they tend to imagine brave aid workers rescuing people from earthquakes, tsunamis, floods, famines and other such natural disasters. But this emergency aid accounts for an extremely small part of the foreign aid money we give either directly to charities or through our taxes to charities and various relief agencies. Perhaps just $5 billion to $6 billion of the $135 billion a year foreign aid is emergency aid. The other ninety five or so per cent of charity and aid money goes to what’s called ‘development aid’ – helping countries escape from poverty and putting them on the path to development.

In the last sixty years around $3 trillion has been donated by developed countries to help poorer countries. There have been some huge successes – extreme poverty has been more than halved, diseases like river blindness and smallpox have been all but eradicated and millions of lives have been saved from famine and conflict. Moreover, many aid recipients have managed to break free from poverty and achieve rising levels of prosperity for their people.

In the 1960s countries like Malaysia, Indonesia, China, Thailand, South Korea and Taiwan had lower income per capita than some African countries. Now, thanks in part to aid, they have shot ahead of their African counterparts. South Korea for example, used to have a lower income per capita than Ghana. By 2013 South Korea’s income per capita at $33,189 was close to ten times that of Ghana at just $3,461. Though the country which has achieved most in improving the lot of its population is probably China where, with very little foreign aid at all, close to seven hundred million people have been taken out of poverty in just thirty years.

Between 1990 and 2010, Kenya and Ghana each received about seventeen per cent of their GDP in aid and grew by just over three per cent a year. In contrast, China received less than one per cent of its GDP in aid and grew by over eleven per cent a year while Malaysia was given just over one per cent of its GDP in aid and grew by six per cent a year.

But while most formerly poor Asian and some South American countries have made significant progress on the road to development and modernisation, too many countries, particularly in Africa, have stagnated or even become more impoverished over the last few decades in spite of being given more in aid than any other part of the world.

In Europe, after the Second World War the US-sponsored Marshall Plan is generally credited for helping war-ravaged European countries to rebuild and become prosperous. So some people have demanded a ‘Marshall Plan for Africa’. There’s only one problem with this demand. Africa has already had its Marshall Plan – several times over. In the last fifty years Africa has been given the equivalent of around ten Marshall Plans. In today’s money, the five-year European Marshall Plan saw about $100 billion – $20 billion a year – being used to rebuild Europe after WWII.

In the last fifty years, Africa has received over $1 trillion in aid. So, Africa received about the same every year – $20 billion a year – for fifty years that Europe received each year for just five years. Yet there’s little evidence that those countries getting the most aid have benefited from this aid and a quarter of Sub-Saharan countries, including some of the world’s greatest recipients of foreign aid, are now poorer than they were in 1960.

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Source by David N Craig