The "foreign aid" myth

The Daily Mail has an excellent opinion piece on why British foreign aid is excessive, misapplied and effectively pointless. Here's a brief extract to whet your appetite.

Defenders of aid say we have a moral duty to help those less fortunate and we are a rich country that can afford it.

. . .

Today, we spend £8.1 billion [on aid], which will increase to £11.4 billion in 2014 — a 34 per cent rise, despite spending cuts elsewhere.

Unsurprisingly, MPs are getting a growing postbag over this. We are giving more than £300 per household to the world’s poor while public sector jobs are lost and vital services for the elderly and disabled are closed. The head of the Royal Navy has warned there may not be enough money to pursue the war in Libya.

Four out of five voters oppose the cross-party consensus of increasing aid spending, according to a new YouGov@Cam survey. I share the ideals behind foreign aid — and, if it worked, I would say spend more. Unfortunately, the policy is based on old-fashioned concepts, outdated figures and all too often makes life worse, not better, for people in poorer nations.

. . .

The economist Peter Bauer famously said aid transfers cash from poor people in rich countries to rich people in poor countries. His words have been underlined by scores of studies that found idealism tempered by harsh reality.

Zambian economist Dambisa Moyo revealed the West had given more than half a trillion pounds to Africa, but over the past three decades the most aid-dependent recipients saw negative annual growth rates.

Haiti is another example. It was given official aid of more than £6 billion — four times as much per person as Europe received under the Marshall plan for post-war reconstruction — in the 50 years before last year’s earthquake.

Private aid poured in as well, with more charities operating in Haiti per capita than any other place on the globe. Despite this, income fell by a third.

It has, of course, endured despotic leaders, dreadful corruption and political unrest.

There's more at the link. Even though the article is written about British foreign aid, it applies just as well to the USA. This country spent $44.9 billion in fiscal year 2009 on foreign aid (economic and military assistance). I'd like to know the following:

1. How much of it was actually spent for the purpose(s) it was given;
2. How much of it was 'siphoned off' into the pockets of corrupt politicians and bureaucrats in recipient nations;
3. How much was spent on administration and overhead costs, and how much actually reached people in need.

I think the answers to those questions might make interesting reading. I don't think they've changed much from a few years ago, when Truthmonk pointed out:

The distribution of aid through social marketing that the Clinton and Bush administrations have favored adds to the costs of the aid. One example is the sale of mosquito nets, a necessity in malaria-infested areas, that have a base-cost of about $2.40 each.

“With consultant fees, transportation, advertising and shipping, social marketing added about $10 to the cost of each net,” said Dr. Peter Olumese, a medical officer in the World Health Organization’s malaria program.

The cost of delivering a $2.40 mosquito net through the U.S. is $12.40, an overhead of 81 percent.

U.S. agribusiness views foreign aid as key to its success. The industry believes in the long run it boosts agricultural exports, opens the door to trade, creates new business opportunities e.g., Brazil, Korea, Taiwan, and Turkey.

“If we’re serious about finding new markets, about creating new business opportunities for American companies in this competitive environment, we must recognize that we have a vested interest in helping the developing world especially in agriculture,” writes Perry Letson Assistant Vice President of Communications for ACDI/VOCA.

Buying food from U.S. sources is seen as a way of disposing of surplus food and is thus a subsidy to U.S. agribusiness. For this and the reasons above, most U.S. food aid should be seen as agribusiness promotion and subsidies, rather than freely given humanitarian aid.

Furthermore, when foreign assistance dollars are used to purchase available food in a nearby country, more food can be purchased and be delivered more quickly to the people who need it.

Most of the aid coming from the U.S is wasted. It was revealed in 2005 that the agency responsible for distributing most of the U.S. aid, United States Agency for International Development (USAID) was spending only five percent on goods and services and wasting the other 95 percent on consultants.

“Aid is larded with back-door kickbacks supporting U.S. exports and overseas military bases,” writes Alan F. Kay, economist.

Again, more at the link.

I don't mind helping those who are genuinely in need. I have a huge problem with splurging gobs of cash on wasteful, inappropriate and corrupt practices, politicians and products!





Peter