Overseas aid target "irresponsible"

August 10, 2012 10:36 AM

In a letter to The Times (£) this week, three development experts questioned the effectiveness of Britain’s large and expanding foreign aid budget. Gordon Bridger, a former economic advisor to the Overseas Development agency, Charles Cullimore, the former British High Commissioner to Uganda and Michael Shaw, a former Foreign Office consultant, concluded that “the huge amount of aid being poured into Africa is making many countries aid dependent.”

Despite the Department for International Development’s claim that aid promotes our national interest, the goal of spending 0.7 per cent of national income on foreign aid is both misguided and unlikely to offer value for money. Nearly all of Britain’s financial aid is in the form of budgetary or sector aid, which countries can allocate to other purposes, rather than to identifiable investment projects. The authors of the letter cited a "US study estimated that two thirds of funding to African governments for healthcare went elsewhere".

The huge cash inflow has the effect of not only propping up incompetent and often corrupt public sectors, but also hindering local entrepreneurs by distorting exchange and interest rates. If the Government is to provide financial aid, it should be for clearly identifiable and auditable projects.

The current approach is at odds with the Coalition’s own agreement which pledges “greater transparency and scrutiny of aid spending to deliver value for money for British taxpayers” and should spell the end of direct grants to foreign governments where this cannot be achieved. Rather than focusing on spending an arbitrary percentage of national income on aid, the Government should aim to create a smaller, better-quality programme.In a letter to The Times (£) this week, three development experts questioned the effectiveness of Britain’s large and expanding foreign aid budget. Gordon Bridger, a former economic advisor to the Overseas Development agency, Charles Cullimore, the former British High Commissioner to Uganda and Michael Shaw, a former Foreign Office consultant, concluded that “the huge amount of aid being poured into Africa is making many countries aid dependent.”

Despite the Department for International Development’s claim that aid promotes our national interest, the goal of spending 0.7 per cent of national income on foreign aid is both misguided and unlikely to offer value for money. Nearly all of Britain’s financial aid is in the form of budgetary or sector aid, which countries can allocate to other purposes, rather than to identifiable investment projects. The authors of the letter cited a "US study estimated that two thirds of funding to African governments for healthcare went elsewhere".

The huge cash inflow has the effect of not only propping up incompetent and often corrupt public sectors, but also hindering local entrepreneurs by distorting exchange and interest rates. If the Government is to provide financial aid, it should be for clearly identifiable and auditable projects.

The current approach is at odds with the Coalition’s own agreement which pledges “greater transparency and scrutiny of aid spending to deliver value for money for British taxpayers” and should spell the end of direct grants to foreign governments where this cannot be achieved. Rather than focusing on spending an arbitrary percentage of national income on aid, the Government should aim to create a smaller, better-quality programme.

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