The wrong sort of Aid

By Harry Phibbs
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This is the third piece in our series debating the pros and cons of International Aid. Yesterday, Philip Davies MP made the case against, and on Monday Jessica Epsey made the case in support of UK Aid spending.

"The truth? You can't handle the truth," said Jack Nicholson in A Few Good Men. That broadly sums up the mentality of the international development industry towards the taxpayers funding it. If the British Government applied the same principles of transparency, accountability, and value for money to the Department for International Development that it applies domestically, then many more lives would be saved.

However, it would be awkward as it would highlight, even more than at present, how much of the money is misspent.  The political calculation is that there is quite enough opposition to aid spending already, without attracting more controversy. Wouldn't greater exposure of corruption and waste further infuriate the electorate - perhaps prompting more Conservatives to switch to UKIP? Wouldn't cutting spending on some areas of Aid prompt hostile campaigns from those well funded "charities" that have their funding cuts? Perhaps. On the other hand, a policy of reducing overall Aid spending, but increasing its effectiveness, should not be impossible to get across. Claiming that spending more money is an achievement in itself is never a credible way to proceed.

Who does DFID champion? The poor in developing countries? Or their Governments - as well as the vast bureaucracy of middle men in international bodies who constitute a leaking hose that aid money is poured through before it even reaches governments, let alone the poor?

The expedient position is for DFID to pretend that present arrangements are fine and to defend the status quo. Imagine if Iain Duncan Smith had said that about the welfare system he inherited? Or Michael Gove ignored failing schools and allowed the Department of Education civil servants to prioritise keeping the NUT happy? Or Jeremy Hunt tried to hide scandals in the NHS rather than take action to deal with them?  I'm afraid DFID, under Justine Greening, has an attitude problem. The approach is too timid and establishment.

As Conservatives we should certainly be proud that the spending is somewhat more effective than it was under Labour.  But the big change that is required is for the British Government to take proper responsibility for all its aid spending. DFID should cease providing "budget support" or PRBS - which means giving money to foreign governments for their general budgets without proper accountability.

In theory there can be conditions attached, but the mechanism are not in place to apply these in practice. The PRBS share of our bilateral aid has fallen from 27% in 2009/10 to 12% in 2012/13. That is huge progress - although nil would be a much better figure.

The bad news is that the proportion of multilateral aid has actually increased. It was 38% under Labour, 43% now. Given the way these funds are abused by the European Union and the United Nations and also (to a lesser extent) by the World Bank this trend is a scandal. The Government can hardly pretend it is unaware of the abuses. This is not to say that all the money is wasted. However, multilateral aid not only has high administrative costs, but also a reputation for poor performance and ineffectiveness.

We should aim for every penny of aid to be spent as effectively as possible. It is just not credible for the Government to claim to be doing this when allowing the EU and other outfits to be the ones doling it out. There are, however, constraints on what we do, due to our membership of the EU. Repatriation of our Aid spending should be one of the many requirements of a renegotiated settlement. Indeed it was included in the 2005 Conservative manifesto. Multilaterals have high costs and too often limited effectiveness.

Even under the existing arrangement we could and should cease contributing to the European Development Fund. This is a voluntary arrangement which does not best serve the poorest on our planet. Yet £327 million of British taxpayers money was handed by the Government to the EDF last year. This spending is very questionable.

The EDF is administered badly and its spending poorly monitored. There are plenty of project evaluation reports that detail the poor performance. It provides direct budget support to a number of dubious countries, and thus all waste and corruption in those countries can be laid at the door of the EU (and the UK). 54% of budget support is targeted at nine countries - Mozambique, Tanzania, Burkina Faso, Ethiopia, Zambia, Madagascar, Niger, Mali and Ghana.  The EDF has performed particularly poorly in Mali with money for road construction that has been wasted. Yet in June DFID agreed to continue to pour our money into the EDF. All this is despite plenty of reports - including one recently from the International Development Select Committee - detailing concerns about multilateral aid spending.

By contrast, when DFID funds are spent directly, the objectives can be clearly specified, the work can be properly evaluated by the Independent Commission on Aid Impact, and worthwhile results can be achieved. Clearly focused bilateral initiatives can and do have a significant impact. For example, DFID work to reform tax administrations in a range of countries is resulting in huge increases in domestic revenue and making those states significantly less reliant on external aid.

Help to Rwanda to sort out land titling has enabled Rwandans to gain proper title to their land and property for the first time, providing a major economic boost since they now have security against which to borrow.  In that country DFID's £28 million Land Tenure Regularisation (LTR) programme, will ensure for the first time that all land holders in Rwanda have clear title to the land they own. It will drastically reduce land disputes and unfair expropriation, increase agricultural productivity and investment in land, and provide collateral for land owners to access credit.

The programme pioneered the use of low-cost, community-led methodologies for land registration and has to date demarcated and entered in a LTR database 9.7 million land parcels. More than 92 percent of land holders surveyed said they were either satisfied or very satisfied with the process, and the cost of registering and issuing legal title will be £6 per parcel-one of the most cost-effective land registration programmes ever carried out.

Another example of good Aid spending is the support to enable hundreds of thousands of Pakistani children to attend low cost private schools is greatly increasing educational opportunity and dealing a blow to the forces of backwardness and barbarism.

The Aid debate has become too polarised. Some argue the spending is wasted or even damaging. Others claim that it is effective - sometimes transformational. The truth is a huge amount, probably most is wasted but that some produces fantastic results.

Effective aid does not just fulfil a moral case of reducing disease and extreme poverty. It also advances our own interests. Stable governments upholding the rule of law advance our security interests as they are less inclined to provide safe havens for terrorists. The more countries in the world that embrace property rights, free markets and open trade the more prosperous we, as well as they, will be.

So don't abolish Aid. But slash the total spending and redirect what the remainder goes on. It is no use pretending that current spending is rigorously ensures value for money. There needs to be more for less.