Is British aid really helping the poorest?

Latest figures show that India is still the second biggest recipient of Britain's £11 billion foreign aid budget getting £284 million last year. Just how deserving are they though?

As published in The Herald - March 18

Decisions as to which sums of money were appropriate for the earthquake-induced crises in Haiti and Chile are the responsibility of the Department for International Development (DFID).

Set up in 1997 to bring greater clarity to the way aid was managed and to make sure every pound was making a difference to the lives of the world’s poorest people, DFID was a cornerstone of New Labour’s ethical foreign policy.

This year it will spend some £9bn on overseas aid, an annual year on year increase of 11.4%. This is one of the few government departments whose budget has been promised ring fenced protection across the political spectrum. Such a huge sum of money should go a long way towards achieving DFID’s goal: to promote sustainable development and eliminate world poverty.

In other words, helping to lift the poorest of the poor out of the economic mire, Professor Paul Collier’s "bottom billion". These are people who live in 30 or so of the world’s poorest countries, caught in a trap of bad government, geographic disadvantage and conflict.

However, instead of concentrating on these people who need help the most DFID spreads its resources across 150 vastly differing countries; nations as diverse as the very poorest such as Afghanistan and Sierra Leone to China, soon to have the second biggest economy in the world.

DFID spent £40m in China last year and has budgeted £30m for its programme this year, mainly on HIV and Aids education and water and sanitation projects. With Britain running a budget deficit of £170bn, should it really be subsiding development work in a country whose economy ran a budget surplus of £453bn last year and has the highest reserves of foreign currency and gold on earth at $US2.4trillion?

Britain has now overtaken Russia and Germany and receives 41% of all Chinese direct investment into Europe.

But by far the biggest chunk of DFID’s budget goes on a country that has earmarked more than $US1bn to further develop its space programme and whose government is preparing plans for a manned space flight. But India receives the lion’s share of UK development spend at nearly £300m annually.

India, the twelfth biggest economy in the world, is due to overtake Britain by 2015. Some of the UK’s best known names are owned by Indian companies.

Vijay Mallya’s UB Group owns Whyte and MacKay. TATA Steel owns the remnants of British Steel and the company’s automotive arm recently took over Jaguar Land Rover for £1.7bn. Last year, India was the second highest inward investor in the UK, creating 4,149 new jobs through 108 new projects, a 44% rise on the previous year.

It would seem that, rather helping the very poorest of the poor, British aid still seems tied to wider strategic goals beyond the elimination of world poverty. Pakistan is another case in point. This nuclear armed regional power is the fifth biggest recipient of UK aid, £133m last year. Yet Malawi, one of the world’s poorest nations, languishes on the DFID giving list in twelfth place.

One happens to be a key ally in the war on terror; the other sits in the middle of strategically unimportant sub Saharan Africa.

DFID is an effective department. Since 1997 it has provided more than 12m people with better sanitation, trained more than 60,000 health professionals and vaccinated three million children against measles.

And it does spend significant sums on the very poor. Ethiopia, Rwanda, Nepal, Tanzania and Bangladesh are countries that receive significant aid through DFID and who are on the bottom rung of the world’s economic ladder. But there is a case to answer as to whether scare resources are stretched too thinly to make a real difference to the lives in greatest need. DFID has a protected budget significantly bigger than the Foreign and Commonwealth Office’s, but it is in danger of losing sight of its original charter.

Some £30m spent in Haiti is a staggering sum for a country on its knees; £30m in China is barely half a day’s interest on its foreign reserves.

A realignment of development spending priorities to focus on real need rather than advancing political influence must be examined if there is to be long-lasting improvement to the prospects of the world’s bottom billion.

Comments (1)
1 Wednesday, 10 March 2010 15:50
Marydelene Vasquez
Thanks for that very insightful article which exposes the myth of development funding. The figures you quote are shocking. It is time for the world's largest economies to be honest with themselves and the world about the real agenda behind their international aid. Hopefully a little honesty will help to get them on the right track towards poverty reduction.

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