As a financier with experience of working with developing countries, I was once asked to help restructure a defaulted £200 million loan that a consortium of banks had made to an African government. I started by following the money trail. It turned out that over £145 million had ended up in the pockets of government ministers and bureaucrats.
Giving aid to Africa remains one of the biggest ideas of our time. Governments are judged by it, and that’s one reason why the Conservatives have rightly given international development such a high priority. It’s not only morally right to help the poorest in the world, but it’s practical politics too. The more Africa develops economically, the fewer conflicts we will get drawn into and the less illegal immigration we’ll see.
We need to look carefully into what form our help takes. Evidence overwhelmingly suggests that government-to-government aid to Africa has made the poor poorer, and growth slower. It has fattened the already bulging offshore bank accounts of Africa’s ruling elite, and made the majority of Africans dependent of Western handouts – unable to work hard and earn a decent living.
Over the last 40 years, at least £450 billion of development-related aid has been transferred to Africa from rich countries. Yet real per capita income today is lower than it was in 1970. Over two-thirds of the continent’s population lives on less than a pound a day.
Foreign aid encourages corruptionRampant corruption in Africa is well known – far too many people go into politics only to get rich. Despite this, much of the roughly £30 billion of international assistance that will go from the developed world to Africa each year will go as direct government to government aid – including most of the cash coming from the UK. The economist Peter Bauer put it well half-a-century ago, foreign aid is a way of “taxing the poor in rich countries and passing it to the rich people in poor countries.”
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