Separating the Truths and Myths in Aid Numbers

By Connor J. Wangler
Source: IMF

Source: IMF

To Jeffrey Sachs, the answer to where the future of aid donors lies is simple: the rich. He doesn’t simply leave it there. Sachs focuses on the richest of the rich, the “One Percent,” as they’ve come to be known. It’s simple; the richest of the richest must help the poorest of the poor. Isn’t that asking to much though? In his acclaimed book The End of PovertySachs gives five reasons as to why the rich can afford this task: the number of extreme poor persons has declined, the goal is just ending extreme forms of poverty, ending the poverty trap is much easier than it appears, the rich world today is so vastly rich, and contemporary tools (mobile phones, internet, etc) are more powerful than ever. I, for one, believe that while the situation is much more complex than Sachs leads on, the rich of the world can take the lead without giving up too many, if any at all, of their comforts.

Assuming rich countries agreed to increase aid flows to 0.7% GNI that Sachs says is enough to do the job, the issue then becomes if this solution is one that can last. The answer that I come up with is yes, difficult, but yes. First of all, several countries have not only met this goal but surpassed it. For example, Luxembourg has achieved an ODA level of 1% of its GNI. While there has been a drop in ODA commitments in the past few years due to the global financial crisis, the OECD outlook reports a growth in overall aid by 9% by 2016 and should remain stable after this point. Furthermore, a recent report has shown that 100 richest people in the world could end extreme poverty right now. Surely, if this is the case, then the world’s rich as a whole could easily sustain the necessary aid flows that Sachs requests. This commitment could provide the resources and investments that developing countries desperately need access to; for example, Uganda currently uses over $500 Million (USD) in critical social infrastructure programs, such as AIDS and Malaria prevention programs. Even more important to eradicating extreme poverty now as opposed to later is the fact that if we are to wait, the problem becomes much more expensive to fix.

The next question that must be examined is if the MDGs only go through 2015, what happens after that? According to Sachs, if the proper attention is paid now to funding the developing world’s aid needs, the levels of poverty in 2015 will drop significantly. Therefore, the overall needs of development assistance will decrease and the burden on the rich to pay for poverty eradication will lessen. Between 1990 and 2010, the global level of extreme poverty went from 43% to 21%. This decline has been evident all over the world; even in Uganda the level of extreme poverty went from 33.8% in 2000 to 24.5% in 2009. Here is a piece that looks at post-2015 development assistance by the European Report on Development:

Despite the progress made and the needs present, many still don’t want to give more. There are many who cite several reasons as to why poor countries, mainly African countries, are a waste of time and money. These reasons, however, are myths. One of the most common myths is that African countries always going to be havens of corruption. While African countries do suffer from poor governance, it is not because of some preordained destiny. As Jeffrey Sachs notes, they have poor governance because they are poor. Good governance comes with higher incomes due to increased literacy and investment in good-governance. Therefore, continuing development assistance is critical in improving income and, consequently, governance.

Source: Transparency International

Source: Transparency International

Sachs calls for us to “think globally” when addressing these myths. This means to look at all of the linkages present in a given context; the world is vastly interconnected and, therefore, solutions to problems require a global, interconnected thinking. In the case of corruption, one can see that corruption plagues every country, even the developing world. Several Sub-saharan African countries have better corruption records than several Central and East Asian countries. To say Africa is somehow special in this aspect is to ignore the global reality of corruption. Clearly the aid debate is muddied with myths and emotions. If one is going to offer a critical response to the global poverty eradication effort, it is vital that one realizes the difference in what is truth and what is myth.

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