By Brian Lee Crowley
In what one journalist breathlessly described to me as the “defining moment” of Paul Martin’s coronation, Irish rocker Bono called on Canada to lead the charge on Third World development. If Paul Martin doesn’t produce, Bono threatened to come back to haunt the new prime minister for his failure.
I spent a sobering year in Kinshasa, Zaire (as it then was known) working as a development administrator for the United Nations Development Program, so no one is more sympathetic than I to Bono’s plea for a more open-handed approach to the repeated crises that besiege that sad continent. But it is precisely because I have seen the dire effects of our well-meaning development efforts that I say to him to be very careful what he wishes for.
Bono hopes to raise Africa from its misery by increasing foreign aid, almost tripling Canada’s foreign aid budget. That may be enough to make every foreign administrator’s heart glad with the spirit of Christmas, but it will beyond doubt worsen Africa’s plight.
The developed world used to spend more on foreign aid. Then we cut back, partly for reasons of economy, and partly because of the growing body of evidence that such “development” actually makes things worse for most recipients. And yet in the last 20 years or so, probably more countries have escaped poverty than at any time in human history.
What explains this paradox?
Partly that money matters less than the quality of governments, police, courts, and property rights in the escape from poverty. Those countries that reduced arbitrary government power and allowed their people to benefit personally from hard work, all saw huge transformations of their economy.
Take China. In 1978 Deng Hsiao Ping embarked on a program of just such liberalizing reform. In agriculture alone the results were staggering. The possibility of opting out of the farming collective and formally leasing land from the government was used to such an extent that in practice nearly all agricultural land passed into private hands in what may have been the largest privatization in history. It paid off in crop yields: Between 1978 and 1984 they rose by an almost unprecedented 7.7 per cent annually. A country which, 20 years earlier, had been devastated by the worst famine in human history, a famine caused entirely by bad policy, now had a food surplus, caused almost entirely by good policy. Foreign aid played almost no part whatsoever in China’s real Great Leap Forward.
That’s the other part of the paradox I referred to earlier. Massive flows of foreign aid actively undermine efforts to improve the quality of governance in a country. And they do so for some pretty obvious reasons.
In a poor country there are often not many ways to make yourself better off. Business is rudimentary, the professions hard to enter, education in short supply. But if the courts and police are ineffective, government institutions corruptible, and accountability mechanisms weak, then foreign aid represents a huge opportunity.
Seize control of the levers of power and proclaim yourself the representative of the local population and foreign governments will send you millions. So the most ruthless and corrupt are inexorably drawn to government, and the poorest countries are wracked by conflict over who will control the spoils.
Shifting aid money into the hands of foreign companies or non-governmental organizations can make a marginal improvement in the case of the very best of them, but since development work is impossible without local partners and official co-operation, there is no reliable way to sterilize the destructive impact of vast flows of money into extremely poor countries.
If we really want to make a difference to the desperately poor in Africa, we need to be more demanding, not more indulgent, of their governments and the ruthless kleptocrats who run them. We need to demand higher standards of accountability, effective action against corruption, strengthening of the judiciary, police and rule of law. We need to encourage them, as Third World development guru Hernando de Soto preaches, to grant real property rights in their land and homes to peasants and slum-dwellers, so that they can participate in the formal economy and not be mere clients of arbitrary state authorities.
And most of all we need to open our own economy to the goods and services that the Third World is capable of producing. When the productive effort of local people allows them to make a decent living through selling the fruits of their labour to you and me, we transfer power to them and away from the kleptocrats. The real measure of our commitment to Africa should not be how much of our wealth we give to them, but how much of their productive effort we allow them to sell to us, and how high we set the standards of probity, accountability and transparency in our dealings with their governments.
Where’s a crusading Bono when you really need one?