“The nature of the ties linking the African with the European has not really changed since the first Portuguese ships went sailing down the west coast of the continent: the sophisticated magic of the white man remains irresistibly alluring to the black.” (Shiva Naipaul)

In all the debates about aid, its visual impact is rarely remarked upon. In rural areas, aid probably looks like a good thing. When you see that a donor has dug a well for your village, you may feel grateful to and enthusiastic about the donor (that is, if you don’t feel embarrassed that your community has failed to dig its own well – a fact rammed home in nearly every village in Guinea-Bissau by a billboard placed next to each well proclaiming that it was a gift of the Kuwaiti, Spanish, Portuguese or American people).

But in cities, to which young Africans are migrating in droves, the visual effect is more ambiguous. When the urban African looks at aid, he sees aid workers and missionaries driving around in brand new Toyota Land Cruisers or Hiluxes. He sees them staring at laptops or chatting on snazzy mobile phones. He sees them dining in expensive restaurants or drinking in smart cafes. And he sees their glittering air-conditioned offices and villas, with iron gates and security guards.

In countries like Senegal, where there are tourists and Western businessmen, aid workers do not stand out. But in poor, remote, unvisited Guinea-Bissau they play an important part in shaping perceptions of the developed world (Guinea-Bissau has no cinemas, precious few internet cafes or televisions, and no press to speak of). And, as they have done for centuries, Africans see all this opulence and want a part of it. Guinean politicians, grown rich on drug money, purchase Land Cruisers and build gated villas. Ordinary citizens spend more than they can afford on mobile phones. And young Guineans, who until recently have not joined the West African exodus to Europe, have begun to talk about taking the boat to Spain – a journey which at least one in six of the many Senegalese who attempt it does not survive.

Of course, foreign aid workers are not the only cause of this new yearning, but it is likely they play some role. Many young Guineans I spoke to, who do not want to risk the trip to Spain, are desperate instead to work for foreign NGOs or the UN. It could be argued that giving young Africans something to aspire to will hasten progress and encourage hard work. Maybe so, but is owning a mobile really progress when you can’t afford your daughter’s $10-a-month school fees (as one mobile-owning mother in Bissau complained to me recently)? And in a country like Guinea-Bissau where aspiration is outpacing people’s capabilities and even well-intentioned governments are struggling to manage expectations, are ostentatious displays of affluence the best way of promoting peaceful development rather than the violent upheavals Nigeria, Guinea-Conakry and others are beginning to experience?

Dambisa Moyo is rapidly becoming the bête noire of orthodox development circles. Her recent book, Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa has stirred up a good deal of controversy, arguing that that ‘overreliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the “need” for more aid.’ (Incidentally, you would not believe how long it look me to realise that ‘Dead Aid’ is a play on Live Aid.)

In typically sceptical fashion, Emmanuel Yujuico at IPE Zone points out that ‘you also have to consider that several books have followed the same formula of catchy title plus scepticism about aid. Others have said it earlier–and better.’ He’s right, and people like James Ferguson have been writing on this for a number of years, but it’s worth noting that none of those authors (to my knowledge, at least) were black. As has been noted by Niall Ferguson, who wrote the foreword to Dead Aid, it is pleasing to see a ‘popular’ book on development that has been written by an African woman, rather than an American male. That said, as Global Dashboard’s own Jules Evans points out, Moyo hasn’t lived in Africa for years. Moreover, her career has followed the path of the archetypal high-flying western development worker – Oxford, Harvard, Goldman Sachs and the World Bank.

Back in February, Global Dashboard asked where the Dead Aid argument leaves traditional developmentists: ‘will they all dig in for a defensive game, or is a serious process of strategic renewal finally in prospect?’ Since then, promotional opinion pieces and interviews for Moyo’s book have led to a spate of debates (surely that is the correct collective noun?) within the development blogosphere and wider media that may be able to shed some light on this question. (more…)

So here I am in the cavernous media centre at the London Summit.  Some of the main excitement of the day so far: (a) the police found an unexploded World War Two bomb sunk in the dock next to the Excel centre, and will be detonating it shortly; and (b) there are free bacon sandwiches.

Plus, it turns out that one of the other G20 voice bloggers is Daniel Kaufmann - now at the Brookings Institution, before that at the World Bank.  He’s one of the top governance experts in the world (the FT’s words), and was one of the World Bank staffers who really put pressure on Paul Wolfowitz during the 2007 graft kerfuffle - if you recall the letter that he and other Bank staff sent to Wolfowitz, it read

The credibility of our front-line staff is eroding in the face of legitimate questions from our clients about the Bank’s ability to practise what it preaches on governance.  In these circumstances, we cannot credibly implement the governance and anti-corruption strategy.”

Hats off for that.  Next up: bloggers’ press conference wit Douglas Alexander coming up shortly.

The Economist has a piece on its website today bemoaning the effect of the credit crunch on aid flows:

It is unclear how aid flows are responding to the slowdown but the most recent data (which predate the crisis) hardly encourages hopes of a substantial expansion. Aid from OECD countries fell between 2006 and 2007, partly because of an exceptionally high level of debt relief in 2006. Disregarding this one-off effect, aid only crept up by 2% in 2007. And as a new report from the OECD points out, a 1970 United Nations target for aid of 0.7% of rich-country GDP remains a distant dream. Only Sweden, Norway, Denmark, Luxembourg and the Netherlands have reached this target. The average contribution is 0.45% of GDP.

And this sum was calculated before donor countries were hit by an economic crisis that has shifted priorities dramatically. Moreover, the size of the overall pot in rich countries will shrink as economies contract. Maintaining current levels of aid implies the unlikely earmarking of an even greater share of GDP.

Ah, the target of giving 0.7% of GNI to development assistance: bow your heads in reverence.  But hang on a minute.  Why are we all paying so much attention to a target that’s (a) not based on any assessment of how much money is needed to achieve any defined set of objectives, and (b) nearly forty years old?

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Former Goldman Sachs economist Dambisa Moyo has just published a new book entitled Dead Aid: Why Aid is Not Working and How There is Another Way for Africa. There’s an outline of the argument in this op-ed in The Independent from 2 February, e.g.

I have long believed that far from being a catalyst, foreign aid has been the biggest single inhibitor of Africa’s growth. Among its shortcomings, aid is correlated with corruption, fosters dependency, and invariably instils bureaucracy that hinders the emergence of an essential entrepreneurial class. For Africa to grow in a sustained way, foreign aid will have to be dramatically reduced over time, forcing countries to adopt more transparent strategies to finance development.  What the credit crunch has effectively done is to instigate this process by default …

The development finance policy that has been the hallmark of consistent growth across the world has almost universally comprised a mix of four essential elements: Trade and commerce, Foreign Direct Investment (FDI), microfinance, and access to international capital markets.

As such, despite negative headlines over China’s expanding role in Africa’s burgeoning economy, African governments should be minded to accelerate alliances with China and the rest of the rapidly emerging world. Rather than continue to spend millions of dollars each year attempting to gain greater access to Western trade markets, they should focus their attention on markets such as China, where, with 1.3bn people to feed and just seven per cent arable land, African produce is welcome.

And with roughly $4 trillion of foreign reserves, China is undoubtedly a better bet for much needed FDI in the foreseeable future than its Western competitors. Furthermore, the reserves profile of not just China but also the Middle East suggests a class of new investors with likely appetite to take on African risk via the bond markets.

As Moyo observes, the credit crunch is likely to have the effect of accelerating this debate, especially as publics in developed countries show lower enthusiasm for spending overseas as the full extent of spending cuts at home becomes evident in a couple of years’ time.

All this presents a major strategic challenge for the development community – where the orthodox narrative has arguably ossified in recent years, especially as no-one (donors, NGOs, developing country governments) has had much of an incentive to ask the really hard questions about aid.

The question now: will they all dig in for a defensive game, or is a serious process of strategic renewal finally in prospect?

One debate that will run and run in the coming months is on the whether, why and how of reforming US foreign assistance – a theme that Barack Obama riffed on frequently during the course of the Presidential campaign.

Over at the Center for Global Development, Sheila Herrling has just posted a Q&A on reforming the antiquated 1961 Foreign Assistance Act, which created USAID in the first place. As Herrling observes, the Act has only been overhauled fully on one occasion – and that was back in 1985. So what should reform achieve?  According to Herrling, a new act should:

- clearly outline the objectives and priorities of U.S. foreign assistance programs;

- consolidate decision making and implementation functions into a single independent institutional entity;

- specify the roles and responsibilities of other government agencies where appropriate;

- clarify the coordination of oversight responsibilities and functions; adjust regulatory requirements to fit the reality of implementing assistance programs; and

- discourage to the highest degree possible political and bureaucratic constraints (such as earmarks and presidential initiatives).

However, the really big question lurking in the background is whether USAID should be hived off and made into a separate department, a la DFID in the UK: expect plenty of speculation and debate about this over the course of the spring.  Me, I’m not holding my breath – for two formidable obstacles stand between here and USDFID.

One: the fact that Obama can’t just create a new department with a stroke of the pen.  In the US, machinery of government changes of that magnitude need Congressional approval (many would argue that the only reason the Department for Homeland Security came into being was the determined campaign run by the 9/11 families for just this outcome).

Two: the even more challenging hurdle of one Ms Hillary Clinton.  Hillary made plenty clear as soon as she arrived at State that she sees development as one of the core pillars of foreign policy.  It’s very unlikely that she’d see such a significant part of her empire slip through her fingers…

As everyone waits to see what Obama plans to do about reforming foreign assistance in the US, back here in Britain change is in the air too: the Conservatives are coming clean about what they really think about DFID, the Department for International Development.

For a while now, there have been whispers that the Tories don’t really buy into the idea of an independent DFID – and that perhaps (gasp!) they might be considering merging it back into the Foreign Office, where it resided until 1997. Well, following last week’s Independent interview with Conservative aid spokesman Andrew Mitchell, we can put that notion to rest: “We are very committed to DFID continuing as an independent department of state”, says he.

So, a ringing endorsement of DFID, then?  Er, not quite.  Here’s the full context:

The shadow International Development Secretary, Andrew Mitchell, said DFID had begun to encroach on the work of other departments and to come “perilously close” to setting its own foreign policy, a role he said should be reserved for the Foreign Office. He said the Foreign Office will be given much greater influence over the use of overseas aid should the Tories win the next election …

“There are times when DFID comes perilously close to pursuing its own foreign policy and that is not right,” Mr Mitchell said. “Foreign policy is decided by the government and the Cabinet, led by the Foreign Office, and DFID should not be an alternative to this. We are very committed to DFID continuing as an independent department of state. But we would make it more of a specialised development department and a little less like an aid agency,” he said.

That left me wondering just which specific instances Mitchell was thinking of in arguing that DFID was coming close to having its own foreign policy.  Iraq? Afghanistan? Climate change? (Thinking that Paul Wolfowitz might not be such a great idea for President of the World Bank?) Sadly, we don’t know.  Earlier today I called his office to ask him to elaborate, but he declined to say more.

This is a shame, on two counts. First, because it’s a cop out.  For the Opposition front bench spokesman on international development to argue that the Department he shadows has come ‘close to pursuing its own foreign policy’ is a serious claim – and one which he ought to be prepared to substantiate.  To fail to do so leaves him open to accusations of offering soundbites rather than reasoned argument.

More fundamentally, though, it’s a shame that Andrew Mitchell wouldn’t elaborate because this debate needs to be had.   (more…)