Britain’s international aid budget costs the equivalent of 22 days of national borrowing from international markets. By 2015, British Aid will have increased by 34.2% to £11.5 billion per annum. Including personal donations and state spending, Britain gives 0.8% of GDP in international aid. With state aid increasing, more people should ask: Why are average per capita incomes in Africa lower than 40 years ago after $1 trillion of aid being given over that period?
Aid infrastructure is somewhat responsible. British charities usually attempt to limit net administration costs to 10% (though they often exceed these targets). Reports from the World Bank and ActionAid respectively estimate that 40%-60% of international aid budgets are spent on consultants. Government bureaucracy diverts 5% of British, and 8.7% of European aid budgets respectively.
Most historical evidence shows that developing world aid recipients are more debt-laden, inflation-prone and likely to experience conflict and corruption. In Afghanistan, DfID was forced to stop aid-money after US intelligence found that £1 billion went missing through institutionalised corruption. Malawi’s president, the recipient of £93 million of direct aid, recently ordered an £8 million presidential jet.
President Kagame, recipient of £83 million of direct aid, recently purchased presidential jets worth £60 million. International aid has also contributed to Rwanda’s conflict with neighbouring Congo (in which 5 million people were killed) and prolonged Rwanda’s genocide. When $1.5 billion was donated to deal with a cholera epidemic in Rwanda, Hutu militias stole 60% to fund their crimes.
The Horn of Africa crisis owes some origins to international aid. In 1980s Ethiopia, £90 million of aid was used to lure starving villagers into state camps, from where 600,000 were deported and at least 100,000 died. Using British and Russian aid, Somalia embarked upon a territorial conflict with Ethiopia, which neither nation could afford. Today, warlords rule most of Somalia, expropriating up to 80% of aid that goes there.
The great paradox of international aid is that resources meant to alleviate humanitarian suffering often perpetuate it. Western living standards can only be exported through free trade and more open migration laws.
Free trade gives poorer countries a competitive advantage to exploit, so they can trade their way to prosperity. Instead of giving dictators money to disperse, enterprising citizens earn the money themselves. Governments can still rob their people, but have to allow at least some commerce to take place to do so.
As Sam has argued, more open immigration rules in the West would allow developing nations’ inhabitants to learn from and experience Western market practices. Along with their earnings, they can return these ideas back to their home countries (where trading opportunities would encourage growth). Meanwhile, Western nations would benefit from better growth and higher tax revenues. Peaceful economic exchange would be a lot better for everyone than paying warlords and dictators to oppress their own people.