The Aid Debate

1. The Aid Debate AGTI Annual Conference Galway October 2011

2. Food for thought... • After 60 years of aid, there are almost one billion people hungry in today’s world…... • "Government-to-government transfers are an excellent method of transferring money from poor people in rich countries to rich people in poor countries." • Peter Bauer - British academic • “It seems as if America needs hungry Africans to eat their surplus.” • Quote by an Ethiopian farmer

3. Some Statistics • More than $100 billion is transferred to the South every year in official aid and through private charities. • However, remittances account for more than twice as much as all official aid. • Sub-Saharan Africa – the world’s poorest region – receives the largest amount of aid of any region – approx $52 per year per capita. 

4. Some more statistics ... • Aid to South-East Asia and the Pacific is about $4 per capita per year. • Some African countries are very dependent on aid. For instance, aid to Liberia and Burundi equals about half of their GDP. • After several decades of receiving aid, Africans are poorer than ever!

5. Aid – Development Assistance • Aid is a partnership between donor countries and recipient countries. • Aid is an industry today. • Aid has been in operation since the middle of the 20th century.

6. Key Terms - aid • Official aid • Bilateral aid • Multi-lateral aid • Emergency aid • Voluntary aid - NGOs • Short Term vs. Long Term aid

7. Tied Aid (A) The USA insisted that Africa’s governments purchase anti-AIDS drugs from the USA instead of buying cheaper generic products from South Africa, India or Brazil. (B) In Vietnam, a €2.3 million tied aid package from Italy is funding the building of the water system in an urban setting. An Italian company is setting up the Vietnamese flood monitoring system at a cost of €2.5 million.

8. The Good Guys • Only six countries – Ireland, Luxembourg, the Netherlands, Sweden Norway and the UK – provide more or less 100% untied aid. • Tied aid was made illegal in the UK with the International Development Act of 2001.

9. Food Aid by Major Donors 1995-2005

12. Time 1999: “One of the world’s 100 most influential people”

14. DambisaMoyo’s Arguments • Aid makes people lazy • It makes recipient governments lazy – they do not pursue tax revenues • Aid fuels corruption • It discourages enterprise

15. DambisaMoyo’s Arguments • Public services that governments should provide are provided by aid agencies • Aid dependence becomes an addiction • Outsiders call the shots.

16. DambisaMoyo’s Solutions • Cold turkey • Inward direct investment • A market economy

17. Aid must be targeted at real needs. • Aid Recipients must be accountable to • donors.

18. IRELAND’S PARTNER COUNTRIES OTHER PARTNER COUNTRIES: • Vietnam • East Timor OTHER PRIORITY COUNTRIES: Sierra Leone Liberia South Africa Palestine

19. ODA - %age of GNP

20. Ireland - ODA in €m

21. ODA - %age of GNI (2010)

22. An NGO example

24. The Trade/Aid Debate • Africa in 1960: A bright future • China in 1960: A basket case • Africa today: A continent in crisis • China today: ……….Double digit growth

27. Is Trade a better bet for Africa??

28. LCHL QUESTIONExamine two major issues that arise from the international aid debate. Tied Aid Dependence Food Aid