x Abu Dhabi, UAEFriday 28 July 2017

A better model of foreign aid to combat poverty

Ending poverty is not merely about money - it takes local knowledge to understand how to genuinely enhance a community

'Can aid end poverty?" asked the economist Abhijit Banerjee at the majlis of Sheikh Mohammed bin Zayed on Monday night. Many, he noted, argue that without aid, poverty cannot be eradicated; others have suggested aid is useless by itself, if not counterproductive. "But that," said Dr Banerjee, "is the wrong way to ask the question."

Dr Banerjee is one of the most prominent scholars of aid, and a proponent of making aid work better. Despite the billions of dollars offered, hundreds of millions of people still languish in poverty worldwide.

There is a difficulty in assessing aid's effect. Providing money or food is often a Band-Aid solution, which may save lives today but leave people in the same circumstances tomorrow and the day after. Aid in the form of infrastructure, such as roads or agricultural improvements, is as important.

Aid can also have unintended consequences, sometimes entrenching a ruling elite that acts as a gatekeeper for foreign funds. Paradoxically, that can curtail the economic development of a country. At the same time, the very complexity of a society often means that it is impossible to judge whether aid "succeeds" or "fails"; there are simply too many variables.

There is also the problem of not knowing how much is spent. Aid is often wrapped up with military cooperation, economic subsidies or favourable trade terms. One oft-quoted figure is that, since the 1960s, developed countries have given $2.3 trillion (Dh8.4 trillion). That seems like a lot but, by a wry coincidence, it is the same amount the Pentagon declared in 2001 had gone "missing" in its accounts.

Often, as Dr Banerjee pointed out, the sheer scale of the problem makes people apathetic. Poverty can seem so big as to be insoluble.

But the better question might be how can aid be made to work better. Because poverty is not the only criterion. Aid has contributed to enormous strides forward in immunisation and in countering diseases like river blindness and leprosy.

For countries like the UAE, the moral imperative to provide aid is a constant. And in many cases, aid and development also have important political consequences; for Arabian Peninsula countries, development in east Africa and Yemen is vital to regional stability. And while poverty is a difficult evil to eradicate, it is a necessary task.

The solution is not less aid, but better targeted aid. Local knowledge can assist agencies and government in developing programmes that genuinely enhance the capability of the community. Aid, done well, is not a handout, but a hand up.