William Easterly: The white band's burden

A great idea, Sir Bob, but there are more useful ways to help Africa
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The Independent Online

Bob Geldof has assembled well-known bands for his Live8 concerts to lobby G8 leaders meeting in July to "Make poverty history" in Africa. Veterans of the 1985 Live Aid concert such as Elton John and Madonna signed up, as well as this generation's Coldplay. It is wonderful that so much energy will go into addressing Africa's problems.

Bob Geldof has assembled well-known bands for his Live8 concerts to lobby G8 leaders meeting in July to "Make poverty history" in Africa. Veterans of the 1985 Live Aid concert such as Elton John and Madonna signed up, as well as this generation's Coldplay. It is wonderful that so much energy will go into addressing Africa's problems.

Unfortunately, this campaign is so far spending most of its effort on causes that will not help the African poor. The objectives are to make trade fair, drop the debt and increase aid. Removing rich country protectionism is a worthy cause, although economists' estimates of the effect on Africa are modest. As for the other two causes - excessive debt and insufficient aid - history has already shown that insufficient Western generosity is not the main cause of Africa's woes.

The mythology of African debt is that huge amounts of money are being sucked out of the continent to go to international creditors. The truth is that much of Africa's debt has been fictional for a long time. When the debtors had difficulty coming up with the repayments, creditors gave new loans, postponed the repayment of old loans, or forgave the old loans altogether. The G7 has already spent 20 years giving ever more debt relief to Africa at each successive summit. Maybe the best argument for dropping the debt is just to end this charade, freeing up the time of people such as Geldof, G7 politicians and African leaders to concentrate on the real problems of African aid.

Debt relief itself shows that insufficient aid was not the problem in Africa. African governments could not repay zero-interest World Bank loans that required no repayment until 10 years after the loan was made and then had a 40-year repayment period. What does that say about the pay -off to the money lent in the first place? The International Monetary Fund and World Bank gave debt relief even to such long-standing "success stories" as Uganda. If a businessman could not generate enough profit to repay a loan with a 10-year grace period and 40-year maturity at zero interest, you wouldn't call that a successful business.

We know that aid is ineffective from the record of the $568bn (£313bn) already given in aid to sub-Saharan Africa. This aid was not successful in preventing decades of stagnation. Yet campaigners and politicians are jostling in the public square to call for ever more aid to Africa, from Geldof to Jeffrey Sachs to Tony Blair and Gordon Brown. Even George Bush has taken time off from his misguided military approach to the world's problems to increase US aid to Africa, although he resists the more sweeping aid and debt relief programmes that Tony Blair carries to Washington this week.

Gordon Brown said in a speech in January that more aid could get 12-cent medicines to children to prevent half of all malaria deaths. Jeffrey Sachs says in his new book The End of Poverty that "ending the poverty trap will be much easier than it appears". At the World Economic Forum in Davos in January, these two got the actress Sharon Stone so excited about easy solutions that she jumped up and raised $1m (from an audience made up mostly of middle-aged males) for bed nets to protect against malarial mosquitoes in Africa. Isn't Mr Brown a little curious as to why hundreds of billions of aid have not already delivered 12-cent medicines to dying children? Isn't Professor Sachs a little worried that four decades of aid efforts have not already ended the easy poverty trap? Isn't Miss Stone a little troubled that hundreds of billions in aid have not already got $4 bed nets to potential malaria victims?

These latest calls for increased aid echo a long tradition that emphasises aid volume as the measure by which we judge success on world poverty. But aid volume measures costs, not benefits. General Motors, which Wall Street has just downgraded to junk-bond status, would not help its case if it cited its high costs of production as an achievement.

Bob Geldof and his fellow campaigners should direct their outrage to the question of why the current sums of foreign aid do not reach the poor. (The campaign makes a token reference to "better aid," but this is not the focus of the effort.) A big problem is that what sells politically in the North is not what is most helpful to the poor in the South. The slogan "Make poverty history" is so general that it does not hold any single, rich government or aid agency accountable for making poor peoples' lives better. If poverty does not become history, who will you blame? Everyone, and thus no one. The aid community proposes worldwide goals (the Millennium Development Goals for eight different dimensions of world poverty, to be achieved by 2015) for which all aid agencies are collectively responsible. Collective responsibility does not work, for the same reason that collective farming has never worked. Hold aid agencies individually responsible for what their own programmes achieve.

It also doesn't help that the goals are so utopian. African poverty is a complex problem that has such roots as past Western exploitation, artificial states created by the colonisers, murderous kleptocrats (presently exemplified by Robert Mugabe), ethnic conflict, and dysfunctional bureaucracy in both the Western aid system and Africa's civil service. To its credit, Tony Blair's Commission on Africa (of which Bob Geldof was a part) recognised many of these factors - but they didn't follow it through to its logical conclusion. Aid agencies are even less accountable for results if they can blame poverty on factors beyond their control.

In contrast, you could hold aid agencies accountable for results if the aid agenda was less utopian, just concentrating on specific tangible steps to help poor people. Researchers have found many programmes that reach the poor: subsidies to parents to keep children in school, free textbooks for school children, de-worming medicines, nutritional supplements, education on condoms and treatment for other sexually transmitted diseases to prevent Aids, indoor spraying to control malaria, fertiliser subsidies, vaccination, and water provision.

Aid agencies need independent evaluation of the effects on the poor of their programmes. What aid agencies do today is mostly self-evaluation. Aid agencies are only accountable if independent evaluators judge them. In short, three steps - individual responsibility of aid agencies, a less utopian agenda for aid and debt relief, and independent evaluation - are more likely to help the poor than even more utopian campaigning for more aid and debt relief.

To all of you who will be listening to Madonna and Coldplay at Live8, you deserve congratulations for your compassion for Africa's desperate poor. Direct your energies at the outrage of aid and debt relief dollars not reaching those same poor. Ask the aid agencies why those 12-cent medicines have still not reached children dying of malaria. Don't let aid agencies shun individual accountability and hide behind utopian agendas and self-evaluation. Once that outrage is fixed, let's go ahead and increase foreign aid.

William Easterly is Professor of Economics (Joint with Africana Studies) at New York University