Will explains why rather than reducing the amount of aid money we give to Malawi, we need to change how it’s spent.
I was reading one of the national newspapers over here last week and an article that quoted a recent piece in The Express caught my eye. It was notable not only for the fact that opinions from The Express is rarely read outside Liverpool – let alone in sub-Saharan Africa – but it also reflected a seemingly growing wave of popular opinion in the UK.
Headlined ‘The Great Aid Rip-Off’, the article claimed that the UK taxpayer was funding the lavish lifestyles of Malawi’s leaders. The article was absurd and completely misrepresented the Malawian government, dubbing the (albeit imperfect – but name one that is perfect) democracy a ‘regime’ and, without any foundation, calling the democratically elected (and very economically able) president ‘one of Africa’s most notorious leaders’. Er – can you name him?
It’s natural that, during tough economic times, questions are asked about foreign aid – and The Express article follows on from a recent editorial from Simon Heffer in The Daily Telegraph calling for foreign aid to be withdrawn in order to fund a Trident replacement. Now I’m no pacifist, but it’s hard not to notice the irony in condemning people to death in order to build something that will condemn even more people to death.
If the critics could see the impact foreign aid is having over here, I think they’d change their tune by at least an octave or two. Indeed, the few pence per year that each of us shells out for foreign aid probably has more impact on people’s lives across the world than any other expenditure.
To appease the critics, we might need to rethink how the aid money is spent. Malawi and a number of other countries in sub-Saharan Africa represent one of the few remaining areas of real economic growth in the world. The region hasn’t yet had its economic revolution. The form of that revolution is not yet clear: In Britain it was industrial, Japan technological, the US somewhere in between the two. The likelihood is that in Malawi it will be agricultural and come in an age where food is increasingly scarce. What’s any economic revolution if not a promotion to global trade?
Development economists are finally shedding the ‘trap’ theories arguing that countries like Malawi are permanently stuck in a rut. These theories are obviously nonsense, especially when you look at Malawian growth rates over the past three years. The biggest barriers to growth, though, remain skills and investment. Whether the lack of capital is the inability to develop a large-scale processing project or for a small village trader to install solar panels in order to trade later, it is significantly stunting economic growth. At the same time, lots of people over here lack the skills or confidence to realise the potential of their businesses.
Why, then, does UK Aid not look to ease these barriers to growth with the provision of a venture capital fund? For all the questions surrounding China’s involvement in Malawi, one thing it does understand (that we don’t) is that Malawi is a market, and one with the potential for significant growth.
I am not suggesting we take profits out of Malawi: that wouldn’t help at all. But I think it should be taking equity stakes in businesses, putting advisers on the board, helping these businesses grow and regaining its investment when the business is afloat so that it can continue to invest elsewhere and appease the Heffers (and Express readers) of this world.
