Squaring the circle: Is it time to stop this 0.7% nonsense?

People and organisations in the UK’s overseas development sector are getting hot under the collar. This is because the government is not prioritising legislation to enshrine a perpetual commitment to spend 0.7% of UK Gross National Income (GNI) on overseas development aid (ODA). Letters are being drafted, articles are being written, politicians are being lobbied. After all, this issue has cross-party support, so why not just rush it through parliament? Well, there are several reasons why not. First, it’s politically naïve to push this issue now. In case NGOs haven’t noticed, most voters are not clamouring for this to be made into law. In fact, most people would rather see UK aid reduced, not increased in line with the 0.7% pledge. The Daily Mail is among voices asking why we are helping people far away when we have so many problems at home. On the whole it’s only aid specialists and some among the political elite who want to increase aid. So pushing the Overseas Development Spending Bill through parliament now would be like raising a red rag to a bull. Asking a government already under pressure to raise a red rag to a bull seems rather naïve – especially when it has already committed itself to raise the aid budget to 0.7%, and when its own backbenchers already have difficulty explaining the overseas aid budget to their constituents. Second, there’s no logical basis for 0.7%. In fact, what is this obsession with 0.7% all about? No-one really seems to know where it came from. As far as I know, someone calculated a few decades ago that the investment gap in what was then known as the Third World was the equivalent of 0.7% of OECD GNP, ergo by transferring that amount from the First to the Third World over a period of a few years, developing countries would catch up. That rather simplistic notion of “development” has long been blown apart, but somehow the mythical, or perhaps I should say “mystical” figure of 0.7% remains. Paul Collier has argued that because aid is a global public good, there is a problem of free-riding and therefore it’s useful to have a target, however arbitrary, to aim for and hold governments to. Hmm, fair enough perhaps, but why should it be 0.7%? Third, surely it’s basic economics that an arbitrary target creates a perverse supply incentive? Fourth, it seems absurd to enshrine this in law. Are any other budgetary targets similarly enshrined, such as the percentage of GNI to be spent on defence, education, health, etc? I doubt it, as it would make little sense to base one’s national education, health or any other policy on the cost of inputs, when one should rather be focused on the outcomes. The same should be true of aid. In any case, I find it profoundly undemocratic to pass laws which simply cannot be enforced, and which bind the representatives of future UK voters to spend a fixed proportion of their voters’ money on overseas aid, whatever circumstances they may be in at the time. Fifth, and most important: it’s the quality of aid that matters, not the volume. The current government has rightly emphasised results and value for money in its approach to overseas aid. This is partly to head off the anti-aid critics, but it’s also a healthy reaction to more than a decade in which UK aid grew and grew and grew, but with far too little attention being paid to whether it was targeted at the right issues, in the right places, nor whether the theories behind it and delivery mechanisms being used were right. One can certainly argue that the current government has swung too far in the other direction with its near-obsession with value for money, but even so it’s understandable it felt the need to do so. Squaring the circle The UK government has a difficult circle to square. It is committed to increasing aid to 0.7% of GNI, with or without passing the Bill. Even though we are in recession, that implies an increase of more 25% in aid expenditure over the course of a few short years. Meanwhile, its criticism of the previous government’s approach to aid means it has called into question some of the delivery mechanisms which allow DFID (the UK’s Dept. for International Development) to spend money in fairly big sums at a relatively low internal cost: large scale budget support to developing country governments, large grants to the UN and other inefficient multilateral organisations, and strategic grants to UK-based development NGOs, to name three. It is also committed to bringing down DFID’s in-house costs, which are already among the lowest in the world compared to DFID’s international peers, by cutting staff numbers and their admin support (ask any DFID staff member how easy it is to get a new stapler, or get the photocopier fixed ...). The government is also committed to spending about one-third of its overseas aid in so-called fragile states, where systems are weak, governments are relatively undemocratic and unaccountable to their people, and where aid needs to be programmed with particular care if it is not to be wasted, misused, stolen or to do outright harm. And finally, people in the aid sector now understand that “development”, especially in fragile contexts, is far more complicated than providing roads, schools and clinics – it is about the emergence of stable, democratic and accountable insitutions including a social contract: thus development aid is also far more complex and complicated than we used to think. So in short, Her Majesty’s Government is trying simultaneously to increase overall aid expenditure, spend a greater proportion in difficult places, tackle ever-more complex problems and find new, more effective and efficient delivery mechanisms which are fit for new and more complex purposes. How can it possibly square that circle? A few years ago I was discussing this issue with an ex-minister for UK overseas development who by then had long retired. I explained why I felt it was more important to focus on the quality, not the quantity of aid. He readily agreed, but he told me that when he’d been a minister, he had felt constrained by the politics of aid to keep increasing the ODA budget, even when his officials told him they were overwhelmed. I think he felt that it was important to keep flying the ODA flag, lest momentum be lost. Squaring almost any circle is made harder by politics, and I would not go as far as to recommend cuts in the UK government’s aid spending. That would be naïve, and probably also wrong. But the argument against reducing DFID’s staffing and admin support, making it harder to deliver aid effectively in fragile contexts is one that can and should be made. And I certainly think it’s time to stop pushing for the 0.7% figure to be reached as fast as possible. Above all it is entirely the wrong moment – if there ever is a right one – to enshrine 0.7% perpetually in law. We have to start having a more honest conversation about development, and development aid. The message of Make Poverty History and those who campaign incessantly for 0.7%, that global poverty can be overcome simply by financial transfers, is misinformation which insults people living in poor and fragile countries while doing little to change their long-term prospects. Development is about political change and societal transformation in fragile contexts, not just financial transfers. It’s time to move the terms of this conversation on, before the Daily Mail does it for us.