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Why the poor stay poor

BY IRFAN HUSAIN / 9 June 2005

THERE is nothing like a roaring log fire to promote reflection. As the rain pattered on a friendís slate roof in the Welsh countryside a fortnight ago, the four of us opened our books and read, thankful to be indoors.

But every so often, I gazed at the flickering patterns the flames made, and my thoughts wandered. Currently, there is much talk in Britain about fighting poverty. "Make Poverty History" is a popular slogan, and Bob Geldof, the rock star, is organising a concert to raise consciousness and cash to help Africa.

Iím sure many well-intentioned people will donate funds for this laudable goal. The British government seems determined to persuade its EU partners to do more to even the playing field for African exporters of agricultural products. And there is a growing lobby in favour of debt relief for developing countries. In themselves, all of these initiatives are meant to alleviate poverty, and must be supported, and indeed applauded. However, at the risk of sounding cynical, I must interject a word of caution here: itís not just a lack of resources that has impoverished large parts of the world, but incompetent and corrupt leadership.

And since the problem is one of poor governance, just throwing money at it wonít suddenly make it go away. Ever since much of the Third World won its independence from the colonial powers, many developing countries have stopped developing at all. If anything, they have slid backwards into chaos and despair. Itís no good blaming colonialism for all our woes because many ex-colonies have thrived, using the social and physical infrastructure they inherited as a platform for modernising their economies and their societies.

Over the years, hundreds of billions of dollars have flowed into the coffers of poor countries, aimed at all kinds of projects. In addition, these countries have allocated hundreds of billions more from their own resources for development. Had the bulk of this money been spent on what it had been meant for, things would have been looking very different. However, much of it has been siphoned off by venal politicians, generals, bureaucrats and businessmen. The result is before us to see. In my long experience of the Pakistani bureaucracy, the rule of thumb was that out of every contract signed for development projects, a third went as kickbacks to those approving the contract, supervising its implementation, and then authorising and making payments. A third went to the contractor, and barely a third was actually spent on the project itself. Of course, this ratio varies from province to province and from project to project. But you get the idea.

Unfortunately, foreign aid does not fare much better. According to an ActionAid study, an obscene proportion of assistance is spent on consultancy as well as goods and services from the donor country. According to the report (Guardian, May 27), on average, "61 per cent of aid flows were phantom rather than real, rising to almost 90 per cent in the case of France and the United States.

And this is despite the fact that rich countries have consistently fallen short of the UN target of 0.7 per cent of GDP they are supposed to be giving as foreign aid. In reality, the average for the rich nationsí club, the G-8, is only 0.07 per cent of national income. In other words, they would have to boost spending ten times to meet the target.

However, given the way much of this "aid" is skimmed off, this would not necessarily be such good news for the poor, even if it were ever to happen. The ActionAid report details the failings of the aid programme: Failure to target aid to the poorest countries, runaway spending on overpriced technical assistance from international consultants, tying aid to purchases from donor countriesí own firms, cumbersome and ill-coordinated planning etc. To give an idea of just how so much of this money goes right back to its country of origin, the authors cite the example of Britainís Department for International Development which pays between $18,000 and $ 27,000 per month to foreign consultants working on its projects in Vietnam. Local experts with the same (or better) qualifications would have cost between $1,500 and $ 3,000.

Given the skim-off by donor countries and agencies, and the scams run by the ruling elites in developing countries, it should come as no surprise that poverty continues to blight large regions. But even the relatively small amounts that actually get spent on development would have had much more of an impact had it not been for the terrible leadership we are cursed with.

The priority a government assigns to any area can be judged by the quality of the civil servants deployed. In Pakistanís case, if education, for example, had been deemed to be important by this or previous governments, it would have put its best bureaucrats to clear the vast backlog that exists. But the people actually entrusted with this vital task are tired time-servers. They have no sense of urgency or purpose. Indeed, they suppress initiative wherever they spot it.

Even the relatively small amounts allocated to education are generally not spent during the financial year, causing the budgetary grant to lapse. At every level of the vast education bureaucracy, mediocrity reigns supreme. And yet, it is widely recognised that education is the primary catalyst for change. But despite endless lip service from our rulers, the situation goes from bad to worse. So itís not just a matter of money, but of political will and manpower allocation.

Those developing countries that have transformed themselves within a generation have done so by giving education top priority, and building a meritocracy. Malaysia, South Korea and Singapore are examples of strong leadership, consistent policies and a clear sense of direction. All these are lacking in countries like North Korea, Burma (or Myanmar, if you must) and Pakistan. Here, a hunger for power underpinned by ideological muddle has replaced logic and clarity of purpose.

As I watched the embers glow red, I saw that the answer lay not in more money, but in reason, consensus and political will. These, alas, do not arrive as part of a World Bank aid package.

Irfan Husain is an eminent Pakistani commentator based in London
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