With the Queen's Speech just two weeks away it's becoming increasingly unlikely that the Coalition government will keep their promise to enshrine 0.7% of GNI on international aid.
Those of us in the development sector saw this as an opportunity to refocus the debate on how effective we could make that contribution. We all know that opposition to this expenditure primarily comes from the Tory right, which is why the commitment by Andrew Mitchell was so important at the time. Our first concern now of course must be the potential loss of sustained funding for key anti-poverty initiatives - aid doesn't work by giving one off donations.
What we've learnt from this coalition, at our desperate cost, is that nothing is really ringfenced, which is why in the same way that Unions and the public rallied against the NHS reforms, we must too be ready for a fight to keep 0.7%.
Extreme poverty is a systemic and complex problem, a problem for which we need an immediate solution. Two solutions that are commonly proposed include taxation and business investments. Extensive studies of domestic resource mobilisation, have found that taxing citizens of developing countries is very difficult. The reasons for this are varied; corruption makes tax collection uneven, garnishing taxes from people without a permanent residence is nearly impossible, and informal markets do not collect VAT. Tax collection in Ghana, for example, is done on a graduated scale where only Ghanaians making more than $700US p/a pay taxes. Ghana Revenue Authority describes that fewer than half of Ghana's citizens pay taxes and that the majority of taxpayers are taxed at a rate of 5%. There simply isn't the domestic revenue to afford infrastructural projects that are desperately needed. Moreover, simply creating a loose taxation system doesn't work anywhere, as demonstrated by European countries such as Greece.
That's not to say that taxation isn't part of the solution but the future of development has to exist with taxation as only one contributing part of a greater strategy. Many organisations have advocated business investment as a strategy for growth, citing the examples of South Korea and India. While the emergence of global brands like Samsung and Hyundai were instrumental in enhancing growth in parts of the developing world, it is unlikely that new popular labels will emerge in rural villages in Africa. Infrastructure and health services must be in place for business investments to be fruitful. More large-scale investment therefore, needs to go into cities and not villages.
The third wheel, if you like, is aid. Kanhaya Gupta explains that, "Foreign aid has also been identified as a factor that may affect revenue performance. A key distinction appears to be whether the aid is used productively or simply to finance current consumption expenditures." Aid is not sustainable or desirable in the long term but has the capacity to kick start growth such that investment and taxation become realistic. Examples of successful aid projects abound and DfID has been an extremely important contributor.
And to the "all aid is bad" skeptics, I'm afraid the statistics just don't agree with you. International aid has an incredible effect on saving lives; the number of children dying before their fifth birthday has reduced by 28% in the last 20 years, and since 1990 international aid has helped lift more than one billion people out of extreme poverty. When I was born around 40% of the world's population lived in extreme poverty, 29 years later and that figure is at 28%. The progress might not be as immediate as we need and sometimes aid is not spent in the most effective way, but progress is happening and as we become more sophisticated in our approach and with the support of new technologies, we can become more immediate.
For me, development has always been about creating opportunities for growth. But if we're serious about more sophisticated approaches to tackling global poverty we can't afford to get ahead of ourselves. In countries where corruption or governance is an issue, how can we expect people to change their own futures if everyday they're consumed with finding food for their families or walking 3 hours a day to collect clean water? How can we create industry without education? We can't, which is why aid remains a critical tool in tackling extreme poverty. This highlights just how disappointing the Government's refusal to put legislation for 0.7 in the Queens speech is. Putting electoral strategy ahead of people's lives is inexcusable whether they live in Carlisle or the Congo; putting 0.7 in law would take the politics out of an issue that has significant cross party support.
The UK population is extremely generous and their level of generosity shows a support and commitment to aid and international projects. Everyday our facebook pages and twitter feeds are filled with friends and relatives running miles and miles to raise money for their favourite international charity. This year I'm supporting a very unique initiative. One that is experiential, one that actually gives you a glimpse of life on the poverty line, one that practically shows you the barriers and restrictions faced by the 1.4 billion people currently living in extreme poverty. Imagine a life where you are forced to eat roughly the same thing everyday and where life's milestones can't be celebrated with a meal out. Spending money comes so natural to those of us living in the developed world. If you're tired, grab a coffee. If you're hungry, have a snack. The 1.4 billion people around the world that the World Bank defines as living in extreme poverty don't have these same luxuries. They represent 28% of the world's population. Government and people must work together to drive this figure down to zero. So from 7-11 May I will join 5,000 Brittons and 20,000 people around the world as we get a taste of extreme poverty by living on £1 a day for 5 days for all food and drink- we will Live Below the Line.
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