Chapter 5
A Quantitative Comparison of Labour and Conservative Aid Programmes (1974-90)
Different Measures of British Aid
It is important to specify which of the several measures of aid are being used in any quantitative comparison. The three common measures in use are:-
1 Official Development Assistance. This is the internationally recognised measure and the one used by the Development Assistance Committee (DAC) of the OECD. Grants and loans must meet the following criteria:
a) that they are official;
b) that they are for developmental purposes and, in the case of loans:
c) that they are sufficiently concessional (ie with a grant element of 25 per cent or more). Loans which fail this last criterion are classified as Other Official Flows (OOF).
2 Public Expenditure on Overseas Aid (PE). This is a general British public expenditure measure that lumps together the Overseas Development Administration budget and net self-financed investment by the Commonwealth Development Corporation (CDC). This latter agency is required to make its investments in the expectation of a financial return. Many of its loans do not qualify, therefore, as ODA, but as OOF.
3 The Aid Programme. This is a narrower departmental measure which comprises solely the budget administered by the Overseas Development Administration. Some of the loans made under this heading may not be sufficiently concessional to qualify as ODA.
The important distinction, then, between the international measure, ODA, on the one hand and the British Governmental measures represented by PE and the Aid Programme on the other, is that the first excludes flows on market terms while the latter two do not. The usefulness, however, of the Public Expenditure on Overseas Aid measure is that it provides a good index of government priorities when considered as a proportion of total public expenditure.
Shifts in the Volume of British Aid
The main source of information about quantitative shifts in British aid is British Aid Statistics published by the Overseas Development Administration. However, in addition to this, extensive use will be made of a set of statistics produced by Jessica Woodroffe and Kathy Jones of Christian Aid, which are based on these Government figures, but which improve on these in a number of ways. For example they adjust the figures for inflation in many places where the Government's statistics do not – allowing comparison of the real value of aid. This practice of putting figures in constant prices has been extended for the purpose of this thesis to other tables in Woodroffe and Jones for the sake of consistency. Woodroffe and Jones also give percentage calculations at a level not provided by any other publication which allow policy implications to be analysed. Another advantage is that they cover the period 1975 to 1990, which is particularly useful for the purposes of the present study.
An overall picture of the shifts in volume of British aid according to all three measures is provided by Figure 1 and Table 1.
Figure 1: Public Expenditure on Aid, Aid Programme, Official Development Assistance, 1975-90. Current and 1985 Constant Prices.
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Source: British Aid Statistics.
Table 1 gives constant figures in 1985 prices, as well as current ones. It can be seen from this that, in real terms, Official Development Assistance, which excludes flows at market terms, in 1987 at the end of two consecutive Conservative terms of office, stood at 65 per cent of its 1979 level, while Public Expenditure on Overseas Aid, which does not exclude flows at market terms, stood at 78 per cent. At the end of the Thatcher period of office these percentages were not significantly different: ODA was 67 per cent and PE was 84 per cent of the 1979 level.
It can also be seen that the progress which Britain has made towards reaching the UN target for Official Development Assistance (0.7 per cent of GNP) has been less than impressive. We will say more about this below. The figure of 67 per cent for the reduction in volume of Official Development Assistance, in real terms since 1979, is a striking indication of the effects of the deprioritisation of aid under the Thatcher administration. Effectively, British Official Development Assistance was cut in value by a third in a period of eight years and it had not recovered significantly from this level at the time she left office. This would be remarkable at the best of times. It is even more remarkable when it is recalled that this occurred in a period during which the nation's television screens were, for a good deal of the time, filled with harrowing pictures of famine in Africa. It was also a time when public interest in raising funds through initiatives such as Band Aid and Comic Relief to relieve the famine was at an all-time high. It would seem, therefore, that while the population (particularly the youth) of Britain were strongly motivated to raise funds for Africa through large-scale benefit concerts and television Sports Aid initiatives, the government had the opposite motivation. The reductions in official aid effectively cancelled out much of the increased private aid raised in the 1980s.
Public Expenditure on Overseas Aid as a percentage of Total Public Spending over the period we are dealing with is given in Figure 2 and Table 2. This shows us that under the Thatcher administration aid was cut disproportionately compared to public spending as a whole. The figure for 1987 after two terms of Conservative rule, was the lowest since 1975, and there was a distinct downward trend after the peak figure in 1979 (the last year of the Labour Government) with the exception of 1984. Thereafter there was a complete collapse of this percentage. The 1990 figure was down by 20 per cent on the 1979 figure. This can only be regarded as evidence of a very low priority given to aid by the Thatcher Government. The usefulness of this particular statistic is that it enables one to see that this is the actual policy of the Thatcher Government. Despite the oft-repeated claims that aid had been cut because of general austerity policies necessitated by the state of the economy, it is possible to see, through this statistic, that aid has been cut at a greater rate than the public expenditure cutbacks in general. This has been an important indication of the real policy of the Thatcher Government and it is one with which the development lobby has strongly taken issue. A more detailed account of this policy can be found in the chapter on the aid policy of the Thatcher government elsewhere in this thesis. Of course, it should also be borne in mind that quantitative increases or decreases in aid should be viewed from the perspective of conditionality. As is pointed out in the conclusion, demands for increased aid (or complaints about decreased aid) are insufficient if conditionality is not addressed also. Without eliminating conditionality, aid will continue to be a lever for the imposition of Northern macro-economic policies (and increasingly political dictats as well).
Figure 2: Gross Public Expenditure on Overseas Aid as a Percentage of Total Public Expenditure.
Source: British Overseas Aid
1975-87; British Overseas Aid 1975-90;
British Aid Statistics (ODA):, CSO Economic Trends:Annual Supplement:
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Christian
Aid information (p9) from British Aid
Statistics (ODA): |
CSO Economic Trends:Annual
Supplement: |
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1979-83
pviii |
1987,
p153. |
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1980-84
pvii |
July
1987 edition, p56. |
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1982-86
pvi |
Annual
Supplement 1988, pp8 &13 |
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1986-90
p4 |
August
1988 edition, pp 8 & 14. |
The picture in terms of Total Financial Flows is summarised in Figures 3(a) and 3(b) and Table 3. This allows us to compare the relative weight of ODA, OOF and private flows. It can be seen, that compared to 1979, the position in 1990 was such that, in real terms (constant 1985 prices), Official Development Assistance was lower, Other Official Flows were higher and Private Flows would appear to have collapsed. One reason for the increase in Other Official Flows is, as Woodroffe and Jones point out, the increase in Commonwealth Development Corporation (CDC) project loans many of which are linked to cash-crop activities. In 1975 these accounted for 4 per cent of total bilateral aid (£35m). In 1979 they accounted for 6 per cent of total bilateral aid (£72m). By 1990 these figures had shot up to 13 per cent and £103m respectively (1985 constant prices). This represents a 43 per cent increase in the constant price figures and a doubling in terms of the percentages of bilateral aid over the course of the Thatcher administration. The CDC is obliged to seek a return on its investments and many of its loans, therefore, do not qualify as Official Development Assistance and consequently form a large part of Other Official Flows.
Figure 3(b): UK Total Net Flows to Developing Countries as a Percentage of UK GNP.
Source: British Aid Statistics; British Overseas Aid.
The collapse in private flows can be analysed from the information contained in Figures 4(a) and 4(b) and Table 4. Here it can be seen that, in 1985 prices, the value of net private flows in 1987 was 1.5 per cent of its value in 1979. There was a subsequent further collapse into negative flows of £-3249 in 1985 prices. As Woodroffe and Jones have noted, as a result of the debt crisis British banks have greatly reduced their bank lending to the South. This in turn has resulted in the situation whereby the banks have recovered more from the developing countries than they have lent. In 1987 there was a negative flow from developing countries to British banks of £-1395m. By 1990 this negative flow had increased to a massive £-4576.[189]
This, in turn, has resulted in negative values of long-term investment (bank lending and direct investments taken together):in 1990 this was £-3451m. Voluntary grants from private charities, by contrast, have at the same time increased their relative role and in 1987 they accounted for almost one-third of positive flows to the South (assuming that long-term investments – ie direct investments and bank lending – is treated as a single category and not separately). In 1990 this had increased to 68 per cent.[190]
The unreliability of private sector finance is evident from the above. When things do not go well in the private sector, finance dries up. The constancy of official finance is evident, while private money fluctuates wildly (see Figure 3(a)). The collapse of the private flows has been very dramatic indeed.
Figure 4(b): Composition of Long-Term UK Investments in Developing Countries, 1975-90 (Constant 1980 Prices).
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Source: British Aid Stratistics; British Overseas Aid 1975-90. |
British Aid Trends and International Targets on Volume of Aid
In comparing the volume of the British aid programme under the Labour and Conservative Governments since 1974, it is useful to bear in mind the international agreements on minimum levels of aid as a percentage of donor country GNP. In 1960 the UN General Assembly agreed that the target for financial flows from North to South should be 1 per cent of GNP and that, of this, 0.7 per cent should be Official Development Assistance (ODA). Further to this, in 1981 in Paris, a conference of donor and recipient nations proposed that a minimum of 0.15 per cent of GNP should go to the least developed countries. Most donors either agreed to implement this latter figure or, failing this, to double the existing amount of their aid budget devoted to these nations.
British Official Development Assistance as a percentage of GNP has varied a good deal since the 0.7 per cent target was established. The 0.28 per cent figure for 1987, given in Table 1, was the worst ever and was almost half the figure for 1979, the last year of the Labour Government. In 1990 the figure of 0.27 per cent was worse still after a brief recovery. Both Labour and Conservative governments have repeatedly refused to even set a timetable for achieving the target. The House of Commons Foreign Affairs Committee, however, recently came out in favour of setting such a timetable in a recent report.[191]
The Overseas Development Administration maintains that its figures are not significantly different to the average of other major donor countries. However, the USA is such a large economy that any reduction in its aid budget gives the false impression that the major donors as a whole are reducing their aid significantly. Chart A, therefore, shows how British aid compares with the other major donors minus the USA, as well as with other EC donor countries. Britain would have had to increase its aid budget by 70 per cent in 1985 to come into line with the other EC budgets.[192]
Chart A: Percentage GNP Allocated as Aid (Disbursements), 1960-1985
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Reproduced
from Clark, J. For Richer, For Poorer,
by permission of Oxfam.
Source: OECD data; 1960-1983, OECD, Development Co-operation (various
Issues); 1984, World Bank, World
Development Report 1985; 1985, ODA, 1985 Annual Report.
With regard to total financial flows, for which the UN set a target of 1 per cent of GNP, Britain, despite its high levels in previous years (see Figure 3), sunk to well below this level in 1987 achieving a mere 0.34 per cent of GNP. In 1990 it became negative for the first time. The ODA has always maintained that this was the most important statistic because it included all types of flows to recipients, not just official aid. In 1975 it was 2.78 per cent of GNP well above the UN target as indeed it was in 1979 at 3.25 per cent of GNP. This was said to compensate for Britain's poor showing in terms of ODA as a percentage of GNP. The 1990 figure of -0.46 per cent is thus a particularly embarrassing one for the ODA. This reflects a decrease in public aid as a result of the disproportionate cuts compared to general public sector austerity levels as well as the dramatic collapse of private lending as a result of the debt crisis. Once again, it should be borne in mind that demands for quantitative increases (or percentage increases) should go alongside demands for the ending of conditionality. It would seem that Britain could do more in percentage terms to offset its collapse in the private sector by increasing official development assistance (ODA) to the internationally-agreed target of 0.7 per cent of GNP.
Multilateral vs Bilateral Flows
Multilateral aid has taken up an increasing proportion of British aid during the period under scrutiny. As Figure 5 and Table 5 show, multilateral aid accounted for 30.2 per cent of gross total spending in 1975 and 40.4 per cent in 1987. In 1990 this figure has not significantly changed. This reflects the slow growth of total aid spending compared to the growth rate of multilateral spending. The long-term nature of multilateral commitments also limit the possibilities for cutbacks. The Thatcher government has been unable, despite its strenuous efforts to redirect aid into bilateral channels (which it sees as being more directly controllable), to reverse the trend towards an increasing proportion of British aid being taken up by multilateral aid. This graph, therefore, exposes the fact that the British commitment to aid is considerably weaker than that of the rest of the economically advanced world as a whole.
Figure 5: Bilateral/Multilateral Aid as a Percentage of Gross Total UK Expenditure on Aid, 1975-90.
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Source: British Aid Statistics; British Overseas
Aid 1975-87; British Aid 1975-90.
Figure 5(a) and Table 5(a) show a breakdown of bilateral
aid. The first thing which shows up is the decline of ODA project aid from 30
per cent of bilateral aid in 1975 to 17 per cent in 1990. This has happened at
the same time that CDC project loans
have increased from a mere 4 per cent of bilateral aid in 1975 to a still
modest 6 per cent in 1979 to a doubling of this figure – 13 per cent – in
1990 so that they occupy an almost equal share of bilateral aid. CDC project
loans are required to make a financial profit, are not eligible for inclusion
in Official Development Assistance (ODA) figures and are strongly linked to
cash-crop activities. These trends indicate a shift towards commercialisation
and the use of aid to facilitate production for the market in the project aid
sector. CDC aid has been popular with the Thatcher government for this very
reason. The policy of the government has been to drag the Third World into the
capitalist market place and away from traditional subsistence production. We
have argued elsewhere in this thesis that this process can be a very painful
one for recipient countries. Women and children, for example, often suffer as a
result of so-called development in the form of production for the market
because male heads of household retain the proceeds of sales for themselves.
The family is the last bastion of the “trickle-down” theory in this respect. A
abstract ideological attachment to the “free market” on the part of the
Thatcher government aid programme can often result in a worsening of standards
of living for the most oppressed layers of recipient communities.
Programme aid increased from 1984 and dramatically in 1988-89. It has collapsed back to half this in 1990, however. It was favoured by the Thatcher administration over project aid because it could be linked closely to structural adjustment lending. Debt cancellation has not dramatically risen despite the Lawson initiative on this question and was in fact significantly higher from 1975-77. As is pointed out in the conclusion of this thesis, a strong project aid sector is preferable to increased programme aid if it means that aid is less conditional and more poverty focussed. Programme aid would be very desirable if it were not so strongly conditional. There is little sign of it becoming less conditional, however. This form of aid is prone to conditionality since it is given in the form of much sought-after foreign exchange. The sums are larger than individual project grants and therefore more prone to having “strings” attached to them.
Grants vs loans
A part of British aid is given in the form of loans at a concessional rate of interest and with longer periods of repayment than purely commercial loans. Even so, a considerable amount of public debt soon built up, especially in Africa, as a result of this form of aid. In order to ease this burden, another form of aid – debt cancellation – became necessary. Figure 6 and Table 6 show that in relation to grants and loans the latter accounted for 32 per cent of Gross Total Expenditure in 1975 and that this was considerably reduced to 7 per cent in 1987. It increased again slightly to 9 per cent in 1990.
An UNCTAD resolution in 1978, which called upon donors to cancel the official debts of the poorest countries, is reflected in these figures and debt cancellation is an ongoing part of the aid programme. In response to the debt crisis, the former Chancellor Nigel Lawson, announced in March 1987 that steps would be taken to convert official aid debt into grants, and that other official bilateral debt would be rescheduled over a longer time period with more generous grace periods and at concessional interest rates to sub-Saharan countries that undertook to carry out structural adjustment programmes. The ever-present proviso of structural adjustment here, which appears to be a condition of great deal of British aid, would appear to signal the continuation of the same cash crop-based polices that led to the loss of food security in this region in the first place. A more detailed account of this can be found in the chapter on the aid policies of the Thatcher Government elsewhere in this thesis.
Figure 6: Grants/Loans Composition of UK Public Expenditure on Aid, 1975-90 (Percentage)
Source: British Aid Statistics; British Aid 1975-87; British Aid 1975-90.
The background to this has been analysed by Ben Jackson in his book Poverty and the Planet:
"As Africa's debt crisis deepened, the move [public debt relief] was a simple recognition of reality – countries just could not pay and were not doing so. It was also prompted by the concern of western voters following the African famines of the mid-1980s and by the message from the industrialists of a collapse in exports to cash-strapped African countries (particularly in France and Britain with the enduring importance of their colonial-based trade-links with the continent).
"Following initiatives from the then British Chancellor of the Exchequer, Nigel Lawson, and from President Mitterand of France, a 'menu' of debt relief was at last agreed by the seven major industrialised powers at their 1988 summit in Toronto. Under the scheme, creditors could choose from the following:
(a) cancel a third of debt service, but reschedule the rest at market interest rates over fourteen years.
(b) reschedule all payments, over a longer period of twenty-five years.
(c) reduce interest payments either by half or by three percentage points – whichever is greater, but to be paid back over fourteen years."[193]
As Jackson points out, point (b) was a "get-out clause" included to please the US – this is not debt relief at all. The US does not have the traditional trading links with Africa which Britain and France have and therefore does not have the same economic interest in safeguarding such links through debt-relief. Jackson also cites a World Bank estimate that taking up the options would save Africa only 5 per cent of its debt service obligations.
There are thus some less than altruistic reasons for this decline in loans.
Tying and Local Costs
A great deal of British aid is tied to purchases of British goods. This reduces the value of aid because recipient countries are not allowed to "shop around" for their purchases and thus obtain the best bargains. Recipients are often forced to buy overpriced products from British firms which are in a monopoly position as a result of foreign competition having been excluded through tying. Tying is seen as being particularly important by the Treasury because of its implications for the balance of payments. Tying also restricts aid from being spent on local costs and recurrent costs within the recipient country such as local materials, salaries, running costs of projects etc, all of which can be seen as locking recipient countries into a dependency on imports from the donor country, which in turn prevents the growth of domestic industrial development. The Treasury has a strict veto over all local costs expenditure.
The figures for tying are given in Figure 7 and Table 7. These show that, while there has been some reduction in bilateral financial aid tying from 38.7 per cent in 1978 to 16.7 per cent in 1987, and the same figure in 1990, the addition to these figures of multilateral EC aid (which is tied to EC member and associated countries' goods) as well as bilateral technical cooperation (which is almost all tied) reduces the decline from 65.0 per cent in 1978, 58.0 per cent in 1987 and 62.2 per cent in 1990 – an insignificant decline in the latter case. It is necessary to strongly oppose typing for the reasons given above. The chaotic competitive trading system among donor countries means that each country is afraid that its aid will create exports for its competitors. Yet the effect of tying is to infringe the self-determination of recipient countries in terms of using aid to purchase goods. Nothing more clearly illustrates the self-interested motives for aid, and nothing more clearly shows the contempt for recipient country self-determination than the practice of tying.
Figure 7: UK Tied Aid as a Percentage of Total Gross Aid, 1978-90.
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Source: British Aid Statistics; British Aid 1975-87; British Aid 1975-90.
As regards local costs, Figure 8 and Table 8 give the amounts spent as well as the percentages of bilateral aid. From these figures it can be seen that the best that has been achieved is a figure of 13.1 per cent and that most of the time the figures have been well below 10 per cent. Judith Hart maintained that the increase in figures between 1979-83 reflect the poverty-focussed projects which were initiated under the Labour Government – it takes several years for expenditure to filter through and commitments made then had to be honoured by the incoming Conservative Government – it had no choice but to do so.[194]
When one considers that local costs are crucial to a poverty-focussed strategy one can begin to see that this is a major limitation on what can be achieved. The Treasury veto on local costs restricts the ability of the ODA to implement a poverty-focussed approach. The ODA claim, however, that there was in 1990 a policy of no limit on local costs for the very poorest countries was adopted.[195] However, this is not the case for recipient countries in general. It is unlikely that the amounts actually spent will be very high because poverty-focussed projects are difficult to implement and require a huge administrative input – something to which the ODA is not committed. Since many of the poorest countries are traditional Commonwealth African and Asian countries, it is probable that the unlimited local cost is motivated by the same self-interested reasons that led to grants replacing loans, ie the need to maintain trading links with debt-crippled nations unable to service or repay their debt. As we shall see below, there was a big drop in the percentage of aid going to the poorest 50 countries over the 1980s. There is no sign of this changing.
Figure 8: Local Costs as a Percentage of Gross UK Bilateral Aid, 1976-90.
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Source: UK Memorandum to the DAC; British
Aid Statistics:
Trends Relating to the Distribution of British Aid
At the 1981 Paris conference on aid to the least developed countries mentioned above, Britain refused to agree to the 0.15 per cent of GNP for the least developed countries, or to any other concession, even though its existing aid has traditionally centred on Commonwealth countries which have tended to be very poor. Thus it would not have been a great sacrifice to agree to the proposed minimum. This angered many Third World delegates and it received much criticism in the press at the time.[196] This niggardly mentality was typical of the Thatcher period and indicates that ending local cost restrictions is insufficient if the political will is lacking at the top to implement a poverty-focussed aid programme. Otherwise, it is a case of the form without the content. Any government could remove limits to local costs knowing full well that inadequate resources and staff limitations exclude a realisation of the potential created by no limits on local costs. What is more important than theoretically or notionally unlimited local costs is the actual amounts disbursed to the very poorest countries and the sector/communities that are most in need of them.
Distribution of Gross Bilateral Aid According to the Income of the Recipient
The figures in Figures 9 and 10 and Tables 9 and 10 show that there was a slight improvement in the 1970s in terms of aid devoted to the poorest countries as a percentage of bilateral aid allocable by country. The figures also show that there was a big drop in real terms (40 per cent), in aid to the poorest fifty countries in the 1980s. Per capita aid has dropped by half from £0.31 to £0.14. A similar pattern is evident in the Lower Middle Income Countries. This pattern is not replicated by the smaller group of Other Low Income Countries, however, where there was a steady rise in per capita aid over the 1980s. There is no obvious trend in the figures for Upper Middle Income Countries.
Figure 9: Distribution of UK Aid Commitments to Poorest Countries, 1974-81 (Percentage).
Source: British Aid Statistics.
Figure 10: Distribution of Gross Bilateral Per Capita UK Aid Allocable by Country by Income Group, 1979-90 (£, Constant 1985 Prices)
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Source: British Aid Statistics; British Overseas Aid 1975-87; British Overseas
Aid 1975-90.
It must also not be forgotten, more importantly, that these figures only give us an idea of the priorities within an inadequate and, in real terms, declining aid budget. Much more instructive is to view the figures for the least developed countries against the level of Britain's GNP. The percentage of British aid to these countries fell, for example, from 0.14 per cent of GNP in 1981 to 0.08 per cent in 1984. The target set by the Paris Conference in 1981 was for a minimum of 0.15 per cent of GNP to be devoted to these countries.[197]
Assessing the extent to which aid is being directed towards the poorest groups is more problematical. As the Independent Group on British Aid report, Real Aid, noted:
"... in 1977, a policy guideline was put around (Circular Minute 77/30). This recommended that: 'Geographical departments should... 1). select projects with defined target groups in mind;... 2) include in project submissions a description of the social and economic position of the target groups and the expected consequences of them. We are engaged in shifting the major part of our aid programme towards the direct benefit of poor people defined as... people with GNP per capita under $140 (1976)'. In fact, 'Geographical departments' have consistently ignored the Minute, in the sense that it is impossible to find any submission to ODA's Projects Committee an account of the predicted quantitative impact of a project on any income group. Occasionally, to be sure, one finds a statement such as 'this project should increase the incomes of small farmers'. But without knowing how small is small, how big is the forecast increase and how it is supposed to happen, it is difficult to work out how many projects were genuinely conceived by their sponsors as being poverty-focussed... we are therefore forced back on the tautology: projects count as poverty-focussed if their sponsors said they were."[198]
The Real Aid report then gave Figure 11 in the light of the above. As the Real Aid report points out, these figures give a superficial "pyramid shape" trend with a concentration of ODA project preparation towards poverty-focussed projects before 1979, (the period of the Labour Government's poverty-orientated "More Help for the Poorest" strategy) and a sudden decline afterwards. However, as the report also points out, The high "poverty" score in 1979 is due to one enormous project, the £100M Victoria dam and electric power project in Sri Lanka. If this one project is reclassified as non-poverty focussed (the case for its original classification is dubious) the "poverty-focussed" percentage for that year drops to 29 per cent and the "pyramid" disappears.
Figure 11(a): UK Poverty-Focussed Projects by Value (Constant 1980 Prices).
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Source: Overseas Development Administration Projects Committee Minutes.
Figure 11(b): Poverty-Focussed Projects by Value: Percentage of Total UK Capital Aid Committed on Poverty-Focussed Projects, 1976-81.
Source: Overseas Development Administration Projects Committee Minutes.
Another indication of the extent to which British aid is poverty focussed is provided by the sectoral breakdown of project aid. This will show us how much of the aid budget is going to the sectors most directly affecting the poorest groups such as Renewable Natural Resources. This breakdown is given in Table 12(a) and Figure 12(a). Here it can be seen that the percentage figures for Renewable Natural Resources have been quite erratic. They have, however, been 20 per cent or under in 14 out of the 16 years.
The other sector which reflects the interests of the poorer groups is Social and Community Services. Once again, the figures are erratic, and the exceptionally good figure for 1986 was, as Woodroffe and Jones point out, largely due to one Aid and Trade Provision deal which provided a rural water supply scheme to Malaysia worth £59.5m. One ATP deal aimed at meeting the commercial requirements of a British company therefore accounted for three-quarters of the 1986 figure. Once again, it should be borne in mind that these figures only provide an indication of relative priorities within an inadequate and, in real terms, declining aid budget. The figures illustrated in Figure 12(a) for total project aid allocable to sectors show that there has been a decrease of 40 per cent in project aid allocable by sectors since 1981 (when projects agreed under the Labour Government would have been figuring in expenditure), despite the increase in Third World population in the intervening period.
Figure 12(b) shows the renewable natural resources and social and community services sectors added together as a percentage of total project aid allocable by sector. The 1986 figure is once again distorted by the single Malaysia ATP rural water supply deal mentioned above. If this deal, which was motivated by commercial British interests, is subtracted from the total on the grounds that it does not reflect a poverty-focus priority the peak disappears: the £59.5 deal accounted for 40.4 per cent of the 1986 RNR+SCS figure and the overall percentage for 1986 for the two sectors drops to below 30 per cent of total project allocable by sector, which is generally where it was for most of the 1980s.
Figure 12(b): Renewable Natural Resources and Social and Community Services as Percentage of Total Project Aid Allocable by Economic Sector, 1975-90.
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Sources: British Aid Statistics; British Overseas Aid 1975-87; British Overseas
Aid 1975-90.
A picture of the relative poverty-focus of the British aid programme may be provided by a number of indicators. One of these is the percentages of aid going to agriculture. The All Parliamentary Group on Overseas Development (APGOOD) report on Aid to African agriculture attempted to analyse the extent to which this sector had declined during the first half of the 1980s. Figure 13 illustrates a breakdown of agriculturally-related aid to African agriculture from all sub-sectors of project allocable by sector, with figures converted into 1980 constant prices.[199]
Figure 13 and Table 13 illustrate the point made by the APGOOD report that in the period dealt with (1979-84) projects which directly benefited agriculture (ie which directly aided agricultural production – crops, livestock, forestry and fisheries – and their related agricultural processing) declined somewhat and that projects which indirectly benefited agriculture (eg infrastructure projects) increased.
Figure 13: UK Direct and Indirect Benefit Agriculturally-Related Project Aid to Sub-Saharan Africa, 1979-84 (£million, Constant 1980 Prices).
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Source: ODA
Statistics Department. |
As John Clark has noted in relation to these figures, in 1984 a staggering two-thirds of UK aid to African agriculture went on roads, paper and rubber schemes. In addition 10 per cent was spent on the cash crops sugar, coffee, cocoa and tea. Only 1.5 per cent was spent on the livestock sector and 1 per cent on rural water supply. Figures 14(a) and 14(b) illustrate this for the years 1979-84.[200]
Figure 14(a): Selected Sectoral Shares of UK Agriculturally-Related Project Aid to Sub-Saharan Africa, 1979-84 (Percentages).
Source:
ODA
Statistics Department.
Figure 14(b): Proportion of UK Agriculturally-Related Aid Allocable by Sector to Sub-Saharan Africa Devoted to Rural Roads Infrastructure and Selected Cash Crops, 1979-84 (Percentage).
Source: ODA Statistics Department.
The APGOOD report on UK Aid to African Agriculture identified a number of disturbing trends. The volume of aid was being reduced more abruptly for agriculture than in other sectors. Within agricultural aid spending there had been a decline in interest in integrated rural development projects; there was a low allocation to agricultural research and large infrastructure projects were growing.[201]
Britain had been successful on the other hand in promoting its commercial interests. Programme and sector aid "meant primarily the supply of foreign exchange linked to the purchase of UK equipment."[202]
There was a low allocation to subsistence farming.
"This means that little UK aid is directly supporting the majority of African farmers in drier regions who grow primarily food staples for domestic consumption using primitive technology (often the hand- held hoe)."[203]
This was identified as being expressed in the decline of rural development projects. Agricultural research was "surprisingly modest given the UK's long experience in tropical agriculture." (p32).
"The disappointments appear to be in developing traditional food staples (in the Western Sudan and Tanzania, for example) and in introducing new farm technologies (in the Gambia, for example). And the lessons appear to be that subsistence farmers, confronted by a range of capital, labour and technology constraints, require a more sustained and patient research input than more commercially-oriented farmers able and willing to risk new crops and practices."[204]
The historical bias of agricultural research against drier rainfed regions, and the problems of new crops species is dealt with at length elsewhere in this thesis.
The APGOOD report also noted that support for farmer services had declined significantly.
"There is no longer any project concerned with seed supply; support for Agricultural banks and cooperatives appears to have been abandoned; disbursements on agricultural storage projects have slowed to a trickle; animal health services expenditure has been much reduced."[205]
The picture in terms of recipient countries as a whole on this question is analysed later in this chapter, where a similar pattern emerges. Access to agricultural credit (development banks), cooperatives and extension services are critical for the poorest farmers. British aid seems to have a low priority for these areas. It is very fashionable in development and aid agency circles to say it is difficult to aid the poorest. This suggests a certain complacency. The problems with the Integrated Rural Development Projects initiated in the 1970s under Labour have not been tackled, as we also discuss elsewhere in this thesis.
In terms of volume of aid, the APGOOD report noted that in sub-Saharan Africa direct benefit agricultural aid declined in real terms by a third in the period 1979-84. This is illustrated by Figure 13.
The report also noted that the Commonwealth Development Corporation had a significant influence on UK aid to crops.
"Sugar, tea, cocoa, rubber, oil palm and tobacco are by far and away the main crops for UK aid expenditure, with cereals a long way behind. The 'CDC' crops are closely bound to its methods of operation and financing: a large degree of management control, production linked to processing and marketing, and foreign exchange earnings (...) In Africa itself, CDC's agricultural projects are primarily in the relatively high rainfall countries: Cameroon, Ghana, Ivory Coast, Liberia, Nigeria, Kenya, Tanzania, Uganda, Malawi, Zambia, Zimbabwe and Swaziland. The arid and semi-arid regions are barely represented and two of CDC's most difficult – and least successful projects have been in northern Nigeria and southern Ethiopia."[206]
Looking at the picture in terms of all recipient countries the ODA produced a series of annual printouts covering a five-yearly period of the sectoral breakdown of project aid allocable sector called Projects by Sector: Allocations and Expenditure for the years 1980-88. This was an internal document for use within the ODA and was not published, although they were made available to the writer of this thesis. It was no longer produced after 1988, making it difficult to establish trends before or after this period. However, the ODA statistics department has kindly supplied me with figures from 1989 to 1991. The breakdown was quite detailed to the level of which project was in a particular sub-sector and whether it was ATP or not, and so on. The ODA Statistics Department are very cooperative in supplying data from their computers, but it is not practical for them to supply the amount of information contained within Projects by Sector repeatedly to enquiring individuals – it needs to be published. It is impossible to evaluate the priorities of British Aid without this information. A sectoral breakdown of technical cooperation and programme aid is only available from 1988 onwards. The ODA Statistics Department again supply these figures to enquiring individuals but they also need to be published.
Table 15 provides a breakdown of agriculturally-related aid. Figure 15(a) shows that the volume of agriculturally-related aid directly benefiting productive sub-sectors (including related processing) fell by 23.9 per cent between the years 1980 to 1988. At the same time, aid indirectly benefiting agriculture (infrastructure) increased by 46 per cent in the same period. Figure 15(b) indicates that there was a small (3.6 per cent) increase in agriculturally-related aid as a percentage of total project allocable by sector between 1980 and 1988. The percentages were less than 25 per cent in four years out of nine and only marginally higher in a further two years, however.
Figure 15(a): Comparison of Direct and Indirect Benefit Aid within Agriculturally-Related Sectors of UK Project Aid Allocable by Sector to all Developing Countries, 1980-88 (£million, Constant 1985 Prices).
Source: Projects by Sector: Allocations and Expenditure
Figure 15(b): UK Agriculturally-Related Aid Expenditure as a Percentage of Total Project Aid Allocable by Sector, 1980-88.
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Source: Projects by Sector:
Allocations and Expenditure.
The combined volume and percentage of the cash crops tobacco, rubber, coffee, cocoa, tea, sugar, oil products (including oil palm) and fibre crops (including cotton) in the agriculture and livestock sector are given in Figure 16(i), along with the combined figures for cereals and livestock. This comparison provides an indication of the priorities of British aid – cereals and livestock come a long way behind. In 1980 and 1981 a staggering 84.3 per cent and 89.1 per cent respectively of this sector was spent on the nine cash crops listed, although it has steadily declined over the decade.[207]
Figure 16(i): Comparison of Share of Selected Cash Crops and Cereals/Livestock in Agriculture and Livestock Sector of UK Project Aid Expenditure (Percentages).
Source: Projects by Sector: Allocations and Expenditure.
Figures 16(ii)(a) through to 16(ii)(c) show selected non-staple cash crops compared to cereals and livestock for project aid, technical cooperation and programme aid allocable by sector. From these graphs it is possible to see that lagging of cereals behind the listed cash crops is not confined to project aid. It is also a clear feature of technical cooperation and programme aid. When Project aid, technical cooperation and programme aid are taken together as shown in figure 16(ii)(c) it can be seen that, while the listed cash crops accounted for around a third during the four years, cereals and livestock went from 6.5 per cent to under 2 per cent. This was largely made up of livestock as cereals were virtually non-existent in project aid and programme aid.
Figure 16(ii)(a): Comparison of Share of Cash Crops and Cereals/Livestock in Agriculture and Livestock Sector of UK Technical Cooperation Expenditure to all Developing Countries, 1988-91 (Percentages).
Source: Projects by Sector: Allocations and Expenditure.
Figure 16(ii)(b): Comparison of Share of Cash Crops and Cereals/Livestock in Agriculture and Livestock Sector of UK Programme Aid Expenditure to all Developing Countries, 1988-91 (Percentages).
Source: Projects by Sector: Allocations and Expenditure.
Figure 16(ii)(c): Comparison of Share of Cash Crops and Cereals/Livestock in Agriculture and Livestock Sector of UK Project Aid, Technical Cooperation and Programme Aid Expenditure to all Developing Countries, 1988-91 (Percentage).
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Source: Projects by Sector: Allocations and Expenditure.
If the agriculture and livestock and agricultural processing sectors are taken together a similar pattern emerges – Figure 17. The listed cash-crops and their related processing accounted for 82.0 per cent of these two combined sectors in 1980 declining steadily to 49.4 per cent in 1988. If the agriculturally- related infrastructure sector is added to the previous two sectors the percentage accounted for by cash crops, their related processing and rural roads together accounted for 41.3 per cent at the beginning of the decade, declining to 32.8 in 1988 – Figure 18.
Figure 17: Share of Rubber, Paper and Selected Cash Crops in Agriculture and Livestock and Agricultural Processing Sub-Sectors of UK Project Aid to all Developing Countries, 1980-88 (Percentage).
Source: Projects by Sector: Allocations and
Expenditure.
Figure 18: Share of Gross Expenditure on Roads, Rubber, Paper and Selected Cash Crops in UK Agriculturally-Related Project Aid Expenditure (Percentage).
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Source: Projects by Sector: Allocations and Expenditure.
If the assumption is made that cash-crops, their related processing and rural roads are not priorities in terms of human development aid, it is necessary to subtract these sectors from total agriculturally-related project aid in order to get a less distorted picture of the directly poverty-relieving weight of this sector within project aid as a whole. It is not being suggested that all the remaining agriculturally-related aid is necessarily poverty relieving or aimed at meeting human development priorities of the kind advocated by for example the UNDP Human Development Report. (see below). That also is an assumption which may be open to question – the statistics do not provide this information in an explicit form. Neither is it being suggested that cash-crops can never ever provide income to poor people. This is a controversial area of debate within academic development circles. The assumption (disputed by some academics and aid agency professionals) behind the subtraction of these particular cash-crops from the figures is, as has already been stated, that they are not generally human development priority projects aimed at basic needs and survival – identified by the UNDP Human Development Report for example, as nutrition, primary education, primary health, sanitation, rural water supply.[208]
Figure 19(a) shows the results of this exercise: agriculturally related aid minus non-staple cash crops, related processing and rural roads as a proportion of total project aid allocable by sector, has been generally less than twenty percent and at its highest 25.2 per cent in 1983.
Figure 19(a): UK Agriculturally-Related Project Aid, Minus Roads and Selected Cash Crops, as a Percentage of Total Project Aid Allocable by Sector. Expenditure 1980-88.
Source: Projects by Sector: Allocations and
Expenditure.
It is unfortunate that statistics on technical cooperation are not available in a disaggregated sectoral form prior to 1987, making an analysis of its relevance to human development priorities impossible before that date. Figures on the sectoral breakdown of project aid are available only for the period 1980-88 in the unpublished internal ODA printout, Projects by Sector: Allocations and Expenditure. This was discontinued after 1988. Figures for the years 1989-91 have been provided for the purposes of this thesis by the ODA, however.
Figure 19(b) and Table 19(b) show the low percentage devoted to cereals, agricultural development and farmer services for all recipient countries. These sub-sectors are critical to poor farmers: cereal food crops are necessary for food security (although there is no indication in the statistics of whether cereals are for subsistence or for sale as cash crops). Without access to agricultural credit (development banks), co-ops, agricultural extension and the inputs of agricultural research etc, such farmers cannot hope to improve their living standards. Private sector loan sharks charge exorbitant interest rates and often won't deal with the poorest because they are not "credit- worthy". The figures show that these sub-sectors accounted for less than ten per cent of total agriculturally-related project aid in five out of the nine years. The dramatic increase from 1981 to 1983 was accounted for by one project in the Agricultural Development Banks sub-sector – the Indian Agricultural Refinancing Development Corporation project phases III and IV. The initial phases of this project were initiated under Labour. This project was no longer funded from 1985 onwards and, indeed, no new allocations were made in this sub-sector in the period 1985-88.
If we compare the figures here with those in Table 18 and Figure 18(a) we can see that, while the percentage of agriculturally-related projects devoted to roads, rubber, paper and selected cash crops accounted for over 50 per cent of total agriculturally-related project aid in one year, over 40 per cent in four years and over 30 per cent in seven years out of a total of nine years; the sub-sectors of cereals, agricultural development and farmer services accounted for less than ten per cent in five years out of nine years. This is illustrated in Figure 19(b) – the graph in figure 18(a) is superimposed on this figure for comparison purposes.
Figure 19(b): Comparison of Expenditure on Cereals, Agricultural Development and Farmer Services with Expenditure on Roads, Rubber, Paper and Cash Crops in UK Agriculturally-Related Project Aid to all Developing Countries, 1980-88
(£million, Constant 1985 Prices).
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Source: Projects by Sector: Allocations and
Expenditure.
An attempt has been made to identify some indicators of human development priorities in terms of aid provision. Primary education, primary health care, sanitation, family planning, nutrition and rural water supply are cited in the UNDP's Human Development Report for 1992.[209]
This report has used a series of ratios: ODA as a percentage of GNP, Aid Social Allocation Ratio (the percentage of aid going to the social sectors), the Social Priority Ratio (the percentage of social sector ODA going to human priority areas mentioned above). When these are multiplied together they give the Aid Human Priority Ratio (Percentage of donor GNP going to Human Priorities) In 1989 the UK Social Priority Aid Ratio was 8.8 per cent. This compared with Norway's figure of 19.7 per cent. The lack of priority given to basic human needs and survival is thus evident. The figures for all donors in terms of these ratios for 1992 are given in Appendix 6. Since these figures are available only for a few recent years a similar exercise has been attempted for the purposes of this thesis to quantify these human priority indicators in relation to British aid. The availability of figures has restricted this to the years 1980-88 and to project aid since a breakdown of technical cooperation is not available before 1987.
Figure 20(a) shows primary education as a proportion of the education project aid sector as whole. This shows that it has generally been below 15 per cent, and below 10 per cent in four years out of nine. It has reached a maximum of 24.4 per cent on one occasion only in 1984. This indicates a relative lack of priority to this sub-sector. Primary health is made up overwhelmingly of family planning provision. While family planning is obviously extremely important, the relative lack of priority given to other important aspects of primary health is evident if family planning is subtracted. When family planning is included primary health care has generally been above 50 percent of the health care sector as a whole. When family planning is excluded it has varied erratically between 73 per cent in 1980 and two per cent or less in two years. It was 20 per cent or less in five out of the eight years. This indicates a lack of priority to primary health care other than family planning (see Figure 20(b)). The proportion of family planning within the primary health budget is brought out by Table 21 and Figure 21, which show that it accounted for over 90 per cent in four years out of eight years and over 60 per cent in six out of the eight years.
Figure 20(a): Share of Primary Education of Total Education Sector of UK Project Aid Expenditure Allocable by Sector, 1980-88 (Percentage).
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Source: Projects by Sector: Allocations and
Expenditure.
Figure 20(b): Share of Primary Health of Total Health Sector of UK Project Aid Expenditure Allocable by Sector, 1980-87 (Percentage).
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Source: Projects by Sector: Allocations and
Expenditure.
Figure 21: Share of Family Planning of Primary Health Sector of UK Project Aid Expenditure Allocable by Sector, 1980-87 (Percentage).
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Source: Projects by Sector: Allocations and
Expenditure.
The lack of priority given to very basic social needs within project aid is also indicated by Table 22 and Figure 22, which show that the total allocated to the human development priorities cited by the UNDP Human Development Report: basic education, primary health care, safe drinking water in rural areas accounts for very small percentages of total project aid allocable by sectors even if housing is added on. It has been 7 per cent or less in six out eight years with the exception of 1984, when it was 9.2 per cent, and 1986 when it was 20.7 per cent. The latter figure was due to one large ATP rural development project in Malaysia (£59m) initiated, as has already been pointed out above, for commercial reasons by a British firm – linked to arms sales (see chapter on Conservative policy).
Figure 22: Share of Primary Education, Primary Health, Rural Water Supply, Sanitation and Housing (combined) in Total UK Project Aid Allocable by Sector,
1980-87 (Percentage).
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Source: Projects by Sector: Allocations and Expenditure.
While this list of priorities may not be exhaustive of all the poverty relieving aspects of project aid, the items included are an attempt to define the minimum for survival.
In terms of multilateral aid, Britain's commitment to providing aid to the poorest must be measured against its record of providing funds for the International Development Agency, the soft loan arm of the World Bank, as well as a number of other UN agencies which base their activities on helping the poorest groups. The recent history of the IDA along with an account of the attempts by the Reagan administration to cut its funds can be found in the earlier chapter on the aid policy of the Thatcher government. Alongside the American attempt to cut overall IDA funds, the Thatcher government imposed a reduction in its percentage contribution to IDA funds at the seventh replenishment in 1984 (at the height of the sub-Saharan famine) on the grounds that its relative GNP compared to other donors had declined. The overall record of British percentage contributions to the IDA can be found in Figure 23.
Figure 23: Britain's Contribution to IDA Replenishments.
Source: OECD. Development Cooperation.1975-86.
It should perhaps be noted here that, whilst Britain would appear to have been ready to seize on declining relative size of GNP in order to cut its funds to the IDA, it has been more reluctant to even set a timetable for reaching the agreed target of 0.7 per cent of GNP for its Official Development Assistance.
With regard to Britain's contribution to the European aid effort, it should firstly be noted that the terms on which Britain agreed to become a member of the EEC excluded several South Asian Commonwealth countries from being recipients of European Development Fund aid (as well as from gaining the preferential access to European markets accorded to the Asian, Caribbean and Pacific countries (ACP). The result was that former French colonies were favoured and Africa in particular, despite being the poorest continent, ended up getting aid out of all proportion to its population. Table 24 and Figure 24 give some idea of the skewed distribution of EDF aid. From this it can be seen that, in 1972-74, Africa with only 19 per cent of the population of developing countries received 46 per cent of the combined total of European multilateral and bilateral aid and Asia and Oceania with 61 per cent of the population of developing countries received only 33 per cent.[210]
Figure 24: Distribution of Bilateral and EEC Multilateral Official Development Aid of the Nine EEC Member Countries by Continent, 1972-74 (Percentage).
Source: Geographical Distribution of the Member States Bilateral Development Assistance.
Parallelling its performance at the IDA replenishments, Britain's policy at the 1984 Lome Convention was to limit the amount, and its share, of aid funds to be pledged. The emphasis was placed on further trade concessions instead of increased aid. The result was neither movement on trade, because of the opposition of southern European countries nor an increased aid pledge, in real terms, as it only just kept pace with inflation. Figure 25 gives the Lome aid pledges since Lome 1. Table 26 gives Britain's contribution to the EDF.
Figure 25: EDF Funding Since 1975 (Current ECU Millions).
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Source: Quoted in IGBA. Missed Opportunities.
Figure 26: UK Gross Contribution to the EDF and EEC Food Aid, 1975-82 (£million, Constant 1980 Prices).
Sources: British Aid Statistics (op cit).
Political Influences in the Distribution of British Aid
Political influences inevitably make themselves felt on the distribution of aid and detract from a poverty focus. In the case of Britain the colonial legacy remains as an important focus for aid. In 1985, despite a massive outcry over the African famine, Ethiopia, with a population of 40m, received as much aid as Gibralter with its tiny population. In the same year, the Falkland Islands received £5,000 per person of UK aid while India received 15p per person.[211]
It has been argued that, irrespective of whether these dependencies require financial support, it should not come from the development aid budget. Figure 27 and Table 27 show the relatively high per capita aid lavished on the dependencies, none of which are among the poorest 50 countries. Meanwhile, there has been a steady decline in the per capita aid level given to the often much poorer non-dependency Commonwealth, despite the fact that the average per capita aid level is much lower.
Figure 27: Distribution of UK Gross Bilateral Aid by Commonwealth Membership,
1978-87 (£ Per Capita).
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Sources: ODA. British Aid Statistics; British Aid 1975-87; British Overseas Aid
1975-90.
Considerable aid was given to the Somoza regime which was axed abruptly after the Sandinista revolution. Costa Rica and Honduras received respectively 40 times and 87 times more aid per person than did Nicaragua in 1983.[212]
While Nicaragua may not be the poorest country in the world, it suffered a debilitating destabilisation campaign by the USA which wrecked its economy. Other wealthier, middle-income countries in the region receive more aid from Britain, for example Mexico, which received 1.6 times more aid per person than Nicaragua in 1983. Similarly, Thailand received 47 times more aid per person than Kampuchea in 1982. Vietnam received nothing.[213]
In Ethiopia, the British Government abandoned development aid in the late 1970s because it was seen as simply supporting a Soviet client state. Neighbouring Egypt and Sudan (not Soviet clients) on the other hand received £47m between them in 1982. In practice the policy of supporting countries of strategic and commercial interest means little is left over to support less developed nations lacking these attributes. Total aid from all countries to sub-Saharan Africa has stagnated at $9 billion per year, while debt repayments have risen from $2.3 billion to $8 billion.[214] The “Good Government” policy adopted by Hurd is only the latest example of attempts by Northern donors to impose a political model on recipient countries decided by the donor. The paternalism of such schemes is evident in this approach, as is the infringement of recipient country self-determination. The Nicaraguan example indicates the hollowness of such policies. Somoza was “good” and qualified for aid; the Sandinistas were “bad” and got very little. The Hurd policy makes no self-criticism on this score.
Commercial Influences
The most enlightening figures for the distribution of British aid relate to the growth of commercial influences via the Aid for Trade Provision (ATP). The origins of ATP are traced in the chapter on the aid policy of the Labour Government 1974-79 elsewhere in this thesis. It was introduced in 1978 on the basis that it would be limited to 5 per cent of total bilateral aid. The Thatcher Government ignored this limit upon taking office, and Table 28 and Figure 28 show the rising and subsequently erratic trend in the percentage of ATP within the bilateral budget as a result. The trend does indicate that there was sudden growth in the late 1970s and early 1980s in the commercialisation of the aid budget since 1978. ATP funds are not available to countries regarded as not creditworthy, and it might logically be supposed that this might mean that less aid reaches the poorest countries as a result of this. The extent to which this is true has been investigated by Clark and Toye in a paper submitted to the Commons Foreign Affairs Committee as part of the evidence for a recent report on Bilateral Aid.[215]
Figure 28: Elements of Total UK Bilateral Project Aid, Total UK Bilateral Financial Aid and Total Bilateral Aid Accounted for by the Aid Trade Provision, 1979-80 (Percentages).
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Sources: British Aid Statistics;
British Overseas Aid 1975-87; British Overseas Aid 1975-90. |
The figures they have gathered from the ODA's British Aid Statistics compare ATP and non-ATP funds during the period 1977- 84. The figures suggest that there are marked divergencies between the destinations of ATP and non-ATP money. Figures 29 and 30 and Tables 29 and 30 indicate that ATP aid has shifted away from Africa to the Americas – a trend which is also reflected in the shift away from the Commonwealth indicated in Figures 31 and 32 and Tables 31 and 32, and as a shift away from the poorest countries, as Tables 33 and 34 confirm.
As the paper states:
"Between 1978-84, roughly two thirds of all non-ATP bilateral aid reached the 50 poorest countries in the world. The comparable figure for ATP aid money was only one third (except for 1983 and 1984 with a 60 per cent share). Middle income countries have done much better from ATP than from non-ATP aid, particularly in the early '80s, when large sums were spent in Mexico and Brazil. (...) the 1983-4 improvement in the share of ATP going to the 50 poorest countries was effectively produced by £30.7m of ATP within three Indian contracts."[216]
The paper notes that the terms of ATP aid have dramatically improved, with much more in the form of grants than non-ATP aid despite the higher proportion of the former going to middle-income countries (Tables 35 and 36 and Figures 35 and 36).
Eighty-four per cent of ATP money between 1978 and 1985 fell within the Standard Industrial Classification, ie mechanical engineering, electrical engineering, shipbuilding, marine engineering and vehicles (see Figure 37). There is a marked bias towards electrical engineering (with 48 per cent of ATP aid in this category). In addition, four firms – GEC, NEI, Davy McKee and Balfour Beatty have absorbed over half of all ATP funds (see Tables and Figures 38 and 39).
Figure 37: UK ATP Commitments by Industrial Sector, 1978-85: Amount of ATP Money Awarded (£m).
Sources: British Aid Statistics.1978-84; British Overseas Aid, 1982-4 Editions.
Figure 38: UK Firms with 3 or More ATP-Supported Sales, 1978-85: Value of ATP Support (£thousands).
Source: British Overseas Aid, 1982-84 Editions; House of Commons Foreign
Affairs Committee, Second Report,
Session 1981-2 and Overseas Statistics Department.
Figure 39: UK Firms Receiving More Than £10m ATP Support, 1978-85: Share of Total ATP Support (Percentages).
Source: British Overseas Aid, 1982-84 Editions;
House of Commons Foreign Affairs Committee, Second
Report, Session 1981-2 and Overseas Statistics Department..
Whereas 32 per cent of non-ATP aid between 1978 and 1984 went towards Renewable Natural Resources, social welfare and the financial sector, no ATP aid went to these sectors. However, 43 per cent of ATP aid went to the energy sector compared with 28 per cent on non-ATP money. (Tables and Figures 40 and 41). This, according to Clarke and Toye, is a:
"reflection of the intense concentration of ATP funds on the electrical engineering sector within the UK and on two leading UK firms, GEC and NEI."[217]
The commercial influence was brought to light very vividly, as we have seen elsewhere in this thesis, by the Pergau Dam affair. Malaysia is a comparatively well-off country in Third World terms, and there are many more poorer countries in Asia and Africa which might have been better candidates for development aid. The exposure of the link between aid and arms illustrates very clearly how ATP diverts aid from the very poorest countries to the NICs. It would be naive to assume that this was an isolated case, as Joan Lestor has pointed out in another part of this thesis.
We can conclude this chapter by asserting that the earlier
analysis of Labour and Conservative aid policies has been generally vindicated
by the figures presented here. At all levels there has been a quantitative as
well as qualitative deterioration of British aid which has gathered pace under
the Conservative government. The volume of bilateral ODA has been cut by a
third in real terms since 1979 Britain's percentage commitments to the IDA have
been cut during a period of acute famine in Africa (development aid was cut,
not famine relief). As a percentage of GNP, gross ODA has never been lower,
reaching an all-time low in 1990. 60 per cent of British aid is tied and local
costs have generally been well below 10 per cent of
bilateral aid which is far too low to generally implement a serious
poverty-focussed programme although there has been some lifting of restrictions
for the very poorest countries announced in the summer of 1990. Political
criteria, most notably in the case of Ethiopia in the late 1970s and early
1980s, are causing gross distortions in the distribution of British aid as are
also the skewed priorities within the Commonwealth in favour of the relatively
well-off dependencies. Commercialisation under the Thatcher Government has also
further distorted the aid programme through the use of ATP which, as we seen,
is directed at quite different and more privileged destinations. All the trends
indicate that there has been a sustained mauling of the aid programme and there
would seem to be no signs of a reverse.
The proportions of aid going to the human development priority areas cited by the UNDP Human Development Report indicate a lack of commitment to these areas of basic need and survival. The UNDP indicates, as we have seen, that only 8 per cent of total British Official Development Assistance went to these areas. Within project aid agriculturally-related activities have been dominated by cash crops, their related processing and infrastructure despite the fact that there has been a steady decline over the decade of the 1980s. When these are subtracted it has been shown that agriculturally-related aid from all project aid sectors, a category that might be thought of as being one of the most critical to meeting basic needs, accounted for 20 per cent or less of total project aid allocable by sector in six out of the nine years examined.
Within the education sub-sector of social and community services, primary education generally accounted for less than 15 per cent and for less than 10 per cent in four out of nine years. Within the health sub-sector, primary health areas other than family planning accounted for less than 20 per cent in five out of eight years and less than two per cent in two of these years. When the urgency of the need for primary health care beyond that of family planning is concerned these are pitifully low percentages.
We have seen also that basic education, primary health, rural water supply, sanitation and housing accounted for less than 7 per cent of project aid in most years. At all levels therefore it can only be concluded that nowhere near enough priority is given to the basic human development needs necessary for survival in the British aid programme.