Helping the World’s Poor is Not Just About GDP Percentages

“We need to move away from seeing aid as purely a government to government exercise,” says Dr Jane Silloway Smith, Researcher at Maxim institute.

The 2010 Index of Global Philanthropy and Remittances, released by the Hudson Institute in Washington DC, has shown that aid from developed country governments makes up just one tiny proportion of the money going to the poorest people in the world.

According to Smith, “this should make us pause and reconsider our mindset about aid. Rallying around Government and pushing for an increase in Government spending on aid side-steps the really important questions and focuses us in the wrong direction. We already have very beneficial financial flows occurring which are not part of any official aid progamme. We need to see all of these as part of the parcel that can contribute to improving the lives of the poorest people.

The Index shows that in 2008, 75 percent of the economic activity between developed and developing countries came through the private sector in the form of philanthropy, private capital investments and remittances (where a migrant sends money back to their home country). Despite expectations that philanthropy would drop significantly due to recession, it remained strong globally.

Smith sees this as an encouraging sign. “Aid needs to be flexible and responsive to the needs of people on the ground. Private aid can often do this better than government aid as it is more likely to work in partnership with aid recipients, and it is often specialised according to expertise of donors and needs of recipients. Other private financial flows can be equally aluable as they targeted directly to communities and individuals who can put them to good developmental use. Smith continues, œThe best chance we have of seeing very significant change occurring is to let financial flows open up in a range of forms and to encourage all this activity.

“If we focus only on government to government aid we run the risk of seeing the money we invested going to waste, or creating dependency that cannot be maintained. Meanwhile, we miss the chance to make the most of other opportunities available that could see the living standards of the world’s poorest raised,” says Smith.

ENDS

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