DFID Should Be In Western Union, Not Westminster
On its face, the Department for International Development (DFID “diff-id” to its friends and foes) is a noble thing. Led by the Rt. Hon. Justine Greening (MP, Cons., Putney), a British accountant who has never lived abroad, it manages expenditures of between six and seven billion pounds annually; nearly all of this money is spent on development projects in developing countries, and over three-quarters of expenditures benefit programmes in Commonwealth nations or former colonies or territories.
The story of DFID parallels the well-worn tale of development aid failure over the last fifty years. None of the countries that has developed and industralised in a meaningful way since WWII has done so with substantial help from DFID. The success stories of South Africa, Australia, and New Zealand (the three clear Anglophone success stories of the southern hemisphere) came with little help from (and many would argue in spite of) British foreign policy.
Israel and Hong Kong are small areas whose histories are inextricably intertwined with that of Britain. But neither developed with substantial help from DFID. Both are places that benefited hugely from remittances from abroad and American technological support (military support in Israel’s case, manufacturing support in Hong Kong’s). Today, Hong Kong has a higher GDP per person than the United States or the United Kingdom.
I propose a simple plan that could be administered by a handful of people to replace DFID with something higher-impact and constituent-driven.
An important thing went nearly unnoticed at the close of 2012: remittances originating from the UK exceeded UK government development spending. Now, this is not true on a per-country basis (the UK government likely sent more money to Uganda than Ugandan expatriates in England sent to Uganda, for instance), but it is nonetheless remarkable. Also, many recent studies suggest that remittances are more economically beneficial, particularly in rural areas, than large aid projects.
I suggest that, rather than spending six or seven billion pounds next year on what DFID might normally spend that money on, DFID should offer a “remittance bonus.” This would replace UK international aid with a “bonus” of, for instance, 50%, on top of whatever money a UK resident would like to send abroad to a given set of countries, up to, say, 750GBP/remitter/annum. Yes, some people will undoubtedly wire money to their own accounts in Kenya or commit some sort of fraud, but this is unlikely to exceed the amount of money wasted in the current system, which has an annoying tendency to do things like build a well in a village that already has three wells or provide used Land Rover Defenders to a police department that can barely afford ammunition and uniforms, let alone parts to fix a crippled beast from Solihull.
For more on the role of diaspora remittances in direct investment and international capital flows, I recommend Kathleen Newland and Erin Patrick’s paper on the topic (2004). For a more compact summary of the situation, I suggest Judith van Doorn’s excellent piece for the ILO available in English here.
