Aid isn’t always what its cut out to be!

We are told it’s quite commendable that the UK government is maintaining its aid commitment of 0.7 per cent of gross national income (GNI)  in these auster times amongst all the developed countries in the world but the reality is aid has always been part of foreign policy tools of a country as the letter from Lord Malloch-Brown in FT dated the 3rd of April, reveals so starkly. Here he clearly states the pay-off of British aid in terms of diplomatic influence. So lets not get too starry eyed about it as some do about achieving the 0.7 per cent target.

The reality anyway though is the $50 billion annual of official assistance globally is dwarfed by flows of remittances or money transfers sent by migrants around the world to their various ancestral homes, by almost tenfold. The latest conservative estimates put it at some $ 400 billion by the  World Bank in 2012 . A flow that is given very little attention in developed world particularly amongst think tanks and NGOs.

Interestingly the global financial crisis of 2008/09 has not sent migrant workers streaming back home, despite worsening employment prsopect and anti-immigration rhetoric in some destination countries. Such international migration has enormous implications for growth and welfare in both origin and destination countries. An important benefit to developing countries is the receipt of remittances or transfers from income earned by overseas emigrants. Ask any Finance Minister in the developing world and he will tell this loud and clearly.

So thanks to Lord Mark Malloch-Brown for giving us a reality check about what aid is really about and lets put more of a focus on making better use of these huge remittance flows into the developing world in the first place.

Please find the letter published in the FT on its letter page for the 8th of April 2012