Alex Singleton | Journalist and political commentator

UNCTAD launched a remarkable report at the Commonwealth Club on Thursday calling for aid currently spent by agencies such as DFID, DANIDA, USAID and the World Bank to be spent through a single, monopoly UN body. I was a platform speaker at the press conference which was organised by the Royal African Sociey and the Royal Commonwealth Society, and I argued that the proposal would damage developing countries’ choices. The speaker from Christian Aid welcomed the report.

There is an argument that dealing with too many donor organisations is a burden, but this is an exaggerated problem. By having multiple sources of funding, this gives developing countries the flexibility to reject agencies that are not on the same wavelength and work with others that are. In Kenya, I found a great deal of scepticism towards the World Bank but much more support for DFID, so they work more with the latter and less with the former. Imposing a monolithic, single aid agency would be bad news for developing country sovereignty.

The author of the report, who is currently writing a book denouncing “market fundamentalism” dismissed the idea that developing countries would benefit from bottom up approaches to aid spending, criticising William Easterly’s support for “searchers” rather than “planners” in aid. He called for socialism in developing counties in order to create successful businesses, saying that private sector investment clearly does not work in poor countries.

I called for less multilateral aid, not more, arguing that much of what is currently done by the World Bank should be taken over by national aid agencies such as DFID and the Bank should become a body funded by money raised on financial markets.

The Guardian and the Independent both quote me in Friday’s papers. According to the Guardian:

The London-based thinktank the Globalisation Institute, which accused the UN of having a “megalomaniac agenda”, said that instead of another “top down institution”, freedom should be given to aid recipients over sourcing their money.

Simon Maxwell, Director of the Overseas Development Institute, also criticised the report, saying: “The UN must earn the right to a larger share of aid… [it] needs to show that it can perform as well or better than the World Bank, the regional development banks and the EU. It is not there yet.”

A spokesman for Hilary Benn, the UK’s Secretary of State for International Development, also attacked the report saying: “We do not agree that a new UN fund is needed or justified. Improving existing mechanisms will be a better way to deliver increasing aid.”

Reuters reports that factories and homes in Tamil Nadu, India, have clean, reliable water for the very first time thanks to private investment. Although private provision of water has received some criticism from anti-capitalist groups, the newly-built water treatment and delivery plant shows a practical way of extending clean water access to a country where 87 per cent of rural dwellers live without running water.

The plant is majority owned by private firms, and is operated by Mahindra Water Utilities, a 50-50 joint venture of Mahindra Infrastructure Developers and Britain’s United Utilities.

State-backed, but majority owned by private firms and investors, the water treatment and delivery plant in Tirupur is the first of its kind in a country where almost half the urban population and 87 percent of rural dwellers live without running water. Before the plant was built, trucks delivered water from the river or wells - but unfiltered.

“The water systems in India need technology upgrades which can minimise wastage and theft and ensure a more efficient system of distribution and transparency,” said Shreerang Deshpande, manager of network and maintenance for Mahindra Water Utilities. “You need private participation for the resources and expertise required.”

The UK’s Department for International Development is the biggest financial funder of state education in Kenya. But out on a recent trip visiting rural Kenya, I found it surprising how critical people were of the state schools. As one (left-wing) NGO worker complained: “98% of children go to primary schools but what use is that when the state schools’ quality is rubbish?”. According to Prof. James Tooley, the thinking behind big top-down approaches by donors such as implemented by DFID is misguided:

Because such large proportions of poor children are in private unrecognised schools, off the state’s radar and not on official statistics, this means that the proportion of children not attending school has been over-estimated. In Lagos State, for instance, the existence of private unregistered schools would reduce the percentage of out of school children from 50 percent to 26 percent. In other words: the difficulty of reaching ‘education for all’ may have been overestimated.

Moreover, our research in the slums of Kibera, Nairobi, suggests that the introduction of free primary education in January 2003 did not increase overall enrolment in schools because there were already private schools serving the slum populations. We found a total of 76 private schools in the slums with around 12,000 students enrolled. These schools had suffered a massive fall in enrolment since free primary education was introduced; and at least 25 private schools had closed altogether. The number of children lost from private education appeared far greater than the additional enrolment in the state schools bordering Kibera. At best - allowing for some exaggeration by the school owners of the numbers of children who had left - we could infer that the additional enrolment was a result of children transferring from private to public schools.

What about quality?

Children transferring from ‘mushrooming’ private to government schools may not seem such a bad thing, given the assumption that private schools can be of low quality. We explored the attainment of students in private and public schools serving poor communities and found that private schools in general had a large achievement advantage. For instance, in Lagos State, the mean maths score advantage over government schools was about 15 and 19 percentage points more respectively in private registered and unregistered schools, while in English it was 23 and 30 percentage points more.

In other words private schools are outperforming government schools. Moreover, they spend less on teachers - a cost which is likely to make up most of school’s recurrent expenditure - than do government schools. In general, the average monthly teacher salary in a government school ranges between three to four times higher than in an unrecognised private school.

If aid is channelled only into state education systems, then it may be concentrated on the low-achieving and expensive option. The way forward, instead, may be to encourage the private sector that has shown itself able and willing to serve the poor. Funds could be channelled through a revolving loan fund, for instance, to help private schools improve their infrastructure, or through voucher schemes to help the poorest access the higher quality private education that is already available.

The problem with DFID’s approach is that it is managed by Planners in Whitehall. Developing countries would be better off if they were helped by Searchers, building upon indigenous systems rather than imposing monolithic Western systems from on high.

Prof. Tooley has another article in today’s Financial Times.