The importance of building the capacity of local governments
Over the last ten years aid and development have been treated as synonymous, with aid being seen as the dominant force for social progress in the developing world. And aid has worked, delivering lasting results. Access to anti-retroviral treatments for HIV/AIDS has more than tripled from 14 percent in 2005 to 43 percent in 2008. Deaths from malaria in Africa have been cut by a third annually. And 75,000 peacekeepers helped bring stability to war-torn regions.
But when I talk to the new generation of leaders, especially in Africa, they tell me they want to get beyond aid, to take their countries' destiny into their own hands, using growth and the power of government to create social change. Over the next ten years, economic growth will be the most disruptive force driving social progress. The challenge for leaders is how to seize that opportunity so it benefits their citizens.
The economic disruption has already begun. Globally, the 20th century misalignment where a country's economic strength and its population fell out of kilter is unravelling. Population and economic might are reconverging as India and China rise. One statistic puts it all in perspective: in a few decades, China has lifted 660 million people out of poverty. That is almost twice the population of the United States. This is an achievement of historic proportions.
Economic progress is reaching the regions that we worried were left behind. Take Africa, often associated with poverty and stagnation. Africa is now on the move. Its GDP growth averaged between five percent and eight percent for the last five years, while the global economic crisis battered other economies. Global FDI to Africa was $84 billion in 2010, which will almost double to $150 billion by 2015. Private infrastructure investment in Africa has tripled since 2000. And the pace of technological change on the continent is mind-boggling: In some markets, it is cheaper to buy a day of mobile internet access than to buy a banana. The creation of jobs, rising wages, and the establishment of a middle class are critical to allowing Africa to build up its domestic economy and de-couple itself from aid. The World Bank estimates that Africa's middle class now numbers 326 million people and rising.
But there is a risk that the benefits of this progress aren't felt widely enough. Recent World Bank statistics show that Africa's economic progress is not translating into sufficient reductions in poverty. This is where governance comes in. For the disruptive power of growth to be used properly, developing countries need good governance. This is partially about issues of transparency and accountability; governments must be held to account by their people, so a small elite cannot capture the economy and use it in their own interests.
There is another aspect of governance that has had far less attention: the capacity of governments to get things done. This is as important, because political choices today are less about ideology and left-versus-right. Increasingly, the biggest political question is how to implement change. A new generation of leaders are determined to take their developing countries forward. But they need government systems able to turn their vision into practical change.
This emphasis on government capacity and leadership is important for three reasons. One, government changes lives for the better. Without effective government, roads and power stations won't get built. Health care and education won't be provided. But where government works, the results are clear. Take the huge reduction in poverty in Rwanda: one million people lifted out of poverty in just five years. Two, effective governance increases the resilience of the state--increasing the chances of avoiding conflict and maintaining democracy. And finally, it allows countries to take ownership of their development, reducing their dependence on outside aid. For development to be sustainable, the transfer of responsibility to developing country governments has to happen.
Within the next generation, we can see an end to aid dependence. If we can get the governance piece right, and seize the opportunities of global economic progress, aid will cease to be the dominant way the rich world thinks about engaging with the developing world.
Let me be clear -- I am an aid advocate. As prime minister of the U.K., I convened the Gleneagles G8 Summit, which doubled aid to Africa. And as I have said already, there are numerous examples of aid having a real impact. But lasting progress can only be achieved by reforming governments in the developing world. Then, they can deliver.
In the long-term, economic growth can replace aid as the primary source of income, paying for infrastructure, creating jobs and income, and forming the core of strong and independent economies. This surge in growth and the strengthening of governance will be defining factors in social development over the next ten years. It is the developed world's duty to adapt and support this new development paradigm, and not stand in its way by sticking to the old ways of "doing-development."
Disruptive change by definition is challenging. But I learned in office that unless you "challenge the givens," you will never create systemic change. When it comes to international development, there has never been a better time to take this challenge on.