I join in the congratulations that have been extended to my right hon. Friend the Minister on her comprehensive speech in introducing the debate and for the diligence that she brings to her office.
The hon. Member for Cynon Valley (Mrs. Clwyd) made some disparaging comments about a speech by the Foreign Secretary last June to the Overseas Development Institute in London. I wish at the outset to acknowledge the significant contribution that that speech made to thinking on this subject. To many of us, it came like a fresh breeze across many of the stale old arguments on overseas development aid that we have heard over the years. Indeed, I was glad to detect gusts of that fresh breeze in the Minister's speech today.
The speech of the Foreign Secretary was given under the title, "Prospects for Africa in the 1990s", and it is on the experience of sub-Saharan Africa that I shall dwell today. The countries of that region, many of them Commonwealth countries, have been recipients of heavy British development aid, yet any observation must lead to the conclusion that all that aid has done almost nothing to elevate the economic condition of the ordinary people in those countries. Indeed, often the reverse has been the case.
In the last 20 years, the real per capita income in many sub-Saharan African states has actually dropped. For example, 10 per cent. of Tanzania's entire GNP is made up of overseas aid, yet its economic condition continues to deteriorate.
What has gone wrong? Why has all our development aid over the years not had its intended effect? Could it be that we are supplying it in the wrong way? In his speech to the Overseas Development Institute, the Foreign Secretary drew some comparisons between the experience over the last 30 years of countries in sub-Saharan Africa and many in south-east Asia around the Pacific rim. Many of the countries in both regions, he said, were once ruled by colonial powers. Both had had the advantages and disadvantages of that experience. Many in south-east Asia have fewer natural resources than countries in Africa, yet over those decades the standard of living of those Pacific rim countries has leapt ahead, while in sub-Saharan Africa it has stagnated.
The Foreign Secretary was careful about drawing easy comparisons, yet he put his finger on the essential difference. By and large, those Pacific rim countries have had good government and, just as important, an open economic system developing free market economies. On the other hand, too many in Africa have suffered from bad government, often in dictatorial one-party states, with highly interventionist and collectivist economies.
The hon. Member for Cynon Valley was selective in quoting from the Foreign Secretary's speech. My right hon. Friend also said:
Economic success depends to a very large extent on effective and honest government, political pluralism and, I would add, observance of the rule of law, freer and more open economies. These are choices for Africans, not for us to make. But aid donors can help where the will is there by providing assistance and training to strengthen legal, financial and other institutions which help form the fabric of a healthy society.
Today, the Minister gave examples of that.
The Foreign Secretary continued:
And they should consider potential recipients of aid in the light of certain criteria. Countries which tend towards pluralism, public accountability, respect for the rule of law, human rights, market principles, should be encouraged. Governments which persist with repressive policies, corrupt management, wasteful discredited economic systems should not expect us to support their folly with scarce aid resources which could be used better elsewhere.
He went on to point out that those were precisely the tests that we were now applying in eastern Europe. I believe that that approach should be made a watershed in British development aid policy.
That gives rise to some interesting lines of thought, many of which were developed in a stimulating report issued last month by the United Kingdom branch of the International Freedom Foundation under the title: "Recommendations for the Future Conduct of British Government Aid and Development Policy." I will not ask the Minister today to comment on the report's proposal that the Overseas Development Administration should be disbanded and replaced by a new overseas enterprise agency within the Department of Trade and Industry. I have a sneaking feeling that she would not agree with that suggestion. That is an idea worth pursuing, although perhaps not in the context of the debate.
I have a couple of thoughts that I shall develop in the light of my right hon. Friend the Foreign Secretary's analysis. The first is perfectly summarised in the report of the International freedom Foundation:
Traditional aid policy has served to reinforce the dirigiste, highly interventionist, economic policies of many Third World states and has not contributed to the political liberalisation of these societies. By failing to tie the continuation of aid to massive economic and political restructuring, western governments have, in effect, rewarded the pursuit of authoritarian administration in the underdeveloped world. The undemocratic regimes of countries such as Zambia, Tanzania, Uganda, the Seychelles and elsewhere have been given no incentive to change their ways.
That is certainly borne out by my own observations in Zambia, which has not only a one-party constitution, with all the stagnation and wasted talent that goes with it, but an economic system dominated by parastatal organisations, with all their managerial posts entirely within the patronage of the central party organisation. It is small wonder that Zambia has a basket-case economy, with many elements distressingly similar to those experienced within the Soviet Union today.
However much development aid one tips in at the top, it will all be frittered away long before it serves to raise the living standards of ordinary people at the bottom. For years, the excuse has been made of the apartheid regime next door and the armed struggle waged by the African National Congress. But that will not wash any more. The fault for Zambia's economic stagnation lies fair and square within its own political and economic structure.
But at last the light is dawning. Zambians have been promised multi-party elections next year. We welcome that, although we wait to see how fair and free they will be. I submit that all sub-Saharan African countries must be told that, unless pluralistic political systems are instituted and the market system encouraged, they can expect development aid to tail off. What goes for eastern Europe must go for southern Africa too.
The second thought prompted by the speech of my right hon. Friend the Foreign Secretary is that we should look again at the practice of pouring so much development aid in at the top of the still collectivist economies. Instead, we should direct more to the bottom and help individuals and families in the third-world countries to pull themselves up by their bootstraps. That would mean not going for ambitious infrastructure schemes, although they are often important, but giving individuals the basics to improve their own economic conditions and serve as points of growth in their economies at the grass roots. That policy is the very reverse of collectivism, but experience suggests that it would have a far more potent effect.
The ODA has experience of such a system in several parts of the world, as we heard earlier in the debate. I have seen it at work in South Africa—in the squatter camps around Cape Town, where groups of women have been given sewing machines to develop their own dressmaking businesses. Machines to make wire fencing or building bricks have been given to small co-operatives, which in turn have spawned other small industries around them. Tools have been given to make furniture and sheds to serve as factories. It is from such acorns that third-world economies can grow, but to do so they must have a free, non-collectivist economic environment.
I welcome the remarks of my right hon. Friend the Minister today about the need to involve local people. Often good development policies require direct contact with such people. We should not always rely on what are often inefficient Government agencies in some of the third-world countries.
Many more thoughts flow from the speech of my right hon. Friend the Foreign Secretary last June. We can only hope that the logic of his diagnosis will be followed through in the Government's future aid policies.