By Marcus Leach

Aid is hindering growth in the developing world, according to some of the world’s leading thinkers on economics, religion and politics, who came together in London at a conference titled From Aid to Enterprise: Economic Liberty and Solutions to Poverty.

Hosted by the Acton Institute, the conference explored the limits and unintended consequences of aid and the role of business in poverty alleviation.

The devastating effects of international aid on local business were expressed by Herman Chinery-Hesse, who referred to institutional aid as an ‘axis of evil’. The software entrepreneur, dubbed ‘Africa’s Bill Gates’ by the BBC, spoke of his own professional experience dealing with a government tied closely to international aid agencies.

“Here is a typical scenario of how aid quashes innovation in developing countries," he said.

"A local technology business for example, spots a problem in the public sector that it believes could be solved through technology. They head to their labs, spend six months developing a solution and present it to the public sector body.

"That public body is be bound by an agreement with its aid organisation to approve spending on any projects. Once the technology company submits a proposal into the system, all lines of communication are almost immediately shut down. It is not uncommon that six months later the government announces that, for example, a French company is being brought in to deliver the project.

"With the process being funded by the French government, how could the recipient government refuse? The result is that an idea born in national labs is being implemented at a premium by a company most people had never heard of. National technology companies have learnt a hard lesson — to often avoid the public sector — the biggest contributors to IT spend in the country.

“Aid allows our governments not to listen to us. Aid causes poverty in many ways. It leads to negative interest and overpriced projects. Aid organisations operate like pimps - Governments can think through a sustainable solution themselves, but this is not easy when there is a pusher saying ‘take, take, take,’ - which they do.

"After all, they get the kick-backs. As a result local industries die. There is constant friction between business and the political class as politicians are incentivised to hold the economy down to keep getting aid.

“What we want is a handshake on a business deal, not a handout.”

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