Commentary: Bono and O'Neill: Who's Right on Foreign Aid?

By Pete Engardio

Hand it to Bono and Paul H. O'Neill. With their 12-day Odd Couple tour of Africa in late May, the hip, anti-Establishment Irish rocker and the staid, Republican Treasury Secretary generated some of the widest media coverage of global poverty in years. It helped that the pair provided a steady story line by publicly airing their differences at each stop. Bono insisted that more foreign aid is urgently needed to lift Africa out of desperate poverty. And O'Neill kept hammering on the need for aid agencies and Third World nations to make better use of the billions already at their disposal and promote market-driven growth before showering them with new money.

So who's right? In part, both are. It can't be denied that, as O'Neill says, a huge portion of the aid poured into developing nations over the past five decades has done little to reduce poverty or promote sustainable economic growth. The examples of waste, corruption, and ill-advised projects in Africa and elsewhere in the developing world are legion. And by and large, the bureaucracies of international aid agencies remain more fixated on boosting their budgets than on ensuring their projects get results.

That said, even the best economic policies won't make a difference when huge portions of the poor have no access to basic health care, education, and rural development projects. And Bono is right that most African governments cannot meet this need without more outside help--especially when up to 30% of their export earnings go to service staggering foreign debts. Yet rich nations have slashed their funding for such programs for the past decade.

What's more, there is abundant evidence that smart aid projects can achieve dramatic results, when combined with good macroeconomic policies and aggressive social programs. O'Neill got a close-up view of such progress while touring Uganda. While incomes still average just $300 a year, Uganda has made great strides since the bloody days of turmoil under strongmen Idi Amin and Milton Obote in the '70s and '80s. In the past decade, the poverty rate has dropped from 56% to 35% and the spread of AIDS has been contained. The credit goes largely to the Ugandans and their wise use of Western aid. The World Bank and International Monetary Fund also played a huge role by forgiving debt payments. That has freed $90 million annually that now goes into services like education and health care.

Seeing the benefits of aid up close seemed to make a deep impression on O'Neill. Earlier this year, he railed against calls for more foreign aid. But in Ethiopia, O'Neill said: "Programs are working, aid is helping, and standards of living are improving." In an interview, he described how he was profoundly moved after visiting AIDS victims in Uganda and an orphanage in an Ethiopian village.

Bono also has acquired a more nuanced view of poverty's root causes. While he still emphasizes philanthropy and debt forgiveness, the singer, once a fixture at anti-globalization rallies, now calls for "fair trade" and opening Western agriculture and textile markets to poor nations.

Both O'Neill and Bono deserve credit for touring Africa with open minds--and both should apply what they learned. They are realizing what experts have long known: There are no simple cures for hardcore poverty. The causes are complex and multidimensional.

But O'Neill is in a position to do the most. He needs to back up his good intentions with more U.S. funds for the health-care, education, and development programs that work. The Bush Administration's promise to boost antipoverty help by $5 billion annually is a start, but new funds won't flow until 2004. Why not sooner? If O'Neill is serious, he'll make sure his eye-opening tour of Africa grows into something more than a colorful PR exercise.

With Declan Walsh in Kampala, Uganda

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