Poverty, Inc. – the Dark Side of Charity and Foreign Aid
This powerful documentary illustrates the old adage that the road to hell is paved with good intentions, and although the good intentions of many supporters of global charities may be undeniable, there is much that goes on behind the scenes that is less than admirable. Poverty, Inc. delves into origins, workings, players and ramifications of what has become a global poverty industry, comprised of aid agencies, NGOs, charities, corporations, governments, and even social entrepreneurs and celebrities.
When natural catastrophes strike, massive and immediate humanitarian aid is of course essential, but, unfortunately, there are aspects of chronic institutionalized aid that are much less benign, and this documentary is a real eye-opener. Aid can become an impediment to the rehabilitation of local economies when, for example, handouts of rice or shoes put local farmers and shoemakers out of business. Who can compete with “free”? Similar things also happen when aid is tied to bilateral agreements, and highly subsidized crops are dumped on local markets. It’s great for U.S. agribusiness and contractors, but disastrous in the long term for the country receiving the aid.
The postwar Marshall Plan for European aid was ostensibly intended to build infrastructure, but in effect became the foundation for neocolonialism. The film suggests that foreign aid has become the cornerstone for the West’s engagement with the Third World. In a sinister twist, such aid is often tied into loans from the IMF that encourages corruption, enriching the country’s leaders but crippling its economy. This has a domino effect whereby countries that are unable to repay these loans are forced to sell off their natural resources, which in turn reduces even further their ability to repay even the interest on the loans, excluding them even further from the global financial markets and perpetuating their dependency on foreign aid.
The film interviews many eloquent and passionate activists and entrepreneurs who have the skills to rebuild their economies but are hampered by not having access to capital in their countries. If they can get loans, interest rates can be as high as 120% a year. Another barrier they face is that the rule of law doesn’t seem to work for poor people. They don’t get justice in the courts, property rights can be a terrible problem, and only the rich can navigate the complex legal structures that are built upon institutionalized corruption.
Africa is a continent rich in resources and land. It needs help in job creation rather than donations that perpetuate dependency. No one, they point out, wants to be a beggar for life. There are a few of NGOs that do train technicians and support businesses, but these are the exceptions rather than the rule. There is a gap between small-scale micro financing and big company financing. The space in between is filled with small and medium enterprises that have proven to be the engine of growth of any economy. Muhammad Yunus, the founder of the Grameen Bank and pioneer of microfinance, says “Poor people are bonsai people. Society doesn’t provide them the base (to grow in) so they remain stunted.”
Because poor people are often excluded from networks of productivity and exchange, providing them with access to cell phones, Internet, banks, financial systems, and educational systems would go a long way towards enabling local entrepreneurship and changing the culture of dependency. Even well-meaning celebrities are taken to task in the film for subtly reinforcing for poor people a self-image that they are not good enough to be able to help themselves.
“Give a man a fish and you feed him for a day,” says the parable, “but teach him to fish and you feed him for life.” This documentary makes a powerful argument for radically rethinking our financial and political support of the charities and NGOs that drive the poverty industry. Obviously disasters will always happen, but we are urged to see the difference between a compassionate response to a crisis, and undermining the resilience and ability of a people to rebuild their communities and their lives. This film should be required viewing for charities and NGOs.