At the end of World War II, with Europe reduced to rubble, the United States put into action the Marshall Plan to rebuild the torn continent. Inundating Europe with money resulted in a succession of economic miracles that spread through the continent and launched it to pre-war economic levels in less than a decade.

Another consequence of the War was decolonization, which rippled across Africa and the rest of the colonial world over the next 20 years. The countries born from this faced the enormous task of lifting millions of people formerly subjugated under colonial rule out of grinding poverty. After the Marshall Plan for Europe, foreign aid was given to developing countries to assist them, too.

Two generations later, little progress has been made, and that which has been made has had very little to do with foreign aid. What went wrong?

Poverty Inc., a film directed by Michael Matheson Miller, a research fellow at the Acton Institute, grapples with these questions and makes perhaps the strongest case for the argument that a paradigm shift is long overdue in the way the development agenda is approached by donor countries and organisations. It recently won a US$100,000 Templeton Freedom Award and a clutch of film festival prizes.

The global aid system, according to the film, is based on a fundamentally flawed model which advocates the plugging of short-term leaks as the means to repairing a broken roof, not just leaving the problem unsolved, but also making it worse and harder to solve.

The flaw in the model begins with the West’s assumptions about the poor. The images of Africa and the rest of the third world romanticize these places as being on the very edges of both civilization and humanity. They are depicted places which are in dire need of direct assistance, and incapable of improving themselves.

Skinny and dirty black children with bloated stomachs and runny noses. Murky rivers chock full of tonnes of plastic. Stinking open sewers winding their way through hectares upon hectares of informal housing in haze-covered cities. Oh, and no snow at Christmas, as the song “Do they Know it’s Christmas” flamboyantly declares, as if snow were a sign of development.

This sentimental image evokes the pity of anyone who beholds it, and in a natural human reaction, many people feel the need to help. They contribute money and old clothes. Governments budget for growing aid. Celebrities exhort fans and fellow celebrities to join the fight against poverty. Social entrepreneurs come up with ingenious ways to help the poor without making any losses.

The problem is, all of this effort and innovation happens within a paternalistic paradigm in which the poor are inert receivers and the giver is the only one capable of eradicating their poverty. It makes no effort recognize the logic that, for the poor to be pulled out of poverty, his own involvement is indispensable. Somehow, it is assumed, the poor will rise above his poverty by receiving the same things over and over again.

Thus, a beggar mentality is inculcated in the poor. Their initiative is destroyed and a vicious cycle which requires the constant input of the giver and the constant poverty of the poor is created. The donor-recipient relationship socially stratifies the two parties, creating an inferiority complex in the poor and entrenching the view that only more handouts from the rich can sustain the poor’s wretched existence. The West has positioned itself as the protagonist of development, giving rise to a vast multi-billion dollar poverty industry.

Companies in the developed world take advantage of these flaws in the system by manipulating their governments to pressure governments in donor-dependent countries to award them aid-funded government contracts, driving a final nail into the miserable coffin of the poor’s initiative. As the documentary puts it, the business of doing good has never been better.

Entire countries are held hostage by a clique of international financial institutions, NGOs, religious charities and companies that are there, ostentatiously, to help lift them out of poverty. “I see multiple colonial governors,”  Ghanaian software entrepreneur Herman Chinery-Hesse says in the film. “We are held captive by the donor community.”

Among the 200 intellectuals and entrepreneurs who are interviewed in Poverty Inc, there is as much unanimity about the fact that the sentiment to help comes from a good heart as there is in the agreement that this is not the issue in question.

The matter in question is why the world sticks to a model for eradicating poverty that has proved itself ineffective and incapable of ever being effective. As Andrew Mwenda said in a TED talk given in Arusha, Tanzania in 2007, no country has ever developed through aid in its current form.

Having a heart for the poor is easy, but this kind of sentiment tends to blind people to the truth that the paternalistic system is broken and should be as much a target for eradication as the poverty it seeks to eliminate.

As a matter of fact, the film contends that poverty will not be eliminated until the approach changes. It must be replaced by one based on partnership.  People in the developing world need to be seen in terms of their dignity and creative potential, not judged by what they lack.  Aid providers need to recognize that they are dealing with people who can think and do things by themselves, given an environment of inclusion and the rule of law.

Poverty Inc documents plenty of evidence from entrepreneurs in a number of developing countries to prove that local initiative driven by a local agenda, rather than foreign intervention, is the only sustainable way to guarantee the eradication of poverty. It is this local initiative that needs to be supported, and not replaced by foreign aid and a foreign agenda, which is rarely well-informed or impartial.

If the approach doesn’t change, foreign aid will continue to achieve little good beyond affording foreign workers comfortable lifestyles, the opportunity to travel the world, and hefty untaxed salaries at the expense of the genuine quest to eradicate poverty.

Mathew Otieno writes from Nairobi. 

Mathew Otieno

Mathew Otieno writes from Kisumu, Kenya.