I am increasingly finding that aid to Africa and developing countries is becoming an umbrella term, which to most people in the developed world is an issue that’s actually as clear as mud. It’s fantastic that celebrities such as Bono and co. are championing the cause but I feel that there is an important gap between popular opinion and understanding of the issues that needs to be closed. My concern is that increasing numbers of genuinely motivated and caring individuals are being swept into this popular movement of flashy presentations, celebrity endorsements and persuasively-scripted talks being given by every man and his dog.

It matters at the end of the day because donated money (and time) itself is never the solution to any problem, it’s what you do with it that matters.

The Munk debate on whether Foreign Aid Does More Harm Than Good offers an excellent starting point:

“In a world where over 3 billion people live on under $2 a day, where economies and threats are globally interconnected, and where only small amounts of aid are given, should wealthy nations do more? Or, given the poor track record of aid, the support it provides to dictators and tyrants, and the actual need for individual entrepreneurialism and free markets, should we focus our limited resources elsewhere?”

This is a loaded and controversial question that deserves to be debated since “$1 trillion of development-related aid has been transferred from rich countries to Africa in the past 60 years, yet real per-capita income today is lower than it was in the 1970s, and more than 50% of the population live on less than a dollar a day, a figure that has nearly doubled in two decades”. Dambisa Moyo addresses this in her essay on Why Foreign Aid is Hurting Africa which both critiques and offers innovative solutions to the current aid model. Moyo, who was raised in Zambia and previously an economist at Goldman Sachs and the World Bank, argues that “the recipients of this aid are not better off as a result of it, but worse—much worse”. I recommend reading her arguments if you are interested in what happens to our government aid money (it should be obvious by now on which side of this debate I sit).

Lending is the new giving

Professor Muhammad Yunus received the 2006 Nobel Peace Prize for his work on alleviating poverty through micro-credit with Grameen Bank in Bangladesh. It’s just one example of how poverty can be tackled successfully using new approaches and not necessarily more money.

“Poverty is not created by the poor. It is created by the structures of society and the policies pursued by society. Change the structure as we are doing in Bangladesh, and you will see that the poor change their own lives. Grameen’s experience demonstrates that, given the support of financial capital, however small, the poor are fully capable of improving their lives.”

The basic premise of microfinance is to provide financial services to the poor. Grameen Bank’s micro-credit loans are collateral-free and given to the poorest of the poor in Bangladesh, often to help them in entrepreneurial income earning activities. 97% of borrowers are women whom have received US $8.26 billion in loans, with a 98% recovery rate (compare this with over $1 trillion lost by irresponsible bankers in the financial crisis!). Furthermore, Grameen Bank is profitable and self-funded from its growing amount of deposits.

Kiva is a Silicon Valley not-for-profit that makes person-to-person micro-lending possible on the web. It allows you to lend as little as $25 directly to an entrepreneur of your choice to achieve their goals. When they repay the loan, you get your money back to loan to someone else. Kiva’s loan repayment rate is 98% and they have distributed $48 million in fully repaid loans since 2005. It’s such an inspiring example of the type of innovative solutions we need to end world poverty in the 21st century.

Can we do it by 2050? It changes everything when you can change the rules of the game. It allows you to compete against big players and solve impossible problems. It’s what innovators do. Educate yourself and participate in the debate, question everything and think critically about what you give and why.

Money is finite as long as poverty remains a problem of economics, but creativity is infinite if we can transform poverty into a problem of will.

If you’re still not convinced then maybe Professor Hans Rosling’s dataset will change your mindset.

Thomas L Friedman wrote a great column in the New York Times questioning whether the global financial crisis is indicative of a greater failure in our society.

“What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall – when Mother Nature and the market both said: ‘No more.’” This is the Great Disruption.

Friedman sums up the ever growing US-China economic interdependence brilliantly in this paragraph:

“We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …”

And I believe he is right in saying that we can’t do this anymore. At least not in the way we are currently depleting non-renewable resources and continuing to create unsustainable models of growth.

Friedman interviewed physicist and climate expert Dr Joseph Romm of climateprogress.org, who believes we have “constructed the grandest of Ponzi schemes, whereby current generations have figured out how to live off the wealth of future generations.”

In the words of Romm, “we created a way of raising standards of living that we can’t possibly pass on to our children. We have been getting rich by depleting all our natural stocks – water, hydrocarbons, forests, rivers, fish and arable land – and not by generating renewable flows. But it has to collapse, unless adults stand up and say, ‘This is a Ponzi scheme. We have not generated real wealth, and we are destroying a livable climate…’ Real wealth is something you can pass on in a way that others can enjoy.”

Until now it has mostly been environmentalists and scientists who have become alarmed at the environmental disruption caused by our unsustainable behaviour. The disruption of global financial markets has now given economists reason to pay attention too. The scary thing is that these “crises” are the symptoms manifested by a sick system which is getting sicker. A trillion dollar bailout is a very expensive pill to take, but it’s simply not a cure. Will it take a revolution, a war, or the next global health epidemic to wake up our politicians and doctors too?

Like our bodies, the modern world is an interdependent system in which we must recognise that every part is important and valuable. It doesn’t matter how smart our brain is because we simply can’t live without a heart, just as we cannot afford to lose our natural resources, our biodiversity, our Africa or our Antarctica.