The charity guru who duped the world

It is hard to think of a more famous global academic than Jeffrey Sachs. He advises the United Nations, collaborates with presidents, hangs out with Hollywood idols, parades around the planet with pop stars and persuades billionaires to part with money. He has starred in a film alongside Angelina Jolie and written a best-selling book on ending poverty. Since becoming a full professor of economics at Harvard University in 1983 at the astonishingly young age of 28, he has seemed an almost permanent fixture in the public eye making impassioned pleas for his pet causes.

His influence has been amazing. In 1985, just two years after taking tenure, he was advising a Bolivian government confronting hyper-inflation. Sachs devised a strong austerity package that hurt many citizens but reined in inflation. This ‘shock therapy’ became his trademark, exported first to Poland as it emerged from the Soviet communist straitjacket and then to Russia with dire consequences. The nation’s economy shrunk by half, state assets were pillaged and, ultimately, the ravaged nation turned to a nationalist strongman to restore stability. As we survey today’s turbulent world, it is arguable he bears some responsibility for Putin’s rise.

By time the impact of his ideas became apparent, Sachs had found a fresh cause after a trip to Zambia: the elimination of global poverty. This crusade might have seemed ambitious, but not for such a brilliant and self-confident fellow. He decided the problem was a poverty trap that left impoverished countries unable to tackle core problems – and the solution was giant dollops of foreign aid to solve issues such as disease, illiteracy, lack of jobs and antiquated agriculture that held back development. “We can banish extreme poverty in our generation”, he said in 2005.

His simple, uplifting gospel coincided with the rise of a new generation of Western political leaders, especially in Washington and Westminster. They were influenced by Live Aid, desperate to show they cared about the world and susceptible to such arguments. Among those who befriended him was George Osborne, then a young Tory shadow chancellor, who travelled with him to Uganda, penned joint articles on aid and pushed the idea of ring-fencing the discredited UN aid target in law. The New York Times called Sachs “the most important economist in the world”. Bono gushed that “his voice is louder than any electric guitar, heavier than heavy metal.”

For many years, those that dared question such tactics were dismissed as callous xenophobes. The political class largely closed ranks, demonstrating the worst kind of groupthink and ignoring evidence of consistent failure. The aid industry became bloated as budgets soared, especially in Britain where they surged even as public services were slashed by austerity. Now we see the consequences: a scandal-plagued charity sector focused on protecting lucrative brands, fat-cat private firms creaming off huge sums and vast flow of funds into pockets of repellent regimes. The estimated poverty trap is now half the size of annual development aid spend.

Some voices have emerged in recent years to question this ‘big bang’ approach promoted by Sachs. They range from African leaders and activists through to Western academics, including a Nobel-winning British economist lauded for his expertise on global poverty. Yet still few politicians question the frittering away of vast taxpayer sums on aid, let alone the dubious morality of donor-dictated policies being inflicted on poor nations. Besides, they are terrified of a backlash from self-serving charity chiefs accusing them of selfishness. And this is why a new report ordered by the department for international development (Dfid) is so significant.

For at the heart of the Sachs mission lies the Millennium Village Project (MVP), a giant experiment designed to prove that drenching places in cash can solve entrenched problems and lift people from extreme poverty. This is, of course, just one more example of how a sense of arrogant entitlement allows the aid industry, in tandem with Western donors, to use sub-Saharan Africa as a testbed for its theories. Yet this scheme was set up by the sector’s guru, pledged to prove huge cash injections can transform deprived rural communities, was endorsed by leading aid advocates and backed with £230 million in ten African nations.

This scheme encompasses half a million Africans. Yet far from proving aid works, it has done the precise opposite. And it has failed even on its own terms. Ever since it started in 2005 with villages in Kenya, there has been fierce debate over its bold claims, the inadequacy of comparison sites and independence of evaluations. One study published by Sachs and some colleagues in The Lancet was even found to be making misleading claims after other development experts highlighted a basic error in compiling child mortality comparisons.

So when Dfid decided to back the idea, they agreed in a phone call with Sachs to do so only on the basis that they would carry out a proper, independent evaluation of the project. Although they should not have spent £11 million in northern Ghana on an idea already taking severe flak, this demand for proper review – unlike other donors – was greatly to their credit. Now we have the results, which are scathing – and to my mind, largely demolish the case for development aid.

They concluded the scheme “did not achieve its stated goals of achieving the MDGs [Millennium Development Goals]” on time and “far from breaking the poverty trap, the project does not appear to have reduced poverty or hunger at all”, while it had “fallen short of producing a synergistic effect.” The authors admitted they were surprised “the project did not improve some of the outcomes explicitly targeted by the intervention such as child mortality, immunisation rates, antenatal care, access to drinking water and usage of mobile phones.”

Their report found scarce difference on many indicators between the 35 villages soaked in British cash – to the tune of £2,906 per household – and others in a struggling savannah region where farmers say they earn £160 in a decent year. It found “a few attributable effects”, such as better attendance at new health clinics and schools, higher incomes (“probably temporarily” and strangely without rising consumption) and decline in child stunting – but even these were not cost effective since “what has been achieved could have been attained at substantially lower cost.” Meanwhile 31% of funds went on management and overhead costs.

The results have disturbed even aid supporters, alarmed by resources being diverted to such causes. One, for instance, questioned the ethics of spending so much public money on these kind of flashy, celebrity-endorsed projects when smaller sums going on simpler ideas such as insecticide-treated anti-malarial bed nets would be cheaper and more effective. These could also be run by local groups, rather than dictated by outsiders.

Sachs disputes some conclusions, telling me in emails that five years was “too short a time horizon” for achievement of all targets, dismissing concerns over cost effectiveness and clutching at straws offered in Dfid’s report. “It says that income went up and multidimensional poverty went down. It says that the income was saved, not consumed.” He pointed me to an “independent analysis” offering more favourable conclusions that he co-authored with his wife and others in The Lancet.

Yet the MVP was promoted to donors as “an integrated development initiative providing immediate evidence that, by empowering communities with basic necessities and adequate resources, people in the poorest regions of rural Africa can lift themselves out of extreme poverty in five year’s time.” And in response to a report I wrote from the region in 2012, Sachs responded on the MVP website that “the real test” would come by 2015 when it could be seen if this scheme achieved the Millennium Development Goals set by the UN. Yet this report found “statistically significant impact” on only seven of the 28 targets.

This project shows herd mentality can be a powerful force. It is not the first attempt to impose ‘big push’ aid ideas on small areas; there was even a series of ‘integrated rural development’ schemes tried four decades ago across Africa, including Ghana, with little lasting effect. But politicians love to look compassionate, and it is safer to follow the crowd even if heading in the wrong direction than challenge conventional wisdoms. So the political, charity, corporate and media elites readily closed ranks around flawed policies. And the result is further corrosion of faith in politics as huge sums are squandered on vanity projects abroad, especially when domestic public services are struggling or even being cut and the money achieves so little.

This is far from the first blow for Sachs, now based at Columbia University. The journalist Nina Munk wrote a devastating book called The Idealist after trailing him around and spending time in two Millennium Villages. As Bill Gates wrote, “It’s a valuable– and, at times, heartbreaking – cautionary tale.” The billionaire decided against investing in MVP after hearing the sales pitch, concluding there were valid questions over the speed of proposed gains, progress measurement and impact of funding withdrawal. Both Munk and Michael Clemens, senior fellow at the Center for Global Development, said last week they have been threatened with lawsuits by the project’s lawyers after voicing criticisms.

The ego has crash landed, yet as Sachs offers his own nation a new foreign policy blueprint in his latest book, it is telling that until now there has been so little accountability for the vainglorious MVPs despite being lavished with public money.

Earlier in the month I revisited the Ghana villages and found people grateful for new clinics, schools and street lights. Yet far from seeing sustained development, already there were clear signs of declining services and decaying infrastructure now the cash taps have been turned off. And not one person with whom I spoke said there were was the slightest sign of rising prosperity.

Finally, after 13 years, we have an independent verdict on this landmark project – and it is a crushing indictment of failure. Sadly, I fear this report will be ignored as the sector simply switches to fresh experiments on poor people, dressed up in the usual talk of innovation. And when do you ever ever hear politicians admit they were wrong, especially when they are spectacularly wrong and billions have been blown? Yet these impoverished Ghana villages serve as a damning indictment of simplistic development ideas that swept the west, demonstrating the corrosive impact of groupthink and the insidious influence of an ambitious academic.

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