Every year, the world's richest nations give some $60 billion in aid to developing countries. But nearly a fifth of the world's population still lives in extreme poverty - they have to less than a dollar a day to survive on. Every year, some ten million children will die at five years or younger - and more than a one hundred and thirteen million don't go to school.

So what is happening to the aid money? is aid getting through? Or is it about more than just funding? In The Big Question, Rosemary Hill asks: Does aid work?

Which countries are the biggest donors? The United States aid budget runs to $13.57 billion every year. The donation chart shows that the Japanese aid programme to be the next most generous, with $8.9 billion, followed by France at $7.3 billion, and Germany on $6.7billion.

So is this funding stimulating development and reducing poverty worldwide?

The Big Question examines the case of Uganda and hears from Zowie Abooli, who grows sugar cane, paw paw and pineapple on the land around her small house in northwest Uganda.

With the backing of Budungo Forest Community Development Organisation, she is learning how to grow vanilla - a more profitable crop. "I hope that growing vanilla will help my income, so I can feed my family well and improve my status."

We are building the capacity of this home to generate income for decades."Madira Davidson, who runs the scheme, says about about 80 farmers are taking part. Much of the funding comes from the UK which has a $98 million dollar programme in Uganda. "Donor funding at grass-root level is very important. When there is minimum corruption and maximum participation of beneficiaries, it has an impact at household level where poverty is rampant."

But he worries that some aid money is embezzled or misspent - not reaching the right people.

So how do the funds reach those who need them? In Uganda most aid money is channelled through the government and the Bank of Uganda. The bank's Deputy Governor, Daniel Opiokello, tells The Big Question that there has been a gradual reduction in poverty in Uganda in the past few years. He says aid money has been a catalyst for this, especially when targeted at the private sector, which he calls an "engine for growth", and at those sectors that have the best chance to increase the household incomes of the poor.

But he says a lot still needs to be done. And he warns against over dependence on foreign aid.

So, does aid work?

For Dr Alex Coutinho of The Aids Support Organisation in Kampala it is about more than just cash - even though TASO relies on foreign aid for 95% of its funds. He says political leadership and the involvement of civil society is key. And, he says, to be effective, organisations like TASO, which offers advice for people living with AIDS, need to mobilise communities and they need to show they can be accountable.

That's a point echoed by Hilary Benn, the British Secretary of State for International Development. Increasingly, he says, donors are working "through governments to build their own capacity to do the job on behalf of their own people". But he acknowledges that it is in Sub-Saharan Africa that the UN millennium targets the world has set itself to reduce poverty, boost primary school enrolment and cut infant mortality are seeing the least progress.

So does aid work? "Aid certainly can work and aid certainly has worked in a number of environments,"says Stephen Jones, from Oxford Policy Management. "But aid doesn't necessarily work on its own. There are very few problems in development to which the solution is money."

He points out that in the African aid experience, there are many examples where aid has had a negative effect - propping up unsustainable regimes and policies. But, he believes, the recent new thinking about aid, and in particular about the donor-recipient relationship means that this is much less likely in the future.

This edition of The Big Question was first broadcast on 2nd October 2004

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