Almost three years ago, Haiti was hit by an earthquake that killed an estimated 220,000 people in 35 seconds of unimaginable terror. It was the worst national disaster in the history of the western hemisphere. The world rushed to help, with huge sums donated amid declarations to "build back better" one of the most blighted nations on earth.

But, as the anniversary approaches, it is evident that many good intentions imploded at the expense of the people they were meant to help. Haiti stands as the latest sad example of how self-aggrandising assumptions of the global aid industry can backfire so badly. The humanitarian business should reflect hard on the failures.

Even before the quake, this was a poor country. More charities were thought to operate per capita there than anywhere else, earning Haiti the nickname Republic of NGOs. In the 50 years before 2010 it was given four times as much per head as Europeans received under the postwar Marshall plan, yet incomes collapsed by more than a third – unlike in the Dominican Republic, on the other half of the island.

After the disaster the international response was impressive. People watching horror play out in primetime donated nearly £2bn to charities; governments and official institutions pledged another £6bn. Although huge amounts still sit in bank accounts – the Red Cross alone has £310m, more than twice the total spent on permanent housing – £5.6bn has been disbursed.

Yet not only has the promised long-term reconstruction barely begun, but poverty is increasing, violent crime rising and 358,000 people remain stuck in the squalor of tent camps, lucky to eat one meal a day. Thousands more families were forcibly evicted with nowhere to go, and the cholera was imported – allegedly by the UN – which has killed more than 7,800 Haitians so far.

Little wonder there is anger among local people, who were left so badly placed when hurricane Sandy struck two months ago. From the start of relief efforts in 2010 there was chaos, with hundreds of aid groups from all over the world flooding in. There had to be dozens of co-ordinating meetings each week, invariably held in English rather than French or Creole, underlining the exclusion of Haitians from the rebuilding of their own country.

It is hard to ignore the idea that some charities saw the disaster as a chance to raise money; why else did they all need to be there despite the duplication and slap their logos everywhere? The Lancet accused them of jostling for publicity while Médécins sans Frontièrs – which almost uniquely stopped fundraising after a few days, having made enough for its needs – told me charities loved to be in front of cameras to ensure cash flowed in to their accounts.

This would not be so bad if the money was well spent. Big chunks went on vital and immediate emergency relief to save lives. But substantial sums were blown on botched projects and needless staff costs. I visited one place were families were lured to live in wooden sheds on the promise of jobs and decent public services, only to find themselves marooned on rocky land 10 miles from town, unemployed and charged twice the going rate for water.

The voices of local people were ignored by arrogant outsiders, undermining accountability and sustainable development. As the Centre for Global Development reported this month, only a shameful 0.6% of the money spent by bilateral and multilateral donors was given to Haitian charities and businesses. Meanwhile an estimated 40% went on supporting all the foreigners dispensing aid, with their inflated housing allowances, vehicles and drivers.

When it comes to development aid, the concept of giving cash to people to spend as they see fit is attracting interest. Perhaps it is time to apply similar tactics to disaster relief once the most pressing emergency needs are out of the way. In Haiti, people could have been given more than double the average annual income. It is hard to believe they would not have spent the money better than the foreigners who have achieved depressingly little.

Twitter: @ianbirrell