Is Aid all we Need?

By Papa Yaw and Husein Shahadu

October 19, 2015

Africa defies conventional logic: grinding poverty amidst immense mineral riches. Africa’s economic growth of 5 percent in 2004, though more respectable than in previous years, was less than the 7 percent needed to achieve the United Nations Millennium Development Goals of reducing poverty and child mortality and improving education. At that rate, the United Nations Development Program has warned that the achievement of the millennium development goals may take 150 years.

The Commission on Africa, which was established by British prime minister Tony Blair, seeks to raise $50 billion a year on the international capital markets and use it to reverse Africa’s economic atrophy. Blair made aid to Africa the centerpiece of the British presidency of the G-8 meeting in Gleneagles, Scotland, in July 2005. President George Bush has tripled aid to Africa to $4.3 billion since he took office in 2001. In addition, the Bush administration’s Millennium Challenge Account (MCA) seeks to boost grants to poor African countries. France proposes an international tax on financial transactions or items such as plane tickets. Japan favors a $200 million fund to nurture private-sector companies in Africa to improve the continent’s investment climate and credit rating. The UN is calling on rich countries to increase their foreign aid to 0.7 percent of GDP by 2015. The UN argues that lack of resources is a major impediment to economic growth and that additional funds will be well spent. But will any of those plans help Africa?

Errrmm we doubt it. Hey we are not pessimists (ooseeyyy Africa!!!). It is not us, it is aid and all the wrong baggage it comes with. By baggage we mean aid policies and poor or no auditing of the use of aid. Over $500 billion in aid have been given or loaned out for African development. These forms of aid although not all, have attached to them policies that claim to facilitate growth.Most of these policies encourage democratization of governments and the economy since free markets have been made synonymous to development. A success story that debunks the popular free-market equals development policy was told and situated between 1984 and 1987 in Burkina Faso during the reign of a socialist government. The socialist government was headed by Thomas Sankara, also known as Africa’s Che Guevara or the upright man. The latter nickname probably originated from his renaming of Upper Volta to Burkina Faso, which translates into “land of the upright people” in English. Sankara was a socialist who believed in self sustenance and cautious of aid and aid policies.

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In summary,  He firmly believed that it was possible for the Burkinabè, with hard work and collective social mobilization, to solve their problems: chiefly scarce food and drinking water.His belief turned into reality when cereal production rose by 75% and 2 million children were vaccinated in 2 weeks, defying skepticism of donor agencies. Within his four year reign, Burkina Faso became a self sustained economy producing its own food and cotton for clothe manufacture.  His four year reign was brought to halt when he was assassinated by his successor Blaise Compaore whose democratic government was currently ousted by public protests. During his 27 year tenure as president has received aid from the IMF with disbursements totaling an estimated $222.7 million from 2010 to 2014.According to the IMF archives these disbursements came with reforms that were necessary for the development of Burkina Faso. Yet Burkina Faso is now ranked as one of the world’s least developing countries as compared to the rising example it was thought to be from 1983 to 1987

But then another question is asked, is political ideology is enough? Ujaama, a socialist experiment in Tanzania, that received about $10 million in aid for over 20 years, failed. It failed because the money was used just like in other African countries to line pockets of others.The failure of Ujaama caused a 0.5% annual contraction of the Tanzanian economy.An observation is this, there is no record of Sankara receiving financial aid unlike Tanzania or Blaise Compaore. Which begs the question, does aid encourage corruption? Percy Mistry of the Oxford International Group pointed out that the external stock of capital held by Africans overseas could be as much as $700 billion to $800 billion (Wonder where all that money comes from?).Also the World Bank estimated that “nearly 40 percent of Africa’s aggregate wealth has fled to foreign bank accounts (banks probably reinvest the money into their own economies).

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So again, if we are asked if any of the plans above will work we say no. No because aid can only work in an upright Africa that is free to to create its own policy reforms.Instead of policy reform and structural adjustment teams we suggest financial auditing teams and enforcement(an ICC for corruption perhaps). So yeah, in case aid with all its wrong baggage  thinks it is irreplaceable, and will leave Mama Africa a broken hearted woman then there is no love lost, because we believe Africa can rise on its own. Now that right there is some optimism.

http://www.imf.org/external/country/BFA/index.htm?pn=0

http://new.spectator.co.uk/2014/01/why-aid-fails/

time.com/3551309/burkina-faso-blaise-compaore-west-africa/

http://www.cato.org/publications/economic-development-bulletin/african-perspectives-aid-foreign-assistance-will-not-pull-africa-out-poverty

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3 thoughts on “Is Aid all we Need?”

  1. He who feeds you, controls you and he who controls you, owns you. Mmmmm Africa’s democracy is an extension of colonialism. Neo-colonialism indeed. Over 73% of Liberia`s GNI is made of aid and over 50% of Uganda and Ghana GDP on aid or debts

  2. From your blog, its very true that aid isnt helping the continent as much as it should, but then should we forgo it? I think, the problem is that, the aid being given to us African nations is not being used properly by those in power. If we can really track how every single dime is spent, I think that would be profitable.

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