On May 11, 2009, Posted by , In News, By , With No Comments

Between 1970 and 2002, African countries received close to $300 billion in development aid, but the continent continues to lag behind the rest of the world in terms of economic growth. This situation has continually stumped development economists who believe that by international financial institutions and Western countries throwing money into Africa, the continent’s problems would disappear. Indeed, there is t alk of doubling this aid by 2015.

But in his timely book, The trouble with aid: Why less means more for Africa, John Glennie says it is time to re-think the issue of aid. Aid, or official development assistance, is not a bad thing in itself. There are countries such as India and Malaysia that have made the most of aid.

But when aid leads to African governments being over-dependent on external assistance, and when donors such as the World Bank continue to dictate policies to African governments, then there is indeed a need to think again. There is also the issue of corruption, which has led to a massive flight of Africa’s financial resources to banks in countries from where the assistance comes.

And this is an issue that Glennie finds troubling. He argues that Africa right now is like a ‘leaky bucket’ ‘ whereby billions of dollars, far more than aid and investment in Africa, leave the continent without the money being tracked down. ‘It is astonishing but true that the World Bank and IMF, which have data for everything, do not have figures, not even official estimates, for what is Africa’s gravest financial problem,’ he writes. ‘While the attention of the world’s governments and campaigners remains on aid, this scandalous haemorrhaging of African cash stays off the radar screen.’
T his is the crux of the matter. African countries have enough natural resources to make the continent a better place. Countries such as Brazil and China that do not have a huge amount of natural resources have weaned themselves of aid through strengthening domestic savings and protecting their domestic markets. The argument that African countries are too small to generate such domestic wealth as China could be rebutted with the counter-argument that the continent’s various regional economic groupings are meant to provide the huge domestic markets needed for economic growth.

The administration of aid itself is another problem. These days, donors channel their assistance to African countries through non-governmental organisations that mean well but fail to understand the complexity of the problems they are dealing with.

In a study of aid effectiveness in Africa in 2007, the Harare-based African Forum and Network on Debt and Development (AFRODAD), clearly spelt out why aid has not guaranteed rapid growth in Africa and why it has not contributed significantly to the reduction of poverty or the creation of conditions for sustainable development. AFRODAD notes: ‘Lack of capacity in the distribution of aid, the absence of indicators to evaluate its effectiveness, the absence of transparency in public financial management, the non-alignment of aid and national priorities, and the divergences amongst=2 0donors regarding reporting requirements and the like, necessitated a unified system of aid delivery and management.’ That turned out to be the Paris Declaration on Aid Effectiveness, which resolved to reform the way aid is delivered and managed.

Dependency on aid is also a major factor for the failure of development assistance to Africa. As Glennie points out, when aid started flowing into Africa in the early 1960s, it accounted for 2.3 per cent of African GDP, the same, he notes, for South Asia, which was then a big recipient of aid.
But since then things have changed. While aid to Asia now accounts for one per cent of GDP, assistance to Africa has skyrocketed to around nine per cent. And in the process, many African countries are now dependent on long-term aid rather than short-term assistance to get them out of trouble, which was the essence of aid in the first place.

‘Never has any group of countries been so dependent on aid for their basic functioning, let alone for development and poverty reduction, for so long,’ writes Glennie. ‘There is a big difference between receiving aid as a welcome support and needing it as a fundamental part of the national budget.

‘Dependency on foreign governments for financial assistance has undermined efforts to develop Africa and will continue to do so despite the modern (laudable) empha sis on ‘good governance’ and ‘country ownership’. But while Africa’s dependence on aid is frequently commented on, it has had virtually no impact on donor policy.’

Glennie supports the notion of Africa trading its way out of dependency on aid, but notes that donor countries still put up protectionist barriers and dish out subsidies to their farmers that hamper African exports. He also notes that countries where ill-gotten gains from Africa end up, turn a blind eye to this looted money. ‘Rich countries cannot claim to be pro-development while simultaneously failing to act to stem the illegal leaks from Africa which are going through tax havens under their control,’ writes Glennie.

But in all this, there is indeed a shining example of an African country that has actually reduced dependency on aid and is using its domestic resources for development: Botswana. In the 1960s and 1970s, it received aid averaging 17 per cent of GDP. But with proper management of its diamond wealth political stability, Botswana has weaned itself of aid.

So, it is clear that African countries can use their natural resources to reduce their dependency on aid. But is there the political will on the part of donors and African leaders to end their obscene relationship? What it is really all about is that Western governments are using aid to salve their consciences by pumping more and more money into Africa while African leaders view the huge amounts of official development assistance their countries receive as a job well done on their part – when, in fact they should be using the resources of their countries to improve the living standards of their people rather than leaving it to outsiders.

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