Some thoughts on foreign aid (to Africa)

 

As always, whatever I write here is my personal opinions and should be taken as such. For this blog, the ideas I share are not news. They are thoughts that have been known for years. I borrow some ideas from Dambisa Moyo, especially from her books, Dead Aid. I also use some research I found when writing a paper about aid for one of the courses I took last semester.

To start with, what is aid. Well, I will not answer that directly. Just to say, there are many forms of aid, from humanitarian to Official Development Aid (ODA). I will only focus on ODA so that is what I will give a definition to. A definition off Wikipedia suffices for this. ODA is financial aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries. ODA can be in form of loans or grants but must always have grants or concessional loans (which are, in simple words, more generous loans than market loans).

From henceforth, I will use aid to mean ODA.

So why the discussion about aid? Well, the discussion about aid is necessary because as good as the idea of aid might sound, history has shown us that aid just doesn’t work, at least not as effective as it could be hoped. To understand why, it is a good idea to know why aid exists in the first place. Aid is based on a simple economic assumption which, unlike some economic assumptions, holds in the real world. The assumption is, investment drives economic growth, for investment to occur, there should be enough savings in the economy (Imagine you want to start a business. You are mostly likely to go to the bank to get a loan. Well, the money you are getting in form of a loan is someone else’s savings). African countries, after coming out of the fight for independence in the 1950s and 60s had small economies and small saving bases. So to bridge the gap between the savings in these countries and the level of savings needed to spur investment to achieve favourble economic growth, the idea of aid was thought of. Brilliant, right? I mean, imagine you want to start a business. You need USD500 worth of capital and you only have USD400 in your savings. If someone gives you USD100, isn’t that wonderful? You can finally start that business of yours! I personally think the initial motivation behind aid was plausible.

In the 1960s, Sub-Saharan Africa was receiving about USD600m of aid each year. In 2017, the amount was a whooping USD49.3B.  Between the 1960s and 2000s, Sub-Saharan Africa received over 1 trillion USD in aid. Folks, that is a lot of money. What do we see though? In the same period (1960s – 2000s), Africa’s economic growth and GDP per capita were lower in the 2000s than in the 1960s. There were more people living below the poverty line in the 2000s than 50 years prior. These are not my statistics, check out Dambisa Moyo’s Dead Aid. You can also just watch her videos on YouTube if you don’t have access to her book.

A natural question to ask is why is something with such a good intention failing so badly? In some cases, aid is not only failing, its creating more problems. This is a well-researched question and scholars find many reasons. Corruption is one of the prominent ones but I won’t go into that. It’s a topic worth its own blog.

Here, I just share one reason I think aid is failing. Before I do, let’s go back to example of you wanting to start a business but are short of USD100. Now imagine with me. Instead of someone offering you USD100 to fill the gap between your savings and your required capital, the fella says they will give you money as long as you need it. Say they will be giving you USD20 every month or every year, doesn’t really matter. Now be honest with yourself, what are you going to do? Will you take those USD20s and save them until you get your required USD100 or will you choose not to start your business after all? Remember, the fella said they will give you USD20 as long as you need it, not until you have USD100. Now, imagine with me once again. What would other people do, given the same circumstances? What would a government do, given similar circumstances? To be fair, some people will save up those USD20s until its USD100. However, we also know that the temptation of not saving up is high so there will be some people who won’t start the business altogether. And that is where, the problem, I think, lies. Africa is getting a free lunch without any agreement on how long this lunch will be provided for. I know, this is a very over simplification of the real matter. Am positive however, there are some truths in it.

Aid takes away the urgency from our leaders and the government to develop their countries using quick yet effective strategies. Leaders no longer have allegiance to the citizens who voted them into power but to those donors, creating aid dependence. The more aid a country gets, the more it would like to get. Don’t you know of any developmental project that has been running for a million years? For some, because they want to get money (aid money), they create problems which they tell the donors about and then the donors send more money and the cycle continues. Why? If and when all the problems are solved, the project will have to stop right? What about people benefiting from the project? You think they will all want the project to stop? A classic example of the race to the bottom maybe?

What bothers me even more about aid is that it castigates the role that pop artists play in raising aid for Africa, creating the so called White saviors. [Just for fun (and educational purposes): There is this cool twitter account called No white saviors. Check out their profile here]. It’s funny how a random rapper can become an ‘expert on Africa’ and be consulted on how best to respond to Africa needs all because they have some dollars and followers on Instagram. Am not arguing against famous people raising awareness about important causes. But we all know this, it is much harder for an educated African scholar to be asked for advice about Africa’s needs than it is for a white rapper to be asked the same. If you are African, try saying you are an expert on any Western country, in the midst of white people and see the stares you will get. On the other hand, it is acceptable for a high school white kid to be an expert on an African country just because, well figure that one for yourself. You can see more evidence of this on the twitter profile I mention above.

Folks, fellow Africans, we will be doing ourselves and future generation a disservice to think some white guy somewhere in the West has the best interest for us than we do ourselves. To think that these countries give us aid just because they are nice people and they want us to develop is absurd! Aid might be labelled as no strings attached, but I can assure you, somehow somewhere, it still serves the interests of the donating country. It is perhaps the reason they are still giving aid despite all the evidence that it not the effective way to bring development to Africa.

A bit of clarification is required here. I am not all together against aid. Aid has saved thousands if not millions from diseases including HIV and AIDS. Aid has built roads and schools. It has transformed people’s lives and so on. My point is, it is taking away the task that should be accomplished by governments in these developing countries and placing it in the hands of the donor. Also, despite all these positives aid has achieved, evidence shows, in some areas it has done more harm than good. It has increased corruption, created inflation, slowed down economies and many more. Further, some arguments might not hold for other types of aid, say humanitarian aid. A separate analysis would have to be made for that.

What is the way forward then? Well in my opinion, I think we should do away with aid. Not instantaneously though. That would create unimaginable damage. I suggest this. Donors and recipients of aid should agree on when aid should be stopped on a case (country) by case (country) basis. Of course it’s my opinion, and you are free to disagree. If you disagree, I just want to ask you this:

  1. Why would you want a country to receive aid indefinitely?
  2. Why should a country give aid indefinitely?

To give is a noble thing. We all feel nice when we give a dollar to someone in need or to a cause. Nonetheless, it’s more important to train people how to fish than to merely give them fish all the time. As it appears, sometimes, the best way to teach someone to fish is to tell them you will give them fish until a certain day.

It can still be argued though, why can’t the donating countries give aid with conditions. Using the business example again, why can’t the fella be like, I will give you USD20 every month/year, if you save the previous USD20 I gave you together with the money you want to start the business with. There are so many reasons why this is problematic not the least being it undermines the sovereignty of a country. With this agenda, a country somewhere else seems to know best how a country in Africa ought to develop and which industries to invest in. That might still seem fine for some. But well, we’ve tried it already. In the 1980s, the IMF and the World Bank implemented what are called the Structural Adjustment Programs (SAPs). Essentially, they told countries that, if you want to get money from us, make some adjustment to your economy. Adjustments would be something like privatization of national assets, reducing the size of the government, reducing government expenditure on certain sectors of the economy etc. Needless to say, this got a lot of criticism from African countries as well as some economists from western countries.

In conclusion, this is not a call for Africa to detach itself from the rest of the world. Contraire. It is a call for Africa and the world to be equal patterns. The West won’t save Africa but they can be our patterns in developing African states. Africans and African leaders need to take ownership of their countries and carve their own developmental path. Ending with some powerful words from the Rwandan president, Paul Kagame who is quoted to have said “A country that depends on aid has not yet experienced a genocide.”

Folks, there is no free lunch. We all know that.

NB: As already mentioned at the beginning, this is just my opinion. I encourage everyone to do their own research and formulate their own opinions. Am very interested in this topic and willing to hear more about what others think. Let’s go for tea if possible and share thoughts. If not possible, let chat online. Thanks for reading.

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