Can Foreign Aid to Africa Ever Work?
Sentiment today on Foreign aid to Africa is widely divided, between the Jeffery Sachs who argue that foreign aid should be increased in order to end poverty and on the other hand we have the William Easterly's who argue that aid is not a cure to poverty but instead a cause of poverty. This essay will explore the repercussion of foreign aid to Africa in order to understand whether it can ever work. This essay will argue that, Western altruism or not, aid in essence is logical and helpful, although, what we have today is hybrid of many evils which has resulted in the need to change the way aid is currently administered in order to strive for an eventual 'zero aid receiving Africa'. Therefore, we can only see when aid has been successful, after aid is no more.
This essay will begin by outlining the different forms of aid. It will then go on to briefly highlight the history of aid. This essay will then discuss how the current system of aid in pouring more money each year into Africa is not working. This essay will then argue that one of the main repercussions of foreign aid to Africa today is African dependency on aid. Therefore, in order for aid to ever work African states need to become less dependent, otherwise they will never be able to completely cut off aid and reach the optimum zero aid level. This essay will then go on to discuss the issue of accountability; arguing that the current system makes African countries less accountable for their actions and policies, as a result, essentially passing the burden of providing basic amenities and needs of their citizens to donor countries and agencies. This essay then goes on to argue grandiose plans such as the Millennium Development Goals will not work, because no one is held individually responsible but instead it creates a collective accountability. This essay will then use William Easterly's 'CIAO' model as a recommendation for repairing the current aid system. This essay will then criticise the political conditionality's and structural adjustments placed on governments receiving aid; although, it will urge donor nations to implement Colliers governance conditionality's. However, this idea will bring up the issue of state sovereignty which this essay will then tackle. Finally this essay will examine the corruption issue.
Humanitarian/Emergency aid, Charity aid and Development aid are the three main types of aid. Humanitarian aid is aid administered in response to disasters such as earthquakes. The reason why I have not included this aid in the general analysis of my essay is because I feel that this aid is necessary; as from time to time nations especially poorer ones can suffer from natural disasters, therefore, it is acceptable for nations to ask for help to ensure that they save as many lives as they can. However, even this aid is not used to the fullest potential, for that reason I argue that the methods used to distribute foreign aid to African states needs to be drastically improved upon. Charity aid is aid which is provided by organisations such as Oxfam and the Red Cross, which aim to deliver specific public goods such as a water pumps for remote villages. This essay argues that this is the aid which is needed to be used in order to eventually reach that zero aid in Africa. This essay will argue that Development aid is what needs to be reduced and eventually discarded, although, emergency and charity aid can work but only if they are reformed. Nevertheless, it is not feasible to write extensively on all three types of aid, therefore, this essay will focus on Development Aid. This aid is mainly bilateral or multilateral aid given by governments or other agencies such as the World Bank in order to support states economic, political and social development.
Foreign aid started flowing into Africa as a result of the successes of the Marshall Plan and the birth of the Bretton Woods institutions post World War Two. Under the Marshall Plan the USA successfully brought Western Europe back from the ruins it had become after the Second World War through administering the transfer of aid to European states for reconstruction. After these successes The West then came to the conclusion that if Europe could be helped through aid, then why not Africa. Therefore the World Bank and the IMF were freed up from post-war European reconstruction and instead geared towards the development of Africa through aid. However, this aid was soon to become a tool controlled by the two remaining hegemonic powers, the USA and the Soviet Union throughout the Cold War.
'The Cold War was used as a justification for providing aid to developing countries to stem the spread of capitalism. Similarly, aid from socialist governments was motivated by a desire to promote socialist political and economic systems.' (Tarp, 2002:2)
Even from its roots aid had been a political tool by donor nations to try and further there lots and instead cover it up through the notion that aid is simply a Western altruism or for the good of the citizens of Africa. Although, 'The fall of Communism and the end of the Cold War eroded support for aid given on ideological grounds' (2002:3), however, aid is still given when the donor nations national interests are at stake for example the US and Ethiopea. The USA sees Ethiopia as a very important ally in East Africa; therefore it gives it huge amounts of aid, because it feels that Ethiopia can be used to stem hardliner Islamists in Somalia and help install a functioning government in order to protect US national interests in the region. This methodology of giving aid in order to promote your values in that country is not feasible as this can lead to aid receiving nations to believe that they will always be in receipt of this aid as long as they promote those values and ethos's which the donor nation wants, forgetting about other things such as developing and investing in their countries. Therefore, in order for development aid to ever be successful in promoting good governance and growth whilst reducing poverty, donor nations need to give aid not for their national interest but for the good of the aid receiving countries national interests.
Many years and many Billions of Dollars later Aid is still being increased year on year without much success or reform of the dismal system which sees enormous amounts of money entering what some would call a bottomless pit. According to William Easterly, 'The West has spent $450 billion on foreign aid to Africa over the past four decades' (Times Accessed 30th December) and still has not managed to 'make poverty history'. Since the onset of foreign aid to Africa there have been many proponents for its increase as a solution to Africa's many problems. Many Westerners have assumed and still assume that the reason why Africa is the poorest continent on the planet with much of its population living on less than $1 a day (DFID Accessed 30th December) is because 'we are not doing enough'. Time after time governments come to this conclusion, be it from the influence of its citizens or their own beliefs, that they could and should do more to help. Take for example, the 2005 Live 8 concerts which saw Bob Geldof assemble major bands and artists around the world to lobby the governments of the 8 richest nations in the world during the G8 summit in Gleneagles in 2005 to 'make poverty history' by cancelling poor countries debts and increasing foreign aid to them. Geldof's enthusiasm and charisma managed to get thousands upon thousands of people, including me onboard in support of the cause by going to the concerts, demonstrating, signing petitions or simply buying wristbands which encompassed something along the lines of 'make poverty history'. This grass root activism and people power lead to the G8 leaders being forced to cancel the debt of the poorest 18 nations in Africa and to increase aid to developing courtiers by $50 billion (BBC Accessed 30th December). For years the solution to poverty had been perceived as being pumping more money into the poorest states in the form of aid. Aid has been increased in many African countries year on year without a thought on its effects. Paul Collier argues that aid is subject to 'diminishing returns' which, means that if you keep on increasing aid you get less and less for every $1 million you put in. Collier goes on to state that 'the Centre for Global Development, a Washington think tank, came up with an estimate of diminishing returns implying that when aid reaches about 16 percent of GDP it more or less ceases to be effective. Africa wasn't far off that level even before Gleneagles... we have broadly reached the limits to aid absorption' (2008: 100).
Therefore increasing aid constantly is not the way forward in alleviating states out of poverty, but instead it is a means of squandering needed resources. The repercussion or outcome of aid today seems to be it becoming extremely ineffective as donor nations are pouring money down a bottomless pit. Consequently, rich nations need to reduce aid to the 16% mark initially so that we can see improvements and actual successes and then gradually start reducing the aid even more until it is at the zero aid mark in which case those states in question would be functioning independently and effectively. This is highlighting the need for aid to be reformed as it shows that aid can work so long as it is implemented in the correct ways.
The yearly increase in aid flows to Africa has resulted in African aid dependency. Africa has an addiction. Like most addictions it is not in Africa or anyone else's best interests to call for an immediate stop to aid, however, there needs to be a gradual reduction in the amount of aid being poured into Africa in order to reach the optimal target of Zero aid. In order to do this the West needs to stop providing Africa with its 'fix' of aid but instead promote better governance divert more money into local aid projects which Africans themselves want and need instead of giving it directly to the governments whom will most likely squander most of the money due to their corrupt nature. Rwanda had drastically managed to decrease its 100% aid dependency after the atrocious genocide in 1994 and Paul Kagame is urging African countries to reduce this dependency on aid.
'Unfortunately, it seems that many still believe they can solve the problems of the poor with sentimentality and promises of massive infusions of aid, which often do not materialise. We who live in, and lead, the world's poorest nations are convinced that the leaders of the rich world and multilateral institutions have a heart for the poor. But they also need to have a mind for the poor.' (Paul Kagame Accessed 6th January 2010)
Kagame's quote above is an extract from the Financial Times in which he argues that the West's method of trying to fix Africa's problems with more aid is unsustainable and ineffective, therefore they should reform this and move to a discussion based on 'when to end aid and how best to end it' and not how much it should be increased by (Paul Kagame Accessed 6th January 2010). This article by Kagame is very interesting due to its acceptance that African countries are dependent on aid not only because of the west but also because of their belief that the west owes Africa a debt which they are now repaying through aid. This he argues is the mentality which is causing African states to not think of new ways to lift their respective countries out of debt and poverty but instead relying on their fix from the west which keeps on coming. This then leads to African countries refusing to get out of their comfort zones in order to help themselves as they know that they will always be bailed out by the West. This aid dependency has pushed most of Africa in a downward spiral of economic self destruction. The aid, economic development ratio in Africa is extremely bad and yet the West still pumps more money into Africa; this is destined to make matters worse. Dambisa Moyo a Former World bank employee and eminent economist states that 'Over the past thirty years, the most aid-dependent countries have exhibited growth rates averaging minus 0.2 per cent per annum.' She goes on to state that 'between 1970 and 1998, when aid flows to Africa were at their peak, poverty in Africa rose from 11 per cent to a staggering 66 per cent.' (2009:46-47). Surely this suggests that there is something truly wrong with the way Aid works today if it seems to be doing more harm than good. However, aid can work as long as it is administered properly and is treated as a means to an end and not an end in itself; with a major step being to reassure African states that aid will not always be forthcoming and that now is the time in which they have to change.
A major problem with aid today is that it takes the accountability burden off of the African government's shoulders. In Western countries state governments are accountable for providing all basic services and needs of the electorate and if they fail to provide this then the electorate will simply vote them out. However, in African countries which receive aid, they are not the ones accountable for providing the needs of their citizens because aid is being used to provide most things from roads to education and healthcare, therefore, if the citizens are not getting those basic amenities then the government can just blame it on aid donors lack of generosity or inefficiency. Therefore, what is needed is for African governments to be more accountable for the money they receive in order to ensure that the aid is reaching the right people in the right places. There needs to be a much harder line on African countries in order to ensure that this accountability is achieved both externally and internally by its own people. When African governments become accountable within their own countries then and then only will we see them providing the services expected of them and standing up and taking the blame when something goes wrong.
If foreign aid to Africa was to completely stop today the consequences would be dire, as aid helps African countries balance their budgets, stimulate growth and help provide for their citizens through financing NGO's (Non-Governmental Organisations) and other organisations. Some very optimistic but admirable targets set for impoverished countries are the Millennium Development Goals (MDG's) which consist of 8 goals such as eradicating extreme poverty, reducing child mortality rates and fighting disease epidemics such as AIDS, which aim to be achieved by 2015. Aiming to achieve these goals is what Africa needs, however, the UN has not set about achieving these goals in the right way, as they relied too much on the West saving Africa and forgot about the huge role Africa needs to play itself in order to meet any of these goals. It is all well and good to say that in 15 year time we will eradicate poverty by halving the amount of people living on less the $1 a day (UN Accessed 16th January 2010), although, this will not be feasible and sometimes may even be a setback if it is carried out in the wrong way such as happened in past aid efforts to help the poor. William Easterly presents this very well when he argues,
'Yet helping the poor today requires learning from past efforts. Unfortunately, the West already has a bad track record of previous beautiful goals. A UN summit in 1990, for example, set a goal for the year 2000 universal primary-school enrolment. (That is now planned for 2015). A previous summit, in 1997, set 1990 as the deadline for realizing the goal of universal access to water and sanitation. (...that target is now 2015.) Nobody was held accountable for these goals.' (2006:9)
Easterly's argument is very simple but very effective in that he is asking why are the MDG's going to succeed when so many others have failed before it. Why are the MDG's geared towards success? According to Jeffrey Sachs a former Special Advisor to former UN Secretary-General Kofi Annan, the 'world' felt that due to all the advances in society, the economic boom and the 'power of modern technologies' would ensure that the world 'followed through' (2005:213). One could understand were all the optimism had come from due to the good state of society at the turn of the century, however, the role of history had not been taken into consideration, there was need to implement a new method of trying to fulfil these goals instead of just throwing aid at the problem. If we fast-forward 10 years to today what we have are the majority of African countries no were near fulfilling the majority of these goals, with the '...strong performers mostly in the North Africa region' (UN, 2008: 106). The downfall of the MDG's is that they create a collective responsibility for meeting these goals; no one is individually responsible for any one of these goals, so if the results are not achieved there will be no accountability. One good way in which aid can be reformed to succeed and eventually lead to Africa's aid dependence being reversed and aid becoming obsolete in Africa is by adopting William Easterly's 'CIAO' model.
Foreign aid to Africa is not working. However, I believe that it can be improved and reshaped in order to make it work. One method proposed which I believe can lead to aid to Africa being effective and essentially working is William Easterly's 'CIAO'. This model proposed by Easterly should be used to amend charity aid so that it can help alleviate some of the African people's troubles so that development aid is gradually reduced and eventually needed no more. Easterly argues that the drawback of creating 'grandiose' plans such as the MDG's is that all aid agencies and recipients are collectively responsible resulting in no one directly responsible for effectively implementing or if need be altering the system in order to improve on previous results. Easterly's argues that 'CIAO' is needed because 'The reason the aid plans go so wrong is because they lack the "C," which is customer feedback; they lack the "I," which is incentives; they lack the "A," which is accountability; and as a result, they lack the "O," which is the good outcome that would come from any intelligent effort to end world poverty.' (Easterly, 2006: 2)
The problem with many aid agencies today is that they concentrate too much on trying to develop societies rather than aiming for piecemeal improvements and helping African governments to do the rest. Easterly uses the MDG's as an example to show that CIAO is needed in order for aid initiatives to work. If Aid is reformed to be given in a way which is effective then more and more African countries will be able to leave aid behind and truly become independent. Although, there are many problems with the rise of charity aid, especially NGO's in Africa.
Foreign aid has been linked with political conditionality's by donor nations since its birth. These are usually conditions placed on recipient nations of aid to implement political reforms which consist of improving their respect for political and civil rights and a promise of democratisation. These were also usually aligned with structural adjustments which were adjustments to be made on the state's economy (for example, committing to free trade) if they wanted more aid. These conditionality's bring many problems with them such as making African markets vulnerable by liberalising them to early or implementing a form of democracy which does not fit the country in question. They also add to the accountability issue. This is because if 'governments were being ordered around by donor agencies, whom should an electorate blame if things went wrong?' African states have already managed to exploit this, take for example Zimbabwe whom introduced reforms and then quickly associated it with the IMF which ultimately shifts the responsibility away from the government and allows states to go back on these reforms the same way Zimbabwe did in 1998 (Collier, 2008: 109). Collier argues that this type of conditionality does not and will not ever work; therefore, you have to change it to a governance conditionality system. This type of conditionality does not aim to 'shift power from governments to donors but to shift power from governments to their own citizens.' (2008: 110) This he argues would ensue that governments are held accountable for all the aid money as this type of conditionality would allow citizens of those aid receiving countries to see how the money is spent. This coupled with some force in the form of bypassing states until they agree to improve good governance and reduce corruption.
A US agency called Millennium Challenge Corporation argues that aid is most effective when it works with 'good governance, economic freedom, and investments in their citizens.' (Millennium Challenge Corporation, Accessed 1st February). This essay does not aim to give a solution to the question of how to eliminate poverty in Africa and promote growth, however, it is arguing that the current system does not work and surely it is time that we took a new approach to make it work starting by promoting good governance. African's themselves have started to promote good governance as they believe this to be the key to reducing poverty and increasing growth in Africa, with one of the most influential but still very young initiatives being the Mo Ibrahim foundation. This foundation promotes good leadership and good governance by essentially ranking the African nations in terms of governance and then awarding a prize to the best head of state as long as they had stepped down after he/she's term was over or had lost an election. The reason that the foundation promotes good governance is because 'Good governance ensures that all of a country's resources are harnessed effectively and fairly to translate into improved quality of life for its people. Every arena, from healthcare to environmental stewardship, from education to human and political rights, is affected by the quality and nature of governance. While there have been improvements in many African countries recently, weaknesses in governance and leadership capacity are central to the issues currently facing the continent. (Mo Ibrahim Foundation, Accessed 1st February 1)
The Mo Ibrahim foundation places governance at the top of its list of improvements as they argue that without good governance a state cannot grow as it would do otherwise. Bad governance therefore, is a one repercussion of foreign aid to Africa. So if good governance is needed to experience marked improvements, letting states with bad track records on governance handle aid money is too much of a temptation and hindrance on them. And when states go on the right path they need to be 'urged to 'take ownership' of aid activities, to establish their own national systems for managing and coordinating donors, and only to accept aid that comes on their terms and accords with their policies'(Whitfield, 2009:2). This Country Ownership method will go hand in hand when states governance is improved in order to tackle the prospect of re-entering a phase of chaos and conditionality. Take corruption for example, it is as a result of bad governance and if bad governance is promoted by aid then it is only logical to go to the root of the probably (this time aid) and then cut it out.
A major problem with implementing new methods of administering aid to Africa is that it would be necessary to bypass certain nation states sovereignty by working directly with NGO's and individuals within the country. This would be necessary in order to ensure that aid is not squandered by central governments or taken as bribes by civil servants and those states which do not wish to change this trend and work towards a more effective aid initiative with little if any miss management of aid will be refused any further aid payments. This is not justifying economic conditionality enforced by the current big players in aid. But instead this would only mean that states would be forced to enforce and work towards good governance, as governance is a very important precondition for aid to work. Reform would be needed in many of these states in order to ensure that the Aid money can be used properly, however, if aid is still provided directly to the government whilst reform is under way then this would be very counterproductive as Paul Collier argues 'sudden extra money, whether from export booms or aid, detracts from the hard choices involved in reform' (2008: 116). Therefore, with the importance of good governance and accountability it would be necessary to cut of direct development aid to governments whilst those states in question are implementing the reforms necessary for their states to function properly and effectively.
Corruption in Africa has become an everday occurance which has almost become accepted as a means of business and life. It would be absurd to say that corruption is solely as a result of aid, however, it is widely argued that foreign aid to Africa has lead to an increase in corruption and corrupt leaders. Therefore, Africa cannot achieve its aim of 'long term sustainable economic growth, and the aleviation of poverty' (Moyo, 2009: 50). The Billions of Dollars of aid being funnelled into africa has not lead to a substantial increase in national economies or poverty reduction in the scale which it should have. Therefore it is safe to argue that another repercussion of aid is coruption. If aid is continuly pumped into countries with high levels of corruption then they will become more and more dependent on aid leading to a higher chance of coruption and resource miss management. The reason for this is fewer entrepeneurs will be willing to invest their private money on business ventures in countries with high levels of corruption and resource missmanagement; as a result of faling levels of interest growth will stagnate leeding to the need of more aid. Transparency International's Coruption Perceptions Index ranks countries from 0 to 10, with the most corrupt to the least corrupt. Using this Index 'Graf Lambsdorff found that a one-point improvemet in a countrie's corruption score was correlated wit an increas in prodcutivity of 4 per cent of GDP. This implies that were Tanzania to imrpove its courrption score to the level of the UK, its GDP could be more than 20 per cent higher' (Moyo, 2009:51).
This estimate from Transparency International highlights the importance of ensuring that aid is used in a manner which does not lead to corruption as corruption will counter all the benefits and aims of aid such as aiming for sustainable economic gowth.
It is easy to condem aid to be the cause of all evils in Africa, however, that is not true and in some instances it does help alliviate Africa from some of its problems. Take bad governance and corrupion for example. States with high levels of corruption and bad governence should have aid witheld from them, but donor states can still use aid to pay for civil servants from these states to be trained en masse in order to combat corruption and turnaround the trend of bad governance in Africa. Aid has been very successful in certain instances were it has beeen used to directly assist African's who needed assistance with new inovative business ideas or simply helping to alleviate peole from poverty through assistance by building wells or road links to city's or paying for doctors to visit remote villages. Although, aid cannot be thought of as a cure for everything as aid itself is not always successful and sometimes it is even thought to make problems a lot worst. Take for example food aid. 'Under the system Washington buys tens of millions of dollars of surplus corn and other products from agribusiness. The food, which can only be exported on US flagged ships, is then sold by charities to raise money to pay for emergencies.' (Independent, Accessed 06 February). This then ruins the local African agricultural industry and makes it very hard for them to produce food for next year, leading to them becoming even more dependent. In conclusion, aid can be very counterproductive if not used in the correct ways and the best way to measure its success is to see how many countries have stopped receiving aid and managed to function independently of foreign aid and foreign intervention.
This essay begun by outlining the different forms of aid. It then went on to briefly highlight the history of aid. Thirdly this essay discussed how the current system of aid to Africa is not working. African dependency on aid was then concluded to be a repercussion of foreign aid. This essay then discussed the issue of accountability; arguing that African states should be made more accountable for their governance and this cannot be done with the current way aid is distributed. The Millennium Development Goals were then used as an example to highlight how grandiose plans do not work as they rely on collective accountability rather than individual accountability. William Easterly's 'CIAO' model was then used to argue for a new and improved system of administering aid. This essay then criticised the political conditionality's and structural adjustments placed on governments receiving aid. The issue of state sovereignty was then tackled by this essay. Finally this essay examined the issue of corruption.
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