Interview on Western aid for Africa

[Ser Clegane]

In the context of the G8 summit and the Live8 concerts, the German news magazine "Der Spiegel" published an interview with the Kenyan economics expert James Shikwati.
"For God's sake, please stop the aid"
Shikwati strongly opposes the way Western countries are currently trying to help African countries.

Some snippets

Development aid is one of the reasons for Africa's problems. If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

... and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN's World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle.

Pretty strong stuff, and I'm not quite sure what to make of it - while he certainly makes some valid points, I'm somewhat missing real solutions from his side (apart from throwing some phrases around, like "Africa should stand on its own two feet.")

What is the Backroom's view on this issue? Should Western aid be stopped? Should the system be changed? What is the best way to really help Africa?

This interview accompanies a longer article on the same issue:
Choking on Aid Money in Africa

[Franconicus]

These problems are not new and there are proposals to change this. Help is coupled to a fight against corruption and a change to democracy. Money is given for special programs which are planned and controlled together. Focus is to build up infrastructure to increase trade and help Africa to satnd on its own feet.

[econ21]

It's easy to say "stop the aid", but I don't think people always appreciate how dependent many African states are on aid. I have a quote from the World Bank (1994) here:

Between 1987-1991, net official development assistance and external transfers to low income, debt-distressed countries in Africa represented 15.4% of the countries real GDP and 75% of real imports.

It's rather dates, but unfortunately I don't think that much as changed. If aid pays for around 3/4 of poor African countries imports, I rather doubt the wisdom of stopping it. Aid is similarly important if we look at particular sectors. For example, in Uganda, I think donor money pays for more than half of all government primary health care spending.

Personally, I suspect aid is not a cure for Africa's economc problems - it's more like a palliative - sort of like an intravenous drip. It would be a reckless doctor who ripped it out before the patient has recovered.

[lars573]

This is why I'm against most aid that goes to Africa. In the long run it dosen't do much to help.

[Sjakihata]

Instead of sending aid as we do it now, we (the western world) should free Africa for the money it is owing us, release the debt.

Then a more focused aid program should be run, preferably by an NGO such as amnesty or any other for that matter, that is less corrupt.

I think that would significantly help africa, and of course EU should allow import of african sugar, so they can sell some products.

[Don Corleone]

I've heard several African economists say much the same. Yet, whenever somebody like the US says they want to be allowed to monitor the aid payments to make certain it's getting to the target audience, we get called a bunch of racists. You can't win. At the end of the day, you cannot control what the African governments do with it. You can only tell yourself that you did what you could.

[Marshal Murat]

http://service.spiegel.de/cache/inte...363663,00.html
I heard about this earlier.
(May be in German!)
According to a economic anaylst
"Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor."
I tend to agree.
After being stripped for all its worth, Africa has wallowed in civil war and tyrany. Almost the entire continent is of beggars, looking for food and clothing from the UN. Not like we shouldn't help the nation, but throwing money seems to increase the problem.

[Beirut]

Moved to Backroom.

[King of Atlantis]

The countries that have collected the most development aid are also the ones that are in the worst shape.

maybe thats why the have been getting the most aid


The problem with africia is civil war, aids, and extreme poverty.

[Xiahou]

I agree- I dont think throwing more money at the problem is the answer. It only allows us to feel better about ourselves while changing nothing.

As the G-8 summit approaches and the leaders of the developed world contemplate huge increases in aid to Africa, we must ask ourselves what has become of the billions of dollars already poured into the continent. Africa remains wracked by poverty and disease while other former colonial outposts like East Asia are booming. At the root of Africa's problems are ruling political elites that have squandered the continent's wealth and choked its productivity over the last 40 years.

The list of abuses is long and impressive. African political elites have systematically exploited their positions in order to line their own pockets. They have given favors and won influence through the funding of huge loss-making industrialization projects. They have exploited the natural resources of their countries and then transferred profits, taxes, and aid funds into their own foreign bank accounts at the same time that they ran up enormous debts to finance their governments' operations.

Read the whole article here.

[Productivity]

I'm not sure if it's too much money per se, more that it's too much money, thrown with little guidance.

[Marshal Murat]

Well, to me it seems the African governments are taking advantage of the system (duh).
Whenever there is a crisis in Africa, like in the article, a drought, then the local leaders beg and plea for aid to line their pockets.
If it was up to me, I would launch a communist state (god I hate saying that) and then begin to establish democracy.
Or
Some nations could come in, kill any opposition, then foster new technologies, and otherwise.

[Lemur]

Read the whole article here.

That's a very well-thought-out article. I don't usually find myself agreeing with the Cato Institute -- too political for this lemur. But that's a fine piece. I was also reading something about how inefficiently the aid is applied, how much disconnect there is between the U.N. idjits in my home city and the places where the money gets sent (or doesn't). Basically, it was an indictment of the whole top-down management strategy.

Bottom-up is always better. And if the aid groups are as mismanaged and misguided as the people who once worked for them say they are, the answer's going to have to come from the private sector. (Well, ultimately that's where the answer was always going to be in the long run.)

I wonder if we developed nations could help them with security, though. Um, probably not, given the level of corruption. But as Iraq demonstrates, a lack of security severely retards efforts at reconstruction.

Hmm. Is there any constructive role the West can play?

[PanzerJaeger]

Less money, more tangible goods?

Of course with that you have to escort the food, medicine, or whatever and make sure it doesn't get taken by warlords..

Maybe we should just leave them alone completely..

[King of Atlantis]

We should just help the countries that are trying to help themselves out.

[Productivity]

We should just help the countries that are trying to help themselves out.

I think that's probably the best idea. Keep plenty of aid going, but make it conditional on the fact that you have to be doing your best. So struggling nations having a go at democracy get the aid.

[Ser Clegane]

Threads merged (same topic, same link )

[L'Impresario]

Well if you wish to know why such amounts of money aren't used efficiently(and the majority isn't for free, they are just nice loans with usually only a 25-30% donation part, they include managment costs, aid to immigrants during their first year away from home as well as scholarships to students who study in the donating country, many of them not going to ever return to their land) then the main problems are these:
1. corruption.
2. countries not in need of aid do claim portions of it that's much needed elsewhere (the USA offers a considerable amount of aid to Israel, Russia and Egypt, while the EU offers more money to Poland than to Asia and Southern America combined).
3. aid that boosts exports and some of the donating countries' companies (with studies showing that blocking competition leads in a 25% extra-cost , with cases like in Mozambique where drugs were bought 50% higher than in market prices).
4. a large aid portion ,designated as technical aid (25% in 1999) is dependant on an incredibly large number of advisors from the donating coutnries. The costs and salaries of these people consume about 70% of the "technical aid" budget.
5. lack of coordination. Duplication of the same researches and projects is experienced many times, with money and time being thrown out of the window, granted tho that coordination between so many different "players" is difficult.

And this is only one side of the issue. Nevertheless, millions of people have benefited from ODA, but a lot potiental has been wasted as well.

[Marshal Murat]

Ser Clegane: Why not put me on top???
Anyway.
I say clear the debt, and stop the aid to clearly corrupt governments, and turn most of the aid into monetary donations that is given out to the general populance. Then, establish stores, hire locals, pay wages, etc. and import local goods (corn, clothes, and other items that could be made locally). To add to the mix, import a company of UN soldiers so that the warlords don't extort, or steal the money, and make sure the government doesn't come up with all sorts of bu**sh*t taxes for the peasents to pay.

Then begin to build a extensive road network and begin to build ground up.

HOWEVER, what will happen is that some corrupt neighbor will looks across the border at profitable Ugalu land, and think
"Boy wouldn't it be nice to go over there, kill, plunder, rape, and set fire to that land so that they will never rival me!"
He will do so, the general populance is dead, and everyone will run away.
Vicious cycle.

[Xiahou]

That's a very well-thought-out article. I don't usually find myself agreeing with the Cato Institute -- too political for this lemur. But that's a fine piece. I was also reading something about how inefficiently the aid is applied, how much disconnect there is between the U.N. idjits in my home city and the places where the money gets sent (or doesn't). Basically, it was an indictment of the whole top-down management strategy.

Bottom-up is always better. And if the aid groups are as mismanaged and misguided as the people who once worked for them say they are, the answer's going to have to come from the private sector. (Well, ultimately that's where the answer was always going to be in the long run.)

I wonder if we developed nations could help them with security, though. Um, probably not, given the level of corruption. But as Iraq demonstrates, a lack of security severely retards efforts at reconstruction.

Hmm. Is there any constructive role the West can play?

Hey, even I don't agree with every that CATO says.

What can we do? I would say that any debt relief or governmental aid should be contingent on real reforms- not just promises. Does that mean poor countries may not get aid? Unfortunately, yes- but we've pretty well shown that such aid mainly lines the pockets of the corrupt with little or none reaching the people who need it.

Second, I think we need to break down unfair trade barriers (like farm subsidies) that prevent the African people from being competetive on the world market.

It will be free markets and democratic reform that will save Africa- not misguided handouts.

[Ser Clegane]

Ser Clegane: Why not put me on top???

Because I posted first