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Aid and Assistance>Elimination of Aid to Africa Published: 22 Feb 2007
By Tinashe Machaka
We care about aid to Africa because it provides relief to the continent that is still plagued by poverty and hunger. However, in spite of all this aid -- and perhaps because of it -- there is nothing to show in terms of better conditions or self-sufficiency. In this brief article, Machaka proposes that such aid be eliminated.
 

We care about aid to Africa because despite receiving billions of dollars in aid every year, the continent is plagued with poverty and hunger and there is no visible sign that living conditions are improving or that the continent is becoming self sufficient. I propose a more drastic approach to dealing with the current poverty plaguing the continent - eliminating the hand outs and advocating for developmental efforts that give the continent a hand up.

We are all familiar with the old adage, "Give a man a fish; you have fed him for today. Teach a man to fish, and you have fed him for a lifetime". This same principle should be applied in the way the US and Europe deal with the issues of poverty and aid to Africa. They should eliminate the fish, provide the fishing rod and better yet, provide knowledge on how best to manufacture and use the fishing rod. I believe that this will allow Africa to stimulate her own industrial sectors, providing jobs and end user products.

The major objection to aid being eliminated is that many people will suffer needlessly. The reasoning behind this is that if giving aid is the only way to avoid such suffering, then it is better to provide the aid. However, I believe that providing aid actually prolongs needless suffering, as countries only become dependant on aid. Aid elimination will provide endurance and "suffering" that stimulate each country’s survival instincts. So in my opinion, elimination of aid is not cruelty, but the provision of a necessary step in a country’s development. There is thus some wisdom in yet another old and popular adage: "Suffering precedes all success in life."

A comparison can be drawn between some African countries and the Asian tigers (Thailand, Indonesia, South Korea, Malaysia, and Singapore). In the Asian financial crisis (1997), the IMF came under fire for not intervening appropriately either during or in the aftermath of the crisis. However, these Asian countries today have declining aid as a percentage of GNI because they realized at an early stage that reliance on aid would only result in suffering for the people. This is because aid flows are volatile and this can be detrimental to countries most dependent on them. Bulir and Hamann in their IMF research in 2005 observe that:

In addition to being volatile, aid flows are also unpredictable, especially for the poorest countries.

They calculate that, on average, aid delivery falls short of pledges by more than 40 percent.

In order to demonstrate my argument, I shall select and briefly analyze 3 countries in Africa, namely Ethiopia, Mozambique, and Rwanda. I chose these three countries because in addition to being poor and being regular beneficiaries of aid, they also represent a cross section of different types of poverty – that is caused by war, caused by government mismanagement and by stunted financial system growth. For example, war torn Ethiopia relies heavily on foreign aid for sustaining economic growth and poverty reduction. If this heavy reliance on aid is eliminated, this will allow the country to fend for itself as a result of faster sustainable economic growth.

If constant aid to Africa was achieving its purpose, one would expect to see a decline of aid as a percentage of Gross National Income (GNI) over time, showing that the countries were becoming more self sufficient. However, when analyzing the three countries I mentioned above, with data collected from the World Bank development indicators website, you can see a positive trend aid inflows over time.

Even though a direct positive link between aid and overall economic growth has not been established, the impact of aid flows on the tradable goods sector found by Rajan and Subramanian (2005) was that aid has adverse effects on growth, wages, and unemployment in labor-intensive and export sectors. This fact allows me to avoid the fallacy of appealing to ignorance by simply concluding that aid is bad even though no recognizable trend has been established.

An important statistic to look at and evaluate is the poverty datum line, and the percentage of the population that live with income below it. The universal definition of poverty datum is a family that has to survive on less a US$ 1 a day or less. Once again if the aid campaign was successful, we would expect to see a significant decrease in the percentage that lives below the poverty datum line. However, on looking at the data given below, I believe that there is no significant improvement in the numbers, indicating that aid is not achieving its purpose. The estimates below were obtained from the World Bank development indicators.

Percentage of Population living on less than US$1 a day

2000

2002

2004

Ethiopia

76%

74%

75%

Rwanda

65%

64%

64%

Mozambique

50%

51%

50%

Not only will more aid encourage dependency, but it will also entrench corrupt regimes. Realizing that not all forms of aid are harmful to countries, it is necessary to advocate for policy changes in the countries that receive aid. A good example of abuse of aid is in Zimbabwe in the 1990s, where various media have documented the misappropriation of aid funds to finance luxury cars for the cabinet ministers and for use as a political tool to bolster support for the oppressive ZANU PF regime (the strategic allocation of relief food is a case in point). This harmed the nation instead of helping it – better run countries tended to grow more quickly when aid is appropriated effectively.

Data from the Center for Global Development suggests that there is a point of diminishing returns, after which aid no longer helps. I believe that this point has been past as aid is not resulting in noticeable economic growth.

Given the fact that aid is not resulting in any significant development in Africa, policy change should be considered with slow announced reductions in aid being implemented while encouraging and supporting fledgling business and trade with these African countries. This in turn should allow for economic growth to follow.


References

Center for Global Development, 6 December 2006, U.S. Foreign Aid Reform: Will It Fix What Is Broken?

URL: http://www.cgdev.org/content/publications/?PubID=130

International Monetary Fund, Bulir and Hamann 6 December 2006 , Does Aid Volatility Harm

URL: http://www.imf.org/external/pubs/ft/afr/aid/2006/eng/aid.pdf

URL: http://www.wiltonpark.org.uk/documents/821%20Presentations/Mosley.pdf

World Bank Development Indicators, 6 December 2006

URL: http://ddpext.worldbank.org/ext/DDPQQ/member.do?method=getMembers&userid=1&queryId=6

URL: http://ddp-ext.worldbank.org/ext/DDPQQ/showReport.do?method=showReport

Comments for this article
 
Tinashes' article although insighful and clearly well researched, i feel falls short greatly in respect to its analysis on developnment, the question and the measures to such an extent that the argument, about the value and his suggestions with regards to foreign aid to africa from an economists perspective is inadmissible.

Development, a term laden by ambivalence and ambiguity has been characterized by a bewildering assortment of policy that have made it enormously abstract and difficult to coin quantitative measures capable of capturing the various components of well being and development across national boundaries.

A paradigm in itself, development, it is essential to have an understanding of its main objectives, before any quantitative measure can be ascertained. The primary objective of development is to benefit the people . Human development is a critical component when looking at the aggregate developmental progress of a nation.

Longevity, the importance of life is one that should never undervalued. Life expectancy at birth as well as infant mortality rates, are two important indicators in capturing longevity, especially as there exists no comprehensive information about people’s nutritional state and health .

Knowledge, captured on a basic level by literacy indicators should also not be undermined. It serves as a gateway to societal empowerment and technical progress hence not only should we consider it at a tertiary level, but also elementary education, should serve as an indication of a nations development.

Command over the resources needed for a decent living is a third key component of development. This indicator perhaps posses the greatest difficulty in quantifying as it requires data such as credit, income, access to land and other resources the scarcity of which presents all sorts of problems.

In a nut-shell all factors considered development and well being can be taken to be the participation or control of people over the goals, direction and the pace of change processes. There is a natural inclination to equate development and well being to economic growth, but this is nothing more than a reductionist view, as there is clearly need for a multidimensional take that incorporates all the above mentioned realms.

For as long as people have pursued the quest of development, many quantitative measures have been developed to help give a qualitative understanding and as a means of keeping track with progress. Furthermore advances in statistics and economic models over the past century have created comfort with such takes. However it is evident from the burgeoning movement to construct new development indicators that there is dissatisfaction in these prevailing modes and growing need for better measures to aid the understanding of this complexity called, ‘development’.

Income is indeed a means not an end, GNP and GDP growth measures are indeed necessary but not sufficient measures of development. They only capture one side of development and well being but not in its entirety. It is a valid argument that higher income can indeed be a gateway, to better education, health system e.t.c. but just an aggregate count does not take into account such things as distribution of wealth and resource. Hence there is no justification of judging a countries development based on their GDP, and GNP growth, similar problems are encountered when purchasing power and per capita adjustments are made.

The dilemma posed above points to the need to try and compute or construct a composite index for development. Having too many indicators will smudge and make difficult to use this single complex indicator. An example of such an indicator that is of great importance when measuring growth is the Human Deprivation and Development index. It balances the virtues of the broad scope in which we look at development but at the same time retaining the sensitivity to critical aspects.

Cross-sectional and time series analysis with the later being the more important are also good ways of analyzing a broad range of factors that we consider as helpful in indicating a nations growth. Correlation analysis, graphical plots, and face off comparisons as in tables 1 and 2 give a trend picture and relative comparison juncture. This is important for policy distribution when deciding in which way you would like move in so as to balance out the broad spectra of factors that determine development and well being.

All that has been said up to this can serve as platform to a broad view on development economics and philosophy, but when narrowed down to a single county there is no question, the measure has to be tailor-made.

National accounts measures to start off with generalize and support the notion that rapid industrialization and improvements in material possession evoke a better life and social improvements for the people. The price of their attainment is at times overlooked examples of which are, massive pollution, urban congestion and monumental waste resources . Growth does indeed involve a trade-off the value of what is given up versus what is gained varies from community to community.

Sub-Saharan Africa, cultural forces tend to sustain high fertility, and this is of great importance to the locals . However common development models would suggest that this weighs down on development, which brings me to an all most important question, on whose terms? Economic, the social ingredient and political dimension can all be generalized to some extend when we look at development measure. Culture on the other hand confers identity and self-worth of a people .

Policy recommendations promoted for ‘growth’, range from tightened credit, budget discipline, wage freezes and export expansion . These are very stringent and limit how individual countries can function within their own confines and hence taking away part of their overall well-being. Debt accrued in pursuit of economic growth also increase dependence of developing countries on the lenders making them liable and accountable to them, hence flouting the notion of economic freedom. These are some factor often overlooked but if we are really to measure development and well being in the context that we have defined it, they are very important.

The question of what the best measure for a country’s development is, is one indeed that raises many conflicting ideas, model compete in defining the good life and the definition of development is one to which a straight answer can never be given. On the other a lot can be agreed upon as far as subtle indicators are concerned. Conclusively what can said is that the development and well-being of a nation can be measured based on a true understanding of the community values society, in addition to the prototypical views on development.

I doubt very much, if you were to collectively put all these things in mind you would write an article in the same exact fashion. Rewrite your article and this time convince us, that aid forms such as for humanitarian benefit, in times of hunger, national disasters or aiming and rehabilitating health delivery in Africa should be done away with, as a gateway to a better tomorrow.

 
Posted by mdarakuda on 23 Feb 2007, 03:16

The point of the paper is not to convince anybody, but merely to spearhead the effort to bring Africans to even think about the idea. I seem to have done that with you. So keep the ideas rolling.
 
Posted by Anonymous on 23 Feb 2007, 15:01

I will agree with Mdarakuda that we fall short on the best measure for development. We can use GDP per capita, but the current trend in many african countries is the formation of a very strong and lucrative informal sector that is unaccounted for when calculating GDP.
 
Posted by Anonymous on 23 Feb 2007, 15:04

when people dwell on the definition of development and how to quantify development and such, then it becomes more a question of semantics and all, and to me that's just folly because, no matter what yardstick one is using, the bottom of the line is that sub saharan Africa is underdeveloped, period. so Tinashe definitely raises a valid issue on questioning the effectiveness of aid to Africa; true we have been receiving lots of aid as a continent and we continue to live in poverty but does that mean aid is useless? i don't think so. firstly, in reference to the Asian tigers, i just want to point out that actually Korea has received the biggest loan from the IMF to date, and that came in the wake of the financial crisis. the contagion does actually offer a great basket case when analyzing the importance of aid on development and because those asian countries where indeed receiving vast amounts of aid from the world bank and the imf but they still failed! the question is why? simply put, those countries did not have the infrastructure and instruments laid down in place that made sure that the aid would be efficiently utilized. and those statutes should have been a prerequisite for aid. what we learned in the wake of the financial asian crisis is that most of the governments were corrupt and had irregular market system that do not fall under the capitalist system that the world bank and the imf assumes. the case in thailand for instance was that the president's son ran a monopoly one one of the major agricultural output (i forget the crop) and as long as such scenarios are in place then aid will continue to be misused because the aid was meant to benefit the poor farmers but in the end only the president's son benefited. and that is the problem we have in africa. and by mentioning the mediagate (i think that's what it's called) scandal, that is just one of the many instances when aid has been abused. so Tinashe's observation is great but i think the remedy is too drastic. i would rather see a situation where the world bank actually makes the recipient countries more accountable for the loans and i believe that with enough institutions monitoring the movement of the funds, eventually they will reach the intended targets and improve the quality of life in Africa.

certainly learning how to make the fishing rods, and then fishing ourselves, to borrow your metaphor, is a good notion-the question, however, is do we have the capital to invest in such projects??

 
Posted by Anonymous on 2 Mar 2007, 02:16

I agree that outlawing all forms of AID would lead to disaster. There are some transfer payments that are necessary - like aid in times of disaster or war. Maybe it was necessary to define the specific forms of AID that I was targeting.

However, some of the loans that nations have received from the IMF and the structural adjustment programs(SAP) they force fed us are to blame for some the woes that some African nations like Zimbabwe face today. have been imposed to ensure debt repayment and economic restructuring. But the way it has happened has required poor countries to reduce spending on things like health, education and development, while debt repayment and other economic policies have been made the priority. At this point though I feel that we beging to blur the lines between debt and AID, and that is indeed incorrect.

 
Posted by Anonymous on 4 Mar 2007, 23:35

i think tinashe has got a point even though up to some extent he needs to understand that with Africans it will take a while for them to get their feet so we need to be patient with them.another thng is the leaders concentrate too much on rivalry with other countires tha they do getting something done in their countries!! but however i do applaud him on the good use of facts and his analysis.

he also needs to understand that as he is an African himself and know what it's like to live in Africa he could have stated how Africans can then become self dependant

 
Posted by Anonymous on 6 Mar 2007, 09:34

if the fish is eliminated, then whats the use of the fishing rod?
 
Posted by Anonymous on 15 Jun 2007, 15:11

mdarakuda missed Tinashe's point...
 
Posted by Anonymous on 11 Feb 2008, 18:20

I love this article, Tinashe (PB)! Africa shall have her day!
 
Posted by Anonymous on 31 Mar 2009, 20:56

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