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Submitted by AT on
President Kagame is totally right. He clearly challenges our thinking on two points: 1) As he has said we cannot “solve the problems of the poor with sentimentality and promises of massive infusions of aid, which often do not materialize.” We all know that aid pledges made by G8 countries at Gleneagles have yet to be fulfilled. Countries that succeeded in developing out off poverty did receive massive aid inflows, including from the Breton Woods institutions. If you give a poor $1 a day for all his life, I doubt that he will be wealthy enough to stop depending on your assistance. If instead you make him a one time gift of $1440- the same amount that you would have given him over 4 years under the previous scheme, he can start up a small business and graduate from poverty to middle class status ( Why did we pick 4 years? It corresponds to the duration of the Marshall Plan). Now let’s ask Tijan to help with numbers: how much money does the World Bank spend in the average poor country and can we honestly hope that this amount will help this country grow out of poverty. How much does the Bank spend in poor countries that graduated from poverty vs. poor countries that did not? 2) The President’s idea of focusing government activities “on supporting entrepreneurship” is brilliant. As a matter of fact recent scholarship have found that this was a key ingredient in the success of the Marshall Plan. Again let’s ask Tijan: How much does the World Bank’s agency dedicated to the private sector development (IFC) spend in Africa? In both absolute and relative terms the numbers utterly come up short. President Kagame didn’t call for the end of Aid. He said :“Do not get me wrong. We appreciate support from the outside...”. Clearly he is challenging us to go beyond aid as we know it. Let’s give him two thumbs up for advocating for smart aid, or for Aid 2.0.