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On Aid to Africa

Tijan Sallah's picture

Dambisa Moyo' book "Dead Aid" is gaining influence among African leaders (I wanted to point to President Kagame's thoughtful commentary in the FT). I would like to add the following comments. Volumes of aid to Africa per se are not the issue; instead the issue is the quality of political leadership and the effectiveness with which aid is put to in Africa to support the continent's development.    Aid, by itself, is not a bad thing and, if utilized properly, can help resource constrained economies make wise investments to move from a low to a higher base of performance. Post-war Western Europe and Japan reconstructed into a modern economy through massive aid provided through the Marshall Plan, and many developing economies in East Asia (China, Korea, etc) and South Asia (e.g., India) have taken off because of large injections of external aid and, of course, the determined will and good policies of those nations. I find the debate championing the ending of aid to Africa as a dangerous one for it misses one key economic argument: resource fungibility.  Having little less external resources does not imply meager internal resources will be better utilized. Africa has a financing gap--- and aid is a part filler. Depriving aid to Africa champions presume ending aid to Africa will make African economies face harder budget constraints and that African leaders will make wiser resource allocation decisions, as a result.   This could not be further from the truth. Instead, I would argue that, if this were the case, we will see economies like that of Zimbabwe fare better. Instead, on account of resource fungibility, depriving aid to African economies, given prevailing patterns of governance and resource use in African economies, would likely hurt Africa's poor more.  What we need to push for is not less aid but more aid to Africa and help untangle those aspects which reduce aid effectiveness: weak and underutilized capacities, aid unpredictability, aid tying, and aid fragmentation. We should continue to push for and assist countries improve their governance and accountability capacities and systems to ensure that aid and resources of African countries are utilized more effectively for growth and lasting poverty reduction.

Comments

Submitted by Mode Murunganwa on
Tijan Sallah's comment on President Paul Kagame's thoughts on aid to Africa is strange. For instance Tijan says he agrees with Kagame on some issues. Tijan does not indicate areas of agreement. He then creates a false debate. For example Tijan cites large infusion of aid through the Marshal Plan to post-WW2 Europe and development aid to Asia as having been responsible for success - besides sensible policies pursued by aid recipients. Now Kagame does not talk of ending aid now but calls on Africa to concentrate on creation of conditions for ending it, including promotion of dynamic economies, precisely the factors that enabled Europe and now Asia to graduate from aid. So what is your point Tijan? Where did Kagame talk of volumes of aid, or where does he call on funders to stop financial support today or tomorrow other than calling for socioeconomic transformation? Should Africans not even visualize a future where they earn their way economically just like any other societies? Is there no dignified future for the one billion Africans - beyond charity and aid? Kagame believes that Africa, like other societies, should at least debate such a future. No Tijan - it is not dangerous to discuss the possibility of a different Africa able to transform and use its enormous human and natural wealth to change the lives of its people. What is unhelpful is to refuse to see the possibility of a dynamic Africa free from aid and begging.

Submitted by GKM on
Dear Sallah - I am sorry, but it seems you got wrong the point made by the Rwanda's President in his FT Article on "Africa has to find its own road to prosperity". He is not opposed to foreign aid per see, he did not say that aid is a bad thing, nor does he downplay the role of political leadership and effectiveness use of aid – he actually emphasized them. The points he made are fourfold: (i) that aid is not a panacea – poor nations should focus much on improving their economies rather than on receiving aid; (ii) that aid is not a right, since richer countries do not owe anything to poor nations ; (iii) that aid, whenever it materializes, should be in support to what recipient country/government intend to achieve themselves; and nobody should pretend that they know better or care more than the people in charge or reciepient people ; (iv) that, in all cases, aid should be temporary (i.e, should not last forever), as otherwise it will end up creating “aid dependence”, which dehumanize the societies it is intended to help. The debate he is calling for is a very interesting one: When to end aid and How best to end it. I purposely underline “when” and “how best”, because it is there where you missed the point. We should remember, as yourself point out, that “aid is a part filler” of financing gap, or an “aid” to complete not to replace countries’ own efforts. Unfortunately, what is often seen, is that the world tends to give more “press” on the importance of foreign aid, but less focus on what countries themselves mobilize internally to drive their economic development. And this increasingly gives feeling that without foreign aid, Africa can not develop. Beside, the ultimate goal is that one day the “financing gap” should not continuously be there or it should be filled through other means such as borrowing, save macroeconomic stability and long-term sustainability. The ultimate debate is how quickly and best to end the cycle of aid and poverty in Africa. And it is hard to believe that the call for more aid is the answer. Last point, you state that “having little less external resources does not imply meager internal resources will be better utilized”. For one, internal resources are not meager – and this is the point I made above. Second, there is not much evidence that infusion of massive aid in a country has contributed to improvement in the management of resources – sometimes the contrary is true. So yes, African countries and the rich world should debate when and how best to end aid dependence – frankly a debate that is more overdue. Regards, GM

Submitted by Anonymous on
Tijah, I do not know which of President Kagame’s views you agree with or which ones you disagree with. I have read his FT article and I have to say you have mischaracterized his argument as a championing ending aid to Africa. The fundamental issue the President raises is that Aid in its present construct will not solve the problem of the poor because it “rarely addresses the underlying issues of poverty and weak societies’. I am sure you agree with that. In the same line of argument, aid can be potentially distractive and makes governments more dependent. Many African countries are well endowed with un harnessed natural resources yet they are equally holding the ‘begging bowl’, don’t you agree that there should be an exit strategy? Aid should come in form of supporting them to build capacity to tap this potential. Yes Africa needs Aid and but needs an exit strategy, through more open trade, investment and building domestic capital markets. In my view his argument is about the old adage ‘don’t hand a man fish but teach him how to fish’. Both donors and African leadership should have a strategy and target date for when Africa should eventually graduate from the ‘fishing school’ and feed on their own catch. You are absolutely right on the role of African leadership but that’s precisely President Kagame’s point as highlighted in the title of his article, and he has clearly demonstrated that with good leadership he has provided to his country, Aid goes a long way, however he also rightly argues that this is not sustainable. You rightly argue that Africa needs a Marshal Plan, I am sure President Kagame would agree with you as well, but to me that’s precisely the point. The marshal plan was targeted, time bound, sufficiently funded and tailored to the needs of the recipient countries, on the other hand aid is unpredictable, fragmented, not customized to the recipient needs despite all the talk about ‘ country ownership’ ‘demand driven’ and is more of ‘drip feed’ which can only maintain Africa on life support for ever. Will it solve Africa’s poverty problem? I doubt.

Tijan, in your eminently sensible and correct post, you don't mention that President Kagame's critique of aid is actually very different from Dambisa Moyo's. Dambisa wants to cut aid because she thinks it goes to corrupt dictators and causes real-exchange-rate appreciation. President Kagame's point is that even well-intentioned aid can lead to aid dependency as a low-level equilibrium. His other critique of aid to Congo and Afghanistan are more along the lines of those in Paul Collier's latest book, "Wars, Guns and Votes," namely that we are giving the wrong kind of aid. President Kagame's commentary therefore should not be seen as an implicit endorsement of Dambisa's arguments; nor should people who dismiss Dambisa's book ignore President Kagame's cogent critique of aid.

Submitted by Anonymous on
Ending aid to Africa is not politically desirable, at this stage, for objective and subjective reasons. Indeed,countries with low capital base have no other choice than to rely on Official Development Aid(ODA)to sustain their economies. In Burkina Faso, for example, 80% of public investment expenses are funded with ODA, and in 2007, aid accounted for 15.18 % of GDP. The country's economy is based on cotton production( about 60% of total exports) but we all know that raw cotton export is not a stable revenue stream in view of the distorsions in the international cotton market. Fortunately, many other Sub Saharan African countries are well endowed with natural resources and there are no objective reasons why these countries should not develop themselves on their own. But if they continue to rely on ODA, it is simply because their leaders are keen to pocket half of the funds they receive at the expense of their poor people. Leaders of donor countries have also incentives to continue to deliver ODA despite these conditions because it serves to mask their businesses non competitive behaviour that allow them to acquire recipient countries' exports at very low prices. I'd like to get any cross country evidence on aid effectiveness in Sub Saharan Africa. I bet that aid is likely to be less responsive to poverty reduction in resource-rich African countries. However, I totally agree with Tijan Sallah that aid itself is not a bad thing if properly utilised. The problem is, as he and some readers already pointed out,bad management of public finance(whether the money comes abroad or within the country):corruption and absence of time value of money considerations makes self-development a far distant goal for most Sub Saharan African countries in my view.

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.

Submitted by Daniel Amponsah on
I have read President Kagame's interesting opinion piece in the FT. It is thoughtful indeed. That said, I would like to make a few points. Instead of seeing Dambisa's "Dead Aid" as controversial, I would rather it's considered a contribution to the debate on effectiveness of foreign aid. Care, therefore, needs to be taken to not regard it as an authoritative reading of the "real" state of development assistance. Dead Aid is a description (critique at best) of an aspect of the aid culture rather than an "accurate evaluation," as President Kagame argues. Whilst Dambisa raises critical points, I am struggling to find out what's new. In my opinion, Dambisa short-circuits Africa's development agenda/process by concentrating her "blue-print" on development financing only, the path of least resistance. This is not to say we should not pay attention to the issues. It is also worth paying attention to the issues Dambisa touches on regarding political leadership on the continent. She cites a database (Polity IV) to stress a point that Africa is still home to at least 11 fully autocratic regimes. Interestingly, Rwanda features prominently on this list. I do not want to believe that President Kagame tacitly agrees with this characterization. But the broader point is leadership matters. Certainly, it will require democratically elected leadership working with the populace to take initiative as well create opportunities for Africa to find its road to prosperity. In the same way, leadership matters on framing and advancing the discussion on when and how best to end aid. If ending aid is Africa's surest way to lift itself out the woods, I am all for it. What steps should Africa take to ensure that it will be able to pull itself by the bootstrap? How does it get there? Who starts this conversation and where? May be cutting or eliminating aid dependency could be a NEPAD target to reach at specified time. The problem, however, is that NEPAD itself depends on the benevolence of outside support to survive. President Kagame could be more serious making it his agenda to get this discussion going practically, substantively not politically. You can never have your cake and eat it!

Submitted by Nwabu on
Dambisa Moyo pointed out one great truth in that more aid has been given to Sub-Saharan Africa than to Western Europe after WWII. So the question is what has africa done with it? I suspect that aid is a failure in Africa because it often combines with typically useless people in equally useless organizational systems that results in resounding failure as it has equally been with the oil-rich states of Cameroon, Nigeria, Central African Republic, Equatorial Guinea and Gabon where all that capital has gone to waste. Aid in Africa needs to change and firstly require minimum evidence of capabilities - that Africans are already helping themselves and striving to do more. The institutions that are aid conduits must have minimum efficient and effective standards and have a history of performance. They should NOT be, as they are now, headed by a few well dressed Sorbonne or Harvard-educated PHDs speaking great English and French in beautiful air-conditioned, wood panelled offices overseeing work that takes place in dusty, filthy backrooms or branch offices with paper strewn all over the place by careless, sleepy-eyed, incompetent and unprofessional personnel - as is the case with most African public institutions. After all, a state water board like the one in my home region of anambra, nigeria has not provided steady water to average people since the 60s at the least talk less laid new pipes since the 70s yet year-in and year out they get World Bank and EU assistance for water projects. Yet had the World Bank and EU officials done their homework like investment bankers and visited the offices of the state board and looked at their infrastructure and performance (or more lack of it), they wouldnt be routing billions to a state entity that is clearly a non-performing entity filled by terribly incompetent people. This to me is the first step western aid must demand of all recipient countries particularly in Africa. Prove that you can make something of the money. Speaking broadly about good governance like democractic institutions, etc is all nice but at a rigorous level proof has to show that disbursing institutions have strong accountability, well-trained management systems, clean accounting and evidence (through surveys for example) of striving to cater to local needs. After all, whats important is not teaching a person how to fish but is having a person eager and willing to learn how to fish with lots of desire to eventually go out there and fish.

Submitted by Anonymous on
The link between development and western style democracy is at best tenuous. Korea, Singapore, Taiwan, etc did very well before embracing western style democracy. China is doing very well. Kagame's Rwanda is doing well because of his leadership. btw, the vote that took place in Rwanda is no less legitimate than the ons in Uganda, Kenya, Ethiopia, Democratic Republic of Congo, Nigeria. Rwanda is emerging as a country where there is clear vision because of Kagame's ledership. Leadership is not synonymous with democratic election. Nor democracy can be reduced to elections. And from that perspective, there are few countries in Africa where one can talk of democracy really. Corruption is rampant in countries where there were apparently clean elections. The point I want to make though is that the development debate on Africa should be based on facts, not ideology. As to "Dead Aid", one need not agree with the book, its premisses, analysis or prescriptions to get the essence of the message. And clearly there is one. I doubt though that the debate it ignited will endure.

During hard times poor country try to seek financial aid to the most powerful country, but the problem arises when there is some political instability within the region that the suppose fund from other sector or foreign country has not been used effectively. We have to bear in mind that a strong political system has something to do with the economic growth of a particular country. Economic growth is not just about the fund but also lies on a strong political leadership that the country may have. It's not all about the money but the brilliant idea to create a change toward economic sustainability and poverty reduction.Anyway, despite of recession, P.F. Chang's remains the most popular restaurant chains of the last few years.The food is not authentic, and often heavily fried, and they have point blank admitted that it isn't authentic, and the restaurant is relatively high end compared with other Chinese restaurants – but not so much that you need a payday loan and a reservation. They have been one of the fastest expanding restaurant chains in North America in the last decade, and they don't seem to need debt relief as more P.F. Chang's keep going up.

Dambisa Moyo's book has often been misunderstood and simplified. It does not just suggest the end of aid but its rapid replacement by more trade, more direct investment, more use of remittances and local financing and, yes, better use of resources. I think there is a compelling argument in this book: aid has very often been granted to governements who do not respect their word. The donors moan, but then they continue to give. This transforms aid in a kind of tax, a tax on which the governements are accountable to nobody. This is a very vicious circle.

Submitted by Lynn Miller on
Aid is definitely needed in Africa, but when the aid is given to governments that are corrupt, the aid never gets to the intended source. So much aid is stolen from the people it is intended to serve, and yet countries still continue to give. Why? If you know the aid is being misused, do something about it. Get another source to be accountable for the aid. I have lived in Kenya for 7 years and I can most definitely tell you that the aid coming into this country is stolen consistently. Only a trickle ever reaches the people.

Submitted by jennifer on
I think the salient issue in the whole 'aid to Africa' debate should be the structure of the aid. Since donor agencies and organizations have provided relief primarily in the form of money, maybe it's time to rethink strategy. Instead of giving funds which end up lining the pockets and suitcases of our corrupt leaders, how about funds in terms of goods and services? For instance if it is determined that infrastructure is needed in a particular country, the type of infrastructure should be agreed on and what the donor agency could do is to probably engage turn key consultants or ask the Country to supply human resources for the job. Major procurement should be undertaken by the donor. I don't see this as a denigration of a nation's sovereignty. Also, training of human resources should be a key focus area for donors. I tell you that it is really heartbreaking watching so many die from preventable causes while the leaders entrusted with their welfare strut about happily with ill gotten wealth.

Submitted by YorTz on
Tijan, in your eminently sensible and correct post, you don't mention that President Kagame's critique of aid is actually very different from Dambisa Moyo's. Dambisa wants to cut aid because she thinks it goes to corrupt dictators and causes real-exchange-rate appreciation. President Kagame's point is that even well-intentioned aid can lead to aid dependency as a low-level equilibrium. His other critique of aid to Congo and Afghanistan are more along the lines of those in Paul Collier's latest book, "Wars, Guns and Votes," namely that we are giving the wrong kind of aid. President Kagame's commentary therefore should not be seen as an implicit endorsement of Dambisa's arguments; nor should people who dismiss Dambisa's book ignore President Kagame's cogent critique of aid.

Submitted by Mike Wells on
" Post-war Western Europe and Japan reconstructed into a modern economy through massive aid provided through the Marshall Plan, and many developing economies in East Asia (China, Korea, etc) and South Asia (e.g., India) have taken off because of large injections of external aid and, of course, the determined will and good policies of those nations." While that is true to a larger extent, I strongly argue that for example the post-war Europe was different in one very important way compared to current day africa: There was a strong sense and tradition of respecting the rule of law. Didn’t already Einstein say that Insanity is doing the same thing over and over again and expecting different results. Nothing draws you a better picture where we stand than this site http://www.youintheworld.info/. Really puts things in perspective. I believe it’s about time to change something or at least stop expecting to see different results from doing the same thing over and over again.

Submitted by Kingwa Kamencu on
Sorry, not contributing to this discussion but i'm writing to ask you (Tijan Sallah) where i can get your book 'When Africa was a Young Woman'. Is it in any bookshops in the UK? Thanks

My book When Africa was a Young Woman was published by Writers Workshop of Calcutta, India, in 1980. I don't know whether it is still in print but you may google Writers' Workshop of Calcutta and ask if they have a copy or perhaps google "used books" to see if you can locate a second hand copy. Selections from it appear in my more recent book, Dream Kingdom, which is a collection of my Selected Poetry from past published volumes and is published by Africa World Press of Trenton, New Jersey. Hope this helps. Tijan

Submitted by Tammy Collier Keita on
Tijan, I still possess the copy you gave to Jals and I. Passing it on to my Grandson, Khamani Chadrick Keita-Newell, and will enlighten him on the value of this gift from a fellow Gambian. He has much to learn about the country of his heritage.

Submitted by Obadias Ndaba on
I don't agree with Wells' argument that 'Post-war Western Europe and Japan reconstructed into a modern economy through massive aid provided through the Marshall Plan, and many developing economies in East Asia (China, Korea, etc) and South Asia (e.g., India) have taken off because of large injections of external aid and, of course, the determined will and good policies of those nations." There are deep differences than the rule of law, though this is important as well. Marshall Plan had a time line of five years and was specifically directed to reconstruct the torn apart infrastructures of Europe, not in every sector of the economy and society like in modern Africa. Further Marshall Plan represented a small percentage of the recipient countries GDPs compared to modern Africa where 15% or more is the normal. In addition Europe had strong institutions and access to resources in their colonies to fuel their industries, this is a big difference. By the way i think the two cases of aid in history are incomparable.

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