Published on Africa Can End Poverty

Buddy, can you spare $20 billion?

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ImageHow much additional foreign aid will it take to prevent the global financial crisis from becoming an economic, social, political and human crisis in Africa?

As my co-authors and I tried to point out in an earlier study of the additional aid needed to reach the Millennium Development Goals, this is not the most important question. Much more important are: (i) what developing country governments can do, and (ii) how the additional resources will be spent. Nevertheless, as world leaders gather for the G-20 summit outside London, the magnitude of additional resources to the world’s poorest continent will be discussed.

Let me suggest a specific answer: $20 billion. As with the earlier study on the costs of reaching the MDGs, we can arrive at this estimate using different methods. Such an approach avoids the accusation of double-counting.  First, the IMF estimates that the balance of payments needs of low-income countries will be about $25 billion this year. Inasmuch as most of those countries are in Africa, $20 billion for Africa would seem a reasonable number. Second, if we put aside balance of payments considerations and look just at Africa’s infrastructure needs, a recent estimate puts these at $20 billion additional also, taking into account the gap that can be filled by better pricing and efficiency gains. Third, $20 billion is the shortfall in the commitments made at Gleneagles in 2005 by the G-8 to double aid to Africa by 2010. In other words, this is not a new need: it is what the world leaders in 2005 thought would be needed for Africa to have a reasonable chance of reaching the MDGs. And if there ever was a time when those additional resources are needed, it is now.


Shanta Devarajan

Teaching Professor of the Practice Chair, International Development Concentration, Georgetown University

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