Why Foreign Aid Is Hurting Africa

[Vince Noir]

Wall Street Journal

A month ago I visited Kibera, the largest slum in Africa. This suburb of Nairobi, the capital of Kenya, is home to more than one million people, who eke out a living in an area of about one square mile -- roughly 75% the size of New York's Central Park. It is a sea of aluminum and cardboard shacks that forgotten families call home. The idea of a slum conjures up an image of children playing amidst piles of garbage, with no running water and the rank, rife stench of sewage. Kibera does not disappoint.

Giving alms to Africa remains one of the biggest ideas of our time -- millions march for it, governments are judged by it, celebrities proselytize the need for it. Calls for more aid to Africa are growing louder, with advocates pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year.

Yet evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It's increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa's population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster.

Over the past 60 years at least $1 trillion of development-related aid has been transferred from rich countries to Africa. Yet real per-capita income today is lower than it was in the 1970s, and more than 50% of the population -- over 350 million people -- live on less than a dollar a day, a figure that has nearly doubled in two decades.

Governments need to attract more foreign direct investment by creating attractive tax structures and reducing the red tape and complex regulations for businesses. African nations should also focus on increasing trade; China is one promising partner. And Western countries can help by cutting off the cycle of giving something for nothing. It's time for a change.

I have been thinking this for quite some time although I think most charity should also be removed to help reign in the populations of Africa. What do you guys think?

[Mikelus Trento]

I think I would like to know what percentage of aid money winds up in the pockets of corrupt officials and leaders? My hunch is it's not the aid itself, but the corruptness of the leaders.

Are there no "shining stars" on the whole continent? No country that has been ably led and the aid has served it's purpose? I'm thinking now of how Costa Rica in Central America has always been stable and growing, even during the times when many Central American countries were having extreme difficulties.

[Gumpfendorfer]

I have been thinking this for quite some time although I think most charity should also be removed to help reign in the populations of Africa. What do you guys think?

Agreed, while at the same time, the EU and US stop dumping our goods and products with the help of large subsidies, lower our import barriers, while at the same time they, within reason, may protect their domestic market for a period.

[Banastre Tarleton]

I think I would like to know what percentage of aid money winds up in the pockets of corrupt officials and leaders? My hunch is it's not the aid itself, but the corruptness of the leaders.

Are there no "shining stars" on the whole continent? No country that has been ably led and the aid has served it's purpose? I'm thinking now of how Costa Rica in Central America has always been stable and growing, even during the times when many Central American countries were having extreme difficulties.

This and the debt in Africa.

Aid paid to African governments is often spent mostly on pork barrels, luxuries, and also paying off debt. African nations are often crippled and unable to help the population because of the sums they owe. If they don't pay, then they are isolated and boycotted.

Foreign aid would do alot of good if it went straight to those that need it. There isn't a very convincing economic case for not giving aid, either. Africans should get back on their own feet themselves? Ok, so people should if they've been metaphorically kicked repeatedly and have been deprived of education and infrastructure that we take for for granted in the west. Africa isn't going to stand up without outside help for many years to come. It's rife with instability and a self-destructive cycle of tribal warfare and poverty.
Democracy doesn't seem to work there, either. Why hasn't it? Many African societies are culturally in the dark ages due to various factors. Tribalism is one of the chief causes of cultural strife, alongside economic problems. Sub-Saharan "democracy" is often dominated by the largest tribe, which elects its own people. Some have overcome this, but other political systems are heavily tribalised...

[Vince Noir]

For me, this is one of key factors crippling the continent.

The over $200 billion that African countries owe to foreign creditors represents a crippling load that undermines economic and social progress. The All-Africa Conference of Churches has called this debt "a new form of slavery, as vicious as the slave trade".

Like they will ever be able to repay this.

[PreussensGloria]

Necessity is always the mother of invention. Just one example out of thousands: the French revolution wouldn't have happened, if there had been modern aid for the French people in that time.

Monetary help indirectly supports corruption, keeps the corrupt and often tyrannic African elites & regimes in power and is alienated, while the aid in goods destroys the local industry and market.

[The_Dude]

Necessity is always the mother of invention. Just one example out of thousands: the French revolution wouldn't have happened, if there would have been modern aid for the French people in that time.

Monetary help indirectly supports corruption, keeps the corrupt and often tyrannic African elites & regimes in power and is alienated, while the aid in goods destroys the local industry and market.

germany after WW2 begs to differ, without the Aid of the US there would have been no reconstruction.

[PreussensGloria]

germany after WW2 begs to differ, without the Aid of the US there would have been no reconstruction.

The marshall plan wasn't amied specifically on Germany, but whole Europe.

The marshall plan (European Recovery Program) was different to modern aid and you can't compare highly developed, advanced and industrialised European nations with Africa. Europe and Germany would have recovered anyway it only would have taken more time.

[The_Dude]

The marshall plan wasn't amied specifically on Germany, but whole Europe.

true that, i only picked out germany as prime examply cause it was well, rubble for the most part

The marshall plan (European Recovery Program) was different to modern aid and you can't compare highly developed, advanced and industrialised European nations with Africa. Europe and Germany would have recovered anyway it only would have taken more time.

how was it different ?
and after the war germany was maybe advanced, in knowledge but there certainly wasnt a lot of industry left. in the first winter after the war, around here, they had to chop down the surrounding forest to have something to heat because otherwise they would have frozen to death.
so no, i really have to disagree when you say that germany was advanced or industrialised at that point.

[PreussensGloria]

true that, i only picked out germany as prime examply cause it was well, rubble for the most part
how was it different ?
and after the war germany was maybe advanced, in knowledge but there certainly wasnt a lot of industry left. in the first winter after the war, around here, they had to chop down the surrounding forest to have something to heat because otherwise they would have frozen to death.
so no, i really have to disagree when you say that germany was advanced or industrialised at that point.

Don't have much time any more today, so I try to make it as short as possible...allthough this is a complex subject.

Germany was bombed heavily, but not bombed into stone age. The knowledghe stayed, before and during the war Germany was and still is one of the most advanced nations of the world, the ruins of factories and facilities can be build up again, the German industry by the way wasn't that much harmed by allied bombings if you look at the production rates in the late war, the bombings in fact most of the time destroyed civilian housings, infrastructure still was functional in most parts, the Allied made good use of it during their advance and with the knowledge it's not that hard, you only need the resources and some cash inflow to start up again. The Marshall plan helped, but Europe and especially Germany would have made it alone, too, it just would have taken longer and there would have been more civilian casualities due to the lack of housings and food.

In no way a mainly tribal organised and quite primitive agrarian Africa with lack of knowledge in almost every branch can be compared to Europe after WWII.

The Marshall plan was different, because it granted the European nations American credits (which had to be payed off later) in order to buy American products, which had to be transported by American ships. The European Recovery Program was aimed to help Europe as a whole to rebuild, but in fact it helped the Americans even more to gain influence and to switch their economy production from war into peace times. The Marshall Plan helped to win the hearts of the people and brought the so called "Americanization" of Europe, to less extend the ERP helped to rebuild.

Modern aid also consits out of monetary aid, but in contrary to post World War II Europe, the monetary aid in Africa is alienated and not spend wisely, the corrupt elites put the money into their own pockets, use it to please their also corrupt supporters and for the army, which is "needed" to rob neighbours and to suppress the own population or rival tribes/clans within the nation. With no monetary aid, those currupt elites soon couldn't please their clan or supporters any more, and the rule would be overthrown. The rebel organisations in Africa are also corrupt and ruthless, as a rule the typical Sub-Saharan government stays as long in power as they need in order to afford a wealthy life in exile, naturally at expense of their own people, the rebels claim to be agents of the common people, but when in power they do it the same way as the previous government.
The local "industry" or better manufactures are destroyed because the market is overflown with aid in various goods, they cannot compete with the subsidized imported goods, too.

Simply leave Africa alone and do not interfere, progress will come, but it will take a long time and it will cost a lot of lives.
Look at European history, development most of the time came shortly after the biggest desasters and the most devastating wars.
This strange helper-complex of many people in the West only worsens things in Africa. One needs to accept that Africa is some hundreds of years backward and therefore they need time to develop themselves, not only economically, but also their mindset, mentality and attitudes.

Very fitting quotes:
"Necessity is the mother of invention"
"Heaven helps those, who help themselves"

In my mind, Marshall Plan and Germany is the obvious connection. I don't recall it being for Europe in general, but I guess I was wrong; that said, its still linked mainly to Germany.
That's an interesting report. Aid is one thing, but huge debt, too? Vicious.

officially the Marshall Plan was called EUROPEAN RECOVERY PROGRAM (ERP) and there were big and heated debates if Germany should also be allowed to recieve the aid. It was aimed at Europe as a whole and if you look who revieved the most American aid after the war, in fact it wasn't Germany. You have to ask yourself why in YOUR mind it is mainly linked to Germany, but I assure you it's simply wrong.

after WWII Europeans also had huge depts to the Americans, but they were able to repay, because the money was spent wisely.

[The Devil's Sergeant]

Poor africans need one thing very desperately, for someone to come in and exploit the hell out of them for private profit.

[Zelech]

In my mind, Marshall Plan and Germany is the obvious connection. I don't recall it being for Europe in general, but I guess I was wrong; that said, its still linked mainly to Germany.

That's an interesting report. Aid is one thing, but huge debt, too? Vicious.

[Ebusitanus]

http://www.spiegel.de/international/...363663,00.html

The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good. The avid proponent of globalization spoke with SPIEGEL about the disastrous effects of Western development policy in Africa, corrupt rulers, and the tendency to overstate the AIDS problem.

Economist James Shikwati: "Despite the billions that have poured in to Africa, the continent remains poor."


SPIEGEL: Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa...

Shikwati: ... for God's sake, please just stop.

SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.

Shikwati: 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.

SPIEGEL: Do you have an explanation for this paradox?

Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: 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.

SPIEGEL: Even in a country like Kenya, people are starving to death each year. Someone has got to help them.

Shikwati: But it has to be the Kenyans themselves who help these people. When there's a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program -- which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It's only natural that they willingly accept the plea for more help. And it's not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa ...

SPIEGEL: ... corn that predominantly comes from highly-subsidized European and American farmers ...




Ruandan President Kagame has over a million deaths on his conscience, says Shikwati.


Shikwati: ... 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.

SPIEGEL: If the World Food Program didn't do anything, the people would starve.

Shikwati: I don't think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure, while making national borders -- drawn by the Europeans by the way -- more permeable. It would also force us to establish laws favoring market economy.

SPIEGEL: Would Africa actually be able to solve these problems on its own?

Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there's a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn't do all that poorly either.

SPIEGEL: But AIDS didn't exist at that time.

Shikwati: If one were to believe all the horrorifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It's not three million Kenyans that are infected. All of the sudden, it's only about one million. Malaria is just as much of a problem, but people rarely talk about that.

SPIEGEL: And why's that?

Shikwati: AIDS is big business, maybe Africa's biggest business. There's nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease here, and we should be very skeptical.

SPIEGEL: The Americans and Europeans have frozen funds previously pledged to Kenya. The country is too corrupt, they say.

Shikwati: I am afraid, though, that the money will still be transfered before long. After all, it has to go somewhere. Unfortunately, the Europeans' devastating urge to do good can no longer be countered with reason. It makes no sense whatsoever that directly after the new Kenyan government was elected -- a leadership change that ended the dictatorship of Daniel arap Mois -- the faucets were suddenly opened and streams of money poured into the country.

SPIEGEL: Such aid is usually earmarked for a specific objective, though.

Shikwati: That doesn't change anything. Millions of dollars earmarked for the fight against AIDS are still stashed away in Kenyan bank accounts and have not been spent. Our politicians were overwhelmed with money, and they try to siphon off as much as possible. The late tyrant of the Central African Republic, Jean Bedel Bokassa, cynically summed it up by saying: "The French government pays for everything in our country. We ask the French for money. We get it, and then we waste it."

Former Central African Republic leader Jean-Bedel Bokassa: "We ask the French for money. We get it, and then we waste it."


SPIEGEL: In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags ...

Shikwati: ... and they flood our markets with that stuff. We can buy these donated clothes cheaply at our so-called Mitumba markets. There are Germans who spend a few dollars to get used Bayern Munich or Werder Bremen jerseys, in other words, clothes that that some German kids sent to Africa for a good cause. After buying these jerseys, they auction them off at Ebay and send them back to Germany -- for three times the price. That's insanity ...

SPIEGEL: ... and hopefully an exception.

Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They're in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria's textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.


SPIEGEL: Following World War II, Germany only managed to get back on its feet because the Americans poured money into the country through the Marshall Plan. Wouldn't that qualify as successful development aid?

Shikwati: In Germany's case, only the destroyed infrastructure had to be repaired. Despite the economic crisis of the Weimar Republic, Germany was a highly- industrialized country before the war. The damages created by the tsunami in Thailand can also be fixed with a little money and some reconstruction aid. Africa, however, must take the first steps into modernity on its own. There must be a change in mentality. We have to stop perceiving ourselves as beggars. These days, Africans only perceive themselves as victims. On the other hand, no one can really picture an African as a businessman. In order to change the current situation, it would be helpful if the aid organizations were to pull out.

SPIEGEL: If they did that, many jobs would be immediately lost ...



Congolese line up for a United Nations food delivery in 2002.


Shikwati: ... jobs that were created artificially in the first place and that distort reality. Jobs with foreign aid organizations are, of course, quite popular, and they can be very selective in choosing the best people. When an aid organization needs a driver, dozens apply for the job. And because it's unacceptable that the aid worker's chauffeur only speaks his own tribal language, an applicant is needed who also speaks English fluently -- and, ideally, one who is also well mannered. So you end up with some African biochemist driving an aid worker around, distributing European food, and forcing local farmers out of their jobs. That's just crazy!

SPIEGEL: The German government takes pride in precisely monitoring the recipients of its funds.

Shikwati: And what's the result? A disaster. The German government threw money right at Rwanda's president Paul Kagame. This is a man who has the deaths of a million people on his conscience -- people that his army killed in the neighboring country of Congo.

SPIEGEL: What are the Germans supposed to do?

Shikwati: If they really want to fight poverty, they should completely halt development aid and give Africa the opportunity to ensure its own survival. Currently, Africa is like a child that immediately cries for its babysitter when something goes wrong. Africa should stand on its own two feet.

[Ebusitanus]

Sadly to see the only viable way for Africa are to set up strickt protectorates that would handle the distribution of the money and work towards repairing the old Colonial infrastructure and improve upon it. The actual spiral of corruption, political correctness gone mad, and bannana rulers can not be broken through simple nice words and more handouts.

[Viking Prince]

Charlie Rose 2/25 broadcast is partially on this topic. The braodcast is not uploaded yet.

A conversation with Jacqueline Novogratz

with Jacqueline Novogratz on Mar 25, 2009


A conversation with economic specialist Dambisa Moyo

with Dambisa Moyo on Mar 25, 2009

http://www.charlierose.com/schedule/

[sephodwyrm]

Like they will ever be able to repay this.

China, a few years ago, wrote off Africa's debts. Granted, the African nations don't owe China much, and the East Asian nation got a few pots of cash as well.

http://www.odiousdebts.org/odiousdeb...ContentID=9341

He offered to provide various types of professional training to 10,000 African personnel over the course of the next three years.

Wen Jiabao also said his government will work cooperatively with African countries in the prevention and treatment of AIDS, malaria, tuberculosis and other infectious diseases, in the prevention of natural disasters and in environmental protection. He also proposed a China-Africa Youth Festival and large-scale Africa-themed cultural exchange activities in China next year.

"It is an unshakeable policy of the new Chinese government to strengthen solidarity and cooperation with African countries and other developing nations," he told those gathered at the Second Ministerial Conference of the China-Africa Cooperation Forum – the first held on the African continent.

The Chinese premier said that his own country's development problems limited what it could offer, but that China would not impose any political conditions on this assistance.

Which means we'd support any dictator that promotes peace and stability and give him arms to fight rebel groups. Aid to Africa is not hurting them. Charging them for aid does.