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Monday, Nov 23, 2009
Corruption, selfishness and greed
Basically it is always the same reasons why development aid in Africa tends to disappear down a black hole: incompetent planning of the donor nations, which means that aid is always distributed according to the wrong priorities, as well as a combination of corruption, selfishness, greed and arbitrary use of government power in the recipient countries themselves.
Often, what started out so promising ends up as a fiasco. Hendrik Hempel, who works for the German Society for Technical Cooperation (GTZ), helped renovate a state-owned farm in North Eritrea after the war with Ethiopia. For years he literally created a blooming landscape.
But Hempel's case became a silent indictment of the incompetence of the ruling government party. He managed to get better yields than the state-run farms. But despite his success, he was forced to give up when the government suddenly installed hundreds of former freedom fighters, who had been left without work after a number of state-run farms had gone bust, as paid employees in his business.
Industrialization and trade, research and development have brought unparalleled levels of prosperity to more sections of society than ever before, first in Europe, and then in the USA. Asia is also making steady progress. The only continent that is falling more and more behind is Africa. And as a result of the dramatic increase in the exchange of goods, data and services, Africa has been left hanging completely.
Apart from South Africa and the West African oil states, most countries on the continent export almost only raw materials, which are notorious for bringing low returns on international markets. These countries barely participate in the sale of services and manufactured goods in international competition.
What is known as the "terms of trade" -- the difference in price between goods that are imported and those that are exported -- have worsened dramatically in large parts of Africa. At the beginning of the 1980s a coffee farmer had to produce 50 sacks of coffee beans in order to buy a tractor. By the end of the '90s this figure had jumped to 140 sacks. And the gap looks set to widen still further.
There is no improvement in sight. In 1964, the year of its independence, Zambia's most important export was copper. Today, 40 years on, copper is still the country's biggest asset. But if the prices fall -- raw material markets wobble up and down like flocks of birds on watering holes in the Serengeti -- the whole country instantly collapses into a major crisis.
In addition to this, industrialized countries put up extra barriers to products coming from developing nations. Although the European Union allows Africans to sell their goods more or less tax free in Europe, the E.U.'s agricultural subsidies have just as catastrophic an effect as any customs barrier.
Cotton from Burkina Faso doesn't stand a chance against subsidized material from Spain. Sugar from Mozambique, Ethiopia or Malawi cannot compete with heavily supported European beet crops. The criticism that Africans direct at Europe and America is, "we are so poor because you are so rich."
Africa is certainly owed a lot as a result both of the colonial control of the European nations during the 19th and 20th centuries, and the slave trade between the 16th and 19th century. However, as time goes on, the argument becomes less convincing: Forty years after the end of colonial hegemony Nelson Mandela is no longer blaming the whites for underdevelopment, but rather pointing the finger at the local politicians and their cronies.
Getting their house in order
The South African minister of finance, Trevor Manuel, and his Ghanaian equivalent, Kwadwo Baah Wiredu, are all singing from the same song sheet: Until Africans get their own house in order, all help will be in vain.
And it's certainly true that chieftains, kleptocrats and dictators have always known how to benefit from development aid. The late gun potentate of Zaire, Mobutu Sese Seko, was well off to the tune of at least $4 billion. The former despot of Kenya, Daniel arap Moi, who stood down in 2002, is likewise thought to have swindled $4 billion during his 24 years in office. "When the gravy train passes by, they all jump on," says Ross Herbert of the South African Institute of International Affairs.
James Shikwati, head of the Inter Region Economic Network in Kenya, thinks that aid should be funneled into private business, rather than state projects. "Instead of looking at the private sector, where profit guarantees discipline and efficiency, politicians concentrate on governmental projects which are not subject to profit and loss."
The German Federal Ministry for Economic Cooperation and Development (BMZ) has had some pretty positive experiences in financially supporting private initiatives. After all, when companies are affected, they have an interest in cooperating with aid workers -- for example, in the case of the workforce being decimated as a result of AIDS. For this reason DaimlerChrysler and the aid organization GTZ have come together to work on a joint project to fight the disease.
However fruitless development aid has shown itself to be so far, the general attitude has simply been to carry on as before. But now the hardboiled new president of the World Bank, Paul Wolfowitz, is modifying this approach. The middle of June he returned from his first visit to Africa, convinced that more money could only make Africa a "continent of hope" if the Africans themselves were more proactive.
"Aid is not the solution"
And now, even the countries that receive aid are coming out with more words of warning. Never before have so many African intellectuals called for an end to the classic type of development aid. "Aid is not the solution," was the headline of the Kenyan newspaper the Standard. According to the paper, aid does not go directly to the people but to "bureaucratic structures."
The worst thing about foreign aid, says the Monitor from Uganda, is that it prevents democratic development and urgently needed reforms. The paper also believes that aid stands in the way of long overdue and highly beneficial transparency in society.
German Chancellor Gerhard Schroeder's commissioner for Africa, the Green politician Uschi Eid, warns against sweeping acts of charity. If the donor countries don't make demands on Africans to act themselves, then they shouldn't expect any reforms -- which could be politically unpopular -- to be carried out. The "massive swing towards more giving," which especially Tony Blair is pushing his summit colleagues to do, she says, will only lead to us "laying double the amount of money on the table, but still not solving Africa's problems."
In Mozambique, at the beginning of the '90s, development aid made up 95 percent of GNP. Statistically the people of Mozambique lived as much off the charity of benefactors as from the results of their own work. Countries like Tanzania and Rwanda, which in the last few decades received more than 80 percent of their GNP in aid, are among those whose debt is now being canceled.
The complete dependence on help from abroad and the World Bank's absurd demands have killed off individual economic incentives. Western therapy for Africa is like giving poison to a sick man. Or chocolate to a diabetic.
Donor country generosity is giving a fatal signal. The message is that it isn't worth paying back loans, as at some point the international community will come along and take the burden anyway. "Those countries who, like us, have always paid their debts have been ignored, while those countries who have simply stopped paying are now getting all the attention," complains the Kenyan minister for planning, Peter Anyang Nyongo.
