For how long should Africa depend on aid?

Rwanda and a handful of countries have been credited for utilising donor money well. For Rwanda it should come as no surprise. There are many levels of scrutiny and stringent accountability demands that nothing would be left to chance. This is becoming the norm and not the exception for this country. In numerous development partners meetings over the last several years, this observation on proper utilization of donor funds has been echoed by representatives of development partners and other members of the donor fraternity. But challenges remain. Among the serious challenges noted include the challenge of poverty eradication. It is probably not an exaggeration to say that poverty remains the oldest and perhaps the most resistant virus whose killing can not be compared to any disease from the genesis of mankind. It will be recalled that Africa is the world’s most aided region in the world. Yet economic growth has been disappointingly low. There is need for honest debate on aid effectiveness in Africa if the problem of aid can be tackled.To say that Africa is the most aided continent is no exaggeration. For instance aid, as a proposition of gross domestic product, has averaged over 5% for much of the past two decades and a half and has reached nearly 10% at times and still equals nearly 6% of the region’s GDP!While Rwanda may be performing reasonably well at an annual economic growth rate of nearly 8%, the development performance of the majority of African countries has been deeply disappointing. There is now serious thinking that aid could actually be contributing, as Dambisa Moyo has illustrated in her book, “Dead Aid: Why Aid is Not Working and How There is another way for Africa”. She laments in her book that over the past years at least 1 trillion of development-related aid has flowed into Africa, yet the number of people living on less than a dollar a day has nearly doubled. I bet she is neither the first nor the last observer to say this. The impotence of the aid industry has been widely condemned and a lot of critiques have been given on the failings of this ‘lucrative’ industry.The philosophical basis for the aid industry should and must be questioned. There are three factors that could explain this phenomenon of aid dependence and Africa’s poor performance. One of these factors is the frequent lack of a proven technology for achieving the desired goals. True, we may know how to build roads and know how to manage elections.However, democracy is not just about elections. Little is known about helping our small farmers expand their production or improving the accountability of newly elected governments. Similarly little is known about how to strengthen our judiciaries, civil society organizations or the civil service. Interestingly, much of what foreign aid tries to do at present is activities like these that involve institutional or behavioral change. The other equally interesting issue is that donors tend to know relatively little about societies or institutions in which they are trying to bring about change. Donors seem to have a straight jacket approach to development with regard to the developing world, especially Africa. While we may know the benefits of globalization as Africans, the fact remains that it has contributed to our countries a physical squeeze that has increased difficulties in the raising of revenue. This has consequently enhanced the demands for public expenditure.One of the main potentially negative economic consequences of aid dependence is transmitted through the ‘Dutch disease’. This simply explains that when there is a large increase in available resources such as the known surge in export prices, discovery of major mineral deposit or even surges in foreign aid, the increase in domestic demand for non-tradeables can provoke a rise in prices and currency overvaluation.What ever one can say about aid and its effect on our economies, one thing remains clear. Recipients of foreign aid must have ownership of the aid-funded activity or else it will not be implemented effectively and sustained.While we appreciate funding from our development partners, we must question the donor-inspired policies that perpetuate the exploitative economic relations reminiscent of the colonial era which is largely to blame for perpetuating the rampant poverty in our otherwise rich continent. And if I may ask, for how long can we continue to depend on aid? I guess your answer is as good as mine.

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For how long should Africa depend on aid?