Aid is not a gift, it’s a tool

SOME PEOPLE might have been surprised that South Africa, which boasts more than a third of sub-Saharan Africa’s Gross Domestic Product, still receives donor aid when the British government recently announced it would halt direct budget support to the country in 2015. The UK aid, worth 19 million British Pounds each year, helps poor South Africans start or grow their businesses, and reduce the number of women dying during childbirth in the country. South Africa is a member of the Brics group – composed of Brazil, Russia, India, China and indeed South Africa – which recently showed its muscle by announcing at a Brics summit in Durban, that the five countries will pool $100 billion of central bank reserves to guard against future economic crises affecting any of them. Being a member of such an elite club of emerging markets suggests that South Africa may not exactly be classified as poor, having emerged in a span of just two decades from Apartheid into a regional powerhouse. The country has, however, vehemently protested against the impending withdrawal of UK aid, suggesting that it may still be in the grip of economic and development doldrums that call for some outside support. A scholar once put it that “aid is developmental only if it lays the foundation for its future rejection”, meaning that aid is only worthwhile if it leaves the recipient better-off and self-sustaining as to never again need it. This is a tall order given the central role of the donor community in development projects and fiscal programmes across sub-Saharan Africa. But can South Africa’s case be termed donor dependence? One definition of such dependence is that it is “as an explanation of the economic development of a state in terms of the external influences – political, economic, and cultural – on national development policies.” We know that aid is not just the transfer of money, but also of goods and technical assistance from a donor to a recipient. But, the cynics among us also know that aid is not a gift; it is a tool. It serves the strategic interests of the donors and their institutions. It plays an enabler for their overall strategy to maintain and expand their influence. We, however, also know that though not benevolent, aid is neither valueless. Examples exist that aid can have a positive impact on economic growth. Rwanda is a good example. When properly used can increase investment and the capacity to import capital goods or technology, as well as increase capital productivity and promote local technical advancements. If this is the case, aid can therefore be a tool that cuts both ways. It may serve the strategic interests of donor countries and institutions, but it can also help in the development of the recipient nation and its people. But it is not enough. Foreign aid, along with domestic savings, human capital and export have all been correlated with economic growth. This follows the assertion that overseas development assistance can accelerate economic growth by supplementing domestic capital formation. But it’s important not to forget the history of aid, however unpleasant it may be. At one time, colonial powers were concerned with the economic development of the territories they occupied. To entrench themselves in those territories, they would often give economic assistance to their proxy governments. It did not matter that, as history would have it, the beneficiaries of the assistance would morph from the minority ruling white elite of the colonial times to the black elite across the continent. Thus, even after independence, political and economic interests overshadowed in the well-known story of the newly elected black elite and the donor interests leading to today’s half-hearted decry of stifling neocolonialism. In short, South Africa, like the rest of the donor supported continent, is a child of its own history. Twitter: @gituram

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Aid is not a gift, it’s a tool