The Only Thing Aid Feeds Is Hunger: The Failure of Development in Africa

by Lauren Sampson

In 2005, American economist Jeffrey Sachs published The End of Poverty: Economic Possibilities for Our Time, in which he calls extreme poverty a “global emergency” and exhorts the developed world to increase funding to debt-ridden countries, claiming that if development aid reached between $135 and $195 billion by 2015, world poverty will end. [1]

Well and good. Or, to phrase it correctly, well-meaning and good. Sachs’ idealism is a driving force behind the ideology of aid, which is a belief system espoused by everyone from Angelina Jolie to Bill Clinton. It boils down to the following: throw money at a problem, watch it disappear and commend yourself for your empathy, charity and liberalism.

Say all you like about how every dollar counts. The simple reality is that over the past fifty years, developed nations have channelled $2.3 trillion USD into international aid. [2] Yet all that money hasn’t even come close to making poverty history. The rate of African poverty actually increased from 11% to 66% between 1970 and 1998. [3] And yet the cries for more money are unceasing.

To extend a medical metaphor, aid is intended to treat the symptoms of crushing poverty, not the disease, and sometimes it fails to do even that. Aid has in fact, become part of the problem – a hindrance to economic self-sufficiency and political autonomy.

Africa is an excellent illustrative example of the ineffectiveness of the once-hallowed aid ideology. In fact, ActionAid, a South African based anti-poverty organization, published a report in 2005 claiming that almost 50% of all aid received in 2004 was “phantom”. [4] That is, aid was badly aimed, calculated twice as debt relief, tied to donor products or attached to a series of conditions. [3] Approximately 40% of Canada’s aid fell into this grouping. [3]

And it gets worse. In 2004, ¼ of global aid (approximately $20 billion) was spent on “technical assistance”, a widely censured form of aid that involves the sending of consultants, trainers and other outside experts, from developed to developing nations. [3] Because foreign experts are often poorly informed or prepared as to local conditions, their training and advice can prove ineffective, or even counter-productive. Former World Bank economist William Easterly argues that such individuals epitomize the modern “white man’s burden”: well-meaning North Americans committed to utopian ideas intended to raise indigent states out of their wretched poverty. [2] Any benefits to the donor nation are attributed as by-the-way conveniences.

A less subtle example of Western beneficiation is tied aid, which must be spent on goods and services from donor nations. According to estimates from the Organization for Economic Co-operation and Development (OECD), tying aid essentially constitutes protectionism, increasing costs by eliminating competitive bidding. [4] Poor nations are then not permitted to spend aid money on goods and services produced domestically. Canada today ties 47% of its aid while the US ties 70%. [3] The interests of the first world have always and will always come first.

And of course, when money actually enters a country, it can often do more harm than good. Foreign aid has become the primary source of income for several African countries, constituting 97% of the government annual budget in Ethiopia and the Gambia. [5] If a country’s revenue is principally derived from sources outside of its territory, its government is no longer dependent on tax dollars and is consequently not accountable to its population. Aid money rolling into Africa can bankroll brutal regimes – a critique of the Live 8 concerts (prime examples of the cloying spectacle that aid has been reduced to) argued that aid to Africa has simply propped up dictators and despots. [6] William Easterly notes that the world’s 25 most undemocratic government leaders were granted $9 billion in foreign aid in 2002. [2] Conflicting interests are at play – while loans to Chad were frozen during Paul Wolfowitz’s time as President of the World Bank because of concerns surrounding government corruption, they were resumed after Chadian President Idriss Deby threatened to cut off oil exports to the West. [7] It is perhaps naïve to believe that anything other than economic expediency is the order of the day.

Ultimately, foreign aid is a vicious cycle, with the capacity to distort wages and exchange rates within a recipient country, reducing competitiveness. [5] It undermines any pretence at democracy by making African governments answerable to donors rather than their electorates. And it can further entrench unhealthy aid dependency, stifling investment and leading to higher rates of poverty – all of which, in turn, creates a demand for yet more aid. Dambisa Moyo, a Zambian economist, argues that:
“There is no incentive for long-term financial planning, no reason to seek alternatives to fund development, when all you have to do is sit back and bank the cheques”. [3]

The idea is slowly crystallizing in Western and African consciousnesses; for example, in February 2009, Rwandan government officials decided to reduce dependence on foreign aid by a considerable amount in order to strengthen economic autonomy. [8]

But why then is aid such a sacrosanct concept? Why are we morally bullied into forking over billions of dollars every year for foreign aid, which demonstrates only the most isolated of gains? The logic to this paradox is both political and personal. Presidents plug foreign aid programmes to divert an electorate from unpopular wars and flagging national programs. Aid workers point to the delivery of equipment and manuals as proof of a job well done and disregard actual usage or outcome. In the West, aid boosts a donor’s public image or self-esteem, functioning as a public relations move rather than a long-term viable solution. In Africa, aid can harm more than it helps. Donating money makes us feel noble, as if we’re part of the solution and places us on a sanctimonious perch, from which we can look down on Africa, shake our heads and write cheque after magnanimous cheque. It may not be useful but at least we’re doingsomething. Right?

Wrong. Africa is not the place to try out a Marshall Plan 2.0, for development and reconstruction are hardly identical. Perhaps foreign aid is championed for the same reasons as democracy: it is simply the most familiar and idealistic system we have. But aid is not the only way to vitalize an underdeveloped region. As the rapid advance of Asia’s poorer countries in the past fifty years demonstrated, indigenous economic activity is a necessary source of domestic growth. [2]

What then are Africa’s solutions, the more effective ways to bankroll development? In Dambisa Moyo’s view, realistic steps must be taken to eradicate trade barriers within Africa. [5] The OECD should cut agricultural subsidies, which prevent African farmers from exporting their goods abroad. [4] Transferring money (particularly remittances from those overseas) needs to be made an easier, cheaper and more efficient process. [5] Moyo also argues that direct investment (particularly on the part of China, which sunk $900 million into Africa in 2004) and the consequent construction of infrastructure such as roads and railways to extract minerals and crops have had a largely positive effect. [3] Small scale banking schemes, including microloans (extension of small loans to stimulate entrepreneurship, as per the Indian Grameen Bank and Kenyan K-Rep Bank) and micro-financing (poor households and businesses are given access to financial services) are also possible sources of growth. [3]

The top-down system of international aid has mostly been a failure, for both ideological and economic reasons. It places conditions on loans that contradict the desires of elected governments and may harm the poorest inhabitants of a country. It is poorly synchronized and rarely accountable, as donors make lofty pledges (like the Millennium Development Goals) and then do little to see them through. Western beliefs and traditions are thrust upon unsuited regions while lessons of the past are never truly learned. Success is measured by how much money is promised, not what results are generated.

Even if the suggested prescriptions do not work instantaneously or on a grand-scale, they will at least give small-scale entrepreneurs, farmers and business people opportunities extant in other of the world and give Africans even a modicum of control of their own economic destiny.