Africa - the continent that keeps
failing?
Nicholas
Newman Wednesday, July
19, 2006
Almost
every day we hear that the West is to blame for Africa’s problems. Yet,
every day we hear the only solution is more European Union (EU) aid is
needed for sub-Saharan Africa, despite the EU spending some € 13.5
billion over the last five years in development aid.
There
are many theories as to why foreign aid policy has failed in Africa. It
certainly worked in South East Asia, which has transformed these
economies into economic tigers. Such theories that try to explain why
sub-Saharan Africa remains stubbornly poor could fill many shelves in a
library.
Such
theories as to why Africa has failed range from poor leadership to the
terms of trade being unfair for developing countries.
The
blame of the continent’s woes has often been blamed on predatory and
corrupt leadership. Certainly Mugabe and Mobutu have been accused of
amassing massive fortunes while bankrupting their countries. Yet, it’s
difficult to simply put it down to just corrupt leadership. Indonesia’s
Suharto; despite amassing a similar sized fortune, still managed to
achieve records in economic growth and poverty reduction.
Then
there is the snag, about the gullibility of much of the development
community to the latest propounded policy initiative. They are always on
the lookout for the next policy elixir on which to place their over
optimistic hopes. Seeming to forget the realities of life in Africa (yes
even cynical journalists get caught up in the spin of simplistic
hypotheses). It is not surprising that when reality finally strikes
home, we hear pronouncements that the EU has betrayed Africa, again.
It is
often said that opening up a poor country to world trade benefits its
people. A good example of this is China. The trouble is the lowering of
trade barriers can have its benefits and disbenefits. One idea
propounded is the removal of import tariffs on goods produced in poor
countries. The danger is such a policy ignores many of the political and
economic implications that would arise. If India implemented such a
policy and opened up its rice markets to poorer Vietnam, the world’s
second biggest rice exporter, India rice prices would fall, causing many
an Indian farmers into bankruptcy and the Indian government in deep
political difficulties.
Yet,
even where tariffs are used to promote domestic production, known as
import substitution, the disbenefits can be high as Malaysia found to
its cost. In 1985 Malaysia decided to establish a domestic car industry
and this political project gained much political kudos for PM
Mahathir. For Malaysia, the disbenefits
have been significant. High import tariffs on foreign made cars has
sparked a major car smuggling industry, increased the cost of motoring
and cost the Malaysian taxpayer billions. To make thing worse exports of
the Proton to Europe have had to be heavily subsidized to keep prices
competitive. Many car industry experts see little prospect of the
Malaysian car industry ever truly being competitive in the world
markets. In Africa, import substation has been found to damage the
economy, discourage efficiency and does little for the poor. Instead we
find the only ones who seem to benefit are the ruling political elites
as they profit from the bribes local business have to make to import
avoiding import tariffs.
The
dilemma is, more often or not, going on past experience, when an African
country is given some slack, it will use it to hang itself, just like
oil rich Nigeria has done many a time.
So if
trade policy, is unlikely to work in solving Africa’s problems. What
will? Well, two fashionable solutions are to continue to give aid, but
in a different manner, and the second is to end foreign aid all
together, and leave African’s to sort it out.
The list
of approaches to resolving Africa’s problems include, cutting back aid
by half, or requiring African ministers to make public their banking
details. The difficulty with requiring ministers to publish their bank
details ignores the fact that it is very easy to hide stolen money, as a
recent investigation into the corruption in the Kenyan government, by
Transparency International, discovered to its amazement.
Another
idea popular amongst aid givers, is the system of budgetary support, a
system where aid givers, simply deposit money into a countries
treasuries and governments, are given the freedom, to decide, how best
to spend the money. Kenya and Uganda were amongst the first to try out
this scheme, but the results were what old Africa hands had expected.
Much of the money disappeared, or went on arms spending rather than the
intended aim of poverty reduction.
Perhaps
one of the most interesting solutions suggested is to end the Gosplan
style (top down central Soviet inspired planning approach) so prevalent
in the development of Africa today. This has resulted in the continent
being littered with over ambitious schemes of white elephant dams,
palaces and stadiums. Such planning did not work well in its homeland of
Eastern Europe, and seems to be equally ineffective.
Another
approach involves where development policy mimics the free market. Here,
at the rural level villages or families are given vouchers to purchase
aid and development programmes. Governments would be bypassed, and aid
providers would have to compete with each other in their attempts to aid
their customers.
At least
this is a novel approach, but it does have its problems. The operators
of such a market would have to have some system to overcome the demands
of local corrupt intent on making money out of the scheme for their
benefit, to the issues of how to maintain resources for unpopular but
highly necessary services.
Finally,
an approach gaining much popularity amongst donor countries is targeted
project based aid; where there is a specific goal is expected to be
achieved. Here aid providers have total control through all the phases
of the project, having direct contact with locals and avoiding contact
with a states government.
China’s
growing influence in Africa is seen by many corrupt leaders as a fresh
source to enrich themselves, but already they are in for a
disappointment. The Chinese in Africa seem to be more hard headed than
the West has ever been when it comes to development aid.
It is
clear, that there are as many theories as to why Africa has failed, as
there are solutions. It looks like no one has got it right, not even the
experts, rock stars and press commentators. So when asked, what is the
solution? I answer, who knows? |
