By Tesfaye Habisso June 18, 2010

“ Like a towering lighthouse guiding sailors towards the coast, ‘development’ stood as the idea which oriented emerging nations in journey through post-war history. No matter whether democracies or dictatorships, the countries of the South proclaimed development as their primary aspiration, after they had been freed from colonial domination. Four decades later, governments and citizens alike still have their eyes fixed on this light flashing just as far away as ever: every effort and every sacrifice is justified in reaching the goal, but the light keeps on receding into the dark.” [Wolfgang Sachs, The Development Dictionary: A Guide to Knowledge and Power, Zed Books, London, 1992, p. 1]

For the past several decades since political independence from European colonialism, industrial countries have provided hundreds of billions of dollars to developing countries in the form of foreign aid or development assistance (also called Overseas Development Assistance, or in short ODA). The figure of ODA rose from $6,480,000,000 in 1965 to $46,697,000,000 in 1989 [Harriet Baldwin, et. al., The World Bank, 1993]. According to the World Bank, aid inflows to Sub-Saharan Africa rose from 3.4% in 1980 to 16.3% in 1995. These official inflows typically funded basic government development expenditures [ibid]. In spite of such massive development assistance and as the aforementioned quote clearly illustrates, foreign development assistance (ODA) has failed to bring forth any meaningful and sustainable development for Africa; for most African countries, development has remained a pipe-dream, or rather a mirage, and not an achievable goal yet even at the dawn of the 21^st century.

As the recent Ethiopian Economics Association report succinctly put it, “…If by aid we mean making a difference in the lives of people over the long term, helping people to live in a situation whereby they do not have to face those kinds of emergencies, then obviously aid has failed, because the number of people affected by emergencies has significantly increased over the years…Aid in the short term might have saved lives, but in the long run it seems things are getting worse…” [Dr. Birhanu Nega,Ethiopian Economics Association, 2004 Report].

Today, Africa is still the most undeveloped and the poorest continent in the world by all standard social and economic indicators one chooses to use:

“Half the population lives below the poverty line, that is, on less than $1 a day. Sub-Saharan Africa, where more than half (51% of the population live in absolute poverty), is home to almost 291 million poor people. More than half the population has no access to safe drinking water. More than 2 million infants die annually before reaching their first birthday. The mortality rate of children under five is 140 per 1000, and life expectancy at birth is only 54 years. The rate of illiteracy for people over 15 is 41%. There are only 18 mainline telephones per 1000 people in Africa, compared with 146 for the world as a whole and 567 for high-income countries. In 1998, Sub-Saharan Africa’s debt stock was estimated at $236 billion and that of the entire continent was over $300 billion. Africa’s debt burden is twice that of any other region in the world—it carries 11% of the developing world’s debt, with only 5% of its income. GNP per capita in Sub-Saharan Africa is $308 while external debt per capita stands at $365” [Time for a NEPAD Reality Check, The Star, Tuesday, September 9, 2003, p. 13].

A recent leading article in the New York Times Magazine paints a similar bleak future for Africa:

“ Each year most nations in the region [Sub-Saharan] grow poorer, hungrier and sicker. Their share of global trade and investment has been collapsing. Average per capita income is lower now than in the 1960s, with half the population surviving on less than US$65 cents a day…During the past decade or so, the poorest of Africa’s poor have suffered as rarely before—hunger has become a chronic problem throughout the region, often occurring even under the best of weather conditions. The World Food Program warns that nearly 40 million Africans are struggling against starvation, a “scale of suffering” that is “unprecedented”. Coincident with the hunger is HIV/AIDS, which has beset Sub-Saharan Africa in a disproportionate way, cursing it with 29.4 million infections, nearly three- quarters of the world’s caseload.” [The New York Times Magazine, 13 July, 2003, p. 3]

The continuing failure of official international aid to encourage the emergence of a self-sustaining growth in agricultural and industrial sectors, geared to local needs, has led many to question the appropriateness of aid per se. A number of problems with the current system of aid assistance have been identified: (i) Since some of the aid is in the form of loans rather than direct grants poorer countries may find themselves getting into increasing debt; (ii) A considerable proportion of any aid package is swallowed up in payments to technical experts, the field-staff of the donor countries, or on the costly housing, transport, and diet arrangements made for them in the host country. As the New Internationalist (1981, p. 9) noted: “Up to 25% of Western aid budgets is spent on experts. After salary, airfares, school fees, various perks and home based overheads are covered, the average British expert costs $ 150,000 a year.”

(iii) An important form of assistance to Third World countries is food aid. In the long term food aid can have serious social and economic consequences. Economically it tends to undermine the Third World agricultural sector by depressing local markets and so discouraging local production. Despite farmers’ desire to work and cultivate successfully, local economic conditions mean that there is limited opportunity to get an adequate return on one’s business (Mann, 1969). Socially this can lead to farmers going out of business adding to the huge volume of under-employed and unemployed landless laborers. Politically it can also encourage a subservience to donor states by Third World governments such that they may be obliged to buy surplus donor goods when they are unwanted: for example, Pakistan has had to take surplus US cotton when it had sufficient of its own (Andrew Webster, 1988); (iv) Aid often increases dependency by being loaned to a country on condition that it is used to purchase goods from the donor country: this is known as aid tying. Almost 70 per cent of British aid is loaned on these terms, which means in effect that aid provides an important market for British manufacturers.

As King (1975, p. 9) says, “Aid creates more jobs and leads to the establishment of more industries in the developed than in the developing countries. The main beneficiaries of aid are those countries which provide the bulk of international expertise to developing countries and which export equipment, through direct links with aid agencies and projects, to them.”

(v) Aid beneficiaries in the Third Word tend to be urban centered—the bureaucrats, entrepreneurs, politicians, and industrial workers. The poorest in the rural sectors, those that one might think are supposed to benefit most from aid, particularly food aid, usually end up seeing very little of it.

As the well-known Pan-Africanist and left-wing intellectual Tajudeen Rahman forcefully argues, aid does not and cannot develop any society. It is not designed to achieve this objective in the first place. Development must be the direct result of people's efforts to take control of their own destiny because nobody owes us a living: We owe it to ourselves. The argument is not whether Africa needs help or not but that it is too weak, fragmented and vulnerable to be able to decide where and when it needs help now. In this situation, aid has created an artificial atmosphere of a few ^‘good guy states^’ that are kept in power by donor funds and external support without any accountability to their own peoples. Nobody can point to any society whose development has been the result of external help that remained sustainable. Development has to come from within and not without, if it is to be sustainable. Aid creates aid dependency and aid addiction that undermines Africa's capacity to help itself. A situation where aid becomes the biggest component of the annual budget of a country's recurrent expenditure and almost all of its capital expenditure undermines democracy and accountability to citizens. If our governments are not in power due to our taxes, why should we expect them to be accountable to us? They will be accountable to those who are paying the pipers. That is why our leaders troop to London, Washington, Paris, Brussels and other non-African capitals to show their masters the required allegiance and that they are ^‘good guys^’. Unfortunately, the same applies to our successful NGOs too. It is immoral that governments that cannot build roads, schools or hospitals but are ready, willing and able to wage all kind of unjust wars, or to perpetrate gross human rights violations against their own citizens without needing any IMF/World Bank aid should turn around to make a claim on the outside world to help them feed, clothe, educate and make their people healthy [Tajudeen Rahman, 2006].

“Analyses confirmed that the countries that had refused to yield to the IMF demands did best. China was a prime example. Although implementing policies to encourage international investors, Beijing took a very different course from that advocated by the IMF. Foreign investments were channeled into factories rather than securities, thus insulating the country against future capital flight and also providing employment and other spin-off benefits. India, Taiwan, and Singapore defied the IMF; their economies remained robust. Malaysia acquiesced, endured a recession, then turned its back on SAPs (Structural Adjustment Packages) and rebounded.” [John Perkins, The Secret History of the American Empire, p.73].

Some of the major recipients of IMF and World Bank aid over a number of years in Africa, like Sierra Leone, Liberia, and Somalia, later became failed states. One World Bank report has even admitted that the three developing countries that have done the most to pull their people out of poverty on a mass-scale are Cuba, China and Vietnam. What the report, however, failed to say was that these are countries that have received no IMF and World Bank aid. In Africa itself, the countries that have the best infrastructure and most flourishing economies are those that receive very little or no IMF and World Bank aid. Botswana does not receive IMF and World Bank aid but has a flourishing economy with good infrastructure and good governance. A World Bank economic forum report recently ranked Botswana first out of 21 African countries for good governance and the rule of law. According to the survey, Chad, which has received massive IMF and World Bank aid over the years, was rated as having the worst public institutions. Namibia receives no IMF and World Bank aid either and is noted for its good governance, good infrastructure and low level of corruption [Trevor Johns, 2009].

Most African states do not need aid; they need proper government that respects its people, insures good governance, the rule of just law, and puts the public's interest above personal and cliquish interests; they need proper governments willing and ready to root out patronage and corruption, the high cost of public administration and outright wastage of public resources. Why should the World Bank or IMF or anybody give aid to Nigeria, for instance? It has more than it needs but has not got what it deserves in leadership--management of government! So, if the West really wants to help Africa, there are a number of things it can do.

One, Western governments and financial institutions should remove all obstacles to free and fair trade which benefits them at our expense, be it IMF/World Bank, WTO or other unfair multi-lateral agreements.

Two, it should accept that the debt owed by all African nations and the developing world is odious and should be written off immediately for everybody, not just a few favorite strong men rulers who they hope will act or are acting as their foremen in Africa. It does not make for sustainable development for Ethiopia and Uganda, for instance, to have the HIPC privilege if the rest of the Horn of Africa, East Africa and the Great Lakes Region is denied it [loc. Cit.]

Three, the West should show its true commitment to free trade by removing all the trade, tariff and non-tariff barriers that continue to prevent Africa and other poorer Third World countries from competing fairly in their markets. For instance, the grotesque subsidy enjoyed through the common agricultural policies of the European Union that protects its unproductive and uncompetitive farmers in the industry or the protectionist measures of the US government that advantages its industry must be removed, if the West indeed wants to help Africa.

Four, globalization should be truly global in terms of addressing the global problem of poverty and the freedom of labor to move across continents without any hindrances or impediments whatsoever. Remittances to Africa are now more than total budget for aid collectively and in some countries it may even be more than the national budget. Let these largely illegal immigrants in Europe and America be legalized and they will help develop their countries. Without this, aid to Africa will only be a case of someone beating you and at the same time offering you a handkerchief to wipe your tears. This is the time for African governments to design an exit strategy for their countries to get rid of this aid dependency over a fixed period of time! [T. Rahman, ibid].

Aid is worse than AIDS, in the long run. After all, AIDS kills specific number of people who do not take proper care to prevent it; aid on the contrary, kills whole generations and those to come in the future (“Blessed are the young for they shall inherit the national debt”!). It is only the commitment and the ability on the part of governments, local people and businesses to retain domestic income and to save more and to invest their savings in things that increase their ability to produce more that will jump-start and accelerate economic development, and, surely, not foreign aid.

With over 50% of Africans living below the poverty line, that is on less than $1 a day, African policymakers have focused on policies that encourage external donor funding rather than mobilizing domestic savings and other resources to their governments. Dependence on aid has led African governments to virtually cede the shaping of their economic and social policies to external agencies. Wealthy nations and international institutions such as the World Bank and the IMF have become the central economic planners for Africa. The result is sporadic project implementation, corruption, poor economic performance attributable to inept policies and lack of human skills; political tensions, as the elites of each ethnic community jostle to partake of the ‘national cake’; and disaster due to donor fatigue.

Africa must urgently move from engaging in reforms to please donors to reforms that will encourage local entrepreneurship and the private sector. Recent developments in Africa in general demonstrate that people are suffering from the fatigue of excessive state manipulation. One regime after the other promises to make life for Africans better but they have all ended up taking away individual liberties and even terrorizing the populace in the name of public safety and/or state security. Citizens are made so docile, terrified and submissive through unabated state repression and terror that they have no courage to stand up for their rights, to make their own independent choices and decisions, and to put their destiny in their own hands.

In essence, African government systems have become agents of dislocation and creators of vulnerability for their own people. They respond to the wishes of the donor community rather than to the views of their own citizens. Rather than strengthening and raising the productivity of the agricultural sector, they provide food aid to the farmers. Rather than strengthening their economies to enable Africans to afford drugs, they ask for free medicines. Rather than focusing on increasing the volume of trade with the developed world, they ask for donor funding. Instead of investing their meager resources on infrastructure, social services and agriculture, they waste them on military hardware, senseless wars and conflicts, and on conspicuous consumption. If Africans are not already enslaved, they are steadily and unwittingly trudging the road to serfdom, if not direct colonialism.

Finally, let us Africans be aware of the fact that most foreign aid to our countries, including IMF and World Bank aid, is about power, and that it has been one of the ways in which powerful countries as well as institutions like the IMF and World Bank encode their doctrines and impose them on Africa, to the detriment of all developing countries. Institutionalized aid has already created parasitic neo-colonial regimes/states in much of today’s Africa. Most African regimes today cannot survive for long without external assistance: they have virtually become so fragile and hopeless that they are destined to crumble and die once donor aid is ended, akin to hospital patients put on drips. Unless a farsighted and viable strategy is formulated in time toward an exit strategy from ODA/donor dependency, the future seems very bleak for all of us Africans. Do we have any clue as to how we could get out of this impasse? No Western scholars seem to come to the rescue of Africans so far.

Recently however, an African Harvard and Oxford graduate economist who had worked for more than a decade at the World Bank and Goldman Sachs and hailing from Zambia, Dambisa Moyo (2009), offers four alternative sources of funding for African economies, none of which has the same negative effects of development aid (ODA). These alternative sources of funding, according to Moyo, are the following: "First, African governments should follow Asian emerging markets in accessing the international bond markets and taking advantage of the falling yields paid by sovereign borrowers over the past decade. Second, they should encourage that Chinese policy of large-scale direct investment in infrastructure....Third, they should continue to press for genuine free trade in agricultural products, which means that the US, the EU and Japan must scrap the various subsidies they pay to their farmers, enabling African countries to increase their earnings from primary product exports. Fourth, they should encourage financial intermediation. Specifically, they need to foster the spread of micro-finance institutions of the sort that have flourished in Asia and Latin America. They should also follow the Peruvian economist Hernando de Soto's advice and grant the inhabitants of shanty towns secure legal title to their homes, so that these can be used as collateral..."[Dambisa Moyo,DEAD AID: Why Aid Is Not Working And How There Is A Better Way For Africa, 2009, pp. x-xi]. Would African states and governments heed the wisdom of this great African economist? Let us wait and see.