At the heads of Commonwealth meeting in Uganda — where 53 states belong to the former British Commonwealth — UK Prime Minister Gordon Brown pledged 700 million pounds in development aid to the East African country. This adds to the yearly combined giving amount of $26 billion from Europe and recent substantial debt forgiveness by G8 finance ministers.
But aid, more often than not, stifles real development and industrialization in Africa. In fact, it goes further by enabling corruption and putting power in the hands of those who don’t deserve it. This isn’t merely coming from Western policy-wonks. Kenyan economist James Shikwati called for "ending this terrible aid" in an article noting that, on the whole, aid also hurts trade. And the president of Uganda himself, Yoweri Museveni, once said, "I don’t want aid; I want trade."
Investment capital is a needed component in the fight against abject poverty. Business solutions — in the form of direct investment by responsible, rights-abiding foreign companies — will help deliver slowing economies like that in Uganda and Africa at large from the world’s worst poverty by employing native Africans, paying them relatively good money, and training them in important disciplines.
Foreign direct investment isn’t the only trick in the playbook. The burgeoning microfinance industry, comprised by for-profit businesses and non-profit organizations, will help bring small native businesses to their feet and increase the flow of accessible capital at rates comparatively good for the borrowers.
Development aid has its place — but that’s just it: it has a place. It best assists emergency endeavors by funding medical treatments and food delivery. Development aid shouldn’t be the bread and butter of money going into Africa.
Bottom line: If the world is interested in ending endemic poverty in Africa, leaders should stop sending so much aid and start encouraging more trade.
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November 25, 2007 at 2:18 pm
Una
Instead of aid in the traditional sense, what about directing money toward capacity-building?
What if developed countries provided thousands and thousands of scholarships for African law, medicine, journalism, and business students to study overseas on the condition they would return to work in their home countries for at least ten years?
What about increasing technical assistance for building effective and ethical police forces in post-war countries? Development requires security.
What about providing more low-cost drugs to fight major killer diseases? Or, even better, helping African countries develop the ability to manufacture these drugs domestically?
Traditional aid has its place, but Africa’s poorest countries need sustainable solutions to their problems.
November 28, 2007 at 11:38 pm
Kara J
Una’s comment is well noted and full of good intentions, but I am going to have to agree here with Ryan. When we talk about dumping money into a country, even under the guise of technological aid, we always have to ask the question, who is buying what? Many types of traditional aid have money going to ineffective governments whose infrastructures are weak and corrupt a là Robert Mugabe of Zimbabwe. So here we have a case of western countries giving up purchasing power to governmental elite, who end up just using it to prop up their own despotic regimes.
Of course these aren’t the only sinkhole aid can fall into. The United States currently produces a surplus of food. This is due to large amount of subsidies to American farmers that make their products competitive on the international and domestic markets. That means in the end the US government has a lot of food with nowhere to go. This is why the US can donate so much food to 3rd world countries. Unfortunately this works out to the native farmer’s disadvantage as a rush of free food comes into the country which makes their produce near to worthless and starts a dependency, and again this all helps keep the prices of food form the US low so it can edge out the poor farmer in international markets. What we are talking about here is breeding a culture of dependency while uprooting the few bastions of self-sufficiency.
The list goes on, sometimes a needy country will take foreign intervention as a sign of colonialism-esque meddling and a challenge to state sovereignty.
By engaging these countries through trade on the other hand, we have an opportunity to motivate people with incentives for a better life.