This could be Africa’s decade, but not if it relies on aid

Nick Thorne

b 300x207 This could be Africas decade, but not if it relies on aidIn the last decade, six of the world’s 10 fastest growing economies were in Africa. While everyone was talking about China, Angola was in fact top of the list, growing at an extraordinary 11 per cent per year. With the current Euro crisis, Angola has even bought assets from its ex-colonial master, Portugal. Even Ethiopia, a country which has a painful recent history of famine and war, experienced 10.9 per cent GDP growth last year. A growing list of African countries including Ghana, South Africa, Botswana, Namibia and Morocco are on the up. So does this mean that the provision of international aid is finally working?

Unfortunately, the answer is no. As Tanzanian journalist Andrew Mwenda puts it, aid is about reducing poverty, not creating wealth. Whether it is food aid or sending in peacekeepers, the objective of aid is to mitigate the effects of poverty, war or famine. While it achieves some good, it tackles the symptoms, not the causes of Africa’s ills. The awakening African economies are the ones which have a growth strategy. As Mwenda says, ‘do you know anybody who grew rich by holding out a begging bowl?’

Angola’s oil and diamond revenues last year totalled more than double the entire African aid budget. At the same time there are 16 Sub-Saharan countries whose foreign assistance accounts for more than half of the total government expenditure. As a proportion, aid to these countries represents more than aid to Germany under the Marshall Plan. First of all this shows the extent of the differences between African economies. And secondly it shows how the countries that receive the most aid are not the richest. In fact, there is a strong case to be made that aid is harmful to Africa.

For many African governments, aid generates more revenue than taxation. Aid destroys the incentive to cooperate with and invest in local entrepreneurs and business leaders, because governments find it more profitable to negotiate with international institutions such as the IMF and World Bank. Thanks to aid, graduates in many African countries know that they will earn far more as a civil servant than they can ever hope to in business. Aid feeds what George Ayittey has called the ‘vampire state’ – corrupt governments that suck the vitality out of the economy.

An interesting case in this debate is Somaliland, the northern autonomous region of Somalia, which has tried but failed to gain recognition as an independent country since 1991. As a result of its status, the government of Somaliland is not eligible for foreign assistance. Nick Eubank argues that this has been Somaliland’s saving grace. With no external funding available, the government has to negotiate with its own citizens and business leaders. The owners of Somaliland’s main port withheld tax revenues from the government, and released them in exchange for democratic reforms. Somaliland has become a thriving democracy, thanks to the fact that the government was dependent on and beholden to its own populace rather than to foreign aid.

A widely held belief is that Africa needs micro-finance projects – small targeted investments into local schemes. As Angus Kennedy pointed out at this year’s Battle of Ideas festival, ‘micro-finance is by definition micro. It’s neither here nor there’. Instead, Africa needs to think big and harness its own resources. A new joint project between Somaliland and Ethiopia involves the construction of a pipeline to tap into Ethiopia’s natural gas reserves.

Rather than preach sustainability, micro-finance and aid, we should welcome developments such as these. Africa is an awakening giant. If more African countries can free themselves from the shackles of aid, this may indeed be Africa’s decade.

Throughout October and November, The Independent Online is partnering with the Institute of Ideas’ Battle of Ideas festival to present a series of guest blogs from festival speakers on the key questions of our time.

Nick Thorne is a journalist and charity fundraiser.

  • Firozali A.Mulla

    Nick Jokes aside. The Chinese are coming in . Each one gets the grant from the govenment of 200$ and a credit tooand a  container of 20 or 40 feet. So the picture you show now is or will become obsolete I hope as we too like you have the high corruption, ALL HAVE THIS. Deny not. As curios as a human can be I am one. I asked my mom, “Where does the black pepper come from?” She replied, “South of India, a state called Kerala and still they can  afford spraying the population with the black pepper. She asked why I had this question when there was no need of the pepper. I causally replied, “You see mom, this reminds me of Chemical Ally. The USA has fallen 249 or 2% points. Do you think USA is heading for a meltdown?” She replied not. She does not understand points etc. While I jump at the opportunity to someone’s adventure, his only condition is I write of his adventure and this time I fail to write anything. Now Barrack Obama wants to veto because of failure of the kick-start to cut the deficit. Do we need religion or ethics has always been in my head. The amount stands staggering at $ 1.2 trillion… Romney blames Obama for the collapsed deficit. What I love about this is, no one takes the blame. It is HIM. All this is hitting the world economy. ONE STATE AMERICA that stood high now bleeds and let other bleed too. That is humanity, I guess. France slows growth as borrowing costs while the good news is Egyptian government resigns from ruling the military council. How can we prevent the Military suicides? This is the question we have today as all dig deep in the pockets. “There was a great deal of laughter and happiness at Henley House. At one stage the boys were asked in a typical test paper (‘not tests of what a boy has learned, but intended to make him think’) to name the things in the world that appeared to them most beautiful. The responses were on the whole predictable: moonlit nights, picturesque ruins, lakes with swans swimming, a field of flax in flower, the sun setting at sea. But the reply which brought the warmest  response from the headmaster was – ‘a boy with a smiling countenance’. He annotated this ‘Et moi aussi’. J.V Milne’s delight was in the happiness of his pupils – true happiness, of course, not the spurious happiness of the indulged. “It was a family school and a school with an unusual method of awarding prizes.  It was not quite a case of ‘Everybody has won, and all must have prizes’, but a  boy was competing only against himself and not against the other boys. As long as he received 75 per cent of the possible marks, he received a prize. ‘There was no danger of emulation becoming envy.’ In December 1882 the boys received their prizes
    from Mr Milne’s two children, Barry and Ken, aged three and a half and two years, sitting on a table surrounded by books. Alan was presumably there too, aged eleven
    months, sitting on a friendly knee.  This from Alan (A.A.) Milne, the author and playwright who later became
    world famous for Winnie the Pooh, grew up in the 1880s I thank you Firozali A.Mulla DBA

  • Firozali A.Mulla

    We are not looking at the differences. We are looking at the Chaines growth against the poverty I thank you Firozali A.Mulla DBA

  • franvalc

    What a total nonsense … and totally impossible to read/ understand/ or even try to make some sort of sense. No logics, no grammar etc etc etc

  • Blaggerr2011

    What a lousey blog.

  • Blaggerr2011

    “How can we successfully achieve scale?”

    Not sure were you got the $3+ trillion in aid. However Government-to-Government aid is ‘bribery’ to the West’s puppet regimes. After all we don’t see Mugabe’s, Mahmoud Ahmadinejad’s or Assad’s government getting much aid!

    For every $ in aid $10 make it back to the West.

    Lets not forget the subsidies the US and EU give their farmers and then dump the produce as aid and so further subsidising their agri sector.

  • Blaggerr2011

    “The biggest mistake of all is the propagation of the value of dog eat
    dog/me me me. Why teach your children to share when all it will do is
    hold them back in business later on in life.”

    It worked for the West and continues to be the mantra!

  • Firozali A.Mulla

    Time to clean house and stop wasting money.What is Black Friday? White Christmas. Well if the government goes broke we have one. I see the first. Black Friday. No cash. My friend says… As a vet I support our troops. But I can also tell you the defense budget CAN afford a less than 10% budget cut. ALL agencies, yes all, can afford to lose 10% off their budget. Stop protecting your sacred cow and your sacred politician. I thank you Firozali A.Mulla DBA

  • PeterPuffin

    I have to say that the fashion in which Mr Pollack describes “sin” is most unfortunate. He describes a moral position that was much parodied by Charles Dickens in his tales of the hypocrisies of wealth position and poverty in Victorian England. I suuggest that a good read of Oliver, Nicholas Nickleby etc might be helpful. I have find his attitude distasteful.

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