I have previously written about Vidagas and how they have innovatively developed a commercial business to become the largest distributor of propane gas in northern (mostly rural) Mozambique.
Posts Tagged ‘africa’
The Trouble With Africa: Why Foreign Aid Isn’t Working
by Robert Calderisi
If you care about a hopeful future of Africa, you’ll want to read different perspectives to make sure that you’re getting the whole story. Calderisi tells about his experience working for much of his 30+ years in international development (mostly in Africa and mostly with the World Bank) and provides an insider perspective on why we are attaining so little results from our aid investments and makes some very specific recommendations on how we should re-direct international aid efforts.
The book is organized more into personal stories and observations which are helpful illustrations but make the book less organized that it could be. Calderisi finishes up with 10 recommendations which I thought could have been made earlier and then expounded on in more detail. Maybe that’s his next book ;-)
No cash to tyrants. Calderisi has a very different perspective than Jeffrey Sachs who has recently gained popularity with Tony Blair, Bono, Clinton and others with his End of Poverty ideas/book. Sachs advocates primarily for increasing the international aid budgets to help Africa out of what he calls its poverty trap (read Easterly’s critique of this theory). Calderisi argues that the international community (including donors) have to play hardball with the rampant corruption of government thugs in Africa who are more interested in flying first class and depositing ill-gotten cash overseas than in truly helping their countries build a better future for their citizenry. He goes into detailed stories of how these various thugs have ruled Africa and how most African countries are still ruled by thugs — even those considered democracies. He says we need to declare that the holiday is over for African tyrants.
Africa needs to move from victim to ownership. Calderisi argues that “slavery, colonialism, the Cold War, international institutions, high debt, geography, the large number of countries and population pressures all have had an effect on Africa. But none of these can explain why the continent has been going backward for the last 30 years.” He goes into specifics about how Africa’s cultural norms and lack of willingness to address widespread petty (and large-scale) corruption are also major issues. He also states that international donors are so often more interested in being politically correct in their public commentary on Africa than they are in telling the truth about what’s really going on in Africa. This “correctness” does no help to Africa despite its helpful intention.
The international trade large sucking sound. One of the most interesting topic Calderisi raises is the massive economic loss that Africa has experienced from its loss of export markets. He states that Africa in the past 30 years has lost over $70 billion a year (in 1990 dollars) in GDP related to exports (mostly to Asia) due to severe neglect by governments in managing their economies. He explains that this is equivalent of $700 per family per year which means that the current international aid budget at the equivalent of $40 per family per year is a pittance and even a doubling of aid would have little economic impact vs. these loss of exports. Calderisi says that accusations that Africa has suffered more than others from international trade rules (globalization) are just not true. If it were true, then we could simply lift all remaining foreign trade barriers and provide an immediate boost to Africa’s fortunes. Unfortunately, Africa has refused to concern itself with foreign markets and must reverse this approach to be in a position to benefit from international trade.
Good intentions are just that. A story about the trouble with foreign aid … “in the northeast corner of the Ivory Coast, the United Nations Development Programme (UNDP) spent $900,000 over three years trying, unsuccessfully, to show farmers how to grow onions. Just 90 miles away, in the neighboring country of Burkina Faso, farmers were growing onions in similar agricultural conditions quite profitably — with aid.” Sad, but not an isolated story of the results from paternalistic aid projects.
The complexity of aid. You might ask, does Calderisi actually care about African people and creating a better future? Is he saying that all aid is wasteful? He demonstrably does care. His stories of personally breaking ranks with traditional international aid approaches and connecting with common people to listen to them and help them are genuine and admirable. Calderisi states that the difficulty of providing effective aid is not a reason for not trying. He illustrates the complexity of aid though through a quote from the economist P.T. Bauer: “The argument that aid is indispensable for development runs into an inescapable dilemma. If the conditions for development other than capital are present, the capital required will either be generated locally or be available commercially from abroad to governments or to businesses. If the required conditions are not present, then aid will be ineffective and wasted.” This is a real dilemma.
His recommendations for international aid priorities:
- Introduce mechanisms for tracing and recovering public funds
- Require all heads of state, ministers, and senior officials to open their bank accounts to public scrutiny.
- Cut direct aid to individual countries in half (instead focus on regional initiatives).
- Focus direct aid on 4-5 countries that are serious about reducing poverty (he suggests Uganda, Ghana, Mozambique, Tanzania and perhaps Mali).
- Require all countries (receiving aid) to hold internationally-supervised elections.
- Promote other aspects of democracy including a free press and an independent judiciary.
- Supervise the running of Africa’s schools and HIV/AIDS programs.
- Establish citizen review groups to oversee government policy and aid agreements.
- Put more emphasis on infrastructure and regional links.
- Merge the World Bank, IMG and UN development programme.
Bold recommendations indeed! But I think many of them are right on. What do you think?
The White Man’s Burden: Why the West’s efforts to aid the rest have done so much ill and so little good
Boy, has this book started a lot of controversy in the international aid community. You’ve even got Nicholas Kristoff writing an oped piece in the New York Times in response to his book! Easterly, a Professor of Economics at NYU and previously an “insider” at the World Bank, doesn’t pull any punches in asking the hard questions about the results of international aid. He’s an economist, so his book is full of numbers and statistics supplemented with a number of humanizing stories.
In a nutshell, he asks “After $2.3 trillion over 5 decades, why are the desperate needs of the world’s poor still so tragically unmet? Isn’t it finally time for an end to the impunity of foreign aid?” He points out that despite spending all of this money, we still don’t deliver vaccines and other medicines costing < $1 and insecticide-treated mosquito nets at a few dollars to those who need them and die without them. The main issue, he argues, is that our international aid agencies (he focuses mostly on multilateral and bilateral government orgs including USAID, The World Bank and the International Money Fund) are run by planners, not the entrepreneurial, finding-what-works “searchers”. We in the West are very utopian with a grand plan to eliminate poverty always the goal and what the politicians like to talk about.
The Big Push Strategy has no Basis in History
Easterly’s argues through his research data that the following legends persist and drive much of the “Big Push” thinking behind international aid strategy today:
- Legend #1: The poorest countries are stuck in a poverty trap from which they cannot emerge without an aid-financed big push.
- Legend #2: Whenever poor countries have lousy growth, it is because of a poverty trap rather than bad government.
- Legend #3: Foreign aid gives a big push to countries to achieve a takeoff into self-sustained growth.
These “legends” are core premise for the “spend more on aid” supported by Jeff Sachs and others. Easterly questions the existence of this poverty trap concept as there have been many success stories of countries growing wealthy without significant aid (e.g. East Asian Tigers including Hong Kong, Singapore, Taiwan and South Korea). A few notes
- May 2005 study that “found no evidence that either ‘short-term impact aid’ or any other type of aid had a positive effect on [a country's] growth.” (p. 49)
- “Over 1950-2001, countries with below-average aid had the same growth rate as countries with above-average foreign aid. Poor countries without aid had no trouble having positive growth.” (p. 39)
- Another new study found that as aid represented 8% or more of the GNP of a country that the there was a negative effect on growth. (p. 50) He notes that 27 countries are already about the 8% aid level and that if the Big Push strategy continues that virtually all of the low-income countries will be pushed over the 8% level.
- In reality, he notes that “most countries that escaped from extreme poverty did so with gradually accelerating growth.” (p. 51)
Some additional highlights from the book (I’m skipping a lot of other interesting stuff):
- Government-to-Government Aid. He asks the question why our government aid agencies need to always give to directly to often corrupt other governments rather than through other orgs who could get the money to the intended people/projects.
- Planning Markets? An oxymoron? Why so often do we in the West think that we can go in and impose significant market changes on the Rest and expect them to endure and succeed? This isn’t how it works (or has worked) in the West?
- Political Correctness vs. Truth. Easterly highlights many examples where the IMF and the World Bank have continued to poor money into countries where there was blatant and widespread corruption with their previous capital. They need to call a spade a spade rather than deceiving themselves that somehow a miracle change will happen this time.
- Helping Bad Governments will Make Them Good Governments? Easterly notes that this is a common argument to justify giving money to gangster governments arguing that it will promote their political development and reform. He responds “this argument is based on the overambitious goals of political transformation [which have no historical precedents].” (p. 157)
- No Aid Org is Accountable. Since the multiple international aid organizations have very broad and overlapping (and sometime contradictory) goals/agendas, they can simply throw up their hands when they don’t produce results and blame it on the other guy. That’s why you always hear them take about “inputs”, not “outputs” (results). Easterly argues for scaling back aid agencies to focus/specialize on smaller, specific, measurable projects which they are held accountable for by independent evaluators and the receipients of the aid. Amazingly, this almost never happens today.
- HIV/AID drugs. He explains that it costs $1,500 per year of total cost to administer the latest cocktail of HIV/AID anti-viral drugs even if the meds themselves are basically free. On average, people taking these drugs live an extra 3-4 years. He asks the question … have we ever asked the Africans how they’d recommend we spend the $5B we’ve committed to these treatments? Would they spend it all in this way? He has asked many Africans and they would likely spend very little of the $5B on this healthcare and instead spend it on other much broader impact healthcare initiatives which would save way more lives. Hmmm … interesting.
International Aid Needs Massive Reform
So, is Easterly against international aid? Surprisingly, not. He argues for significant reforms to focus on what works, smaller initiatives (vs. grand plans) and more accountability. So, his grand plan is that there is no grand plan. History argues that it is the initiative of the people themselves along with their governments are the only path to sustainable economic growth. In conclusion, Easterly summarizes:
“Aid won’t make poverty history, which Western aid efforts cannot possibly do. Only the self-reliant efforts of poor people and poor societies themselves can end poverty, borrowing ideas and institutions from the West when it suits them to do so. But aid that concentrates on feasible tasks will alleviate the sufferings of many desperate people in the meantime. Isn’t that enough?”
Scary for the status quo in international aid, but great news for the customer!