FOREIGN AID TO AFRICA. OPTIMUM SOLUTION?

          “In this financial year we will be spending at least $1.5 billion on foreign aid and we cannot be sure that this money will be properly spent, as corruption and mismanagement in many of the recipient countries are legend”– Pauline Hanson

There have always been huge controversies about foreign aid to developing countries and the benefits have always been under severe analysis. There are different opinions to the effect of Foreign aid. Proponents believe aids encourage economic growth and development while critics are of the opinion that it worsens the condition of recipient countries especially the developing countries. Critics believe it is unnecessary, this is because it is often misappropriated, and it deters economic growth, encourages laziness, enriches the already rich and increases unproductive public consumption. Alesina and Dollar (2000) mentioned that the common reasons for these results are bureaucratic features in the developing countries, corruption, poor institutional development and other inefficiencies. Over the past 60 years, over a trillion dollar of aid money has been contributed to African countries by the western countries, yet, we have not seen an increase in growth and reduction in poverty. The question then is what is done with this money?

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Types of Foreign aid

According to worldvision, the three major types of foreign aid are:

  1. Bilateral Aid: This is also known as government to government transfers. It is assistance given directly from the government of one country to the government of another country.
  2. Non-Governmental / Charitable Aid: This is support provided by NGOs, commonly from public donations from businesses, organizations, and individuals. NGO aid focuses on three main aspects which are Humanitarian relief (aids given out during major disasters such as floods, wars), Long-term community development (aid given to empower poor communities) and advocacy and education aids.
  3. Multilateral Aids: Aid provided by governments to international organizations such as IMF, World Bank in attempts to reduce poverty in the developing nations.

 

There are evidence that points out that foreign aid is no doubt useful and can be used to achieve economic development if used properly (Todd et al ,2006). The question is how well African leaders use the aid given to them? The writers also pointed out that aid will work best in environments where the public institutions are of high quality. Again, another question is how organized are the public institutions in the receiving countries?

Findings have revealed that these aids do not get to the targeted public. This way, foreign governments are only enriching the pockets of recipient government and corrupt leaders. The best means of ensuring these aids get to the targeted public is to ensure that a good monitoring and accountability system is put in place. The question is; how costly is the cost of monitoring?

Foreign Aid has contributed to the already defective way African leaders govern. African leaders must take the responsibility of making their people better and reducing poverty. It is not the duty of the foreign countries to do so. It is the duty of the government to provide public goods for the economy, however, in Africa; we have cases where the leaders wait around for foreign donors to provide public goods such as health care and education. Africa is a very large continent, where different countries are blessed with different resources. These resources can be put to good use to create public goods for the people. However, our resources are wasting away and not being put to good use (I know and I have seen this as a Nigerian), money generated locally are being embezzled and yet African leaders still wait for foreign aid.

Foreign aid is free money that doesn’t need to be accounted for; therefore, anything can be done with this money. The foreign government should reduce or stop giving aids to African leaders; they should allow them to use the resources they have to generate their income. Asia has been fast growing without depending on foreign aid. African governments need to work on means of attracting foreign direct investment. According to an old Chinese saying “give a man a fish, you feed him for a day. Teach a man to fish and you feed him for a lifetime”. It would be more recommendable if the foreign Government can put in place conditions that will enable African countries to utilize the already existing human and material resources.

There are mixed feelings about foreign aid because some aids are quite necessary and such as the humanitarian relief. But I stand on the position of effective monitoring. I was having a discussion with a Ghanaian friend of mine recently, who works at the Ministry of Health, he informed me of how free essential drugs (malaria drugs and antiretroviral) given to the hospitals are sold at high prices to the patients. The foreign organizations are always willing to give but unfortunately have to pass through the government to give the drugs. These drugs are labelled “not to be sold” but unfortunately are still being sold by some government officials.

CONCLUSIONS

Several questions come to mind when discussing foreign aid. What is African Government doing with the money they have? Does foreign aid work? Are they really necessary? If yes, what should be put in place to make it get to the targeted public? Should these countries be left alone to fund themselves?

I am not in support of total removal; other types of aid can be given out. The NGO/ non- charitable aid is more personal and has more control over it unlike the government to government aid, but as a popular foreign aid critic Dambisa Moyo said “what is the essence of sending a girl to school, taking care of the cost of her education, then she finishes school and she cannot get a job because the government was too lazy to create jobs.”

African cannot rely on foreign aid forever. In my opinion, it is not the optimum solution. what`s your take?

 

REFERENCE

Acemoglu, Daron and James Robinson. “Why Foreign Aid Fails – And How to Really Help Africa”. The Spectator, (2014)

Alesina, Alberto and David Dollar. “Who Gives Foreign Aid to Whom and Why?”. Journal of Economic Growth 5:33-63 (2000)

Moss, Todd J., Gunilla Pettersson, and Nicolas van de Walle. “An Aid-Institutions Paradox? A Review Essay On Aid Dependency and State Building in Sub-Saharan Africa”. SSRN Electronic Journal (2006)

Pauline Hanson. (n.d.). BrainyQuote.com. Retrieved June 24, 2016, from BrainyQuote.com Web site: http://www.brainyquote.com/quotes/quotes/p/paulinehan214715.html

“What Are the Different Types of Aids? “ Worldvision.com.au.,(2016).

2 thoughts on “

  1. Foreign aid should basically play a key role in promoting the growth of the target country via different channels such as improving infrastructure and providing basic healthcare. Economically, according to the Solow growth model, we expect that developing countries which lack a sufficient level of capital will experience a significant growth after receiving extra capital. Unfortunately, we haven’t witnessed this improvement in recent decades due to various reasons. Lack of governments accountability and transparency, lack of feedback loops, corruption and poor level of innovation. Besides, economic growth can be influenced by different factors such as population growth and savings rates.
    From my perspective, such aids could be so beneficial if they are transferred through a provision system in order to make it optimum and control governments from corruption. Under the supervision of such system, government notice that aids are not unlimited and they should give a feedback not only to the system authorities but to people as well.

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  2. Your arguments are sure reasonable. However, there is a big clause which you have rightly pointed out. Lack of government accountability and transparency. This point is even more sad because not only does it not allow the objectives of foreign aids to be achieved, it is actually contibuting to more inequality in the economy. This is because the individuals that have access to this foreign aids by virtue of their political power are rich individuals. We both understand the economic growth effect of inequality.
    Then, a very important question is if government transfers could not achieve their objective which is to fill in infrastructural gap, alleviate people out of poverty, provide emergency aids to farmers and other examples, should the whole idea of foreign aids be repealed, and if not, what measures could donor agencies, giving governments put in place to ensure aids gets directly to those who really need them?

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