Aid not the answer for African economies

Over years African economies have been thriving on foreign inflows in form of aid to support economic growth.

Over years African economies have been thriving on foreign inflows in form of aid to support economic growth.

With every economy now looking forward to a self funded budget, it should be clear to any one that indeed if you have ambitions of achieving such objectives you must look at your potential.

Aid or “international aid”, “overseas aid”, or “foreign aid”, is the help, mostly economic, which may be provided to communities or countries in the event of a humanitarian crisis or to achieve a socioeconomic objective.

This aid can be advanced by international bodies like the World Bank and International Monetary Fund or it can be support from other developed economies.

Debates are now on if really this form of economic support to poor nations especially in Africa will offer a long term solution to the poverty question or it is just a question of short term strategy to assist crisis stricken nations.

Of recent the President Paul Kagame noted that we have to be honest about the consequences of aid dependence.

“Countries that have used aid as a temporary support, while domestic and foreign investment stocks are built up, have achieved lasting success” the president explained.

This implies that aid is not core to economic growth and development but rather can just be used on a short term basis to address short term needs of needy economies.  
  
Shhriti Vadarath an official from Department for International Development (DFID) in Rwanda shares the same view that indeed aid will never provide a long term solution to the poverty question in Africa.

But he notes that half of most countries’ budgets in Africa are still funded by donor funds.

He focuses on two challenges taking place in Rwanda for instance; first, how to accelerate and sustain growth and second how to make it more inclusive so it helps maximize poverty reduction. 

There is international evidence showing that while it’s relatively easy to initiate growth, it’s much harder to sustain it. Statistically, in any 10 year period, countries have a one in four chances of sustaining a marked increase in per capita growth for at least 8 years.

Humanitarian aid is therefore primarily used for emergency relief, while development aid assumes to create long-term sustainable economic growth.

Wealthier countries typically provide aid to economically developing countries.

One argument is that foreign aid does not contribute significantly to economic progress in developing countries. Aid that is intended to foster development may enable some regimes to divert money to other, non-productive activities.

One reason why aid won’t work in creating and sustaining growth is because it is wasted on countries that do not have the technical or administrative ability to absorb and use it properly.

Furthermore, the recipients of aid may usually use it to fund projects that are poorly conceived and planned.
Examples of roads being built and going not maintained and unused, or other large projects destroying more productive resources than they create, are usually common in African states.

It should be understood that in most development nations like the US and the UK, development was left to market forces.

This call for much will by the poor African states to support the development of vibrant private sectors.

The private sector in developing countries would be much more efficient in promoting economic growth than development specialists.

Peter Bauer has argued that aid has serious, distorting consequences in the political life of recipient countries.

He adds that aid is generally transferred to the governments of those countries, which tend to increase the government’s power, resources, and patronage relative to the rest of society and, consequently, the stakes in any struggle for control of that power.

Ends

 

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