The paradox of foreign aid in the new Africa

SINCE time immemorial, Africa has received aid from left and right. A curious pan African should ask this question, is Africa any better than it was or should have been before the birth of aid? Foreign aid is not a mere offer/ transfer of wealth from the rich world to the poor.

SINCE time immemorial, Africa has received aid from left and right. A curious pan African should ask this question, is Africa any better than it was or should have been before the birth of aid?

Foreign aid is not a mere offer/ transfer of wealth from the rich world to the poor. I believe that the concealed essence of aid is to create a potential market for the products from the developed world while ensuring the continuity of the transfer of raw materials needed in western industries.

Africa has barely moved from the mere production of raw materials to value added and finished goods to be exported to where they are demanded. The reason is the fact that the nature of aid given to Africa is ineffective and with strings attached.

It’s my belief that the logic behind aid is thus; the Aid providers believe they may not fully benefit from the strategic socio-economic nature of the African economies not until Africans start marginal development and therefore increase their purchasing power to create a steady and ready market for capital and consumer goods produced from their economies.

Foreign aid flows to African capital development projects. These projects create more jobs, increases the disposable income of the employed staff and their aggregate demand.

Since most of African economies are consumer economies the increased domestic demand triggers the desire for more imports of course from the donor communities.

Foreign aid thus becomes distrustful because it comes in from the front door and leaves from the back door. Foreign aid increases domestic aggregate demand that can’t be quenched by domestic production. This calls for more imports from the same providers of this aid.

The problem I have is the tendency of aid to divert from the desires of the beneficiaries to the selfish interests of the donors.

From the outset, after the Second World War, the International Bank for Reconstruction and Development (IBRD) now  the World Bank was set up to extend foreign aid to the shattered European nations and later to other poor nations.

The primary purpose of the formation of the World Bank was to help the war battered economies of Germany and Japan and other poor economies to climb the economic ladder.

However, in the wake of establishing the IBRD, the concealed selfish interests of the architects of aid was revealed.

This is when we started hearing of aid tied to specific projects that would either require materials from the donors or technical expertise from the western experts.

McNamara, the president of the World Bank in the late 1970’s believed that foreign aid was a more strategic investment in international security than an investment in the then arms race.

Indeed it’s true that poverty is the breeding ground for disease and mass migrations and ignoring the war on poverty is a grave mistake in efforts to restore world peace.

However, as we receive aid, we have an obligation to invest  in areas we believe are strategic to poverty alleviation without bending towards the desires of the donor communities.

It’s evident after all that countries which have reduced foreign aid have developed more than countries still receiving heavy inflows of aid.

Foreign aid has continued to be neglected in most of emerging economies in their path of development. China, Malaysia, Singapore, South Korea and other similar economies decided to substitute foreign aid for trade as a means of economic survival. It was trade not aid that drove these economies to prosperity.

In other words if we receive aid, we should plan on how to utilize it in ventures that will take us out of the continued trap of aid as a means of socio-economic survival.

Benon Talemwa is staff member of the Macroeconomics department in the Ministry of Finance

tbenon132@gmail.com

 

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