Monday, July 11, 2005

Aid for Africa?

Offline again. Now the wifi signal shows, but the router must be off. So I had no access for the past four days at the beach. We used the one beautiful day to paint our old tool storage shed. That's OK; we had to get it done. "For God's Sake, Please Stop the Aid!" The Kenyan economics expert James Shikwati, 35, says that aid to Africa does more harm than good. An interview in Der Spiegel:
SPIEGEL: Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa... Shikwati: ... for God's sake, please just stop. SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty. Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor. SPIEGEL: Do you have an explanation for this paradox? Shikwati: Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa's problems. If the West were to cancel these payments, normal Africans wouldn't even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.
So what can be done?
SPIEGEL: Even in a country like Kenya, people are starving to death each year. Someone has got to help them. Shikwati: But it has to be the Kenyans themselves who help these people. When there's a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program -- which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It's only natural that they willingly accept the plea for more help. And it's not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa ... SPIEGEL: ... corn that predominantly comes from highly-subsidized European and American farmers ... Shikwati: ... and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unscrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN's World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It's a simple but fatal cycle.
So the UN aid causes the local prices to drop to the point that Kenyan farmers cannot compete. The aid kills the indigenous agriculture. And the UN bureaucrats, as much as they care about the starving in Kenya - I am sure they do - the reward structure in the bureaucracy they are in rewards actions that cause more dependency, rather than building up local agriculture toward self sufficiency. Update. Scott Cummins pointed me to Blake Lambert of Kampala, Uganda's "Sub-Saharan African Blues" blog and the following:
Nicky Oppenheimer, chairman of De Beers Group, explains why a hand up is much better than a handout. Here's the core of his argument: "Over the last 50 years, sub-Saharan Africa has received more than $1 trillion worth of aid, or more than $5000 dollars in today's terms for every man, woman and child on the continent. And yet today many African countries are poorer than they were 50 years ago. At the time of independence, many African states had a higher per capita income than much of Southeast Asia. Today, however, more than 300 million Africans are living on less than a dollar a day, while South Korea, to take one example, which was much poorer than many African countries around the time of their independence, is now 37 times richer."


P Scott Cummins said...

Bravo on covering this Ron! All the best, Scott

P Scott Cummins said...

Oh, and check out this African blog:

tradersmith said...

Awesome discussion and post of this situation.