Introduction
Aid is defined as transfers to poorer countries. To
be able to understand the term aid it’s important to concentrate on net aid,
that is, “transfers to poor countries less the amount of reverse flows in the
form of repayment of principle on credit extended in the earlier years
“Development for assistance for rich countries (DAC, 2005).
Aid also covers a multitude of different types of
transfers, of which not all of them go directly to poor countries.
According to the oxford dictionary, Aid refers to
financial help as given by richer countries to poorer countries. Aid is categorized
into two; Humanitarian and Development aid. While humanitarian aid aims to help
short term cases and objectives, for instance emergencies, natural disaster
which can be provided inform of essential services and resources to help people
in difficulty. This kind of aid is only meant to alleviate suffering in the
short term rather than contributing towards the longer term objective like for
instance poverty alleviation.
Development aid on the
other hand, refers to help a country receives with the aim of the recipient to
achieve long-term sustainable growth and poverty reduction. It may be given
directly from one to another (bilateral aid) or money may be given by many governments
to international organizations such as World Bank, IMF and the United Nations.
These International organizations then spend the money on assistance for poorer
countries (multilateral aid).
Africa for the last
50years plus has been the biggest beneficiary of foreign aid in the world. Whereas
most African countries have gained from the aid most African leaders have taken
advantage of the African situation, by conniving with the lenders and instead made
its masses victims. It’s important to note that humanitarian aid has benefited
most African states and perhaps should be encouraged particularly because it
takes care of emergencies and disaster instances, however development aid has
crippled Africa’s economies, increased corruption and escalated conflict, as
well as encouraged dependency. The richer countries have also used the
development aid to exert power on the poor and weak states and therefore
through their financial influence manipulated affairs of the poor states.
According, to DAC
report 2005, while the average number of donors per country is growing the
average project size is shrinking, implying growing fragmentation of aid. Some
of the key issues that should be keenly addressed and perhaps have impacted
negatively on the effectiveness of aid in Africa are; the mechanisms for
information sharing, coordination and planning are not only ineffective but
costly. African leaders have abused aid and diverted funds for selfish motives;
therefore there is need for donor countries to allocate rules to the recipient
country so that aid can be assessed. If indeed these mechanisms exist then they
are ineffective.
The role and significance of aid in Africa
We cannot afford to deny
the fact that specifically humanitarian aid has had a positive impact on the
many lives of communities in Africa. Many initiatives sponsored by USAID have
seen many of our young go to school through free education, accessibility to
free clean water, in emergency and disaster catered for the homeless shelter
and food and many others.
Dambisa Moyo, 2005
“Whatever its strengths and weaknesses, such charity-based
aid is relatively small beer when compared to the sea of money that floods
Africa each year in government-to-government aid or aid from large development
institutions such as the World Bank”
In response to recent
doubts over the effectiveness of aid to Africa and the corresponding ‘aid
fatigue’, recently influential works and speeches from mainstream liberal
instances, like United Nations’ Millennium Project (2005), led by J. Sachs, the
World Bank (2002) and the UK-sponsored Commission For Africa have given fresh
impetus to the idea that aid can work and is absolutely necessary for the
poorest (African) countries, insisting that a case for aid can still be made on
very straightforward grounds from the point of view of donors. First, there is
the ethical argument of the basic responsibilities of human beings vis-à-vis
deprivation anywhere in the world. Secondly, the low cost of the extra effort
needed for rich countries to channel substantial resources to very poor
countries. Third, less altruistically, the growing security concerns and the
costs that state failures, which are often related to poverty and desperation
in a globalized context, and which have to be borne by intervening countries,
particularly the US. Politically, balancing the costs of costly military interventions
with the costs of increasing aid provides a strong ‘moral’ case for aid and
perhaps a quicker way of persuading the general public opinion in the West that
may be more responsive to security concerns or ‘compassionate politics’. The
critical question, however, is who benefits from these two very different
expenditure patterns (more aid or more military spending for protracted
occupations).
It is also clear that
sustained increases in imports (especially capital and intermediate imports,
but even food in some cases) and long-term investment in many of the poorest
SSA countries are not conceivable without large increases in aid flows in the
foreseeable future. Some may reasonably argue that extreme aid dependence can
be pernicious per se (Easterly 2001; Moss et al. 2005; Clemens and Radelet
2003). One reason is the alleged lack of absorptive capacities in poor
countries and therefore the difficulties in scaling up aid flows targeted to
the poorest economies (Clemens and Radelet 2003).
Aid
and Debt
Borrowing in economics
sense is healthy and it enables states to implement national program and
projects in the interest of its citizens to attain economic growth and
sustainable development. However if very strict conditions are imposed on the
country that is borrowing and in the future fails to pay its debt in time then
that country becomes deeply indebted. This in the future will have economic
implications on the recipient, since governments have to divert the biggest
percentage of its resources to repay the debt as well as pleasing their
lenders. This has affected most African economies since government cannot
engage in public investments yet poverty has increased with the largest population
in Africa lacking access to basic needs.
Disadvantages
of development aid
Many governments in
Africa are suffering from the burden of un-payable debt.
Development aid is
provided but with heavy economic
conditions imposed on countries in return for new loans which have a huge
negative impact , on the already poverty
stricken citizens.
Its also argued that
development aid to poor African countries has led to loss of policy space and
sovereignty. While many African leaders have prioritized their ambitions to
hold on to power ,under harsh economic realities faced in the region. Even with
efforts made to establish institutions to cater for the trading blocks in order
to pursue regional integration. These countries have been reluctant to
implement these institutions making them weak, with the pretext that they have
been deprived off their policy space and sovereignty.
What
has been done
By the 1980s 1990s,
most Africa countries suffered debt crisis and poor economic growth, something
had to be done by the donor countries and these are some of the initiatives. Efforts have been made since the early
80s and 90s to solve the debt crisis problem in Africa, and outlined below are
some of the initiatives taken up to solve the crisis as well as uplift the
economic situation in many African countries. In the early 90s some of the
countries admitted and declared inability to repay the debt, although IMF and
World bank stepped in to help, conditions through the “structural adjustment
system” were imposed. The aim was to alter the structure of how money in each
county was spent. The SAP's, consisted of strict measures designed to help a
country repay its debts, through increasing its exports and reducing on their
exports. This kind of response was again designed to benefit the richer countries
while the poor countries continue to drown in poverty and its related problems.
The only way poor countries can come out of the heavy debt problem and poverty
is by increasing the aid, shift the aid to more productive sectors like
agriculture, energy, increase production, increase importation and decrease
exportation as well as strive to meet the global economic competition.
In
the mid-90s, the World Bank came up with another new international debt relief
scheme called the heavily indebted poor countries (HIP C), through write-offs by
official donors. By 2004 countries were receiving debt relief under HIP C. There
is sold evidence that countries whose debts they cancelled achieved the scheme
achieved its objective, for instance in East. Africa Tanzania, Uganda had their
debts cancelled. In Tanzania the debt relief enabled the government to abolish
primary school fees leading to 60% increase in attendance. In Uganda, the debt
relief led to 2.2millionpeople gaining access to clean water. However, there
are still many countries that are not receiving aid simply because they were
not able to fulfill the HIP C criteria
The HIP C initiative did not help to cancel debts in Africa at all, because countries
still continued to spend most of its resources to repay debts, instead of
meeting their basic needs such as education, health and infrastructure.
Although
there was an effort, debt relief is yet a limited instrument its estimated that
out of 30, 25 African countries have participated in the heavily indebted poor countries
(HIP C), initiative, 22 of these countries have reached already their HIP C
completion points, indicating full irrevocable disbursement of their relief
package. These countries will not receive any more funds in debt relief.
Meanwhile
the growing debt crisis in Africa is still a very big challenge to the region
economic growth and sustainable development and therefore there is need for something
to be done. Below are some of the suggestions that could help countries in
Africa overcome the debt crisis and in the future achieve economic growth,
development and sustainable development.
Recommendations
Aid
is undermining and therefore the form of aid given should change from charity
to supportive, community based should support development initiatives of the
recipient.
The
problem with previous aid is that it has been tied on contracts where the donor
imposes on the recipient and time has only proven that it has had negative
impact on development initiatives. The conditions and terms should not be
imposed on any party, and all stakeholder’s must be involved in setting the
terms.
With the emergency of china’s big investment in
Africa heavily in infrastructure it will play a potential role to generate
potential for the recovery of policy space in many African countries associated
with donor- recipient relations in aid flows. Although china has increasingly
become key player for some African states inform of Chinese Foreign Direct
Investment (FDI) and aid flows, the western world thinks china is taking
advantage of Africa’s big cheap labor market to benefit its global economic
position. Nevertheless it is important
to appreciate the positive impact china has had on Africa states it has partnered
with and this impact has been felt. This may also be seen as an opportunity for
Africa to regain its policy space.
African
continent is very resourceful and there is so much that has not yet been
exploited and utilized in terms of land, labor force, and human capital. Africa’s
leader’s efforts should be driven towards tapping these potentials,
capabilities among the young people. More public and private investment should be
encouraged in order to reduce future debt crisis. Africa has the highest
percentage of the most productive population that is the youth, let’s empower
and support the youth in various initiatives.
In
order to achieve aid effectiveness, aid should be targeted and directed towards
more productive initiatives such as agriculture, food production, food
security. More research and training
should be invested in agriculture sector, as well as utilizing technology and
innovation.
Provide
safety nets to both small scale farmers, minority groups for instance women as
well as increased investment in human development.
Governments
should work towards achieving political will that will support good governance
and economic progress.
African
states have made an effort and should continue the spirit to take the lead in
their own development. Initiate partnerships at both international and regional
levels in order to solve the problems in the region.
Conclusion
Aid,
debt and poverty, the relationship is that aid is not what in real sense what
it seems to be. We have seen that aid is not charity; it’s a soft loan, grant. Africa
continues to suffer the challenge of repaying the debt. Governments have been
struggling to pay these debts by diverting the minimal resources to paying the debts;
its citizens continue suffering from extreme poverty. It’s not too late
something can still be done; African leaders have a big role to play to be
accountable to its masses. At a certain point in every country needs financial
support but the aid need to be provided in way that it should be able to meet
the objectives of the program it’s being funded for without compromising the
future interests of its masses.
