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Monday, September 21, 2020

Lessons to learn from the aid experiment: the cancer of Africa’s development

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It will not be misleading to claim that aid has been and is still the cancer of Africa’s development. Various literatures including the famous “Dead Aid” by Zambian born international economist, Dambisa Moyo, have revealed to us, the grave negative consequences aid has on Africa and her development realities. Her work reveals to us that more than $1 trillion dollars in development related aid has been moved to Africa by rich countries in the name of rescuing them from the burden of poverty and growth deficiency in economy. Moyo in her work offers a bold new road map for financing development of the world’s poorest countries alongside guaranteeing economic growth and a momentous decline in poverty–without the necessity to rely on foreign aid or aid-related assistance.

 

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More importantly, “Dead Aid” and Moyo’s economic roadmap for Africa and other poor economic countries, categorically debunked and represents a shift from the so-called post-war development policy initiated by the international lending institutions through their Structural Adjustment and Economic Recovery Programmes, meant to see that African countries pay their debts owed to the big economies, thereby affecting economic growth and poverty reduction on the continent. The so-called Poverty Reduction Strategy Programmes I and II and other fake development blueprints have no intention but to cripple African economies and make African leaders and their citizens civilized and dishonorable beggars to the rich countries. Moyo therefore presents a new, more hopeful vision of how to address the desperate poverty that plagues millions of Africans across the continent since the time of independence. Has all the billions and billions of dollars in aid assisted in reducing poverty and promoting economic growth for Africa?

 

The answer by Moyo and her disciples is an emphatic NO!
Mr. President, in “The State of Africa: A History of Fifty Years of Independence”, by Martin Meredith highlights how African countries were subjected to receiving aid from international financial institutions and agencies, describing it as ‘The Lost Decade’ for Africa. To Meredith, in one country after another, living standards of Africans plummeted. By the mid-1980s, Africans according to him were as poor as or even poorer than they were at the time of independence. Mismanagement and collapse in tax revenue, crippled by rise in debt both domestic and international, African countries had to turn to donor agencies for assistance because proper public services could not be maintained-as schools and universities, hospitals were all starved of funds, the service sectors were entirely deteriorated, thus the productive sectors of the economy were near dead and the dream of development became a far-fetched one.

 

In the 1980s, it is estimated that some thirty-six governments in Sub-Saharan Africa entered into stabilization agreements with the IMF or Structural Adjustment Programmes with the World Bank and a total of 243 loan agreements were made. In two decades (1980s and 1990s), Africa obtained more than $200 billion in foreign aid. Countries like Ghana under J.J Rawlings with his initial Marxist advisers, Kenya, Uganda, Guinea and a host of others experienced poor economic performances just as many other countries on the continent had (see Meredith).

 

Christopher Clapham in Africa and the International System: the Politics of State Survival argues that the surplus cash extracted from oil consumers due to the rise in oil price in the 1970s, led to investment by the producers in Western banks, which subsequently led to lending to African governments, and borrowing was done on favourable terms from Western governments and International Financial Institutions. The easiest shot-term expedient for governments on the continent was therefore to borrow the money which they were no longer able to earn. This resulted in speedy increase in African indebtedness from $5,244million in 1970 to $48,793million in 1980, and $151,176million in 1991 (total outstanding public debt). In this light, indebtedness is said to be a normal way of financing the acquisition of productive resources, the income from which can be used to repay the debt, with the borrower having a more productive economy and enhanced opportunities for raising additional capital with which to finance further development (ibid).

 

However, this financing of the acquisition of productive resources to service the debt has been the problem with many African governments from the ‘lost decades’ the continent had experienced, mainly due to lack of fiscal discipline and general sound economic policies to date. As a result, debt servicing concomitantly with interest and capital payments consumes good percentages of the GDPs of African countries. Douglas Rimmer, a renowned economist concluded in The Economies of West Africa that Africa’s political leaders, despite their protestations, had never been primarily concerned with economic growth but rather with the maintenance of political power and the distribution of wealth to themselves and their supporters.

 

Now to the Gambia Mr. President, when Jammeh took over the country in 1994 through a military coup, the government received financial and economic aids from various donor agencies and governments. Through the IMF’s Enhanced Structural Adjustment Facility (ESAF) programme, the government received a pledge of US$25 million from the IMF as a balance of payments support, a reported US$10.8 million from Africa Development Bank (ADB) to be spent in the reformations of the education and civil service sectors, US$ 5.5 million dollars from UNDP for the areas of health, education, governance and economic management, equally US$ 8.3 million for health and education programmes, US$ 4.5 from UNFPA for its population programme, US$5.5 million from WHO for its health programme only, US$3.1 million from WFP for the school-feeding programme, a total US$16 million from the World Bank for economic management and budgetary support, US$1.5 million from the Italian government , US$6 million dollars from USA through the CRS for health and education and US$8.4 million from the European Commission for budgetary support and education, with the United Kingdom and International Development Bank giving firm pledges for specific intervention areas (Budget Speech, 1999, in Eddie, 2000).

 

In 1998, external loans stood at a tune of D127.6 million with foreign borrowing helped reduce budget deficit, but concomitantly increasing the government’s external debt, totaling payments for debt serving to D333 million out of which D234.7 million were for interest payments (ibid). Despite this huge assistance by international donor agencies, the Gambia continued to struggle with major development challenges. The end result of 22 years of borrowing couple with the injudicious spending of foreign aid by Jammeh only retarded the country’s development, especially in the area of economic growth and more seriously left our economy bankrupt with huge amount of domestic and foreign debts that may not be easily settled by the current generation amid balance of payment difficulties.

 

Mr. President, despite inheriting those billions of dalasi debt, both domestic and external at a public debt ratio of 115% as at the end of 2016, totaling debt stock at D48.3 billion comprising D20.3 billion for external and D28 billion for domestic, the Gambia continues to accept various loan agreements which are currently on the table including the one between the government and the International Development Association for the second additional financing for integrated financial management information system and the results for education achievement development projects. In addition, the revised budget is projecting a budget support at a staggering 2.4 billion with most support coming from the IMF, World Bank, EU and the African Development Bank. Well, there is a lesson to learn from the preceding paragraph on reduction in budget deficit and increase in external debt.

 

 

Mr. President, the poor will never be told why these loan agreements are being signed as parliamentarians will never communicate with their people to put them in picture on whose behalf the government is taking those loans. Remember these loans have to be repaid by no others but the citizens. The loans never come without conditions and we must critically look into these conditions before agreeing to them. But sadly, African governments continue to sign their death warrants through aid in the forms of loans and so-called grants. When shall we learn from this terrible experiment once tried by our post-independence leaders but ended in a total debacle? The new government under your leadership must have it as a priority to stop taking loans in the long-term. But unless and until we start thinking inward and untilise our sovereign national wealth and avoid being exploited by so-called development partners who continue to have access to our resources, be it human, capital and more especially the productive sectors, entice us with the mega figures and false assistance they keep on bringing, we shall continue to suffer from this cancer and the resting place shall be the grave of poverty and continued underdevelopment.

Yours in the service of the nation
Essa Njie

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