Overdependence on aid is rendering the continent’s current development
model unsustainable, argue Abigail Ashun-Sarpy and Jean-Philip Lawson.
“Even if there were no aid fatigue, and with the best will in the world, and the most charitable governments in place in the so-called donor countries, there will never be enough aid to develop Ghana to the level we want… Aid was never meant to be what would bring us to the status of a developed nation.” – Nana Akufo-Addo, President of the Republic of Ghana.
These remarks were made at Ghana’s 61st Independence Day celebration in 2018 and have fascinated political analysts, journalists, and academics alike. The bold declaration has ramifications for Ghana and the larger African continent, which have for so long depended on aid from developed nations and seem to be stuck in a murky cycle of aid dependency.
Africa’s economic and foreign policies have in essence been defined by aid, with large chunks of national budgets heavily dependent on it.
One can question if aid has really been effective in pushing Africa’s development. Decades of development assistance have been clouded by corruption, embezzlement, and political unrest. Problems abound and persist: lamentable transportation networks, inequalities in access to quality education, poor health care and other amenities, rising unemployment and unemployability, high population growth rates, prevalence of disease, inefficient sanitation systems. The list is seemingly endless.
The dual nature of aid
What then is the future of development aid in Africa? Can we truly aspire to an Africa that is beyond aid, with robust systems and self-reliance? In exploring this topic, it will be useful to make reference to the dual nature of aid, exemplified in a number of African countries.
Africa is a resource-rich continent that still faces economic growth and development problems. Its aid structure reveals an age-old recourse to financial and technical support (mainly from the West but also from Japan and China) for the development of infrastructure, budget assistance, national planning, institutions of governance and healthcare, and even for conducting elections and censuses.
For example, with donor support, an Inter-Party Advisory Committee was established in Ghana in 1995 to promote free and fair elections. This institution promoted relevant reforms such as transparent ballot boxes and ballot counting at polling centres, which have contributed to the Ghanaian democracy being one of the shining examples on the continent.
Furthermore, US assistance saw the construction of the six-lane 14km Mallam-Tetteh Quarshie highway in Accra, which since its opening in 2012, has facilitated the movement of goods and people across the city. It is presently one of the most important road networks in the country.
In another example, USAID’s annual funding to Rwanda from 2004 to 2016 grew from $48m to $128m, an increase of over 250%, with an annual average increase of approximately 22%. This has mostly been for health programmes like AIDS and malaria prevention, and food security.
Rwanda has seen commendable aid-supported growth in the aftermath of the genocide in 1994, which made the country a favourable recipient of foreign assistance. According to recent government statistics, the service sector is currently contributing more to the country’s GDP than agriculture, with an increase in regional trade and the reduction of poverty levels.
North African countries have for many decades been major recipients of foreign aid. According to the OECD, in 2017, Morocco and Egypt were among the top 10 aid recipients in Africa. It has been targeted at the commercial viability of the region, strengthening governance structures, and reducing conflict and terrorism, especially in the aftermath of the Arab Spring.
So evidently, development aid has proven beneficial on various fronts. In many parts of Africa, it has helped to deliver essential services in healthcare, infrastructural development, a boost to local economies, and strengthened political and governance structures.
Some pitfalls of aid
Many have argued that Africa would be better off without aid. It has been over six decades since the first country in Africa achieved independence from colonial powers: six decades of receiving development assistance from the West.
If foreign aid were a truly viable long-term strategy for Africa’s socio-economic self-sufficiency, it must have worked by now. It is not without evidence that the proponents of an Africa beyond aid make the claims that they do.
Beyond the problem of aid dependency for the provision of the most basic of social amenities and economic opportunities, foreign aid has corrupted the African political leadership. Political parties fight tooth and nail (figuratively, and sometimes literally) to gain political power and hence access to development aid.
This access is inadvertently tainted by mismanagement, minimal monitoring and misappropriation for the personal aggrandisement of political figures. This creates an atmosphere of ‘winner takes it all’, which contributes to fuelling political unrest across the continent.
Worse still, development aid helps to make political leadership less accountable to the people they are supposed to serve. Because of the access to aid, African governments have little motivation to improve the generation of domestic revenue by widening the tax net to cover the largely informal sector of their economies.
Governments are likely to be more accountable and efficient in their spending if the majority of their spending was sourced from taxing the entire populace. The citizens would be more attentive to how their money was being used and hold the leadership responsible.
Finally, without a doubt, aid is increasing Africa’s indebtedness and is leading to a situation of concern where future generations will be compelled to pay debts accrued by current administrations.
Debt relief packages like the World Bank’s Heavily Indebted Poor Countries (HIPC) Initiative only provide further motivation for accepting development assistance and hence reinforce the cycle.
In the particular case of Zambia, research shows that it has regressed from being an upper middle-income country in the 1970s to a lower middle-income country today. In the mid-60s Zambia’s GDP was three times that of South Korea. Today, its GDP is superseded almost 25 times by South Korea’s.
This was triggered by an economic stagnation in the 1970s, which marked an increase in Zambia’s dependence on foreign aid. Even after being declared a HIPC in 2000, the nation has been unable to climb to its former position as an upper middle-income country.
Resetting international relations
Africa is the youngest continent in the world, with close to 60% of its population below 25 years. By the time the 22nd century sets in, the youthful population of Africa could be twice that of Europe’s entire population. This holds promise for economic growth but also portends danger of civil unrest, cast in the mould of the Arab Spring.
African governments will have to redefine their international cooperation priorities and policies to reflect a desire to secure mutually beneficial and lasting partnerships, as against dependent relationships that further impoverish the continent.
The development needed in Africa is an accelerated one, which should match the growing needs and expectations of the teeming youth, who amongst many other things require employment opportunities, quality education, and the provision of good healthcare.
Should the continent be keeping its relations with the world’s biggest economies on the basis of dependence alone? For obvious reasons, this does not look like the path the continent should be treading.
A good number of analysts and experts, including politicians, have called for Africa to seek opportunities to trade and not depend on aid. In his address at the 2nd Ordinary Session of the Conference of the African Union Ministers of Trade in 2004, the President of Rwanda, Paul Kagame, said, “In Africa today, we recognise that trade and investment, and not aid, are pillars of development.”
The call for trade and investment will boost local production levels and give local entrepreneurs international competitiveness through technology transfer and the operationalisation of the African Continental Free Trade Area (AfCFTA).
But before trade and investment can take the place of aid, aid being received presently must be translated into providing the essentials: an educated workforce, infrastructure, industries, sustainable markets, and most importantly, political stability.
In addition, private sector participation in investment and business must be encouraged and supported through the elimination of bottlenecks and the provision of incentives, especially for local start-ups. This will boost the local and foreign investment that African economies need to become resilient.
Moving beyond aid
We need to prepare to make a bold call for an Africa beyond aid. As it stands, it may be premature to envision this with the high unemployment rates, subsistence agriculture in many states, few burgeoning markets, and political volatility. And now, with a pandemic that has hit so hard, we must redirect policy and action at building back better so that self-reliance can
To be clear, development aid is not the solution to Africa’s problem, neither is it the entirety of the problem. It is the persistent nature of aid – and Africa’s apparent inability to be weaned off it – which is undoubtedly rendering the continent’s current development model unsustainable.
This article was originally published in New African Magazine.