Africa's aid industry

A long time ago I had started writing an article on how foreign aid in Africa had done absolutely nothing to bring the people out of their poverty and instead given birth to this huge self-serving industry in the developed nations which involved expensive fund raisers for the rich and vacations in the third world for their 'volunteers'.

I have in fact written about this earlier, but a very nice and detailed article again introduced me to this issue. Written by Yash Tandon on the news site http://www.allafrica.com/, the article follows the Fourth High-Level Forum on Aid Effectiveness, held at Busan, South Korea from 29 November to 1 December.

Titled "It is Official - Busan Heralds the Dismantling of the Aid Industry", the article says that all the donors at the Forum finally came around to accept that what is required is not "aid effectiveness", which has been the focus all along, but "development cooperation", which should have been the focus on the entire aid industry in the first place. Everybody got this but the Western aid industry itself, and perhaps for very obvious and self-serving reasons.

According to The Guardian, the biggest outcome of the Forum at Busan was the emergence of the BRIC nations as one of the key players in providing aid and assistance in future. Apart from that, the article says, there was no serious commitment or targets set at the Forum, but only a promise to do so in the future.

If you care about evidence-based policy making, this conference has been mixed. While there was not enough explicit referencing, sifting and collation of the plethora of evidence available on what has worked and what hasn't over the five years since the Paris declaration, it has, nevertheless, filtered into the outcome document, with less important Paris commitments being dropped and the vital ones being reaffirmed.

The issue of ownership, as I understand, is that the third world nation that is the recipient of the aid must have a great control on the aid and a greater say in where to spend the aid. This has been lacking because, I feel, the donor does not believe the recipient has the ability to spend it wisely, or perhaps the fear of corruption, or simply because they think they can do a better job. In India's case, corruption was and remains a huge issue as large amounts pilfered through the numerous aid schemes, both funded within and without the country.

After last minute negotiations (in which Brazil played a key role) and the insertion of a paragraph distancing non-DAC (the Development Assistance Committee of the Organisation for Economic Co-operation and Development) donors from concrete commitments, China, India and Brazil all endorsed the idea of working together more closely in what is being described, even by usually critical civil society representatives, as a "new global partnership". This matters to African countries that want to apply principles to all international partners, without diminishing the distinctiveness of Chinese support for their development.

The inclusion of civil society in negotiations was also an important procedural innovation, in contrast to the reduced political space it is experiencing in many countries.

If Paris was a triumph of technocratic organisation, Busan has been an expression of shifting geopolitical realities, with the role of the BRICS (Brazil, Russia, India, China and South Africa) proving more critical than ever before.

African nations too, are beginning to demand greater ownership of aid, and its a good step forward in asserting to the donors that the former probably knows best whats best for itself.

The Business Daily Africa article linked above says it best that while aid is a noble thing, all effort must be made by African nations to replace it with homegrown aids to development.

In the aid industry, since the fall of the Berlin wall in 1989 there have been significant structural changes to make aid more effective. In recent years, this re-engineering process has come to be known as ‘the new aid architecture’.” Before 1989 aid transfers to poor countries were largely driven by geopolitical and commercial reasons. Consequently, some of the most inhuman regimes in Zaire, Philippines, Haiti, Bangladesh and Nigeria received aid regardless of atrocities committed on citizens.

With the Cold War long gone today aid delivery is being informed by a number of factors. These include: failures of previous economic management approaches such as the Washington Consensus; emergence of new global economic players (Brazil, Russia, India, China, South Africa, Venezuela and South Korea) from among recent developing countries; reinvigorated roles of the international philanthropic foundations; emerging development challenges such as climate change and global terrorism; and recurrence of financial crises around the world since the 1970s.

Much as aid has been useful in preventing destitution and in catalysing economic growth, on its own it is not a panacea to development in poor countries. There is need therefore to radically implement local non- aid means to development.

But to finish out on this post where I can see that the global consensus is firmly headed towards the realization that the aid industry, the way it has functioned, has achieved very little, and rather, has emasculated the societies it proposes to help by making them dependent on that aid and doing nothing to enable them to be independent. China has built a lot of infrastructure in the continent of Africa in recent years, but as more and more media publications find out, it is mainly on a quid pro quo basis as the Chinese ask for the country's natural resources in return. A Professor in the American University in the United States follows Chinese aid in Africa and seems to be a decent source (biased in the way I like it) of information.

Coming to the paper written by Mr.Tandon, there are some choice lines I could pick up.

Professional politicians and diplomats have a particular way of making public speeches. They send important and often critical messages encrypted in coded language. One has to be able to interpret the code, to read between the lines, in order to get to their hidden messages. At Busan, when the US Secretary of State Hillary Clinton said 'Beware of those who want to take your resources with quick fixes', you can be reasonably sure that the warning was levelled at African countries and the pointer was at China. (I was once a politician and a diplomat; I have learnt to read between the lines).

One, the ODA (Overseas Development Aid) is no longer the main source of development financing. 'It used to be 70% of total financial flows in the 1960s; now it is only 13% -- even as aid quantity has increased'. So, then, what is the purpose of aid? It should be, she said, 'to facilitate private sector investment'.

Two, 'donor aid is driven by donor agenda...We should follow partner lead'. By 'partner' she meant the recipients of aid. There should be, she added, 'genuine mutual accountability'. She gave the example of recipients' insistence that donor aid should be 'untied' to donor procurement sources.

Three, and this is a telling statistic that put to question the whole issue of aid effectiveness. Clinton said that an independent study undertaken just before the Busan meeting revealed that out of 13 objectives set out by the Paris Declaration on Aid Effectiveness, only one was met.

The principles of the Paris Declaration on Aid Effectiveness do not address the underlying dynamics of 'aid'. The PDAE takes 'aid' for granted as a 'virtue', and gets on to the 'technical' task of making it 'effective'. Deeper thinking (not a forte of 'normal' professional politicians and diplomats) would show that the PDAE principles obscure, obfuscate, reality of life; they encourage muddled thinking on aid.

The President of Rwanda made a cool, dispassionate, speech covering the following issues.

One, 'massive aid transfers have been ineffective'.

Two, there is a contradiction in the growth statistics of Africa. On the one hand, African economies have grown 7 to 8 per cent over the last several years; on the other hand, the per capita income has fallen.

Three, many African countries are unlikely to meet the Millennium Development Goals (MDGs) by 2015. This is the hard reality.

Four, there is a 'huge aid industry' that has now become 'a permanent feature' of north-south relations. This 'industry' is undermining the essential linkages between aid, trade and investment.

Five, the Paris Declaration on Aid Effectiveness states 'mutual accountability' as one of its principles. 'In reality there is no mutual accountability'. Kagame pointedly added: 'When a country is not managing its resources how can it be held accountable?'

Six, Donors only talk about channelling aid through country systems; 'in practice they refuse to use national systems'. There is a 'need for greater mutual trust'.

QUEEN RANIA AL ABDULLAH OF JORDAN - THE MOST ENLIGHTENED AND FUTURIST SPEECH OF THE WHOLE BUSAN CONFERENCE

Busan, she said, is different from Paris or Accra. 'We live in a different world; it is a world of Tahrir Square, and Wall Street occupation'. The world, despite all talk about globalisation, is 'growing apart, not coming close'. In some countries such as Argentina and Malaysia they have narrowed income gap. But global inequality is increasing. We need 'a new development paradigm'. Development has to be based on equity; growth itself does not bring equity. We must give everyone an opportunity to develop his or her potential. 'Sixty percent of our people are youth and a quarter of them are unemployed. They want jobs not aid'.

ANGEL GURRIA, MYUNG-BAK LEE AND BAN KI MOON TREAD OLD, OBSOLETE, PATHS

Angel Gurria, the Secretary General of the OECD, President Lee Myung-bak of Korea, and Ban Ki-Moon, UN Secretary-General were treading old, worn out, paths in their presentations. Interestingly, they had the same message, as if they had sat together and planned what to say. Their arguments can be briefly summarised as follows:

One, Korea is a shining example of a country that has 'moved from being a recipient of aid to a donor'. (This message was played up, insensitively, almost nauseatingly, in speeches and in large poster displays at the Bexco Convention Centre).

Two, aid will end poverty, improve gender equality, bring education to girl children, and so on and so forth.

Three, the world has fallen behind achieving the Millennium Development Goals (MDGs). 'Therefore' (sic!), rich countries need to 'give more aid'.

Four, the 2008 financial crisis has shown that when countries work together they can prevent contagion. Etc, etc.

Korea was presented as a 'success story'; that may be the case. But the period when Korea was able to carry out land reform under American occupation; pursue state-aided and bank-rolled programs for encouraging Daihatsus; industrialise without having to pay massive intellectual property rents for technology; and export to the US almost duty-free at a time when the latter needed a dependable ally in Asia to contain communism - this period and its circumstances are not the same as today. Korea cannot be repeated by, for example, African countries. Korea is no 'model'. Furthermore, the two Koreans (Lee Myung-bak and Ban Ki-Moon) conveniently ignored the fact that their country's development owes itself largely to their hard-working working classes rather than 'aid'.

Here is a brief analysis of the outcome document.

To start with its title, 'Busan Partnership for Effective Development Co-operation'. 'Effective aid' is now replaced with 'effective development'. This is a more telling indictment of 'aid' than is realised at first glance.

HLF4 was largely an affair between the 'poor' countries of the so-called 'third world' and the so-called 'traditional donors' of the OECD countries. Conspicuously absent were the BRIC countries (Brazil, Russia, India and China).

This was reflected in the telling opening of paragraph two of the 'Outcome Document' with the words 'The nature, modalities and responsibilities that apply to South-South cooperation differ from those that apply to North-South cooperation.'

There is no question that the bigger countries of the south (India, Brazil and China) as well as Russia have distanced themselves from the 'aid effectiveness' agenda of HLF4. Their agreement to refer to the principles of North-South relations on a 'voluntary basis' can only be interpreted as a political rejection of those principles.

Aid to the Third World is a self-important feel good activity of the developed world, and Mr. Tandon makes a very valid point that it will not go away easily. The likes of Oxfam and Bono will forever call for aid to help the third world, but I believe it will be better if they channel their energies in getting the third world to be more self reliant and thus more confident in its abilities to take care of itself.

One big point made is the greater south-south cooperation, which is something I have always stood for and believed in in my blog. The third world, including the fast industrializing and fast developing nations, must come together and get out of the WASP shadow on their own future. I had written in a post some time ago about how countries like India and Brazil help the rest of the third world by introducing them to better agriculture practices, or China can come in (without its greed for resources) and genuinely usher in infrastructure development and redevelopment of cities and urban spaces.

An important point is that if global trade is still the way forward, notwithstanding the protectionist attitude of the first world now that globalization is finally becoming the two way street they advertised, the third world is an important market in itself. There are big markets in developing nations across the globe where fledgling industries in other third world countries can sell their goods and services.

I think a big factor in achieving this greater south-south cooperation is getting rid of the developed west centrality. A brown man must learn to trust a black man or a yellow man, to give a very crude example! Considering the last two centuries were ruled the WASPs, unfortunately our thinking is centered around their thinking. Global media and flow of arts and culture is controlled by North America and Western Europe, and a greater exchange of people and ideas among the third world is absolutely essential for this shift to take place. I can see it happening and I hope it only goes stronger.