Africa Issue- Development & Aid

The other day, Bob Geldoff announced the series of concerts, Live 8, to held to coincide with the G8 meeting in July. It is intended as a political statement to the governments of the most developed nations to take Africa’s poverty issues more seriously. I’ve been following these developments as I’m African and I intend to return there in the long-term and hopefully be a part of a turn around in Africa’s development. I’m generally impressed with Britain & especially other European countries that this issue is finally being taken seriously, but I think there are three strands to the argument as to how to resolve Africa’s dilemma from the point of view aid. One strand is the level of aid that developed countries should be contributing to the whole Africa problem, the second is how do countries qualify for aid, and finally how the aid should be spent.

Show me the money!
This argument is about full debt cancellation of the most seriously underdeveloped countries and an increase of contributions by the developed countries to the Millennium goal target of 0.7% of GDP (calculated to meet developing world’s needs to eliminate extreme poverty). I fully agree with debt cancellation in certain countries where previous official aid assistance has been misspent on projects with no impact real impact on the poverty issue. Some Scandinavian countries have largely met the 0.7% GDP target and I can see Britain and other European countries catching up by 2015. It’s amazing that developing countries are now wealthy enough that only a measly 0.7% of GDP is required, this was much higher 20 years ago. But the huge criticism from this side of the argument is the low amount of aid in terms of GDP that America, the biggest potential absolute donor, is contributing.

Criteria for aid
The conditions for which aid is given is how America sees its role in the aid business, and hence, their reservations for meeting the 0.7% GDP target so hastily. Their approach is to identify which countries have reformed themselves enough and demonstrated positive steps towards the reducing corruption at the governmental level, increased transparency and of course the extent to which a country has adopted democracy. In other words, governance is a key criteria for the US to even consider a country for aid. Once a country has proven they can govern themselves adequately so that aid is not wasted. I’m beginning to doubt the commitment of America to providing aid, although I agree somewhat with their view for strict governance criteria for distributing aid- so far it seems only Madagascar has qualified, despite many countries having made real progress in governance. Governments of developing countries in Africa won’t become super star transparent and democratic over night, rather it will take time- possibly too much time. I wonder whether the US are being too strict here and are on the path to letting the world community down as a key player in meeting the challenging poverty reduction targets by 2025.

Where do you spend it?
Top of the list would be infrastructure (roads, ICT etc..), health & education. These are the key development issues that act as a barrier for underdeveloped countries since their governments cannot raise enough money through taxation to meet basic levels. And aid is required to address this shortfall.

It’s not just about aid! Fairness, opportunity & self reliance:
But really it’s not just about aid- another view that shouldn’t go unmentioned here is how western world is sometimes reluctant to open up key markets to fair trade to the extent so that undeveloped countries can work their way out of poverty and eventually become self reliant. There is no point in making a country reliant on aid forever- aid needs to be given with the assumption that these countries will be able to work their way out of poverty and become economically sustainable in the long-term and become part of the integrated global economy. Some challenges to this include understanding the impacts of globalisation on developed economies which include working out a practical means to end subsidies in developed countries that impede trade growth opportunities for developing ones. There are some who have been complaining about how Africa is being portrayed as a helpless continent in the media in the west and masking some of the progress made, although I agree somewhat with this, I feel it's probably the only way to tap into the minds of the west to address a really important issue for now. In time, those images of starvation on TV will hopefully decrease and replaced with images of positive development.

I’m interested to hear more about how aid to Africa is perceived in the US when I’m over there for the next 2 years. It certainly seems to be getting a lot of coverage on this side of the Atlantic- an MBA classroom maybe the closest I’ll get to hearing some good arguments and views- specifically on the trade and corporate social responsibility side of things.