Is aid the problem, not the solution?

Well-meaning activists like Bono have pressured the West into giving billions more to Africa. But is all that money doing more harm than good?

Published July 6, 2005 11:25PM (EDT)

The aid workers are thirsty and the beer is flowing: There is a party mood in Rumbak, the city of tents that at one time almost became the capital of Southern Sudan. It's a bit like the end of the day atmosphere at a trade fair: The stands have closed down and people have knocked off work.

All over the place people in sandals and washed-out T-shirts emblazoned with meaningful slogans ("no cattle plague -- more milk") and where they are stationed ("Somalia, Uganda, Sudan") dart down side streets. The aid organizations' colored pennants flutter in the hot evening wind.

Several times a day local people heave heavy crates out of the rickety old planes that have just landed. Obscure airlines use these planes, before they are sent to the scrap yard, to turn a fast buck. Rumbak, which until recently was a Godforsaken hole, is now booming.

After over 20 years of civil war between the North and the South in Sudan, a peace agreement has now been reached. In April it was decided in Oslo that Sudan would be granted $4.5 billion in reconstruction aid -- a decision that, although greeted joyfully by many people, is viewed with skepticism by Norway's minister for development aid, Hilde Frafjord Johnson: "Much more aid has been agreed on than I think we actually need."

This sudden wealth is a cause for concern even among the aid workers themselves. "If we carry on like this," says Lammart Zwaagstra, who comes from the Netherlands and works for the EU's department for humanitarian aid, "then people will never stand on their own two feet."

Creating more "need" with generous aid

Rumbak threatens to become a bitter example of how development aid doesn't really help. Again and again finance is hurriedly provided for one project after another, without any evidence of a convincing overall concept. The money is just thrown at projects as quickly as possible. In this case, Norway has made $500,000 available for just 500 refugees in the camps. The windfall immediately sparked off further need, and a second camp, this time home to 345 people, has sprung up. It is the Italians who are footing the bill for the new camp.

Money is, for the Europeans, the solution to all of Africa's problems. But despite yearly payments of, at last count, some $26 billion, the majority of the continent resembles something approaching one big emergency military hospital.

Already today there are increasing numbers of Africans who call for an end to this sort of support. They believe that it simply benefits a paternalistic economy, supports corruption, weakens trade and places Africans in the degrading position of having to accept charity. "Just stop this terrible aid," says the Kenyan economic expert James Shikwati.

The suffering is overwhelming: More than 300 million people south of the Sahara have to survive on less than a dollar a day. This figure has gone up by around 100 million over the last 10 years alone. Two-thirds of the poorest countries in the world are in Africa, as are 34 of the 35 states with the lowest life expectancy. The U.N.'s development expert Jeffrey D. Sachs has written that sickness plagues Africa like a "silent tsunami" surging over the continent every day.

It is impossible to develop prosperity in states that are falling apart. Only 1 percent of the world's wealth is created in the region between the Sahara and the Cape of Good Hope, despite the fact that this area is home to 11 percent of the globe's population. And without the gold and diamond mines of South Africa and the oil and gas reserves of Nigeria, this figure would be less than half a percent. Forty-two of the 52 states in Africa have either slim, or even no, recognizable opportunities for development. According to Jean Ziegler, a developmental sociologist from Geneva, Africa is like a "raft at sea at night." It is drifting away and is slowly vanishing off the Western world's radar.

Rock music for the world's poor

Now a rather unusual band of rescuers has decided to help the shipwrecked continent. The aging rock star Bob Geldof has woken the world up with his Live 8 concerts in a series of cities, including Rome, Paris, Berlin, London and Philadelphia. By listening live to Elton John, Paul McCartney, Eric Clapton and a reunited Pink Floyd, hundreds of thousands of people, as well as the tens of millions who watch the concert on television, are demanding that their politicians stick to their promises and save Africa. The motto of the music festival, which has been embraced by millions of people, is "the long march to justice."

The timing for the worldwide mobilization to combat the African tragedy has been well chosen. Four days after the concerts, the leaders of the world's most important industrialized nations will meet in the Scottish golf resort of Gleneagles, near Edinburgh, in order to make a decision on new aid for Africa. Geldof wants to send them an army of demonstrators.

Even before the summit has begun, the G8 nations have already decided to alleviate the debts that 18 of the world's poorest countries -- 14 of which are in Africa -- have accumulated with the World Bank, the International Monetary Fund and the African Development Bank. Instead of having to pay the interest on the debt, $40 billion will be now be available for education, health and support for local businesses.

Tony Blair, the summit's host, has the ambitious aim of doubling, even tripling, development aid for Africa south of the Sahara. Yet even the debt relief is an admission of how much traditional development policy has failed. It shows that despite the massive sums of money that have flowed into Africa, it has not been possible to make much progress in the fight against poverty.

Between 1970 and 2002 the countries south of the Sahara received a total of $294 billion in loans. In the same period of time they paid back $268 billion, and accumulated, after interest, a mountain of debt amounting to $210 billion. Why is it that the billions, which both the West and the East poured into Africa during the Cold War, have been so useless? The suspicion is hard to avoid that aid, sometimes, paralyzes.

Corruption, selfishness and greed

Basically it is always the same reasons why development aid in Africa tends to disappear down a black hole: incompetent planning of the donor nations, which means that aid is always distributed according to the wrong priorities, as well as a combination of corruption, selfishness, greed and arbitrary use of government power in the recipient countries themselves.

Often, what started out so promising ends up as a fiasco. Hendrik Hempel, who works for the German Society for Technical Cooperation (GTZ), helped renovate a state-owned farm in North Eritrea after the war with Ethiopia. For years he literally created a blooming landscape.

But Hempel's case became a silent indictment of the incompetence of the ruling government party. He managed to get better yields than the state-run farms. But despite his success, he was forced to give up when the government suddenly installed hundreds of former freedom fighters, who had been left without work after a number of state-run farms had gone bust, as paid employees in his business.

Industrialization and trade, research and development have brought unparalleled levels of prosperity to more sections of society than ever before, first in Europe, and then in the USA. Asia is also making steady progress. The only continent that is falling more and more behind is Africa. And as a result of the dramatic increase in the exchange of goods, data and services, Africa has been left hanging completely.

Apart from South Africa and the West African oil states, most countries on the continent export almost only raw materials, which are notorious for bringing low returns on international markets. These countries barely participate in the sale of services and manufactured goods in international competition.

What is known as the "terms of trade" -- the difference in price between goods that are imported and those that are exported -- have worsened dramatically in large parts of Africa. At the beginning of the 1980s a coffee farmer had to produce 50 sacks of coffee beans in order to buy a tractor. By the end of the '90s this figure had jumped to 140 sacks. And the gap looks set to widen still further.

There is no improvement in sight. In 1964, the year of its independence, Zambia's most important export was copper. Today, 40 years on, copper is still the country's biggest asset. But if the prices fall -- raw material markets wobble up and down like flocks of birds on watering holes in the Serengeti -- the whole country instantly collapses into a major crisis.

In addition to this, industrialized countries put up extra barriers to products coming from developing nations. Although the European Union allows Africans to sell their goods more or less tax free in Europe, the E.U.'s agricultural subsidies have just as catastrophic an effect as any customs barrier.

Cotton from Burkina Faso doesn't stand a chance against subsidized material from Spain. Sugar from Mozambique, Ethiopia or Malawi cannot compete with heavily supported European beet crops. The criticism that Africans direct at Europe and America is, "we are so poor because you are so rich."

Africa is certainly owed a lot as a result both of the colonial control of the European nations during the 19th and 20th centuries, and the slave trade between the 16th and 19th century. However, as time goes on, the argument becomes less convincing: Forty years after the end of colonial hegemony Nelson Mandela is no longer blaming the whites for underdevelopment, but rather pointing the finger at the local politicians and their cronies.

Getting their house in order

The South African minister of finance, Trevor Manuel, and his Ghanaian equivalent, Kwadwo Baah Wiredu, are all singing from the same song sheet: Until Africans get their own house in order, all help will be in vain.

And it's certainly true that chieftains, kleptocrats and dictators have always known how to benefit from development aid. The late gun potentate of Zaire, Mobutu Sese Seko, was well off to the tune of at least $4 billion. The former despot of Kenya, Daniel arap Moi, who stood down in 2002, is likewise thought to have swindled $4 billion during his 24 years in office. "When the gravy train passes by, they all jump on," says Ross Herbert of the South African Institute of International Affairs.

James Shikwati, head of the Inter Region Economic Network in Kenya, thinks that aid should be funneled into private business, rather than state projects. "Instead of looking at the private sector, where profit guarantees discipline and efficiency, politicians concentrate on governmental projects which are not subject to profit and loss."

The German Federal Ministry for Economic Cooperation and Development (BMZ) has had some pretty positive experiences in financially supporting private initiatives. After all, when companies are affected, they have an interest in cooperating with aid workers -- for example, in the case of the workforce being decimated as a result of AIDS. For this reason DaimlerChrysler and the aid organization GTZ have come together to work on a joint project to fight the disease.

However fruitless development aid has shown itself to be so far, the general attitude has simply been to carry on as before. But now the hardboiled new president of the World Bank, Paul Wolfowitz, is modifying this approach. The middle of June he returned from his first visit to Africa, convinced that more money could only make Africa a "continent of hope" if the Africans themselves were more proactive.

"Aid is not the solution"

And now, even the countries that receive aid are coming out with more words of warning. Never before have so many African intellectuals called for an end to the classic type of development aid. "Aid is not the solution," was the headline of the Kenyan newspaper the Standard. According to the paper, aid does not go directly to the people but to "bureaucratic structures."

The worst thing about foreign aid, says the Monitor from Uganda, is that it prevents democratic development and urgently needed reforms. The paper also believes that aid stands in the way of long overdue and highly beneficial transparency in society.

German Chancellor Gerhard Schroeder's commissioner for Africa, the Green politician Uschi Eid, warns against sweeping acts of charity. If the donor countries don't make demands on Africans to act themselves, then they shouldn't expect any reforms -- which could be politically unpopular -- to be carried out. The "massive swing towards more giving," which especially Tony Blair is pushing his summit colleagues to do, she says, will only lead to us "laying double the amount of money on the table, but still not solving Africa's problems."

In Mozambique, at the beginning of the '90s, development aid made up 95 percent of GNP. Statistically the people of Mozambique lived as much off the charity of benefactors as from the results of their own work. Countries like Tanzania and Rwanda, which in the last few decades received more than 80 percent of their GNP in aid, are among those whose debt is now being canceled.

The complete dependence on help from abroad and the World Bank's absurd demands have killed off individual economic incentives. Western therapy for Africa is like giving poison to a sick man. Or chocolate to a diabetic.

Donor country generosity is giving a fatal signal. The message is that it isn't worth paying back loans, as at some point the international community will come along and take the burden anyway. "Those countries who, like us, have always paid their debts have been ignored, while those countries who have simply stopped paying are now getting all the attention," complains the Kenyan minister for planning, Peter Anyang Nyongo.

New wells running dry

Lord Peter Bauer, who was once a professor at the London School of Economics and an advisor to Margaret Thatcher, had already written, 20 years ago, that development aid was "partly one of the reasons for the North-South conflict, rather than its solution."

Again and again aid workers put a lot of time and effort into something, with the end result being a grotesque blunder. For example, in the building of wells.

In the past African wells were primitive and not very effective. Modern wells drilled by Western aid workers brought more water in a shorter amount of time. But the high-tech equipment is very complex and requires discipline and expertise -- both of which are in short supply in the continent's neediest regions.

Only last year, for example, Swiss technicians drilled seven deep wells in Southern Sudan, each of which cost $8,300 -- in the meantime five have already run dry. Despite enormous financial investment, the provision of water in, say, parts of the Sahel region has not improved at all over the last 20 years. In fact it has probably gotten worse.

Mistakes make no impression on the development aid industry. That is due in part to a lack of suitable quality control procedures. Effect analysis, as it is called at the BMZ, does not give any reliable information about a project's efficiency. This is because the ministry monitors itself. Or it lets its procedures be regulated by "independent assessment researchers," who of course want to get hired again later and therefore allow themselves to make, at best, timid criticism.

The main duty of aid workers is to make themselves redundant. Understandably they take their time doing this. "When I started this job I was brimming with idealism," says Bernhard Meyer zu Biesen, head of German Agro Action. "But after I had saved enough money within a few years to buy a house, the relationship I had to my job changed."

It's "development cooperation," not aid

Officially development aid doesn't exist anymore. The BMZ uses the wonderfully colorful term "development cooperation." The rationale being that "the countries and organizations which Germany works with are not recipients of aid, but rather our partners."

Yet the largest projects have come into being almost entirely without input from the beneficiaries. Such as the 203 kilometers of road that connect the Zambian copper belt to the Namibian port of Walvis Bay.

So that it didn't look like charity, the Zambians contributed 4.1 percent of the $30 million road, which was financed by the German Bank for Reconstruction. But just before the road was to be inaugurated, at the beginning of 2004, the government in Lusaka announced that it wouldn't pay.

The Germans then had to come up with extra funds so that the South African contractor would carry on with the work. They also had to pay the interest accumulated on account of the delay.

On May 13, 2004, the then president of Namibia, Sam Nujoma, attended the opening celebrations, along with the Zambian President Levy Patrick Mwanawasa, so that they could be praised for having built the wonderful road. Banners were put up with the words "Thank you, Sam Nujoma, thank you, Levy Mwanawasa." The German ambassador came anyway. Shortly before the inauguration a small metal sign, noting German involvement in the project, was put up on the bridge crossing the Sambesi, which marks the border between the two countries.

It remains a mystery as to why the German Federal Ministry for Economic Cooperation and Development places such an emphasis on certain countries. Why does Namibia get so much more than others?

The former colony has a special relationship to Germany. In 1904 and 1905 the Kaiser's troops put down a Herero revolt; in the process they killed as many as 65,000 people, among them many women and children. Certainly one motive for German aid development is to make up for this brutality. Except the figures don't always stack up.

Giving money to the relatively well-off

Namibia is one of the wealthiest countries on the continent -- it has a relatively well developed infrastructure, has a growth rate of 3.7 percent and a per capita income that is 10 times higher than that of Chad or Ethiopia.

Since Namibia's independence 15 years ago, Germany has donated more than $476 million. Sudan, on the other hand, which is much poorer and has 16 times as many inhabitants, receives $119 million less. Nevertheless, in 2003 Berlin increased Namibia's already enormous development aid by 50 percent.

All this, when Namibia's leader, Sam Nujoma, believes that his people actually don't need any help. The Africans are every bit as good as the Europeans, he said to Britain's prime minister, Tony Blair, "and to hell with those who think differently."

That hasn't stopped Nujoma from begging the government in Berlin for money for the planned land reform. Minister Wieczorek-Zeul didn't disappoint him. Now German tax revenue is helping to finance the legally controversial ousting of German farmers from their land.

According to the British sociologist and best-selling author Graham Hancock, in his book "Lords of Poverty," it is the fault of bureaucratic monstrosities like the U.N. that so many people in the third world are "overworked and underfed." He doesn't pull any punches when he sums the situation up: "Development aid is bad through and through, and it is impossible to reform it."

These institutions, writes the development theorist Reinold Thiel, have shown themselves to be "amazingly incapable of taking into account practical experience." Thiel does however see a trend towards improvement.

The Washington Center for Global Development has calculated that $3,521 of development aid would have to be invested per person, in order to increase the per capita yearly income of the target group by $3.65.

Yet anyone who tries asking the question about how cost-effective development aid actually is, is quickly labeled a misanthropic cynic. Thiel rails against the fact that these institutions follow their own second-rate way of thinking, which justifies awarding public funds to rainmakers: If they manage to "make rain," then this proves that giving aid was the right thing to do. If they don't, then this shows that more aid is urgently needed.

Media overstates the aid case

Many media organizations play along too. The German news channel n-tv allows entire programs to be "co-financed" by charitable institutions. The best example being its cooperation with the Christian charity World Vision, with which it produced 24 television documentaries. The programs, which focused on war and catastrophe, showed World Vision to its best advantage. Ethiopia, Africa's top social case, stood at the center of World Vision's campaign. Seventy million people are kept alive by "an economy of the heart," as Horst Siebert, at the time head of the Global Economic Institute of Kiel, put it -- but without any hope of ever being freed from the slow drip of aid from donor countries.

Every autumn, the U.N. publishes seasonal figures on the areas of hunger in Ethiopia. At the beginning of 2000, 8 million people were thought to be short of food. The notoriously sober Swiss daily Neue Zuercher Zeitung thought these figures were exaggerated -- and was right. The paper researched how the panic had arisen: There were camps only in Gode, a town hit by drought. But that was where most of the media coverage was focused. The circus really got going once the news channels CNN and BBC had discovered the camps.

Hence the completely unrepresentative picture of Ethiopia as a country sinking once more into starvation. It was certainly a saddening situation. But it wasn't a catastrophe.

Whenever the media starts calling in the major aid organizations the result is often grotesque and sometimes even harmful. Certainly the white sacks of corn with emergency rations do save human life.

But very often too many are delivered. The surplus corn is then sold at dumping prices on local markets -- which is a massive blow to local businesses. As soon as the emergency situation has eased off, the region's small landowners hoard their crops. And local farmers stop planting millet, as corn is easy to come by.

Countries that attempt to defend themselves against what is supposed to be charity have to expect to be harshly slapped down: When in autumn 2002 the Zambian government refused to accept genetically modified grain, the American ambassador was blunt in his criticism to the U.N.'s Food and Agricultural Organization. "Leaders who refuse to let their people have food should be put in the dock for the most serious crimes against humanity," he said.

Shortly after that, the U.N.'s global nutrition program called a "starvation alarm." Millions of people would die, it said, if help wasn't given straight away. But the threatened catastrophe never happened. Aid workers had "dramatized the situation," as the organization Care International was forced to later admit.

Exaggerating the dangers

Guy Scott, the former agricultural minister for Zambia, understands why such announcements happen. "Go to a village and ask people if they are hungry. Of course they will always say, yes, they are hungry."

Zambia, at least, was spared a major food crisis. As was neighboring Malawi, although the country did experience serious problems when foreign-financed food reserves, which had been set aside for times of need, were illegally sold to Kenya.

The reports of imminent catastrophe in Zimbabwe were also exaggerated. The British government, most of the major media outlets and the large aid organizations had declared famine to be unavoidable. And in fact the aid lobby actually needed these reports to support the theory that Robert Mugabe was driving his country into the ground with the dispossession of white farmers.

Now, once again, large amounts of money are supposed to transform Africa. The leaders of the Western nations, when they meet in Gleneagles, will be all too willing to bow down to pressure from Geldof's fans if this proves them to be merciful heroes. Russia, the permanent outsider among the big eight, has already announced that it will cancel the debt it is owed.

The Newsweek columnist Fareed Zakaria thinks it is possible that Gleneagles will herald "the brightest moment in Africa's history." If so, this will have been made possible by "American realism, European generosity and an African sense of responsibility."

Until now American realism and European generosity have not been enough to save the continent. Would an African sense of responsibility now manage to change things?

To help this to happen, the world's largest donator, the Microsoft billionaire Bill Gates, has defined a strict set of rules. Anyone who applies for help from the Bill and Melinda Gates Foundation to fight AIDS or TB, must prove that he can work as efficiently as a private company. Every project must regularly submit sets of accounts. If the project doesn't work, then the money will be stopped.

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