BOOK EXTRACT & VIDEO
Expensive Poverty: Why Aid Fails and How It Can Work
In his new book, Dr Greg Mills examines how, with the assistance of external actors, Africa can find its way out of poverty.
Outsiders need to get insiders to do their jobs better. This is the key lesson from years of aid to Africa, from which the continent has little to show. Most of the aid given has been consumed, some by the donors themselves, much of it by local governments and elites. While it may have made things “less bad”, it has not proven the development panacea that Western leaders, among many, once hoped.
THE DILEMMAS OF AID
Donors have poured $1.2-trillion of development assistance into the continent in the 30 years since the end of the Cold War, a figure that could conceivably be doubled if it included unofficial charitable giving. While one might justifiably discount the value of aid before 1990, given the strategic and ideological rather than primarily developmental purpose of a Cold War rationale, since then, however, this excuse has waned. As such, the development opportunity cost and wastage are staggering.
This $1.2-trillion alone could have provided 682,000 kilometres of new, two-lane, all-weather highway. Sub-Saharan Africa has an estimated 2.8 million kilometres of road network currently, only 800,000 kilometres of which are paved. Of this, 50% is deemed to be in good condition. As an indicator of the impact of such a network, China has built 150,000 kilometres of modern multilane highway since 1980, thereby enhancing the competitiveness of Chinese businesses by reducing transport costs and travel times. The Democratic Republic of the Congo (DRC) has, by comparison, just 2,500 kilometres of paved roads for a territory one-quarter of the size of China.
This money, spent wisely over these 30 years, could have created extraordinary wealth. Even one-quarter of the $40-billion spent annually on average could have provided one million university scholarships every year, representing an enormous talent pool that could be working for the continent’s benefit.
The $1.2-trillion could have repaved 5.5 million kilometres of African roads or revitalised the continent’s rail network. If we use the cost of the Ethiopian standard gauge railway as a contemporary benchmark, the same money could have bought over 200,000 kilometres of brand-new rail-line, along with rolling stock and engines. Africa currently has 68,880 kilometres of operational rail-line, less than 20% of which is standard gauge and the remainder the narrower, lower-speed and freight Cape gauge. Also, some 171 new, modern, fully equipped commercial seaports could have been constructed, or 160,000 state-of-the-art, one-stop border posts.
Currently, Africa produces 168,000 megawatts of electricity, of which over one-quarter is produced by one country, South Africa. The last 30 years of aid expenditure could have built 240 top-of-the-range, 1,000-megawatt generation plants.
Why have decades of spending had such a small impact on improving the lives of the poor?
The average per capita income of sub-Saharan Africans changed by just $352 during these 30 years, from $1,304 in 1990 (when there was a population of 500 million) to $1,656 in 2019 (1.1 billion). Donors have spent $1,111 per person over 30 years to lift the incomes of Africans by $352.
And Africa’s share of global income has been falling steadily since the mid-2000s. The world is getting richer at a faster rate than Africans.
As a result, prominent Africans condemn the notion of development through aid. “Aid has been more of a disincentive to development in most cases,” says Olusegun Obasanjo, the former Nigerian president. “No wonder people in developing countries are asking for trade and investment rather than aid. There will always be room for humanitarian assistance in cases of human and natural disasters and emergencies. But foreign aid as an instrument of development must be accepted as ‘tried and failed’.”
Donors likewise have continuously scrutinised aid effectiveness. In November 2020, the British government announced its intention to deviate from its obligation to spend 0.7% of gross national income (GNI) on aid. An Integrated Review of Security, Defence, Development and Foreign Policy, conducted in 2020/2021, led to the merger of the United Kingdom’s Department for International Development and the Foreign and Commonwealth Office into the Foreign, Commonwealth and Development Office. France, meanwhile, established a Fund for Innovation in Development in 2021 to test and scale-up policy solutions to poverty and inequality in an attempt to “transform” the country’s approach to aid, most of which will go to projects in sub-Saharan Africa.
These are among the latest in a long line of attempts to improve aid inputs and outcomes.
Still, despite terrific needs and poverty, aid is consumed with little evidence of sustained development progress, in part because it is given to countries that do not possess the capacity to use it properly and develop in the first instance.
It is funnelled into a governance environment from where as much as $90-billion – almost half of the annual funding gap necessary to achieve the 2030 Sustainable Development Goals – is illicitly externalised every year. From 2000 to 2015, illicit capital flight from Africa totalled $836-billion, involving practices such as misinvoicing, along with corruption and theft.
Politics and economic choices matter. Aid cannot be separated from the wider political and economic context into which it is given.
There are other problems with the giving of aid, which this book examines, including the belief that it is primarily a technocratic function, that the politics matters less than the technical solutions, and that success demands a focus on state capacity. This may be entirely explicable given that official development assistance (ODA) is given by governments, although their intentions may be altruistic. By ignoring the importance of the individual over the state, this approach encourages the unchecked power of the state. As William Easterly notes, the “technical problems of the poor (and the absence of technical solutions for those problems) are a symptom of poverty, not a cause of poverty”. Yet, remarkably, the evidence from Western donors, in particular, is how well improvements in individual freedom have worked historically for development, and how governance goes hand in hand with liberty, equality, values and rights. Democratic competition is a powerful force for positive change in getting the basic ideas and principles right.
Strategy in this respect encompasses more than just tactical and technical capacity. It is an undertaking based on principles, values and rules, demanding a systematic approach that includes all the attributes and sources of state power: of people, institutions and processes. Success requires a combination of all these factors. There is a need to understand the local dynamics and political balances. In Afghanistan, for example, while the premise of military intervention may have been correct in order to buy time for the Afghan government to establish itself, Western leadership did not understand the place and the impact of outsiders on a delicate social and political equilibrium.
Put differently, while battles can be won through superior military capabilities and technology, wars – including a “war” on poverty – will have to be won by the application of political and economic resources rather than simply technical interventions.
This challenge of government in development should not be surprising given Africa’s history, where private sector growth has largely been anathema, and not just in the colonial era. As I argued in Africa’s Third Liberation, written with Jeffrey Herbst, the colonialists established interventionist states that actively prevented indigenous African economic enrichment, while protecting white settlers, colonial companies and monopoly capital. The combination of racism, the imperative of control and vested interests prevented Western actors from seeing an alternative to state-led economic activity as possible, one based largely on individual rights and initiative. After independence, the African successors to colonial rule were comfortable with the economic systems they inherited once stripped of racism, especially as state intervention offered many patronage opportunities. Expanding state control and intervention was one of the few levers open to them in the context of overall state weakness.
This absence of options was exaggerated by the failure of the liberators, as Morgan Tsvangirai, then Zimbabwe’s prime minister, lamented, “to have a plan beyond redistribution and no focus on production” and an environment where “politics has been about personality cults, not policies”. East Asian countries, by comparison, benefited from commitment by their leadership to popular welfare, to do the right thing for their people, a goodness of will that could more easily be consolidated and accelerated by outsiders than in those situations, including in Africa, where the compulsion for control forestalled the forces for economic change.
But this is not a book principally about the failings of aid. That would be too easy to write. It is rather one that examines how, with the assistance of external actors, Africa can find its way out of poverty.
This book argues that, since poverty is largely a choice made by leaders, the strengthening of individual economic and political rights and discourse is at the core of sustainable solutions to ending poverty, not simply improving the delivery of technical assistance. It contends that people, not the state, are the critical thread linking donors and development, enabling public and private sector solutions. It does not, however, claim that aid is a principal reason for African failure, even though it may have distortive effects and deliver less than promised. That argument is akin to saying: here is some money, so you are poor.
The book accepts that there are enormous problems in trying to instil terms of growth and stability from outside. As the former British aid minister Rory Stewart has argued, “We have been trying to do this in northern Britain since the 1930s. It is very hard to do this in countries with a proper domestic environment and of course much more so in tricky, poor countries.” It argues that there is a need for donors, as a key first principle, to “not harm”, a criterion that is not always upheld in external dealings with the continent, where they are shaped less by the needs of Africans than those of donors themselves.
It acknowledges that there are successes. The US President’s Emergency Plan for AIDS Relief (Pepfar) initiative is one example of how things can change for the better if the right amount of strategic thinking, political will and management are present. Launched in 2003, by 2020 Pepfar had provided more than $85-billion in cumulative funding for HIV/AIDS treatment, prevention and research, and distributed antiretroviral medicine to more than 13 million Africans across 50 countries, saving an estimated 18 million lives in the process.
This book also recognises that there are different types of aid, that spending on a variety of humanitarian and other emergencies, along with military and peacekeeping assistance, has different goals from improving growth and development outcomes. It recognises the dilemma in aid-giving, the realisation that funding humanitarian causes, for example, can undermine governance in the longer term while saving lives immediately, and that support for democracy, like education, can compete with other pressing needs and clash with competing national interests. There is also the dilemma of support, as will be seen, for certain authoritarian regimes in the interests of (at least) short-term stability and recovery.
Thus, it is much more difficult to write a book on aid that outlines ways to spend money better. It is more popular – populist, even – to point out the folly and abuse of aid or to talk in generalities about strengthening governance and the capacity of the state.
Finally, while a huge sum has been spent on aid, it is also a relatively small amount, given the scale of Africa’s fast-changing needs. The need to reform traditional approaches to development is heightened by the pace of change in Africa, particularly in the delinquent way in which many of the continent’s governments manage their economies and the slow pace of job creation for young people. Such a business-as-usual approach is likely to end in disaster, given the scale of Africa’s demographic pressures and the presence of so many social fault lines.
The scale of the challenge
Two significant and frequently unheralded shifts followed the end of the Cold War: from a state- to a market-based economic system, and from authoritarian to democratic systems of government. Freedom House is an independent research and advocacy organisation dedicated to promoting democracy, political rights and civil liberties since its founding in 1941. It charts an increase in the number of African democracies from just two to over 10 between the 1980s and the 2000s. During this time, Africa enjoyed a sustained period of economic growth not seen since the heady immediate post-independence days of the 1960s.
In the next 30 years from now, the same amount of time since the Berlin Wall fell, Africa will undergo a seismic demographic change – the continent is projected to double its population to 2.5 billion people by 2050. This has staggering implications. The numbers are startling. At current rates, Nigeria’s population will increase to over 400 million, while Tanzania’s, currently 53 million, will grow to the same size as that of Russia at 137 million. Kenya’s will more than double to 95 million, while Uganda’s will balloon from 43 million to 106 million, according to the United Nations. Even before Covid-19 hit, the liberal economic and political transition in Africa had regressed somewhat.
African economic growth had slowed from its 21st-century peak of 9.2% in 2006 to -1.4% in 2018. By this time, the continent had become the site of the majority of the world’s poor, with one in three Africans – 422 million people – living below the global poverty line. At the same time, the number of African democracies fell to just eight in 2020, with the number of countries classified by Freedom House as “partly free” at 25. This occurred despite clear evidence linking economic outcomes to the quality of democracy in the continent’s 55 states, as will be seen in Chapter 7, and despite the preference of more than two-thirds of Africans routinely polled for a democratic system. While there might be “democracy fatigue” in parts of the developed world, especially among young people, given the apparent failures of the political system to deal with complex problems, Africa does not share the same lack of enthusiasm.
This preference is not surprising. No governance accountability framework remains more viable than democracy and its attributes of a free press, freedom of speech, competition, and parliamentary oversight, along with institutional checks and balances. Yet, by 2020, less than 10% of people in sub-Saharan Africa lived in “free” countries. Donors have been complicit in its sub-optimal performance, whether by design or neglect.
Such a combination of government and development has consequences. Africa’s youth are, for instance, disproportionately disadvantaged and economically marginalised, accounting for 60% of all the continent’s jobless, their rate of unemployment averaging more than double the adult proportion, according to the African Development Bank. As the Arab Spring reminds us, there are wider implications than just desperate images and frustrated social media posts. The World Bank shows that about 40% of those who join rebel movements are motivated by a lack of employment. With 200 million people aged between 15 and 24, Africa has the largest population of young people in the world. Without radical improvement to how Africa’s economies and politics are run, social and political catastrophe looms. The costs of failing to do so are immeasurable.
Migration is a particularly powerful symbol of inequality. It also perfectly illustrates the political economy that both gives rise to and sustains this flow. By the middle of 2020, for example, 24,000 refugees were stuck on Greece’s Aegean islands of Samos, Chios, Leros, Kos and Lesvos, plus another 90,000 on the Greek mainland seeking a way into Europe, many sleeping rough around Athens’ Victoria Square, before heading for Greece’s northern borders and the richer pickings of Germany and Scandinavia. Athens’ abandoned retail spaces had been transformed into non-governmental organisation (NGO) offices around the square, offering support services from legal representation to counselling.
The presence of so many refugees represents both failure and opportunity – and not always the sort that politicians and NGOs want to be reminded of. There is much at stake in improving the giving of aid, especially on the African continent.
Aiding or abetting?
The problem with aid is that it is incomplete. It lacks an overarching political and economic rationale – a strategic policy framework. Rather than looking at ways of changing behaviour in a manner that assists reforms and greater competitiveness, it tends towards selecting technical and tactical responses. As a result, aid has undermined the value of international assistance and relationships and undersold itself as a tool for development. The cost of the absence of a strategic framework is shown when donor political interests trump on-the-ground realities, thrusting the donors into a political choice that they invariably get wrong since it is made largely for short-term reasons of expediency over a principled partnership.
Robert Kyagulanyi Ssentamu was born just four years before President Yoweri Museveni and his National Resistance Movement came to power in Uganda in 1986. Known by his stage name, Bobi Wine, the reggae artist has produced more than 70 songs in a 15-year artistic career. Since 2017, he has also served as a member of parliament, representing the Kyadondo East constituency. He says Museveni clings to power “as this was his agenda” all along in “milking dry the nation”. Wine argues that Museveni has kept “people poor so that their preoccupation is to find a daily meal and not to question why their lives are not getting better”.
The singer has been constantly harassed, beaten up and arrested by the authorities. During the run-up to the January 2021 election, he was illegally detained, tortured and abducted by security forces. Clearly, Wine rattled the Ugandan authorities, who apparently viewed him as a threat to Museveni (born in 1944) on account of Wine’s popularity among the youth.
Uganda is one of the youngest countries in the world, with a median age of 15.9 years, the population nearly doubling since the turn of the century. Nearly half its 45 million people are 14 or under, while just 2% are aged over 65. About 700,000 young people reach working age every year – a figure set to rise to one million by 2030 – but only 75,000 new jobs are created for them. Wine has frequently called on Museveni to retire, saying young people must prepare to take over leadership of the East African nation. Given the extent of foreign funding for the regime, Wine asks of the donor community, and of the United States in particular: “Why do you fund our oppressor?” Even at the height of the most egregious anti-democratic behaviour in the run-up to the January 2021 election, the international flow of funds to Museveni’s regime continued. In 2020, for example, Uganda received $2-billion in aid, including $432-million from the US, while ranking eleventh on the UK’s list of top aid recipients, receiving over £150-million. To these contributions have to be added Uganda’s cut from the flow of regional humanitarian assistance, estimated at $348-million in 2017, along with the substantial income and diverted expenditure from the efforts of Ugandan peacekeeping troops in Somalia.
In essence, aid cannot be divorced from political considerations. This point resonates across Africa, as donors attempt to manage the tension between regime and human security – between supporting those in power and those citizens disempowered – while at the same time maintaining a balancing act between national interests and human rights concerns.
“The donors,” says Wine, “should be honest and true to the values that they represent, values of human dignity, values of democracy and values of the rule of law, or else they would be partners in crime. And, secondly, they should be relating with the nation, and not with an individual. The people of Uganda are represented by their Constitution, and by their laws.” He adds, “They should not do things just to maintain Museveni’s rule… his grip on power. They should be doing things to maintain relations between their nations and our nation.”
Wine argues: “Our [Ugandan] military has been so funded by the United States, and yet it has been key in abusing the rights of citizens of Uganda. We want them to hold the administration in Kampala accountable. We want them to put the rule of law and respect for human rights as a precondition for cooperation.”
This is a fair point, especially given the history of aid to Africa. There are tensions between the national interest, in respect of security and business, for instance, and aid as a force for good. These have to be constantly managed, not ignored.
Uganda’s strategic situation explains the tensions in the relationship between donor and recipient. While the ruling party might not align with the West on democracy, this is excused by Uganda’s role in South Sudan and Somalia, the role played by Uganda regionally in hosting 1.4 million refugees (the fourth-largest population worldwide after Turkey, Colombia and Pakistan), and, probably, the intelligence-sharing between Kampala and the West. At the same time, it has been in the West’s strategic interest to keep Wine and other opposition figures operating, probably cynically to keep the pretence of democracy alive, and certainly to prevent the implosion of Uganda if something was to happen to them. Similarly, Museveni has sold himself as the man standing between order and chaos in the region, the chaos that he has no small part in fomenting himself: he is adept, like warlords and mobsters elsewhere, at creating his own demand. Essentially, the War on Terror has let Museveni and others off the hook, their wiggle room widened by the advent of different donors. And yet, the leverage of aid has not been put to any obvious good on human rights. Donors have sat largely marginalised on the sidelines despite the flows of assistance.
Other country examples illustrate a similar tension between favouring short-term stability and interests over the type of democracy that produces long-term results. In the DRC, the international community preferred recognising the government of Félix Tshisekedi, which came to power in 2019 after a deal with the incumbent, Joseph Kabila, on the grounds that the country would otherwise be thrown into bloody tumult. The cost of such a circuitous, negotiated route to State House is inevitably a lack of legitimacy and credibility, making the administration’s already difficult task of national consolidation and development virtually impossible. Such carelessness is evident in the financial straits in which Kinshasa continuously finds itself. It is not a decision that outsiders should be making effectively on behalf of the Congolese, no matter the justification. As Freddy Matungulu, the former Congolese finance minister, remarks, “Governance has been horrible for the last 10 years and now we have to repay [loans] when we have not built capacity for debt service obligations. The lesson for donors is that the concern for stability should not become the driving force behind the provision of aid.”
Such a tension between external interests and internal preferences is nothing new. During the Cold War, aid was routinely given to one superpower proxy regardless of its governance or human rights record, and only because of its support for that particular superpower. The most (in)famous of these recipients was undoubtedly Mobutu Sese Seko, who took some $12-billion off Western donors over his 32 years in power, in spite of (or perhaps because of) the fact that he had come to power via a coup, and had an abysmal human rights record. What was more important than Mobutu’s governance record was his loyalty. Under the terms of the War on Terror, loyalty and utility in the struggle have been at least as important a quality as human rights and the democratic condition, perhaps more so.
Another donor-recipient tension surrounds the nature of the international community itself, which is increasingly diverse and no longer governed by state-to-state interactions. In Africa, this community, such as it exists, is no longer centred around the financial activities of the West. Rather, it is a much more complex and less cohesive configuration than before. Turkey, Brazil, the United Arab Emirates (UAE), China, Saudi Arabia, Qatar, Kuwait, Iran and Russia, among others, are all players. China, especially, has proven highly transactional in its dealings, and this requires Africa to appreciate the line between risk and reward inherent in the relationship.
In 2019, ODA by the 30-member countries of the Development Assistance Committee (DAC) totalled $152.8 billion, representing 0.3% of their combined national income. Nearly 98% of this total flowed in the form of grants, loans to sovereign entities and contributions to multilateral institutions, the remainder to private sector instruments and companies and in the form of debt relief. This was an increase of 1.4% compared to 2018. In addition, non-DAC member countries contributed a further estimated $20-billion, foremost among them China ($2.4-billion), Turkey ($8.8-billion), the UAE ($2.3-billion) and Saudi Arabia ($4.5-billion).
As will be seen in Chapter 1, to this amount can be added an even larger chunk of private aid spending, inflating the total amount of annual charity to over $500-billion.
For outsiders, there is a tension between the need for strong local leaders, of the sort that “get things done”, and strong institutions. Similarly, there is widespread recognition of the imperative for local ownership and the realisation that not all local ownership is good – as violent events in South Sudan after its 2011 secession illustrate. Letting the locals do their thing, and fail, is hard to allow when the humanitarian bill is picked up elsewhere.
Aid continually stumbles on the translation of rhetoric into roll-out – in turning visions and plans into actual projects and development. As a result, many good intentions never see the light of day, and aid is simply consumed with little tangible effect. Sound political leadership is at a premium in separating good intentions from actual results.
Ultimately, countries will not be rebuilt by donors but by locals, even if this takes hundreds of years. Can donors speed this up by avoiding their worst excesses, taking heed of their massive moral blind spots, and promoting the very means that have enabled their own countries and peoples to prosper? Can they take advantage of the global economy and Africa’s attractiveness as a growth frontier?
Whatever the challenges of translating aid into development – of ensuring the conducive combination of people, institutions and systems – African countries have more options today than in the past, despite the constraints of their changing demographic circumstances.
Today’s differences with the past
The restaurant on the 16th floor of the Corinthia Hotel in Khartoum affords an incredible view of the spot where the White Nile and the Blue Nile converge. The White Nile flows from the Great Lakes of equatorial Africa, with the shorter Blue Nile, the remotest source of which is the Felege Ghion spring in the Ethiopian Highlands, contributing nearly 90% of the water carried overall by the Nile. The slow, sweeping waters through Khartoum contrast with the darting traffic at its edges; both the passage of the river and the country’s history are marked by a series of bridges – from the bascule Blue Nile Road and Railway Bridge completed by the Cleveland Bridge & Engineering Company in 1909, to the modern Tuti suspension bridge opposite the hotel.
It is no coincidence that the locals translate Khartoum as the “hose” or “elephant’s trunk”. It may be blessed with an extraordinary water resource in the two Niles, but, in less positive ways, Sudan reflects Africa’s internal traits and external tendencies. With the country lying at the intersection of regional interests and geopolitical ambition, the inadequate development responses of various governments, more careless than careful, demonstrate the extent of the disconnect between elite practices and popular welfare.
The largest country by landmass in Africa until the 2011 secession of South Sudan, Sudan seems, to borrow adjectives used by The Economist in cover stories on Africa a decade apart, to be simultaneously “rising” and “hopeless”. Its natural resources and the strength of its civil society, which helped to eject long-time President Omar Hassan al-Bashir unceremoniously from office in 2019, are powerful positives. Its weaknesses lie in its insipid institutions, thin layers of expertise, self-interested external relationships, and extractive elite practices, which have seen the country squander its agricultural wealth and oil bonanza in a costly combination of war and corruption.
This did not take place in isolation. For decades, the world has engaged and interfered, pouring in aid and humanitarian resources and helping develop plans to change the regime and turn Sudan around. Why these efforts have so far failed to move the needle in Sudan – and almost everywhere else in Africa – is the subject of this book.
Still, today’s policy environment enjoys many advantages over the past, regardless of wistful rearward glances at the Cold War years and their scope for ideological experimentation and rhetorical gaslighting.
While nearly half of Americans may see globalisation as responsible for destroying their lives, the faster and deeper global flows of people, goods and money have transformed the lives of a generation of global citizens. Globalisation might have threatened the American dream for the industrial workers of the Midwest. Still, it has been the force behind realising an Asian dream of rising incomes, improved living standards and expanded opportunities over several generations.
This transformation has been driven by a commitment of East Asia’s leaders to popular welfare, no matter the political system. It reminds us, too, that the state’s legitimacy rests on what Ashraf Ghani, the former president of Afghanistan, describes as the “judgment of its people” on the delivery of basic services and infrastructure. The modern era has redefined sovereignty away from its traditional preoccupations with security and defence, towards state efficiency, global connectivity and national competitiveness. The results of this (re)engagement with globalisation have been stupendous. In 1990, China’s average per capita income was just $729; within 30 years, this had increased (in real, constant terms) more than tenfold to
$8,254, and its poverty level had fallen from 66% (of 1.1 billion people) to an astonishing 0.5% (of 1.4 billion people). Such growth has lifted more than a billion people from poverty in a single generation.
Can globalisation offer an African dream along the lines of that of East Asia?
As will be seen here, lessons learned in Africa remind us that, however imperfect democracy may be, there is no sustainable way of addressing poverty and inequality without a liberal democratic system: one that offers the prospect of a leadership change if the ideas and management of existing leaders prove not up to the task. Even so, no humanitarian or security or development challenge is ever going to be solved by simply staring at it. If we are to live without disturbing and possibly life-threatening insecurity, the world must become a more liberal place, ensuring that the poor and dispossessed gain a greater share of resources. This is especially true as Africa’s challenges multiply, with rapid population and urban growth, seemingly faster than the continent is able to offer solutions.
At one level, it will demand continued generosity. “From those to whom much is given,” reminds Mary Gates, mother of Bill, “much is expected.”
At another level, accelerating development will require improving policy and governance structures to ensure that money is well spent. It will also necessitate reforming legal and tax structures that facilitate inequality through fiscal dysfunction.
International aid is, however, much more limited as a development tool than some imagine. In no country in Africa does development spending amount to more than 5% of the economy, notes Erik Solheim, a former Norwegian development minister and United Nations under-secretary-general, and in none does that of the UN amount to more than 1%. “So why do we tell people,” he asks, “that the UN is bringing development to the world, when 98.5% of the costs of education in developing countries is financed by taxpayers or mothers and fathers or relatives?” Development is all about business, not about aid, as the development success of East Asia reminds us. Yet, Africa has proven a notable laggard in gaining a reasonable slice of the average annual $1.5-trillion global pie of foreign direct investment.
This suggests that better ways should be found to use aid as an enabling tool for entrepreneurship and that jobs should be created to reduce inequality and the social and political disquiet. There remains no other sustainable way, despite the attraction of rhetorical commitments to redistribution and even though capitalism contains plenty of hard edges.
The massive increase in wealth in Asia, and in China and India in particular, has reduced the difference in average incomes between regions, although it remains high for some. A recent UN study, for example, shows the average income in North America is 16 times higher than that of people in sub-Saharan Africa. But it is the extent of inequality within countries, particularly in Africa, that stands out. Of the 49 countries worldwide that recorded increased levels of inequality between 1990 and 2016, 13 were African. Ten of the 19 most unequal countries worldwide are in sub-Saharan Africa – namely, South Africa, Namibia, Botswana, Zambia, the Central African Republic, the Comoros, Lesotho, Swaziland, Rwanda and Kenya.
Inequality can have a deleterious effect on reform and on democracy. The elites in highly unequal societies are disposed to protect a political and policy environment that favours their interests and reinforces their social and economic position.
Such disincentives for reform can threaten social stability. It is a wonder that the super-poor are not angrier with the super-rich and the circumstances perpetuating inequality of opportunity. The examples are all around us: the poor farmers in the village of Mankohokwe in Malawi, one hour north of the capital Lilongwe, who scuffle in the dust for maize pips, unable to afford livestock, the $40 to buy a bicycle or the $40 per term required to send their children to a state secondary school. Or the 100,000 who live in appallingly unhealthy conditions where malaria and typhoid are rife in the stilt houses of the Makoko community on the edge of Lagos Lagoon, a community long a centrepiece of Western poverty porn. The water is petrol black, full of faeces and much else. On the other side of Africa, examples also abound in the sweating mkokoteni pulling and pushing their barrows laden with vegetables, fruit and household commodities across Mombasa’s four-lane Nyali Bridge. The traffic weaves dangerously past them and the sidewalks where hawkers offer 10-shilling (US 10 cent) bags of peanuts, sliced pineapples, bananas and second-hand clothes. The same goes for the endless lines of people and bicycles traipsing along the roads of Burundi, carrying everything from women side-saddle, water, corrugated iron, wood, clumps of bananas, animal feed, beds and other furniture, bundles of thatch and building material.
The free market offers a ladder of development and progress that has brought more than a billion people out of poverty in the last quarter-century, an extraordinary and unprecedented accomplishment. Still, it is a system with hard edges and tough knocks, which leaves some behind, their fortunes often determined by life’s great lottery – the circumstances into which they are born. It behoves us to do more to offer a hand-up to those left behind and a softer landing for those who have fallen down. For while capitalism’s cream invariably rises, sometimes this is accomplished through less than transparent structures.
The success of aid as a tool for development depends not only on what is done, but how it is done and by whom. Local ownership is the most critical element of success, itself a product of politics and leadership. Just as power is never purely technocratic but rather about collaborative relationships, development depends on the ability of diverse interests to work together for a common goal.
As will be noted throughout this volume, there is certainly no shortage of good causes to be funded by outsiders. But there are dangers in targeting inputs as the solution, not least since when this becomes the dominant measure, less attention is invariably focused on where and how well money is spent and the outputs achieved. David Cameron made the 0.7% aid target a centrepiece of his time as British prime minister, and it was written into the Conservative Party’s 2010 manifesto and later enshrined in law. Seen as a symbol of a compassionate foreign policy, the target was achieved in 2013 when expenditure reached £11.4-billion. Perhaps more than anything, this overriding focus showed how little his premiership achieved and how much it centred on public relations spin.
Politics lies behind problems of ownership and responsibility, authority and implementation. It explains why commitments to arbitrary aid expenditure benchmarks, such as that of 0.7% of GNI, are made, even though they are obviously not the answer. It is why donors grant funds directly to projects, even though they know that government budget support is the best way to build capacity and ownership. It explains, too, why donors go completely off the deep end in pursuing schemes like the Millennium Villages Project, which they know instinctively will not work but do so anyway because the people promoting them are politically influential in the donor nations – at the intersection of Hollywood and Harvard (or Columbia in this case). And the need to justify the levels of expenditure and foreign policy focus is why the world loves spending on poverty alleviation targets, including the UN Millennium Development Goals and subsequent Sustainable Development Goals. While such objectives are positive in signalling an ambitious and collective agenda, they are largely top-down, technical, state-centric and bureaucratic rather than bottom-up, people-centred and organic, as they should be.
There are changes, too, in this international order, which have brought greater scope in funding and policy experimentation that so far may have helped elites more than citizens. The confrontation between China and the US has given African leaders an alternative to Western systems and conditions, as in the Cold War. As democracy has slipped backwards, encouraged no doubt in instances by the prospect of the Beijing model, the Russians and the Chinese, among others, have been happy to fill the vacuum left by the West. Their aid giving appears to be less about local development, however, or even a “win-win” bargain, as the Chinese government prefers to profess, than one underpinned by a mercantilist transactionalism: a focus on the immediate profit of the deal without much thought to the other partner or the longer-term relationship.
A pernicious political economy can drive aid transfers in a way that has its own logic, one less to do with solving development problems than feeding a system in both the donor and recipient nations. Getting this right is thus a challenge for both developed and developing nations.
The political economy of change
This book centres on the association between politics and economics and the policy choices that exist in the interplay between these two disciplines, summed up by the term “political economy” – essentially the relationship between business and governance. Development is a profoundly political process, which demands an understanding of why certain policy choices are made (or not); essentially, who gets what, when and how (the core questions in the discipline of politics) in the context of scarcity (the key question in the discipline of economics). While acknowledging the existence of different frameworks for analysis in political economy – notably mercantilism or economic nationalism, liberalism and Marxism – this volume is less concerned with a critique of the international system per se, than working out the best ways for states to prosper within this structure. The key reform challenge in Africa centres on the political economy of change: turning the system away from what the former Nigerian minister and vice-president of the World Bank, Oby Ezekwesili, has described as the “fundamental structural problem” for Africa: “the corrupted political class has no incentive to correct [the system of governance]. They own it, and it works for them as it is.” For example, if the explanation for the growth of East Asia resides largely in policy changes, the failure of Africa to develop at comparative rates rests in such decisions not being made. The reasons behind this failure often relate to the existence of a patronage-ridden system of government, where investment and economic decisions are not made solely on economic principles but rather on the imperatives of redistribution and maintaining allegiances for the sake of political control and the maintenance of power. In such situations, the need for stability of a narrow political power base is all-important, overriding the imperative to extend growth and development beyond a tiny elite.
Understanding why things happen – and don’t happen – and why decisions are made – or not made – in particular ways thus demands an understanding of the incentives that shape these outcomes. “Poverty,” reminds the Ugandan opposition leader Dr Kizza Besigye,“remains a tool of political control in Africa.”
Without addressing these aspects, reform efforts inevitably fail to take root, and money flows make only a fleeting difference. This explains why, for example, money is spent on new facilities at border posts, which lack the necessary institutional systems and policies for the smooth passage of trade, or why roads are built but lack a maintenance structure. This also explains why money is spent on the trappings of presidential convoys and expensive overseas travel while education and health systems fail. That is what happens when policies are geared towards preserving elite interests at the expense of the majority.
Changing the incentive structure that ensures reform and development is, as Ezekwesili observes, “not a technical process, but a political one”. There are clear and established guidelines for best practice on aid derived from years of experience and many examples of success and failure both inside and outside Africa. If donors ignore these and try to reinvent the wheel, they can do considerably more harm than good.
The threads of best practice presented here illustrate that the goals and plans of donors, for one, should match the complex on-the-ground realities, rather than attempt to meet the political needs of external players or other higher theories and ideals. Experience teaches us that donors should be patient, too, since the period of recovery and reform in states is at least as long as the period of decline. Outsiders must guard against employing metrics of expenditure and focus instead on the assessment of impact.
Sometimes doing nothing is actually a choice and thus amounts to doing something.
Donors need to be guided by local needs because local ownership is imperative. From that springs responsibility for process, policy and outcomes. While locals will seldom say no to foreign assistance, misalignment of international and internal intentions can only lead to friction, disappointment and, ultimately, failure. The devil of development lies in the delivery of the detail, while local realities need to be calculated according to strengths, not hopes. Messianic zeal should be guarded against, as should the tautology of assistance and consultants, just as the antipathy of donors towards the private sector is ultimately self-defeating to a thesis of growth, development and stability. After all, countries get rich and more stable, and their people more satisfied, when they make things (or services) and sell them.
The answers to how outsiders can play a more constructive role lie in African experiences and beyond, in Latin America, the Middle East and East, South and Central Asia. They illustrate the power of policy choice, and of agency, over geography and history. The value of these answers relies on understanding the problems not only from the perspective of the donor but also that of the recipient.
* * *
“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.” This saying, overused to the point of cliché, has become an article of faith to donors. Many still ignore its message, however, preferring acts of charitable giving and benevolence, preferably with their label on the side. But people want to be enabled, not just fed. Charity should thus not centre on the wealthy giving money or goodies to the poor. That is too easy and, perhaps unwittingly, only reinforces the intrinsic power relationship. Development is about the transfer of more finite and valuable resources: time, expertise and means. Herein lies the rub: this form of empowerment is necessarily long term and demands engagement in understanding (and attempting to change) the incentive structure that hinders development in the first instance.
Whatever the area of aid expenditure – humanitarian, governance, military, development – the overall intention should be the same: to try to reach the point where aid is no longer necessary. Recognising the tautology of aid is a key step, as is how to find the means to spend it better. This requires removing spending and the metrics of effectiveness from the realm of the subjective, in which personalities, personal relationships and strategic donor preferences play a disproportionate role in deciding where the money is spent, to one where more objective criteria can be applied.
Aid agencies, ambassadors and recipients are seldom invested in changing the system. Current incentives are geared to making the best job possible of a terrible situation, where the metrics often favour spending rather than saying no. There is also always a good reason to spend money, with little reward in walking away, no matter how obviously limited the chances of success. And anyway, there are reasons for giving aid other than development, as the Ugandan example illustrates.
Yet, Africa faces formidable challenges over the next generation, driven by a huge increase in population numbers. Even before Covid-19, most African countries were struggling to lift economic growth to levels that could provide opportunities for a large increase in the number of young people. Rather than promoting the sort of governance regimes that have enabled East Asia’s transformation, for example, donors have not only struggled to disrupt these patterns of policy and leadership, but, in some instances, they have simply reinforced bad practices.
The following chapters explain the scale and scope of aid today, the nature of advisory services that increasingly lend structure to the business of aid, and the differences between delivering military and other forms of assistance in developing a model of best or at least better practice. The book also looks at the reasons behind the success of the Marshall Plan concept, asking if it can be repeated today. In identifying key drivers behind Africa’s development trajectory, it concludes with advice for both donors and recipients on getting more out of the current aid environment.
Whether aid can be a great disruptor in promoting Africa’s rapid development is the key question posed in this volume. Answering this relies on identifying and understanding lessons from within and without the continent, lessons which, I hope, have relevance beyond Africa. The answer to whether aid can be better used for development rests on taking a longer strategic approach with regard to people, institutions and process. DM
Expensive Poverty: Why Aid Fails and How It Can Work by Greg Mills is available at the Daily Maverick shop.
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