Does Foreign Aid Benefit African Countries Or is The OECD’s Development Assistance Committee Using It to Exploit Them?
Supervised by: Prof S. Zondi
A research report submitted to the Department of Political Science, faculty of Humanities, in partial fulfilment of the award of a Bachelor of Political Science (Hons) in Political Science
Date: 29 September 2018
Foreign aid is believed to help countries reach their economic goals and assisting with development, yet Africa has a different narrative concerning this. It seems though that Africa is heavily dependent on aid and that donor countries are using it to pursue their foreign policies instead of pursuing suitable developmental policies. There is no sense of accountability when policies from these donor countries fail instead blame gets shifted on the underdevelopment of Africa. Western countries believe that they know what Africa needs for development to occur forgetting that they are the ones who placed Africa in this position, yet this is never mentioned. Lastly, the OECD is an organisation whose membership includes former colonisers who still to some extent have power over some countries using foreign aid, yet the organisation seems like they are only focused on creating polices which will enhance development.
The paper will critically discuss the OECD as an international institution and how in trying to help African countries develop through foreign aid and other measures, it perpetuates the old problems of development in Africa. The concept of development will be discussed in relation to how western countries just use it to retain their power over others. The main argument in this article foreign aid, as championed by the OECD, is an ineffective method for causing development in Africa because in decades of its provision, African countries have not developed.
TOC o “1-3” h z u Abstract PAGEREF _Toc525966698 h 1Acronyms PAGEREF _Toc525966699 h 21.Introduction PAGEREF _Toc525966700 h 32.Theoretical Framework PAGEREF _Toc525966701 h 53.About the OECD PAGEREF _Toc525966702 h 113.1 OECD’s Development Structures PAGEREF _Toc525966703 h 113.2 OECD and Africa PAGEREF _Toc525966704 h 124.Foreign Aid in Context PAGEREF _Toc525966705 h 164.1 Africa’s Debt Crisis PAGEREF _Toc525966706 h 185.The OECD Responses to Africa’s Needs: False Façade PAGEREF _Toc525966707 h 205.1 France’s role PAGEREF _Toc525966709 h 215.2 Unrealistic MDG’s, SDG’s and Developmental policies PAGEREF _Toc525966710 h 22Goal 1: Reduce extreme poverty and hunger by half PAGEREF _Toc525966711 h 23Goal 2: Attain universal primary enrolment by 2015 PAGEREF _Toc525966712 h 23Goal 3: Gender Equality PAGEREF _Toc525966713 h 24Goal 4, 5 and 6: Health PAGEREF _Toc525966714 h 245.3 SDG’s as a continuation of the MDG’s PAGEREF _Toc525966715 h 256.Is Foreign Aid Working in Africa? PAGEREF _Toc525966716 h 276.1 Why Foreign Aid fails in Africa? PAGEREF _Toc525966717 h 286.2 So Much Aid Yet No Development. What Is the Real Problem PAGEREF _Toc525966718 h 297. Recommendations and Conclusion PAGEREF _Toc525966719 h 32
AcronymsDRC Democratic Republic of Congo
OECD Organisation of Economic Co-operation and Development
ODA Official Development Assistance
IMF International Monetary Fund
ECOWAS Economic Community of Western Africa
NEPAD New Partnership for Africa’s Development
MENA Middle East and North Africa
EU European Union
MDG Millennium Development Goals
SDG Sustainable Development Goals
OEEC Organisation for European Economic Cooperation
DAC Development Assistance Committee
UN United Nations
TOSSD Total Official Support for Sustainable Development
SAP Structural Adjustment Programme
SWAC Sahel and West Africa Club
CFAFrench Community of Africa
IntroductionAfrica’s trade was advancing prior to the ‘Scramble of Africa’ by the major European nations during the 19th century. It was already engaged in international trade as seen with ancient empires of Ghana, Songhai and Mali. The beginning of Western-driven Atlantic slave trade significantly changed Africa’s economy and the process of imperialism as well as the policies which were accompanied by colonialism (Settles, 1996). Colonialism is defined as “the direct and overall domination of one country on the basis of state power being in the hands of a foreign power” (Ocheni & Nkwankwo; 2012:46). The main aim was to exploit the colonised country’s resources (economic, physical and human) in order to benefit the colonizer’s nations.
Colonialism has caused the underdevelopment of African countries and the rooted reason for this is the education system which was laid by the colonialist. According to Ocheni & Nkwankwo (2012:51) “The colonial education was not rooted in African culture and therefore could not foster any meaningful development within the African environment because it had no organic linkage. Furthermore, colonial education was essentially literary; it had no technological base and therefore antithetical to real or industrial development”. This education’s aim was to train people who would assist them with their exploitation of the resources instead of industrialising African countries or encouraging technological development. Colonialism is therefore the root reason for the under-development of Africa because during Europe’s industrialisation period, Africa was exploited for years, making it fall back with its development.
Today, foreign aid is used as a foreign policy tool of most European countries that form part of the the Organisation of Economic Co-operation and Development (OECD). Their stated aim is to ‘assist’ Africa’s development by providing foreign aid however, as the book by Dambisa Moyo shows that “this is the vicious cycle of aid. The cycle that chokes of desperately needed investment, instils a culture of dependency, and facilitates rampant and systematic corruption, all with delirious consequences for growth. However foreign aid perpetuates poverty and weakens civil society by increasing the burden of government and reducing civil freedoms. Foreign aid does not strengthen the social capital it weakens it. In the world of aid, there is no need or incentive to trust your neighbour, and no need for your neighbour to trust you. Which is why foreign aid fomenting conflict. The prospect of seizing power and gaining access to unlimited aid wealth is irresistible” (Moyo, 2009). There hasn’t been much progress in this development. Foreign aid is given to recipient countries as either a reward or as an inducement for a change of behaviour therefore in this sense, foreign aid can be used to influence the recipient country’s behaviour. It creates systematic corruption because these donors provide foreign aid to gain power in that country and it also weakens institutions which are meant to combat corruption and create political stability.
The OECD consists of 30 members whose aim is to “help governments foster prosperity and fight poverty through economic growth, financial stability, trade and investment, technology, innovation, entrepreneurship and development co-operation” (OECD, 2008:7). This is to ensure that economic and social development take place. Furthermore, the OECD has an Official Development Assistance ODA) which is described by the OECD as “government aid that promotes and specifically targets the economic development and welfare of developing countries” (Organisation of Economic Co-operation Development). The difference between the International Monetary Fund, World Bank and OECD is that the OECD does not dispense money, but it helps governments formulate policies which will make development more effective.
The OECD donor states use this institution as a way of decreasing the risk of being individually criticized in case the loans fail in the recipient countries. Furthermore, the funds which are distributed to recipient countries are not efficiently used and distributed at the required place, therefore there’s no sense of accountability between these two parties. This indicates how foreign aid is not solely given for alleviating poverty and humanitarian reasons because there are other interests besides these. In this paper, there is a reference to the ‘west’, which means the rich governments in North America and Western Europe that control international agencies and have motives of transforming ‘poor’ nations, while they help keep them poor. They also control other international organisations including Multinational Corporations, aid agencies, the G7 and others.
Theoretical FrameworkThere are three approaches which describe the relationship between the OECD and foreign aid in Africa They are the neo-colonial dependence approach, the false paradigm approach and the dualistic approach (Ilorah, 2013). These three approaches have harshly criticized the relationship between the rich and poor countries because it is characterised by dependence and dominance with poor countries being viewed as subordinates of rich countries. Yet their explanation of this differs as we will show below.
The neo-colonial approach views Africa’s dependency on foreign aid as rich countries controlling the political and economy of poor developing countries with the assistance of certain forces within these poor countries. These forces are political elites who are meant to have the country’s best interest at heart but instead would rather put their self interest first. The aid which was supposed to benefit the citizens is being used by the political elites. With the help of political elites, donor countries provide aid to promote their interest and often ignore the fact that these aid packages are not used for their intended purpose. This relationship is exploitative thus making development stagnant. This relationship can be seen with France and its former colonies, because they feel obliged to exploit natural resources. Furthermore, “France claims it has the right to buy any natural resources found on the territory of its ex-colonies. The African countries are not allowed to seek others partners freely” (Promskaya, 2015). This indicates how France has economic control over its territories in an exploitive manner instead of having intentions to develop them.
The false-paradigm approach according to Richard Ilorah (2013: 7), “sees underdevelopment and poverty and, by extension, the dependency syndrome in the poor countries as the result of an often-misleading a-single-prescription-fits-all doctrine, usually adopted for poor developing countries by naïve and assuming international experts employed by own donor countries, multinational donor organisations, and intergovernmental institutions”. These experts often recommend models which are inappropriate policies created to protect their interest such as the Structural Adjustment Programme (SAPs) which were created to restructure developing countries’ economies and to ensure debt repayment. What these policies created instead was more debt and poverty thus leading to an increased dependency of poor countries on rich. Lastly, “the dualistic-development approach argues that the co-existence of industrialised developed countries and poor developing countries has become so entrenched, reinforcing in itself with the former getting only richer and the later only poorer” (Ilorah, 2013: 7). The dependency and poverty which these African countries face reinforces the dependency on richer countries.
The approach which will be most helpful in understanding the reason for Africa’s underdevelopment is the false paradigm approach. This approach is useful in understanding how the policies which the OECD proposes to African counties does not enhance development but instead perpetuates underdevelopment. It also shows the motives which donor countries have by providing aid because before aid is given, certain policies need to be implemented and recipient countries need to adhere to the donor country’s terms and conditions. Furthermore, this approach shows how models which worked for western countries will not work for African countries because of the different historical backgrounds
According to Goulet (1990: 125)” The false paradigm model attributes third world underdevelopment to faulty and inappropriate advice proceeded by well meaning but often uninformed, biased and ethnocentric international ‘expert’ advisers from developed country’s assistance agencies and multinational donor organisations”. These international experts create incorrect policies because they apply their western models of development on African countries hoping that the results will be the same as theirs. These policies however may” serve the interest of an appropriate few belonging to the ruling elite that controls their countries meagre resources, including donor aid packages” (Ilorah, 2013:7). African countries have a poor development rate due to these bad policies which in effect deepens their aid dependency making them prone to more debt.
African countries have failed to develop due to adopting western centric policies which are incorrect. These models fail to acknowledge the colonial past which Africa has and that these countries cannot follow a linear development pathway as they did however, institutional change which accommodates the political and economic environment is needed for development to occur. The OECD assists in creating effective policies which will help enhance development.
The OECD seeks to enhance development by partnering with regional organisations such as the Economic Community of Western Africa (ECOWAS), New Partnership for Africa’s Development (NEPAD), Middle East and North Africa (MENA) as well as through individual countries. According to the OECD (2018) “The OECD’s work with the region addresses a broad range of policy issues, including structural reform, trade and investment integration, business climate, competition policy, infrastructure development, domestic resource mobilization, the fight against tax evasion, public debt management, budget reform, public governance, the fight against bribery state owned enterprise reform, sustainable development and green growth, food security”. Furthermore, the OECD focuses on the Official Development Assistance Committee which aims at economic development by providing aid to developing countries.
The argument of this paper is that what the mentioned regional organisations fail to understand is that addressing Africa’s problems through western institutions like the OECD will not solve the underlying problems instead, these institutions have other agendas than assisting with development. If truly they were committed, Africa would have been long developed, given that they have been assisting for more than 6 decades now. Furthermore, foreign aid is used only to serve the interest of the donor countries instead of development
Bigsten et al (2011) estimated that if “European Union countries were to choose to optimize the distribution of foreign aid for the sole motive of reducing poverty, they would need to reallocate $19 billion of the $27 billion of EU aid—that is, over 70% of EU foreign aid—directing it to only the 20 poorest countries”. If this occurred, poverty would have increased in these donor countries and poverty would have been alleviated in the recipient counties. But unfortunately, these donor states would never optimise this aid because when allocating aid, they would rather serve their economic and political interests. This entire notion justifies Stiglitz’s (2002) critique that “Especially in times of crises in developing countries, these experts recommend outmoded and inappropriate policies based on strange, if curious, mixture of ideology and poor economics that, at best, protect special interests but neglect the effects on the general population in the countries for which the policies are meant”.
Once people become aware of the false paradigm model, hopefully African development will take off in the right direction with the right intentions. This model shows how “the developed world maintains a certain hold over production and development of poorer countries” (Celyse, 2012). Furthermore, the false paradigm indicates that even if they are genuine about helping, their actions may not produce the desired outcomes. When aid is given in bulk, it can be used for the right projects and allocated where need be if it ends up in the right hands. It is both the donor and recipient’s responsibility that the aid is used as efficiently as possible and both parties should account for it.
“The Millennium Development Goals and the Sustainable Development Goals are an example of poorly designed development goals because there is uneven progress amongst them. Progress has not been uniformed with the goals because there are disparities across the world when it comes to poverty. Africa has seen a continuation of Poverty even in the 21st century for example in Sub Saharan Africa. According to Ngwira (2015) “It is the epicentre of crisis with continuing food insecurity, a rise of extreme poverty, stunningly high child maternal mortality and large numbers of people living in slumps”. These goals have worked for Asia because it has witnessed progress however, poverty still remains. More than half of the aid given to developing countries went to debt relief and the rest went to military aid and natural disaster relief instead of development”. The major problem here is that these goals were created by ethnocentric international experts who do not have enough knowledge about what is happening in Africa which is one of the reasons why the MDG’s were never achieved in the given year and this can be seen in Figure 1. Furthermore, both these goals fail to acknowledge the fundamental reason why Africa is in such a state. How can poverty be alleviated when countries are facing countless debts? How can development occur when both the leaders of the country and international experts only care about serving their own interests?
World bank graph showing how Africa failed to meet the Millennium Development Goals
Source: Easterly, W. 2008. How the Millennium Development Goals are Unfair to Africa. Vol 37 (1). P26-35
This model is important in understanding the reason for Africa’s underdevelopment. It does not make sense to apply western centric policies on African countries because they both have different historical backgrounds. These western countries refuse to acknowledge Africa’s colonial past because if they did, they would not impose such policies. Most of the policies which they implemented have failed such as the structural adjustment programme and the millennium development goals which both aimed at assisting Africa’s development. With all these failures, its evident that western countries are ‘assisting’ the continent only for beneficial reasons.
About the OECDThe OECD is described as “an organisation which provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and coordinate domestic and international policies” (OECD,2008:7). This organisation has 36 members who produce almost 60% of the world’s goods and services and Its aim is to foster prosperity, alleviate poverty, create jobs, social security as well as achieving clean and effective government.
Before it was officially called the OECD, it was known as the Organisation for European Economic Cooperation (OEEC) which emerged in 1948. This organisation was established to finance the US marshal plan for reconstruction in Europe after World War II. Canada and USA joined the OEEC members and they signed a convention of the reformed OEEC which is now known as the OECD on the 14 December 1960. The Organisation of Economic Cooperation and Development was officialised on 30 September 1961. Since that moment on, they identify, discuss and analyse problems as well as promote policies which will solve these identified problems. According to the OECD (2018) “The US has seen its national wealth almost triple in the 5 decades since the OECD was created, calculated in terms of gross domestic product per head of population”. US contributes approximately 25% of the organisation’s budget which is followed by Japan. The OECD is funded by its members and the contribution they make is dependant on the relative size of their economies. The overall budget for 2017 was EUR 374 million and the biggest contributor was the USA with a 20.6 contribution. Since the USA is the biggest contributor, one would assume that this country has more power in the decision-making process and the allocation of funds. It is important to not that within the members of this organisation, there isn’t any African country, but South Africa is one of its partners.3.1 OECD’s Development StructuresThe OECD has the Development Assistance Committee (DAC) which was created by the ministerial resolution of 23 July 1960 and the reason for its formation was for “consultation among aid donors on assistance to less developed countries” (OECD, 2006). The objective of the DAC is “to promote development co-operation and other policies so as to contribute sustainable development, including poor economic growth, poverty reduction, improvement of living standards in developing countries and to a future in which no country will depend on aid” (OECD, 2018). The DAC has 30 members including the European Union which is a full member of the committee, The World Bank, The IMF, the African Development Bank, the Asian development bank and the Inter-American Development are observers. The committee is tasked with setting and evaluating the organisation’s rules for official development assistance. The DAC recognises that developing countries are responsible for their own development, therefore “it concentrates on how international co-operation can contribute to developing countries’ capacity to participate in the global economy and overcome poverty” (OECD,2018)
The ODA is defined by the OECD as “a government aid that promotes and specifically targets the economic development and welfare of developing countries” (OECD, 2018). Aid in this sense can be transferred either bilaterally or transferred through multilateral development agencies such as the UN and the World Bank. This aid includes soft loans (which are aimed at promoting economic development and welfare) and technical assistance. There is a list of countries who are eligible for ODA which is updated every 3 years and, in these countries, should have per capita incomes which are below USD 12 276 in 2010.
3.2 OECD and Africa
According to the OECD (2017) “The OECD development centre provides a place where OECD countries as well as emerging and developing economies can meet as equals. The Centre provides analysis and fosters dialogue with an emphasises on promoting sustainable growth and well-being in its members’ constituents to include several African countries”. The OECD basically acts as an institution where developed countries can assist developing countries with creating policies which can enhance development and growth. Furthermore, most developed and developing countries can share ideas on how to overcome the challenges which they similarly face. In September 27, this development centre has 52 members which 27 are OECD members and 25 are non-OECD members which includes 9 African countries (Cato Verbe, Cotê D’Ivoire, Egypt, Ghana, Mauritius, Morocco, Senegal, South Africa and Tunisia). There is an International Economic Forum on Africa which is an annual gathering between the OECD and African policy makers. This forum serves as a platform which bridges African and OECD’s countries’ perspectives. This forum focuses on “emerging systemic issues and specific development challenges faced by African economies, the forum gives the opportunity to have an impact on the implementation of the objectives of the African Unions Agenda 2063 and the sustainable development goals” (OECD, 2017:9). This forum aims at prioritising and responding to the challenges which Africa faces.
I will focus on only 3 big regional initiatives which the OECD is part of and they are; SWAC, MENA-OECD and NEPAD-OECD. The first regional initiative which works with the OECD is the Sahel and West Africa Club (SWAC). Its mission is to “enhance the effectiveness of regional integration policies and promote West African initiatives and positions in global debates” (OECD, 2017: 10). The members partners are Austria, Belgium, Canada, the Permanent Inter-State Committee for Drought Control in the Sahel (CILSS), the Economic Community of West African (ECOWAS), the European Union, France, Luxembourg, the Netherlands, Switzerland, the West African Economic and Monetary Union (UEMOA) and the United States. NEPAD, ROPPA and the World Bank are active observers.
The second regional organisation is MENA-OECD which “promotes policies for sustainable and inclusive growth. It addresses regional needs and development priorities including the integration of women and youth through jobs and greater participation in policy making” (OECD,2017:11). Tunisia, Spain, and Turkey are co-chairs of the group. The third regional organisation is the NEPAD-OECD and its aim are to “strengthen the capacity of African countries to design and implement reforms that improve their business climate. It also works to raise the profile for Africa as an investment destination while facilitation regional cooperation and highlighting the African perspective in international dialogue on investment policies “(OECD, 2017:11).
The OOECD has the stated aim of helping Africa achieve the sustainable development goals through data, learned lesson and policy guidance. The OECD’s DAC created a new statistical measurement framework called ‘Total Official Support for Sustainable Development’ (TOSSD) and this measure will “track all financiers provided by official bilateral and multilateral institutions capturing cross-border flow as well as support for development enablers and global challenges” (OECD, 2017:30). The OECD helps developing countries implement the SDG’s and that their development strategies are aligned with the SDG’s. Figure 2 shows the external flows to Africa which are supposed to assist African countries implement and achieve their sustainable development goals.
External flows to Africa
Source: OECD: African Economic Outlook 2017. OECD Publishing
The OECD has no African country as a member, however South Africa is a partner meaning that “the country contributes to the OECD’s work in a sustained and comprehensive manner and a central element of the collaboration is the promotion of direct and active participation of these countries in the work of substantive bodies of the organisation” (OECD, 2018). This raises the question just how they make policies for Africa when none of the African countries are members. This to some extend can reflect on how the policies are based on assumptions because there is no African perspective during their decision-making process.
Foreign Aid in Context
Foreign aid according to Omotola and Saliu (2009:87) “basically encompasses all forms of assistance that a country derives from other governments or multilateral agencies and financial institutions to fill noticeable gaps especially in production, savings and investments”. Aid can come in forms of grants, loans, foreign direct investment (FDI), joint ventures and technical assistance. Dambisa Moyo (2009) mentions three types of aid which are humanitarian or emergency aid, charity aid and systemic aid. The first one is money which is mobilised and dispensed due to catastrophes and calamities. The second one is money which is dispensed by either charity organisations or people on the ground. Lastly, payments are made directly to government either bilaterally or multilaterally. The DAC defines foreign aid as “resources flows provided by official agencies with the intent to promote economic development and these resources must be given on concessional terms with at least 25% grant element” (OECD, 2018)
The concept of foreign aid began at a meeting which was held at Mount Washington hotel in Bretton Woods on July 1944 during the second world war however, large scale aid transfers was seen during the 19th century. According to Moyo (2009:10) “under the colonial development act of 1929, the British government administration goals for infrastructure projects across poor countries. Aid transfers in these early periods were as much about donor largesse as they were about political control over the colonial domain and only later in 1940 British Colonial Development and Welfare act was the programme expanded to allow function of social sector activities”. Even though the focus was not on political control but hey did have some sort of control in that country.
Aid seemed to be working in Europe seeing the success of the Marshall plan because by the end of the 1950s reconstruction in Europe was done and seemed successful, attention then shifted towards Africa and richer countries saw Africa as a target for aid. Even though the colonial era ended, and African countries were independent, this independence was only on paper because economically they were still dependant on the west. For the West specifically British and France, aid was a way for them to benefit their self-interest while maintaining strategic geographical holds. Aid became a tool for the Cold War political contest for the US. Therefore, by the beginning of the 1960s Africa had already received US$100million.
In the 1990s, seeing that the aid-based development programme failed, donors blamed Africa’s economic failure on political leadership and weak institutions. This was because Latin America and Asia were well away on their development path while Africa was still stagnant. This is when the notion of good governance was seen as important for sustainable economic growth which lacked in Africa. The irony however was that during the Cold War, aid was given to the most corrupt countries in Africa and the most dangerous dictators in Africa like Idi Amin, Mobuto Seso Seko and Samuel Doe. Regardless of the problem being governance, aid was still transferred to African countries.
A new obsession came after the concept of governance which was democracy and “this installation of democracy was the donor’s final refugee, the last attempt to show that aid intervention could work only if the political conditions were right” (Moyo,2009: 23). The growth agenda which was aimed at delivering growth failed in 1960 just like the 1970s emphasis on the poor and economic stabilization adjustment in 1980. Clearly this pattern showed how these policies where not working for Africa after 3 decades of failed policies, the west felt that democracy is the only solution to development. The west believed that democracy would guarantee economic and political fortunes. In 1990, Africa was still failing to develop despite the quality of governance as well as the free and fair democratic process. Many scholars sensed that Africa could develop if it can be released from its debts.
The former president of Rwanda, Paul Kagame, recently explained that “the primary reason that there is little to show for the more than US$300 billion of aid that has gone to Africa since 1970 is that in the context of post-second world war, geographical and strategic rivalries and economic interests much of this aid was spent on creating and sustaining client regimes of one type or another, with minimal regard to development outcomes as our continent” (Perry, 2007). During the 2000 period, Africa created live aid concerts to get response for the humanitarian catastrophes and getting money to cancel their debts. Even after billions of dollars being cancelled, another form of aid replaced it which introduced fresh new debt. Aid now was not received as emergency aid but as developmental aid. Regardless of these continuous failures, “development agencies and policy makers have chosen to ignore the blatant alarm signals and have continued to pursue the aid-based model even when it has become apparent that aid, under whatever guise, is not working” (Moyo, 2009: 27). Even if aid was stolen, it has not been productive because there is no evidence of any growth in Africa. The only result that can be seen is increased poverty, increased debts and slow growth.
4.1 Africa’s Debt Crisis
Africa’s development has been in trapped in foreign debt for a long period and this is described as “a condition whereby a country has accumulated as much debt that it can no longer sustain the management of the debt resulting in sever distortions and contradictions in the domestic political economy “(Omotola ; Saliu,2009:90). This has been the situation in Africa that has been faced and this debt crisis can be traced back to the colonial period which laid this foundation. Due to the pressure put on by domestic politics, they had to begin development programmes which would rely on external funding to be implemented. There also had to be investments in the economy to encourage economic growth and therefore for these reasons, African countries sleeked for external funds to fill their savings as well as their investment gaps
According to Omotola ; Saliu (2009:90) “between 1970 and 1996 the long-term debt of developing countries expanding about 30 times to the tune of $1,726 billion, despite the sharp decline in net aggregate resource inflow in the 1980s. Shirt term debt on the other hand increased by 216% from $146.5 billion in 1980 to $463 billion in 1997. The aggregate debt stock rose by 80.6% from $1,365 billion in 1988 to $2,265 billion in 1998. The external debt stock of Africa also increased from $164,9 billion in 1988 to $215,7 billion in 2000 by 2002. Africa’s stock of external debt was put at an estimated $333,3 billion”. This debt crisis meant that there needs to be an annual exportation of capital from the South to the North and this is a form of debt servicing. This leads to fiscal deficits in country’s which are heavily indebted due to the pressure on the budget and this constraint that is placed on macro-economic policies. Economic and financial institutions will in effect deteriorate.
With so much debt, its impossible for Africa to reach its development target. It is quite evident that western countries still want to have some form of control because the only reason the continent is in so much debt dates back to its colonial past. If truly they were invested in the development of Africa, they could have cleared this historical debt but if they did, they would not have any form of control over Africa.
5.The OECD Responses to Africa’s Needs: False Façade
The OECD has appeared controversial in many aspects because what OECD countries have in their documents is different from the reality they cause on the ground. Firstly, in its official documents the organisation claims that unlike the World Bank and IMF, they do not dispense money rather they assist with policies which will help them develop and reach their development targets. Secondly, this organisation is so fixated in achieving these MDG’s and SDG’s as well as creating policies which will help enhance development forgetting why Africa is in the position that its in. These policies are overly ambitious for a continent which still has debts and never went through the same development pattern as the west.
The first controversial aspect raised is the issue of not explicitly stating that the organisation does in fact dispense money and the IMF as well as the World bank act like watchdogs (OECD, 2018). If they do not dispense money in the form of aid it is more likely that the countries within the organisation would not have any power over African countries. Most of the donor countries are previous colonisers and the aim for the reformed OECD is to help countries develop as they did however, this assistance is for their own beneficial interests and the OECD acts as a façade for this. By joining the OECD, it increases a country’s prestige so that they can seem like good global citizens.
It has been 58 years since the OECD emerged with the same objectives, yet within these years what they have accomplished is getting Africa into more debt and poverty levels have been fluctuating. It is quite evident that there is more to these policies and there are ulterior motives. In 2012 “developing countries received a total of $1,3tn including all aid, investments and income from abroad however, that same year some $3.3tn flowed out of them” (Hackle,2017). This therefore means that developing countries sent $2tn to the donors which is more than they received. The narrative of the OECD generously giving their wealth to poor nations to alleviate poverty and increase development is false. Aid is flowing in reverse because instead of rich countries developing poor countries, it is the other way around.
Realistically, the rest of the world is draining Africa’s resources because the continent is losing more than it is receiving. According to Sharples et al (2014:5) “While $134 billion flows into the continent each year, predominantly in the form of loans, foreign investments and foreign aid, $192 billions is taken out mainly in profits made by foreign companies, tax dodging and the costs of adopting to climate change”. This idea of these countries aiding Africa is flawed because the reality is that Africa is aiding the world. The table below in Figure 3 shows the money inflows compared to the money outflows in Africa. What these tables indicate is the annual net loss of $58 billion which Africa has compared to government aid which the difference is $ 162 billion. It is important to note that $29,1 of official aid comes from the OECD and $0,4 billion comes from non-OECD members
Inflows and Outflows in Africa
Source: OECD: African Economic Outlook 2017. OECD Publishing5.1 France’s roleFrance has managed to create a relationship with its former colonies and it’s called the FranÇafreque. This relationship includes France and Belgium’s former African colonies what are; Togo, DRC, Republic of Congo, Rwanda, Cotê d’voire, Cameroon, Burundi, Chad, Comoros, Gabon, Burkina Faso, Madagascar, Benin, Tunisia, Morocco, Guinea, Niger, Djibouti, Mali, Central African Republic, Mauritania and Algeria. France’s motives in these former colonies are political, economic and diplomatically influenced. Politically, former colonial allies in Africa which faced civil unrest were backed by the French military to protect them against communist expansion during the cold war. Economically, most former colonies are rich in oil and minerals. According to Simmons (2014) “Uranium from Niger is responsible for about 25% of France’s electricity production and of 16 African oil-exporting countries”. Lastly, with France maintaining its relations with these African states, its image as a major international power is sustained. France maintains ties to maintain its relationship with former colonies by proving aid so that they can still have some sort of influence.
Decolonisation in Africa did not mean the end of colonial power, but it meant the restructuring of imperial relationships to keep unequal relations in more indirect and hidden ways. As a result of this, former French colonies today still pay colonial tax. According to Jabber (2013) “Just before France conceded to African demands for independence in the 1969s, it carefully organised its former colonies (CFA colonies) in a system of ‘compulsory solidarity’ which consisted if obliging the 14 African states to put 65% of their foreign currency reserves into the French treasury plus 20% for financial liabilities”. This therefore means that these countries only get 15% of their money to use domestically it’s obvious that they would have to borrow money, and, in this sense, they would have to borrow their own money from France. This colonial pact therefore gives France much dominance and privilege on these African countries. It explains why France gives aid to its former colonies due to beneficial reasons. If they were serious about helping development, then they would not expect their former colonies to pay colonial tax.
5.2 Unrealistic MDG’s, SDG’s and Developmental policies
The millennium development goals were created in 2000 by world leaders in the UN. These were created to increase development efforts for por countries and were meant to be a motivational device for them. The target year to accomplish these goals was 2015 however, these goals were never met and there never was any accountability. These MDG’s are designed poorly as a measurement of progress against poverty and they make Africa look far worse than it is. 8 goals will be discussed below on how bias they are towards African countries.
Goal 1: Reduce extreme poverty and hunger by halfBefore creating such a goal, the question they should have asked was ‘what is the nature of poverty in different African countries? The poverty situation in Ethiopia might not be of the same nature and level as that of in Nigeria or Sierra-Leone. By measuring people whose income that is less than $1.90 per day as compared to people who are poverty stricken cannot capture a country’s true poverty, therefore this yardstick used cannot adequately measure poverty. For example, “a country like Nigeria has a minimum wage of N18,000 monthly while the MDG target was to halve the population of people whose income is less than $1 a day (which was changed in 2011). The equivalent of $1,90 aa day today in Naira is N608 while the black-market rate us N874. Hence if an individual with a wife and children earns a minimum wage of N18 000 monthly following the global yardstick, they would be living in poverty” (Durofika & Ijeoma, 2018:260). This yardstick therefore increases the level of poverty in African countries making the situation seem far worse than it is.
Goal 2: Attain universal primary enrolment by 2015Attaining the second MDG was not enough to give African students with the knowledge and skills needed. According to Easterly (2008: 29)” Most African countries have actually expanded primary enrolment far more rapidly over the last 5 decades than Western countries did during their development, but Africans still would not reach the target of universal enrolment by 2015″. In 2003, Burkina Faso was condemned as being ‘off track’ with the second MDG yet this country expanded its elementary education far more than western historical experience. Figure 4 shows data from the World Bank indicators and Global Development Network Growth Database. It indicates that Africa is converging rapidly to other developing countries therefore Africa is doing well when looking in terms of absolute changes instead of proportional changes.
Graph Showing Primary Enrolment rates in Africa and developing countries
Source: Easterly, W. 2008. How the Millennium Development Goals are Unfair to Africa. Vol 37 (1). P26-p35
Goal 3: Gender EqualityThe third goal is focused on gender equality in primary and secondary schools. “According to Durofika and Ijeoma (2018:361) “the MDG’s failed to capture the cultural practice and the historical context that underpins gender and religious beliefs in Africa”. Some areas in Africa for example prohibit the female child from attaining education and doing certain work. Such beliefs hinder development and until some cultural practices are changed, this goal is unrealistic in African countries. Furthermore, gender equality and primary school enrolment are interconnected. It is important to note that Africa is still catching up to other developing and developed countries in terms of gender equality therefore, the design of the MDG’s labels Africa’s performance as a failure even though it is successful within its own range.
Goal 4, 5 and 6: HealthThese 3 goals are related to improving health in African countries like reducing infant mortality by two thirds, reducing maternal mortality and stopping the spread of pandemic disease such as Aids, malaria and tuberculosis. “The MDG’s did not put in place holistic policies which would have aided African governments in addressing the underlying courses of death and diseases ” (Durofika ; Ijeoma, 2018:361).The WHO and the ADB however reported that Africa instead progressed in matters related to health for example which were are ere able to reduce their under 5 mortality rate are :Ethiopia, Liberia , Malawi and Tanzania. Cape Verde, Equatorial Guinea, Rwanda and Eritrea to a large extent managed to reduce their mortality rate. Algeria, Burundi, Republic of Congo, Ethiopia, Gambia, Ghana, Kenya, Malawi and Nigeria managed to stop tuberculosis and Algeria, Botswana, Gabon, Ghana, Kenya, Lesotho, Seychelles and Tanzania have managed to acquire good outcomes in the fight against malaria and other diseases.
MDG policies have failed to recognise African problems such as corruption, mismanagement of funds, inadequate data, weak monitoring and evaluation as well as weak human and institutional capacity leading to low programme implementation. Specific policies that are aligned with African problems should be developed and implemented.
5.3 SDG’s as a continuation of the MDG’sThe MDG’s were not attained fully in 2015 which is why the SDG’s were developed to continue what was not achieved in the previous goals. These goals are known as ‘global goals’ and are regarded as the 2030 Agenda for sustainable development. These are a set of 17 SDG’s which aim to end poverty, fight inequality and justice as well as tackle climate change. The OECD supports the United Nations in making sure that the 2030 goals are achieved by existing knowledge, unique tools and experiences. Furthermore, this partnership according to the OECD (2018) “creates synergies among private and public, domestic and international, and donor and developing country resources to provide countries with a strong support mechanism on which to build towards a better future”
The problem with the MDG’s is that some goals were impossible to attain yet the SDG’s have the same unrealistic goals. The period between 2000 and 2015 has witnessed the worsening of poverty in developing countries. Many leaders are praising the SDG’s already when the MDG’s were never successful because people living in South Sudan are still poverty stricken, in 2015 Malawi reported that it was facing food shortage in their history. Africa still faces unequal access to education and more than 200 young girls are kidnapped from learning institutions, yet no answers are given. According to Ngwira (2015) “The UN should have waited until the MDG’s came to and end then carry out an extensive country or regional evaluation of the success or failure of the MDG’s other than adopting another programme before the other one has to an end”. Global leaders claim that the MDG’s have contributed to poverty reduction, yet Africa has not seen much improvement.
The SDG’s are problematic because some goals have vague targets with a lack of independent accountable mechanisms in order to measure if states have met the benchmarks and this already undermines the new programme for example, the SDG 8 which is sustainable economic growth and decent work for all, does not state how growth should be accelerated in developing countries without having any negative impacts on the environment. African leaders have failed to fight the structural injustices in the global economic and development system to ensure that sustainable development is centred around the people. This agenda is not enough to support implementation at the local level which is the individual member state.
It is questionable how the OECD aims to help achieve these goals, yet their member countries are only providing aid for their selfish interests. Furthermore, it is quite evident that the policies offered to African countries are not for assistance but for beneficial reasons. Countries which colonised African countries should now and have a depth understanding of Africa’s problems because they are the ones who created them but instead, unrealistic policies are implemented. The OECD is just a façade of a self-interested organisation and these factors shown above have proved this.
6.Is Foreign Aid Working in Africa?US $1 trillion of aid is approximate to have been transferred from rich countries to Africa since the 1940s and in 2014, the OECD’s DAC have spent more than $132bn on 0DA. This results to the question; if whether aid is working or not? and by looking at the development level of Africa and the amount spent on these African countries since the beginning of aid transfer, aid is definitely not working. Aid comes with conditionalities as well and “this is the notion that the imposition of rules and regulations by donors to govern the conditions under which aid is disbursed can ultimately determine its success or failure” (Moyo,2009:38). These conditions can be seen with the French demanding that their former colonies carry out the French legacy as well as paying colonial tax. Nigeria and the DRC are amongst the top 10 aid recipients as seen in Figure 5 yet these countries are one of the most underdeveloped countries in Africa. This indicates how accountability lacks in the distribution of aid and that these conditionalities that ODA donors give are of self interest only.
Top 10 ODA Recipients in USD millions
Source: Development Aid at Glance: Statistics by Region. Africa 2016 edition.
6.1 Why Foreign Aid fails in Africa?Omotola and Saliu (2009: 89) argue that “foreign aid brings about wider distortions in the political economy of recipients such as debt crisis, poverty, wider technological gap and disequilibrium in the foreign sector”. Foreign aid is perceived to be a form of capitalism because of its exploitation of surplus value along with its cruel effects. This exploitation which is associated with foreign aid “manifests in the conditions imposed by the majority of aid regimes. These include donor access to recipient national decision-making processes direct transfer of resources from the recipient countries to the donors (through repatriation); imposition of dysfunctional economic policies upon recipients and high interests among others” (Omotola and Saliu, 2009: 89). This type of exploitation can be seen through policies such as the SAPs which was supposed to assist with development and the OECD’s DAC committee which also exploits African countries.
Usually, soft loans and outright grants are politically motivated to the extent that corrupt and irresponsible countries which are characterised by poor governance are often recipients who are only prioritised if they fulfil the politically strategic needs of donors. Furthermore, instead of these soft loans being spent on the recipient country’s’ projects of their choice, they spend their money on purchasing goods and services for donor countries. Aid helps corruption escalate to the point where both domestic and international actors participate. The aid which is meant to help African citizens ends up in the hands of bureaucracies in poor counties, Moyo captures this situation: “At a hearing before the US Senate Committee on foreign relations in May 2004, experts argued that the World Bank has participated in the corruption of roughly US $100 billion of its loan funds intended for development. When corruption associated with loans from other multinational development bank is included, the figure roughly doubles US $billion. Others estimate that of the US $525 billion that the World Bank has lent to developing countries since 1946, at least 25% has been misused “(Moyo, 2009). This indicates how huge amounts of aid not only perpetuates corruption but breeds corruption.
Easterly explains why foreign aid fails and uses the terms ‘planners’ and ‘searchers’; the planners being the DAC members who create policies concerning development and aid as well as distribute the funds and the searchers being citizens of the recipient countries who have more knowledge of the problems facing Africa. According to Easterly (2006: 5) “In foreign aid, planners announce good intentions but don’t motivate anyone to carry them out; searchers find things that work and get some reward. Planners raise expectations but take no responsibility for meeting them; searchers accept responsibility for their actions. Planners determine blueprints; searchers find out what is in demand. Planners at the top lack knowledge of the bottom; searchers find put what the reality is at the bottom. Planners never hear whether the planned got what it needed; searchers find out if the customer is satisfied”. Foreign aid fails because of a lack of responsible and accountability. These planners think they already know the answers to African problems and think that poverty is similar to a technical engineering problem. Based on their assumptions, they create policies with solutions which will be imposed on these countries. They think that they have more knowledge however, when these policies fail there is no accountability that is taken instead they blame everything on Africa’s underdevelopment.
6.2 So Much Aid Yet No Development. What Is the Real Problem
The continent has been receiving this aid since the 1940s yet years later it still remains one of the most undeveloped continents in the world. Africa has potential of being well developed because it is rich in national and human resources however, it is still underdeveloped. It has not managed to capitalise on its wealth because its infrastructure is poor, economies are small and not as sophisticated, and the people are still within poverty. Africa still remains a puzzle of failed policies to the West.
The western countries have been promoting the concept of modernity, democracy and development to African countries. According to Mignolio (2009:132) “coloniality is the hidden side of modernity and by writing modernity, we mean that coloniality is constitute of modernity and that there is no modernity without coloniality”. Furthermore, Mignolo sees development associated with modernity therefore “coloniality is like the unconsciousness, the hidden weapon of both the civilization and developmental mission of modernity” (Mignolio, 2009: 133). This constant emphasis of the need for African countries to follow a similar linear development route as western countries is a façade for the continuation of coloniality.
The concept of development only came to rise after WWII and this concept is linked to the liberal ideology which became an ideology used globally by the capitalist world economy. ‘Developmentalism’ became an excuse which western countries so that they can be able to interfere and intervene in African domestic political affairs but if countries were not ‘westernised’ they would be labelled as underdeveloped. During the speech of President Harry Truman of the United States, he used the term ‘underdevelopment to reference non- Western countries. This to some extent seemed as if the president was ‘othering’ Africa and saw that this continent immediately needed western intervention. One problem of this concept according to Ndlovu-Gatsheni (2013:44) “was that as an idea that originated with Eurocentrism, implied that development of any kind could only take place within the parameters of the capitalist world system that manifested its ugly face within the non-western world in terms of the slave trade, imperialism and colonialism”. This concept denied other ideas of progress due to its hegemonic tendency therefore anything which was not western would not be approved of and would be called barbaric.
The only way that underdevelopment can be explained is through the relationship of one country exploiting the other because all countries which were seen as underdeveloped by the west were once exploited by them during colonialization. Scholars like Samir Amin grappled with the problems of underdevelopment which occurred in colonised parts of the world and the impact of the colonial matrix of power. Furthermore “they interrogated the dialectics of the centre-periphery relations that were created by colonial modernity and located the roots of underdevelopment in this exploitative relationship within which the ex-colonial powers continued to reap economic benefits from the former colonial world to develop their nations at the expense of the ex-colonized peoples.” (Ndlovu-Gatsheni, 2013: 41). International institutions do not like African countries to repay their loans quickly instead can they would rather prefer countries to service these loans continuously so that they can create some sort of dependency on them. According to Stiglitz (2002:30) “Ethiopia had repaid an American Bank loan early, using some of its reserves. The transaction made perfect economic sense. Despite the quality of the collateral (an airplane), Ethiopia was paying a far higher interest rate on its loan than it was receiving on its reserves. The USA and the IMF objected to the early repayment. They objected not to the logic of the strategy, but to the fact that Ethiopia had undertaken this course without IMF approval”. These donor countries do not want to give African countries financial liberalization because it is a way of retaining power in the global economy.
The concept of development is therefore not what it claims to be because it is just a way of the western countries to interfere, intervene and maintain control over African countries. It is important to understand the true meaning of development to understand the real reason why the DAC members give out development aid.
7. Recommendations and ConclusionIn this paper, a critical analysis was provided concerning the issue of the OECD providing aid to African countries and if truly it is enhancing development. Despite the trillions of dollars which donor countries have provided for the past 78 years, global inequality is still evident, and counties are still underdeveloped both politically and economically. A foreign aid scholar spoke about the U.S foreign assistance and said “Foreign aid as a political instrument of U.S. policy is here to stay because of its usefulness and flexibility “(Montgomery, 1962:9). These words are awfully true because foreign aid is not an instrument of economic development of poor countries alone, but it is a foreign policy tool as well. France is another example of a donor country exploiting underdeveloped countries in order to pursue their national interest. The OECD has many contradictions therefore this organisation cannot be trusted at all because it harbours all the countries which previous colonial powers were. There’s no single African country within the members of the organisation therefore during their decision-making process, African countries are excluded, and policies are made on their behalf.
It is evident that foreign aid is not working in Africa and these countries need to find an alternative to develop by themselves. Being under the shadow of western countries is only making matters worse and the economic and political conditions are getting worse than they were. Its time for African leaders to take matters in their own hands and drift away from the west and create policies which will only be suitable for the continent, this way progress will be seen.
It is quite evident that foreign aid is not working in Africa for sustainable economic growth however, how can African countries abandon foreign aid after years of addiction because now the continent is dependant on it. It seems almost impossible considering how aid has become so central in most African economies and it would mean that Africa would face gruesome consequences from cutting their aid from these donors because as much as these recipient countries benefit from it, these donor countries equally do. The biggest problem is that African countries have been pursuing policies which are aimed at extracting resources instead of development.
African countries need to limit their external borrowing because of the conditions attached to it therefore, domestic production needs to be intensified by mobilising unused natural resources in order to make up for investments, savings and consumption gaps which will be encountered.
Africa has been following the recommended western centric development model which is not suited for Africa considering the continent’s historical background. These western development policies will never consider the colonial legacy which Africa has mainly because they are the reason for Africa’s problems. Africa should therefore create policies which are best suited for the continent because policy makers know what is really needed for development to occur. The OECD is not really interested in helping the continent develop because they have helped create policies which have not been effective. Furthermore, this organisation has not been transparent with how the individual DAC members have put up conditions that suit them while hurting the country’s economic conditions and the organisation does not account for this.
Donors have assumed that they all know what African countries need and they want to allocate the money and run it with no accountability. This has created a situation where foreign aid has landed at the wrong places and has been misused. Furthermore, Senegal’s president Wade stated in 2002 “I’ve never seen a country develop itself through aid or credit. Countries that have developed in Europe, America, Japan and Asia have all believed in free markets. There is no mystery there, Africa took the wrong road after independence” (Moyo,2009). Aid is definitely not meant to be used for this long, its only supposed to be used during a certain period of time. African should now look for alternatives on how they can develop and assist each other because is evident that western countries are here to only exploit these countries more than they have already did.
Its obvious that these donor countries do not exploit African countries single handed, they do this with the assistance of the leaders. Corruption caused by the leaders is caused by a lack of political will which is also encouraged by self-interests. African leaders create policies which will only benefit them and their western friends forgetting about the citizens because if they really stood up for their citizens, most of these policies implemented would not be created at the first place. In order for development to occur and to move away from this aid dependency African leaders need to have a strong sense of political will. Donor countries only take advantage of these countries because of them, that they will easily adhere to their rules as long as they benefit something. This therefore needs to change, once African leaders stand their ground and unite to enhance Africa’s conditions, then this whole problem will come to end.
Africa has a long way until they can recover from this aid dependency, the only thing which can save the continent is if the leaders become serious about developing Africa and moving away from the west. Africa is very, much capable of becoming one of the strongest continents in the world because everything is available, they just need to focus on creating the means of production. It is very ironic that these donor countries want to help development, yet they have never recommended that these recipient countries should create production factories because they have so much
resources. This only indicates that they only want to assist only when it will not affect their capitalist behaviour and their economies.
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