Dead Aid! – Africa needs business – not aid
As Africa is building its economy, what it needs now – without wasting any precious time – is business from international organisations and not aid.
Given that there are no free lunches in the world, aid will always come at a cost and that is what we cannot afford at the moment.
Dambisa Moyo, an internationally renowned economist and the author of “Dead Aid” is of the view that African growth should rely on capital markets, innovative funding models and entrepreneurs to succeed, rather than handouts or more big and bulky development institutions.
“To me, the most damaging problem of the aid system is it allows governments to abdicate responsibility,” she comments.
Moyo adds, “Emerging markets need to grow at 6 percent a year to make a dent in poverty and if they did not you’ve got a problem.”
Consequently, aid stifles entrepreneurial spirit and encourages a bloated bureaucracy that chokes off the very business that is crucial for continental economic growth. This is because aid is a silent killer of and has adverse effects on overall product competitiveness, wages, export sector, employment and ultimately growth.
In a recent editorial in The Southern Times titled “Creating an empire state of mind”, it was clearly stated that right now Africans mostly think like victims and this is hampering the development of the continent.
“We (African) consider ourselves underdogs and we are treated by the rest of the world as such,” goes the editorial.
Sharing the same sentiments, Nigerian economist, banker, investor and philanthropist Tony Elumelu, states that the continent needs sustainable change not aid to create the environment – political, economic, and social – to achieve self-sufficiency.
He comments, “Experience teaches that connecting the private sector to economic development is the most effective way to build wealth and resources in local economies and to ensure sustainable development.”
Furthermore, to successfully rebuild and/or transform the continent’s economy, it is time for Africa to assume full control over its economic and political destiny and not lean on foreign-funded institutions whose role in the continent remains shrouded in mystery.
This means – as remarked in The Southern Times editorial, Africa’s development starts with cultivating the correct state of mind.
“What we think of ourselves, how much we value our citizens, what status we assign to our worth to the world – all this determines what Africa is and will become.
“… If we envision an Africa that cannot industrialise, that cannot feed its people without the Western world, that cannot provide education, healthcare, water and sanitation without general budgetary support from the European Union and World Bank, then that is precisely what we will become,” remarks the editorial comment.
It goes on to say, “It all starts with a state of mind, and a positive state of mind is consciously nurtured and fed the very kind of self-belief that makes America so arrogant, Europe so self-assured and Southeast Asia so confident.”
Africa as a great continent should also grasp the many means and opportunities available for improving the life of her citizens.
This means that Africans have to first destroy the myth that aid is indispensable in the socio-economic and political set-up of the motherland.
More so, it is time for countries within and across the great African continent to start planning, substitute trade for aid and try to foster relationships and alliances with countries where there is real opportunity for Africa to sell her produce.
There is a need to attract foreign direct investment and support domestic investment. For this revolution to be successful, exiting aid dependency should be at the top of the political agenda.
It is of paramount importance to note that exiting aid dependency requires a radical shift both in the mindset and in the development strategy of the continent and a deeper and direct involvement of the people.
This also means the continental development paradigm requires a radical and fundamental restructuring of the institutional aid architecture at the global level which unfortunately the West is not prepared to implement because of their vested interest in Africa.
The time is ripe for Africa to look inwards and ensure that adequate funds are made available for the development of the continent.
Ghana’s Dr Kofi Amoah, who is the CEO of Progeny Ventures, believes African governments should put their under-utilised resources together to build sustainable economy and reduce dependence on aid.
He says, “Africa must learn to live within its means, learn to balance its budgets and limit dependence on aid and external financial assistance.”
Dr Kofi Amoah explained that Africa’s new opportunities must be embraced with an African mindset.
On policy response, he remarks, “Africa must adopt economic policies that would reflect realities of the society, ensure Africans work to combine land and other resources to produce its needs and drive a viable export sector.”
As urged by Amoah, African politicians should negotiate with traditional rulers to make land available for investors to invest in their economies for national development.
African leaders must deal with the issue of corruption since it has become entrenched and must be tackled strongly. To effectively deal with this cancer, Africa needs strong public institutions. If Africa could reduce corruption by 50 percent, she would be an economic haven.
Furthermore, institutions and systems must work efficiently for African countries to raise much needed resources to develop.
Prince Kofi Amoabeng, the CEO of Ghana’s UT Bank, reveals that the structural and institutional deficiencies of African countries continued to hamper their progress and limit their ability to take advantage of available opportunities.
He comments, “Financial intermediation must be deepened to reflect the standards of a modern economy, and make Africa a viable consumer and investment destination.”
Accordingly, African Governments should empower their nationals to take up businesses in their countries rather than “leaving them for only foreigners”.
Frankly, if countries within the continent achieve this it will improve and encourage so much research and development within them and as a result position the continent to be a force to reckon with.
Ugandan academic, Prof Augustus Nuwagaba, says if the world changed the current economic order that robs Africa of the ability to trade on equal terms on the world market, the continent would not need donor aid and could look after itself, even through crises like the East African famine.
Indeed, Africa does not need any more aid to develop; it needs moral support and guidance to harness her resources to develop.