Thursday, 31 July 2008

MY LAST ARTICLE FOR AFRICANPATH

DEVELOPMENT AID TO AFRICA: QUO VADIS? (Part II)


Poverty is in the eye of the beholder _ Amartya Sen, Nobel Prize of Economics

A year has passed since the much talked about issue of Vanity Fair on Africa, with its spectacular twenty different covers. It has also been a year since I wrote my first take on it, expressed my reticences about the Sachs v. Easterly debate and promised to come back to Sachs’ ‘Big Dream’ for Africa… I finally decided to come back to it, but I’m afraid only to reiterate my initial reticences. This is, therefore, my last take on the issue – which is only appropriate since this is also my last article for Africanpath.


I wrote in that first take that my reticences stemmed mainly from the realisation that most of the issues raised by that and other related debates were not essentially about economics but about charitable aid. And that I maintain. So, why write about it again? Well, firstly, because I always make it a point to keep my promises (even if only a year later…) and, secondly, because there are, nevertheless, a few considerations I deem worthy of making about the world of “development aid” or, to be more precise, the world of the “charitable aid industry” to Africa and Africans, from an economic perspective.

From the top of my head I can think of a few established “engines of growth” in the developing world, such as ‘infrastructure development’, ‘technology transfer’, ‘seed capital’, ‘value-addition to raw materials’, ‘comparative advantages-based trade’, ‘self-sustained agriculture’, ‘redistribution of assets’, ‘small business development’, ‘social enterprise’, ‘primary and secondary education’, ‘vocational training’, ‘learning by doing’, 'women's political and economic empowerment', ‘institutional strengthening and organisational streamlining’, etc., among a range of inputs across the various economic sectors that can significantly contribute to endogenous economic, human and social development.

However, I never came across one single development model where ‘charity’ plays any meaningful role as an “engine of growth”, whichever way we approach it. That said, I recognise that it is extremely difficult to achieve any significant level of development when large segments of the population of a country or region are affected by HIV/AIDS, Tuberculosis or Malaria – and here Sachs’ projects and the money he is able to raise for them play a role in saving lives and improving the living conditions of such affected populations, thereby securing the basis upon which to build strong economies in the continent.

Unfortunately, though, there is a major drawback to that kind of projects which ultimately prevents them, in most cases, from being taken as reliable and sustainable inputs to development: they are randomly located and funded and, more importantly, exogenously determined and disconnected from the targeted regions and countries’ economic, political and institutional structures. At this point, I am compelled to return to that Vanity Fair issue to recast the tale of that African Health Minister who was so grateful to Sachs for the extra money she got for her ministry’s budget and Sachs’ expressed outrage at the “ridiculously small budget allocated to health” in that and other African countries.

Of course he was right about that. I wonder, however, how much of the current African governments’ budgetary strife in the education, health and other social sectors could have been prevented if Sachs had expressed the same level of outrage when he was in a position to do so throughout the 80s and 90s when the ‘Structural Adjustment Programmes’ for Africa, spearheaded by the Bretton Woods Institutions, were being inspired and actively guided by his “universal shock therapy” prescriptions?

That question leads me to one critical ‘entry point’ to the understanding of the ever growing “charitable aid industry” to Africa and its current branching out to NGOs operating in virtually all sectors of policy making in the continent – yes, it is an industry: it increasingly operates as an employer of choice for the masses of young, and the not so young, unemployed or under-employed people flocking to Africa to fulfill all sorts of needs, dreams and fantasies (including this one, or those which led to this report), while crowding-out the masses of unemployed and under-employed Africans who, more often than not, end up in the West as immigrants invariably treated as a ‘burden’ to the host countries’ public budgets, which are themselves continuously ‘balanced’ by the transfers and remittances from their aid organisations and workers in Africa and the relief of part of the budgetary pressures induced by their domestic levels of unemployment; and it is self-justified: with very few notable exceptions, it tends to lack openness and transparency as far as its raison d’etre and modus operandi are concerned, hardly contributes to any transfer of know-how or technology relevant to its target groups or countries’ self-reliance and, in order to maintain the continuous influx of donations and public funding it relies upon, often resorts to over-dramatising, thus reinforcing, the problems it was supposed to help solve in the first place.

That critical ‘entry point’ refers to the, concealed or overly assumed, sense of ‘guilt’ apparently moving its main protagonists and determining the way poverty in Africa is seen through the eyes of their beholders – the same eyes which appear wide shut to such realities as the one reported just two days ago by the Black AIDS Institute, according to which the incidence of HIV/AIDS in the US is higher than that observed in some of the African countries most affected by the epidemic, such as Botswana or Uganda. It is this sense of (just misguided or simply irrational?) ‘guilt’ which is acting as a “engine of growth” for that self-justified industry and, with its self-centered, self-righteous captains often perceived in the recipient countries as the ‘new colonisers’ or the ‘new missionaries’ (yes, “The White Man’s Burden” is back with a vengeance…), perpetuating the dependency structures that have characterised for centuries the relationship between the West and Africa – a continent many invariably conceive as an abstract entity only awaiting their arrival to materialise itself into real countries with real (if frequently failing) governments, real people with dreams and aspirations of their own, real cities and villages with their own rhythms and paces, real cultures and institutions with their own history, in short, a real continent with its own place in the world. Thus all seems to suggest that the “charitable aid industry” has been more effective as a guilt relief engine than a poverty relief one.

I would like to finish on a positive note, though, by calling your attention to this young African and the inspiration and faith in the future of the continent he has been inspiring: now, that’s what I call a ‘Cheetah’!

DEVELOPMENT AID TO AFRICA: QUO VADIS? (Part II)


Poverty is in the eye of the beholder _ Amartya Sen, Nobel Prize of Economics

A year has passed since the much talked about issue of Vanity Fair on Africa, with its spectacular twenty different covers. It has also been a year since I wrote my first take on it, expressed my reticences about the Sachs v. Easterly debate and promised to come back to Sachs’ ‘Big Dream’ for Africa… I finally decided to come back to it, but I’m afraid only to reiterate my initial reticences. This is, therefore, my last take on the issue – which is only appropriate since this is also my last article for Africanpath.


I wrote in that first take that my reticences stemmed mainly from the realisation that most of the issues raised by that and other related debates were not essentially about economics but about charitable aid. And that I maintain. So, why write about it again? Well, firstly, because I always make it a point to keep my promises (even if only a year later…) and, secondly, because there are, nevertheless, a few considerations I deem worthy of making about the world of “development aid” or, to be more precise, the world of the “charitable aid industry” to Africa and Africans, from an economic perspective.

From the top of my head I can think of a few established “engines of growth” in the developing world, such as ‘infrastructure development’, ‘technology transfer’, ‘seed capital’, ‘value-addition to raw materials’, ‘comparative advantages-based trade’, ‘self-sustained agriculture’, ‘redistribution of assets’, ‘small business development’, ‘social enterprise’, ‘primary and secondary education’, ‘vocational training’, ‘learning by doing’, 'women's political and economic empowerment', ‘institutional strengthening and organisational streamlining’, etc., among a range of inputs across the various economic sectors that can significantly contribute to endogenous economic, human and social development.

However, I never came across one single development model where ‘charity’ plays any meaningful role as an “engine of growth”, whichever way we approach it. That said, I recognise that it is extremely difficult to achieve any significant level of development when large segments of the population of a country or region are affected by HIV/AIDS, Tuberculosis or Malaria – and here Sachs’ projects and the money he is able to raise for them play a role in saving lives and improving the living conditions of such affected populations, thereby securing the basis upon which to build strong economies in the continent.

Unfortunately, though, there is a major drawback to that kind of projects which ultimately prevents them, in most cases, from being taken as reliable and sustainable inputs to development: they are randomly located and funded and, more importantly, exogenously determined and disconnected from the targeted regions and countries’ economic, political and institutional structures. At this point, I am compelled to return to that Vanity Fair issue to recast the tale of that African Health Minister who was so grateful to Sachs for the extra money she got for her ministry’s budget and Sachs’ expressed outrage at the “ridiculously small budget allocated to health” in that and other African countries.

Of course he was right about that. I wonder, however, how much of the current African governments’ budgetary strife in the education, health and other social sectors could have been prevented if Sachs had expressed the same level of outrage when he was in a position to do so throughout the 80s and 90s when the ‘Structural Adjustment Programmes’ for Africa, spearheaded by the Bretton Woods Institutions, were being inspired and actively guided by his “universal shock therapy” prescriptions?

That question leads me to one critical ‘entry point’ to the understanding of the ever growing “charitable aid industry” to Africa and its current branching out to NGOs operating in virtually all sectors of policy making in the continent – yes, it is an industry: it increasingly operates as an employer of choice for the masses of young, and the not so young, unemployed or under-employed people flocking to Africa to fulfill all sorts of needs, dreams and fantasies (including this one, or those which led to this report), while crowding-out the masses of unemployed and under-employed Africans who, more often than not, end up in the West as immigrants invariably treated as a ‘burden’ to the host countries’ public budgets, which are themselves continuously ‘balanced’ by the transfers and remittances from their aid organisations and workers in Africa and the relief of part of the budgetary pressures induced by their domestic levels of unemployment; and it is self-justified: with very few notable exceptions, it tends to lack openness and transparency as far as its raison d’etre and modus operandi are concerned, hardly contributes to any transfer of know-how or technology relevant to its target groups or countries’ self-reliance and, in order to maintain the continuous influx of donations and public funding it relies upon, often resorts to over-dramatising, thus reinforcing, the problems it was supposed to help solve in the first place.

That critical ‘entry point’ refers to the, concealed or overly assumed, sense of ‘guilt’ apparently moving its main protagonists and determining the way poverty in Africa is seen through the eyes of their beholders – the same eyes which appear wide shut to such realities as the one reported just two days ago by the Black AIDS Institute, according to which the incidence of HIV/AIDS in the US is higher than that observed in some of the African countries most affected by the epidemic, such as Botswana or Uganda. It is this sense of (just misguided or simply irrational?) ‘guilt’ which is acting as a “engine of growth” for that self-justified industry and, with its self-centered, self-righteous captains often perceived in the recipient countries as the ‘new colonisers’ or the ‘new missionaries’ (yes, “The White Man’s Burden” is back with a vengeance…), perpetuating the dependency structures that have characterised for centuries the relationship between the West and Africa – a continent many invariably conceive as an abstract entity only awaiting their arrival to materialise itself into real countries with real (if frequently failing) governments, real people with dreams and aspirations of their own, real cities and villages with their own rhythms and paces, real cultures and institutions with their own history, in short, a real continent with its own place in the world. Thus all seems to suggest that the “charitable aid industry” has been more effective as a guilt relief engine than a poverty relief one.

I would like to finish on a positive note, though, by calling your attention to this young African and the inspiration and faith in the future of the continent he has been inspiring: now, that’s what I call a ‘Cheetah’!

8 comments:

luis said...

Dear Ana,
While I agree with you regarding your views on the "dependency structures" built over years through the work of the "aid industry" I also question myself what would happen to the "aid recipients" if no Western NGOs were there providing for some relief in face of generally "non-functional states"....
Recently I am even wondering about how can we evaluate, if there is something to be evaluated, the role of missionaries in Africa...

I still to many questions....but few answers....the only thing that I think stands at this point is that without a functional (some call it strong) state not sustainable development is possible....

Koluki said...

Comment from Africanpath

Added: August 01, 2008 06:45 AM

Think Investment Instead of Aid

Sorry to see you go. I couldn't agree more heartily with your conclusions. Humanitarian aid is indeed a self-perpetuating industry. Helpful? Perhaps. Fueling development? Not at all. The only thing that will make African economies fly--thus enabling health, education, and governance issues to be addressed with long-term solutions--is rigorously-vetted capital investment in business, agriculture, and industry. Must that come from "white" sources? Probably, since that is where the money is. But that's not necessarily exploitative if the investments are made with legitimate African partners who add value to the enterprise.
Dave Donelson, author of Heart of Diamonds

By: Dave Donelson

Koluki said...

Dear Luis,

First of all thank you for your input to the issues I've raised in my article.
It's always important to have the contributions of people like yourself, a PhD in Development Studies, to this major issue for Africa and the world.
I hope that from Dave's comment you can get a general answer to your questions.
On my part, I would ask you to please consider the following points:

1. As an Economist, I am required to provide evidence for whatever statements or opinions I formulate about the issues at hand. And that I did with the various documents, articles and reports I attached to the article. Maybe, if you haven't done so, it would be helpful to find answers to your questions if you read those and measured your opinions against them;

2. In this article, I am not in the business of wondering "what if..." but of extracting lessons and possible answers to the issues I and many others have been raising about "development aid". Rather, I am pondering about "what is..." in the face of the existing evidence;

3. It would be useful to let us know more specifically what is the definition of a "failing state" and provide clear evidence for the idea of "generally failing states" in Africa;

4. Regarding the role of missionaries in Africa, I can tell you from what I know about their history in Angola, that they were crucial from the outset at "evangelising" the "ungodly savages" and generally establishing the 'ideological setup' for colonisation. Only later, they started to become instrumental in providing education for segments of the population failed by the colonial state - which comes to show that 'failing states' do exist and have always existed... the issue is how exactly they are defined in any specific historical, political and economic context.

5. Perhaps more importantly, I am not in the business of speculating about Africa (which I know reasonably well from various standpoints) from an ideological perspective (which seems to me is where you're coming from) but from a strictly economic one. It doesn't really matter much to me which standpoint people come from to this discussion, but it would be useful if we could all contribute positively to answering this basic question: "Development Aid to Africa: Quo Vadis?"...

Thanks again for your comment.

luis said...

Ana,

Thanks for the comments on my comments...I know it would be good to elaborate further on what I meant by "non-functinal states" (I did not use the term "failing states" as this still raises a lot of debate..though I did use "strong")...can I leave this maybe for my "guest column" ? :-)

You seem to believe that I am discussing these issues from an ideological point of view...but I do not feel that I am doing such...i fully agree with Dave´s comments..in fact these days I do not like to talk about "overseas development aid" but "overseas development investment"...

It seems to me that these days that issue is finally being addressed but I am not so sure it will be "white money" doing it..we need to look carefully at China (and other East Asian nations),Middle East countries and even Brazil and India now...and what the impact is...

My point, however, stands...without funcional/strong states and adequate institutions these investments whether on industry, business or agriculture might not lead to long-term and sustainable positive development...

Do we have those institutions in place in most of African states? Probably some of them are moving forward..(but see for example World Bank´s "Doing business" indexes that are not so nice to Africa in general)

History tells us that states/institutions are important for development, whether we talk about the U.S., Europe or Asia...

So I am trying to Bring the State Back Again....not NGOS...

Koluki said...

Luis:

Now we're talking!

I knew that you'd eventually honour this excerpt from Amartya Sen's autobiography:

The intellectual atmosphere at the LSE in particular and in London in general was most gratifying, with a dazzling array of historians, economists, sociologists and others. It was wonderful to have the opportunity of seeing Eric Hobsbawm (the great historian) and his wife Marlene very frequently and to interact regularly with Frank and Dorothy Hahn, Terence and Dorinda Gorman, and many others. Our small neighbourhood in London (Bartholomew estate, within the Kentish Town) itself offered wonderful company of intellectual and artistic creativity and political involvement. Even after I took an Oxford job (Professor of Economics, 1977-80, Drummond Professor of Political Economy, 1980-87) later on, I could not be budged from living in London.

As I settled down at the London School of Economics in 1971, I resumed my work on social choice theory. Again, I had excellent students at LSE, and later on at Oxford. In addition to Kaushik Basu and Rajat Deb (who had come from Dehli), other students such as Siddiq Osmani, Ben Fine, Ravi Kanbur, Carl Hamilton, John Wriglesworth, David Kelsey, Yasumi Matsumoto, Jonathan Riley, produced distinguished Ph.D. theses on a variety of economic and social choice problems. It made me very proud that many of the results that became standard in social choice theory and welfare economics had first emerged in these Ph.D. theses.

I was also fortunate to have colleagues who were working on serious social choice problems, including Peter Hammond, Charles Blackorby, Kotaro Suzumura, Geoffrey Heal, Gracieda Chichilnisky, Ken Binmore, Wulf Gaertner, Eric Maskin, John Muellbauer, Kevin Roberts, Susan Hurley, at LSE or Oxford, or neighbouring British universities. (I also learned greatly from conversations with economists who were in other fields, but whose works were of great interest to me, including Sudhir Anand, Tony Atkinson, Christopher Bliss, Meghnad Desai, Terence Gorman, Frank Hahn, David Hendry, Richard Layard, James Mirrlees, John Muellbauer, Steve Nickel, among others.) I also had the opportunity of collaboration with social choice theorists elsewhere, such as Claude d'Aspremont and Louis Gevers in Belgium, Koichi Hamada and Ken-ichi Inada in Japan (joined later by Suzumura when he returned there), and many others in America, Canada, Israel, Australia, Russia, and elsewhere). There were many new formal results and informal understandings that emerged in these works, and the gloom of "impossibility results" ceased to be the only prominent theme in the field. The 1970s were probably the golden years of social choice theory across the world. Personally, I had the sense of having a ball.


Having noted that, let me point this out:

- Yes, I can't wait for your 'guest post', preferably on this issue. Note, however, that I don't see much substantive difference between "failing" and "non-functional" states: a state that "doesn't function" fails, doesn't it?

- My mention to your 'ideological standpoint' related the way you put the role of missionaires and the 'what ifs' there weren't Western NGOs in Africa...

- Those issues of investment and 'bringing back the state' are core economic issues to which I may come back to in due course.

Hope to read from you soon...

luis said...

Dear Ana,

I am not really sure if the excerpts from Sen was supposed to kind of praise my alma mater..but if so..I am far far away from being a good representative of such academic institution..I am too lazy...:-)

But I will try my best to come out with a "challenging" guest column...when i get to the enchanting Alentejo on wednesday I will start preparing it...

Until then...beijos

Koluki said...

Well, if you are so lazy that you can't even bother to not let it down, then let's say that it was to praise my alma matter... :-)
And also to call attention to the fact that what the 'charitable aid industry' in Africa raises are basically "social and economic choice" problems - Sen's field of study.
Anyway, enjoy Alentejo - eat some of its good oranges to prep-up your brain for the guest column!

Until then... beijocas.

Koluki said...

My reply to Dave @ Africanpath

Added: August 02, 2008 01:45 PM

Thanks for your comment Dave.
I also agree with you on putting the emphasis, and the money, on productive investment. Does it have to be “white”? People say “money has no colour” and I tend to agree with it - what matters most is what is it used for. Besides, there’s also “black” money around – I’m thinking about Ophra Winfrey’s school for girls in South Africa, just to give an example.

Keep well .

P.S.: I will try to get your book – the title and presentation sounds interesting. And, please, don't feel sorry for my going away from here - I still have my own blog, which you are most welcome to visit!

By: Koluki