Why aid fails to assist Africans

By Archbishop Njongo Ndungane

The story about why African countries are still poor has been told from many angles, each with varying degrees of validity. In terms of aid flows and their effectiveness or ineffectiveness to African development, various perspectives have been advanced.

There are those that argue that African development failures and ravaging poverty are entirely of Africa’s own making. Then there are those that look at African underdevelopment and poverty as completely a result of donors’ vested commercial and strategic interests in the provision of aid. Both these perspectives offer some explanation, but the real truth lies somewhere in the middle. Aid fails due to a number of interrelated factors.

Several promises and pledges have been made to increase aid and debt relief to some of the world’s poorest nations, partial or no fulfillment. A large percentage of the figures for aid claimed by donor countries is not genuine aid, but debt relief.

One main problem is that Official Development Aid (ODA) flows to African countries are not aligned to greatest need. Most ODA flows are to countries that, although having large poor populations, are not among the poorest in Africa. A study by African Monitor, found that the top ten aid recipients on average during 2003-2005 were DRC, Nigeria, Ethiopia, Tanzania, Mozambique, Ghana, Sudan, Uganda, Egypt and Madagascar. Of these “darlings of the donors”, only DRC and Ethiopia are among the 10 least developed countries on the continent as judged by the UN’s low income criteria.
In essence, vulnerability of a country is not the main reason for receiving aid. So, what could be the reason? Donors tend to tie aid to certain conditionalities, some of which depend on the same aid to be met. A lot of attention has been given to upholding the rule of law, investment in human development and promotion of economic freedom as the conditions for aid. Overemphasis of these as the yardstick to prioritise has resulted in countries that tow the line getting more aid to the detriment of those in dire need of assistance. While these conditionalities are important, they need to be weighed against the needs of the people on the ground.

The bias in favour of donors’ priorities, over those of the recipients of aid, has resulted in more concentration on sectors that are not important to poor countries. Donors, in the last 20 years, gave preference to social sectors like health and education and not much on productive ones like agriculture. It is imperative to fund social sectors as they benefit the poorest people. However, since these are consumption-oriented, without the complementary productive sectors, aid contributes very little to the country’s economic growth and sustainability.

Some donors favour urban, over rural, projects because of the pressure to see immediate results. Such a tilted approach is prejudicial to the grassroots in the peri-urban and rural areas. In another recent study by African Monitor, countries like Mozambique reported that donors still have undue influence over African governments in terms of prioritization and resource allocation. African governments have succumbed to this undue influence during negotiations, focusing on what can be funded instead of their actual needs and priorities.

This problem in Africa is compounded by the lack of capacity, which donors have not adequately addressed. The result of this challenge is that aid becomes ineffective, rarely benefiting the main target - the grassroots. Therefore, although decentralisation is vital and poor people should have a say on what aid has to be used for, there is need to build the capacity of the local level structures to ensure maximum impact and effectiveness.

It would be a mistake not to acknowledge corruption, which has diverted aid from delivery and compromised its effectiveness. However, corruption is not an overriding issue in the failure or success of aid. There are other major contributory factors. First, are the weak linkages within African countries between local and national levels to direct aid towards the needs of the grassroots. Local budgets (including budget-support funding) are usually done at national level. They tend to be blinkered, with some based on what the district was able to spend during the previous financial year as opposed to need. This failure to consult the grassroots when it comes to actual budget allocations has rendered the budget insensitive to the realities of the beneficiaries, and subsequently ineffective.

Another problem has been the failure to put in place clear systems to channel resources to the grassroots. When governments operate with insufficient attention to the needs of the constituency that they should serve, poverty reduction is hampered.

Notably, another challenge has been the lack of accounting and monitoring systems for development aid flows between central and district governments as well as between governments and donors who channel resources through NGOs.

If aid is to be effective and address the needs of the people that it sets out to assist, a lot of transformation would have to take place. Donors need to change completely and desist from insisting on deciding what aid money should be used for. There should be a fair consultation that is not tilted towards those with money. There is also need to investigate ways to ensure that foreign direct investment is a tool for equitable development in Africa, with strong investments in infrastructure and other labour intensive areas. International support for economic growth in Africa should be twinned with the responsibility to ensure that growth improves livelihoods at the grassroots level and achievement of the MDGs.

The major vehicle of meaningful development in Africa is trade. There is need to push for trade justice so that the international trading systems and mechanisms provide a fair platform for Africa as well. Africa should develop strategies to move from aid dependency towards aid for trade, and vigorously promote intra-Africa trade.

The supportive element of the Diaspora, whose financial impact is notable, must be exploited as an alternative source of funding for Africa. For instance remittances flows from Africans in the Diaspora are on the increase, accounting for almost 25% of the GDP of some African countries. It is estimated globally at $200 billion - far more than official development and Foreign Direct Investments (FDI). Various other intensive mechanisms and systems should be explored to make aid effective as well as to move away from the dependency syndrome. Only then can aid succeed in Africa.

*This article appeared in The Star newspaper of 18 January 2008