George Ayittey concludes his treatise:



The Failure of Foreign Aid Programs in Africa

That foreign aid has failed to accelerate economic development in the
Third World generally is no longer in dispute. An empirical study of
foreign aid by Boone (1995) shows that "there was no significant
correlation between aid and growth" but that "government consumption
rises by approximately three quarters of total aid receipts" (Boone
1995: 4). So, according to Boone, aid in its usual
government-to-government form, does little to promote a long-term
economic growth but does induce growth in government bureaucracy. As far
as the poor are concerned, regardless of regime type, "aid flows
primarily benefit a wealthy political elite" (Boone 1995: 5). One
indicator of this, are infant mortality rates, which are sensitive to
even tiny changes in nutrition for the poor. However, there is "no
significant impact of aid" on these indicators (Boone 1995: 4-5).

Alan Woods, the late administrator for US AID noted in a February 1989
report that, while the United States had provided some $400 billion in
aid to the developing countries, no country receiving U.S. aid since
1968 has graduated from a less-developed to a developed status. Worse,
he concluded, "only a handful of countries that started receiving U.S.
assistance in the 1950s and 1960s has ever graduated from dependent
status" (Woods, 1989; p. 112). US AID again admitted in 1993 that "much
of the [Third World] investment financed by U.S. AID and other donors
between 1960 and 1980 has disappeared without a trace" (The Washington
Times, October 10, 1996, A19). According to Doug Bandow of the Cato
Institute, a Washington-based libertarian organization, "The United
Nations [in 1999] declared that 70 countries--aid recipients all--are
now poorer than they were in 1980. An incredible 43 were worse off than
in 1970. Chaos, slaughter, poverty and ruin stalked Third World states,
irrespective of how much foreign assistance they received" (The
Washington Post, Nov 25, 1999; p.A31). Except for Haiti, all of the 13
foreign aid failures he cited--Somalia, Sierra Leone, Liberia, Angola,
Chad, Burundi, Rwanda, Uganda, Zaire, Mozambique, Ethiopia and
Sudan--were in sub-Saharan Africa.

With particular reference to Africa, the record has been abysmal and a
general consensus has emerged that aid to the continent, both bilateral
and multilateral, has been ineffective. Between 1980 and 1988
sub-Saharan Africa received $83 billion of aid. Yet all that aid failed
to spur economic growth and to arrest Africa's economic atrophy or
promote democracy. Africa is littered with a multitude of "black
elephants" (basilicas, grand conference halls, new capitals, and show
airports) amid institutional decay, deteriorating infrastructure and
environmental degradation. The standard of living in black Africa fell
by 1.2 percent a year from 1960 to 1980. "Overall, Africans are almost
as poor today as they were 30 years ago (at independence)," according to
the World Bank (1989; p.1). Nor did the aid buy much influence or
leverage for the West since many of the aid programs were ill-conceived
and economically unsound. Western backers tended to support almost any
gaudy and extravagant project. Even Jean-Bedel Bokassa's coronation and
Felix Houphouet-Boigny's basilica had Western financiers. Tanzania's
less glamorous but ill-conceived Ujaama socialist experiment also
received Western support. The New York Times reported that, "at first,
many Western aid donors, particularly in Scandinavia, gave enthusiastic
backing to this socialist experiment, pouring an estimated $10 billion
into Tanzania over 20 years. Yet, today as Mr. Nyerere leaves the stage,
the country's largely agricultural economy is in ruins, with its 26
million people eking out their living on a per capita income of slightly
more than $200 a year, one of the lowest in the world" (Oct 24, 1990; p.
A8).

The 1990 World Development Report by the World Bank noted that
Tanzania's economy contracted an average of 0.5 percent a year between
1965 and 1988. Average personal consumption declined dramatically by 43
percent between 1973 and 1988. The Economist observed that for all the
aid poured into the country, Tanzania only had "pot-holed roads,
decaying buildings, cracked pavements, demoralised clinics and
universities, and a 1988 income per capita of $160 [lower than at
independence in 1961]" to show for it (June 2, 1990; p. 48).

The African countries that received the most aid -- Somalia, Liberia,
and Zaire -- slid into virtual anarchy. "Another large recipient, Kenya,
inflicts unspeakable abuses of human rights on its own citizens while
aid pays the bills" (Maren, 1997, 11). In a letter to Secretary of
State, Warren Christopher, the U.S. House of Representative's
International Relations Committee chairman, Republican Benjamin Gilman
-- a Republican -- and Lee H. Hamilton, a ranking Democratic member,
wrote:

"Zaire under Mobutu represents perhaps the most egregious example of the
misuse of U.S. assistance resources. The U.S. has given Mobutu nearly
$1.5 billion in various forms of aid since Mobutu came to power in 1965.
Mobutu claims that during the Cold War he and his fellow African
autocrats were concerned with fighting Soviet influence and were unable
to concentrate on creating viable economic and political systems. The
reality is that during this time Mr. Mobutu was becoming one of the
world's wealthiest individuals while the people of Zaire, a once-wealthy
country, were pauperized" (The Washington Times, 6 July, 1995, A18).

Similarly, the United States gave Liberia's late President Samuel Doe
more than $375 million in aid between 1980 and 1985. But much of it was
squandered and looted, forcing that country into a receivership on 2
May, 1986. Somalia is probably the most egregious example of Western
patronage gone berserk. Huge amounts of economic and disaster relief aid
was dumped into Somalia, transforming the country into the Graveyard of
Aid. But the massive inflow of food aid in the early 1990s did much to
shred the fabric of Somali society. Droughts and famines are not new to
Africa, and most traditional societies developed indigenous methods of
coping. These methods were destroyed in Somalia, and the country became
more and more dependent on food imports. "The share of food import in
the total volume of food consumption rose from less than 33 percent on
average for the 1970-79 period to over 63 percent during the 1980-84
period, which coincides with Western involvement in the Somalia economy
and food-aid programs" (Maren, 1997, 171).

Similar food aid has induced an import food dependency in Ghana,
according to Young and Kunz (2000). Despite Ghana's relatively small
size, it is the sixth largest recipient of food aid (AID, CDIE, 5). The
way PL 480 works is to, give food on easy credit terms to the government
to sell for development money (title I), to fund development projects
(title II) to give it for a specific sale for agricultural
improvement/food security (title III). A country can save on foreign
exchange, and raise capital by getting these types of aid. Yet, as an
AID report itself concludes, the general direction of the country's
growth has not been positive.

Further, humanitarian aid may have created an import dependency as the
two major aid components of "wheat and rice… tend to end up on the
plates of the better-off"(AID, CDIE, 11). Internally, "natural resource
depletion…, declining agricultural productivity, low private savings,
low investment rates, and a high population growth rate" spell an
unstable future for Ghana, especially concerning agriculture and famine.
To sum up AID's presence in Ghana, "only a small percent of the
population in need were served" by development initiatives (AID, CDIE,
3). As far as consumption inequality is concerned, the lowest 10 percent
in Ghana consume 3.4 percent of total consumption, whereas the top 10
percent consume 27 percent of total consumption (World Bank 1997:
222-23).

Nor has conditional aid under Structural Adjustment Programs (SAPs) been
successful in Africa. According to UNCTAD (1998), "Despite many years of
policy reform, barely any country in the region has successfully
completed its adjustment program with a return to sustained growth.
Indeed, the path from adjustment to improved performance is, at best, a
rough one and, at worst, disappointing dead-end. Of the 15 countries
identified as `core adjusters' by the World Bank in 1993, only three
(Lesotho, Nigeria and Uganda) are now classified by the IMF as `strong
performers'" (p.xii). The World Bank itself evaluated the performance of
29 African countries it had provided more than $20 billion in funding to
sponsor Structural Adjustment Programs (SAPs) over a ten-year period,
1981-1991. Its Report, Adjustment Lending in Africa, released in March
1994, concluded that only six African countries had performed well: The
Gambia, Burkina Faso, Ghana, Nigeria, Tanzania, and Zimbabwe. Six out of
29 gives a failure rate in excess of 80 percent. More distressing, the
World Bank concluded, "no African country has achieved a sound
macro-economic policy stance." Since then, the World Bank's list of
"success stories" has shrunk. The Gambia, Nigeria and Zimbabwe are no
longer on the list and even on Ghana, the World Bank's own Operations
Evaluation Department noted in its December 1995 Report that, "although
Ghana has been projected as a success story, prospects for satisfactory
growth rates and poverty reduction are uncertain."

In 1998, four new countries were added (Guinea, Lesotho, Eritrea and
Uganda) were identified as the new "success stories." However, the
senseless Ethiopian-Eritrean war, the eruption of civil strife following
an army take-over in 1998, and the eruption of civil wars in western and
northern Uganda have knocked off most of the new "success stories." Of
the 9 African "success stories" listed by the World Bank, 6 of them had
income per capita in 1997 that was less than in 1980. Declining income
per capita, used as an indicator of standard of living, can hardly be
considered a "success."

A blistering affirmation came from a very unlikely source. Sir William
Ryrie, executive vice-president of the International Finance
Corporation, a World Bank subsidiary, declared that "the West's record
of aid for Africa in the past decade [1980s] can only be characterised
as one of failure" (Financial Times, June 7, 1990; p. 5). In a more
general indictment, Eberstadt (1988) wrote:

"Western aid today may be compromising economic progress in Africa and
retarding its development of human capital. Overseas development
assistance (ODA), after all, provides a very substantial fraction of the
operating budgets of virtually all governments in sub-Saharan Africa. In
1983, ODA accounted for two-fifths of Liberia's central government
budget, for three-quarters of Ghana's, and four-fifths of Uganda's.
Western aid directly underwrites current policies and practices; indeed,
it may actually make possible some of the more injurious policies, which
would be impossible to finance without external help (p. 100).

Indeed, Africans themselves have realized that Western aid has not been
effective. David Karanja, a former Kenya MP for example, was blunt:

"In fact, foreign aid has done more harm to Africa than we care to
admit. It has led to a situation where Africa has failed to set its own
pace and direction of development free of external interference. Today,
Africa's development plans are drawn thousands of miles away in the
corridors of the IMF and World Bank. What is sad is that the IMF and
World Bank "experts" who draw these development plans are people
completely out of touch with the local African reality" (New African,
June 1992; p.20).

Of all the U.S. presidents in recent times, Bill Clinton was perhaps the
one who was most "friendly" to Africa and concerned about its plight. On
June 27, 1994, Clinton held a White House gathering "to raise the
profile of Africa" and "express solidarity with its people." This was
followed by a visit to South Africa by Vice-President Al Gore in 1995.
There were also high level visits by Warren Christopher, former
Secretary of State in October 1996, and by First Lady Hillary Clinton in
February 1997.  But even Clinton eventually came to the realization that
the traditional foreign aid programs were not working in Africa. On
February 5, 1996, he submitted to Congress a report that outlined a
comprehensive trade and development policy for the countries of Africa.
Its primary objective was "to work with the people and leaders of Africa
in the pursuit of increased trade and investment." The policy framework
was structured around five basic objectives: trade liberalization and
promotion; investment liberalization and promotion; development of the
private sector; infrastructure enhancement; and economic and regulatory
reform.

This report however drew a scathing denunciation from Rep. Jim McDermott
(D, Washington). "Unfortunately, masquerading as a trade and development
policy are an assortment of programs and initiatives that don't work
well together, have no central focus, policy or direction --- a
compilation of programs and initiatives that are trapped in a Cold War
and almost paternalistic approach to sub-Saharan Africa. A very good
example of this disjointed approach is Vice President Gore's Bi-National
Commission with South Africa," he said. (Statement by Representative Jim
Dermott before the Subcommittee on Trade Committee on Ways and Means,
U.S. Trade Policy with Africa, 1 August 1996).

His indictment of the Clinton's initiative was valid because I was
invited to one session of Vice President Al Gore's Bi-National
Commission at the White House on Dec 22, 1995. This was after the
Vice-President had led a delegation of U.S. policymakers and businessmen
to South Africa, to explore the possibilities of increased trade with
South Africa. From the discussions, it became clear to me that the U.S.
had no "Africa Policy." It had focused most of its attention on South
Africa and President Nelson Mandela and expected him to provide the
leadership for the rest of Africa. Of course, Mandela's leadership had
been par excellence but he alone could not solve all of Africa's
problems. Besides, South Africa had its own problems to attend to.

A revised version of Clinton's Africa Initiative was drawn up by U.S.
Congressmen Phil Crane, Charles Rangel and Jim McDermott, which tacitly
recognized that the old donor-recipient approach had failed and
attempted to sharpen focus and seek new direction. Said Rep. Jim
McDermott: "We propose to move away from `If you reform your economy we
will give you development assistance' to a more dynamic response that
says `If you liberalize your trade, political and economic policies, we
will expand our trade and investment relation with you" (Congressional
Testimony, 1 August 1996, 7).

In June 1997 the Clinton Administration unveiled this as its new Africa
initiative, encapsulated in the bi-partisan Bill, "Growth and Investment
Opportunity in Africa: The End of Dependency Act" (HR 4198), which
subsequently morphed into AGOA (the Africa Growth and Opportunity Act of
May 1999). This sought "to create a transition path from development
assistance to economic self-sufficiency for sub-Saharan African
countries." The Bill authorized a one time appropriation of $150 million
for an equity fund and $500 million for a infrastructure fund beginning
in 1998. These funds were to be used to mobilize private savings from
developed economies for equity investment in Africa; stimulate the
growth of securities markets in Africa; improve access to third party
equity and management advice for Africa's small and medium-sized firms.
The infrastructure funds were to help improve the operations of
telecommunications, roads, railways and power plants in Africa. These
improvements, it was hoped, would help attract U.S. investors to
potentially profitable projects in Africa.

The other cornerstones of the initiative were: U.S.-Africa Economic
Forum (an annual high level discussions of trade and investment
policies); U.S.-Africa Free Trade Area (developing a plan to enter into
one or more free trade agreements with sub-Saharan African countries by
the year 2020); a Textile Initiative (the lifting of World Trade
Organization Textile and Clothing restrictions on imports from Africa
until the aggregate value of such imports exceed $3.5 billion annually);
and granting the poorest African nations duty-free access to the U.S.
market for 1,800 products.

To be eligible to participate in this program, an African country must
show a "strong commitment to economic and political reform, market
incentives and private sector growth and poverty reduction"
(Congressional Testimony, 1 August 1996, 9). President Clinton sought to
sell this program to other donor countries at the June 1997 G-7 Summit
conference in Denver under the mantra, "Trade not Aid."

Will AGOA Work?

In a meeting with a dozen African heads of state, key senators and major
U.S. investors in Africa in June, 2003, President Bush said that "AGOA
is helping to reform old economies, creating new jobs, is attracting new
investment; most importantly, is offering hope to millions of Africans"
(The Washington Times, June 28, 2003; p.A7). But business leaders
dealing with Africa described AGOA's effect more modestly. Mr. Stephen
Hayes, president of Corporate Council on Africa, said in written
testimony to the Senate: "Most African nations do not yet benefit
significantly from AGOA because they lack a manufacturing base and an
infrastructure adequate to ensure that products easily and quickly reach
their destinations. African nations remain dependent on one or two
products to carry their entire economy. AGOA, with its heavy emphasis on
textiles and apparel, has done little to change this situation" (The
Washington Times, June 28, 2003; p.A7).

U.S. business leaders said U.S. efforts to date to boost African
economic growth rates appear largely unsuccessful. But African countries
must continue to reform to receive U.S. support. "In Africa, the danger
is that AGOA has created expectations that cannot be met," Stephen
Hayes, president of the Corporate Council on Africa, told the Senate
Foreign Relations Committee on Wednesday. "As an investment tool, AGOA
has simply not worked." ((The Washington Times, June 28, 2003; p.A7).

The gains achieved by AGOA has only been modest: "It has created 150,000
jobs there, stimulated $340 million dollars of private investment and
boosted the region's exports by perhaps $1 billion a year" (The
Washington Post, May 31, 2004; p.A23). Further,

"Imports from countries covered by the new law rose from $8.2 billion in
2001 to $9 billion in 2002.  But that's a pretty unimpressive increase.
The Washington Office on Africa says 16 of the 38 eligible countries
shipped nothing to the U.S. under the new rules, and only six have
significantly increased their exports. Some 75 percent of what we buy
from Africa consists of oil, platinum and diamonds. Yanking raw
materials out of the ground doesn't exactly provide the foundation of an
entrepreneurial economy and a thriving middle class (The Washington
Times, July 15, 2003; p.A18).

The program suffers from two fundamental problems. First, as the program
itself acknowledged, a "strong commitment to economic and political
reform" on the part of African leaders was required for the initiative
to succeed in reducing African dependency on aid and expanding U.S.
trade and investment. But African leaders and the ruling vampire elites
are simply not interested in reforming their abominable political and
economic systems. Thus, they have not kept up their side of the bargain.
In 1990, only 4 out of the 54 African countries (Botswana, Gambia,
Mauritius and Senegal) were democratic. This tiny number rose to 16 in
1996 and has remained stuck there although there has been gains and
reversals. And the number of economic success stories keep shrinking.
African leaders are just not interested in reform. Period. Under
pressure from Western donors, they undertake the minimal cosmetic
reforms to ensure the continued flow of Western aid. But Africans deride
this posturing as the "Babangida boogie" - one step forward, three steps
back, a flip and a sidekick to land on a FAT Swiss bank account." Much
ado about nothing.Even the Clinton administration correctly recognized
that handing over money to African reform laggards and acrobats had not
stimulated much change. The pace of reform had been unimpressive.

It is unlikely access to U.S. markets, as envisaged by the new
initiative, would spark greater commitment to reform among African
leaders. Their economies may collapse around them and their people in
open rebellion against them. But they would be content as long as they
occupied the presidency. How committed was President Laurent Kabila to
ending the civil war that has devastated his country, Congo? At the
August 14, 2000 meeting of 10 regional heads of state to revive the
Lusaka Peace Accord, President Kabila was the last to arrive. Said
President Yoweri Museveni of Uganda: "The problem is that people say
they are committed [to ending the crisis], but in actual fact they are
not" (The Washington Post, August 15, 2000; p.A19).

President Clinton himself bemoaned this fact in his Feb 5, 1996 Report
to Congress: "The responsibility rests with African countries to commit
themselves to these objectives and to make policy choices that will
enable them to achieve these objectives. Help from outside Africa cannot
overcome lack of commitment or wrong choices by the governments of
Africa" (U.S. Government Report, 1996, 3).

Second, AGOA got entangled in partisan politics, special interest
wrangling and bureaucratic logjam. It was supposed to have a big impact
on apparel and farm products, which generally faced high tariffs in the
U.S.. But hundreds of items were excluded and the law has onerous rules
to qualify for open access to the U.S. market. "A study by the
International Monetary Fund found the benefits to Africa were only
one-fifth what they would have been under a genuine free-trade regime"
(The Washington Times, July 15, 2003; p.A18). As Sebastian Mallaby
wrote:

"To participate in the AGOA program, African countries need to jump
through complicated bureaucratic hoops devised by U.S. Customs; as a
result, only 13 of the nearly 40 countries theoretically eligible are
deriving real benefits . . .  It's not just the exclusion of most
countries that prevents AGOA from reaching its full potential. Like most
"free trade" deals enacted by Congress, this one has several kinks
designed to placate domestic protectionists. Some are comically absurd.
AGOA lays down, for example, that Africans may take full advantage of
the law if they make their clothes out of African or U.S. fabric. A
South African firm duly won a contract with Limited Brands, a leading
American retailer: It was for jackets made of local cloth on the outside
and a U.S.-made lining on the inside. But the South Africans soon lost
the contract, because U.S. Customs insisted that the shipment had to pay
duty. The law, the bureaucrats declared, said that you had to use
African fabric or American fabric. African fabric and American fabric
was strictly verboten.
Another AGOA rule allows Africans to make some of their garments out of
material from a third country, which usually means an Asian one. Based
on this rule, Gap Inc. got ready to shift most of its orders for polo
shirts to southern Africa. But when the Customs bureaucrats got a look
at Gap's material, it was not to their liking. The collar and cuff
fabric, you see, came in large rolls with perforations every few inches
or so, indicating where to cut it. Perforated material is not material
at all, as far as Customs is concerned; it is a "component" (The
Washington Post, May 31, 2004; p.A23).

Conclusion

Evidently, the record of official development assistance in Africa under
all phases has generally been dismal - a fact recognized by the donors
and which underscores their unwillingness to provide more aid (donor
fatigue). OECD aid to Africa fell by 22 percent between 1990 and 1996,
decreasing by 18 percent to sub-Saharan countries between 1994 and 1996
alone. (DeYoung, 2000a; p.A1).

Even humanitarian aid to Africa has been shrinking. Contributors to
United Nations aid and development programs have provided slightly more
than half of the $800 million requested in 1999 for African countries
suffering from "complex emergencies"--the term applied when war and
failed institutions, often combined with a natural disaster, leave vast
numbers of people homeless and starving. Specific programs for some
particularly problematic areas, such as the Great Lakes region of
Central Africa including the two Congos, Rwanda and Burundi, have fared
even less well (DeYoung, 2000b; p.A1).

In Sept 1999, the U.N.'s World Food Program announced it would curtail
its feeding program for nearly 2 million refugees in Sierra Leone,
Liberia and Guinea after receiving less than 20 percent of requested
funding. An emergency appeal during the summer to feed and shelter at
least 600,000 Angolans who had been displaced in that country's
long-standing civil war brought minimal initial response and predictions
of mass starvation. In Africa's Great Lakes region of Congo, Burundi and
Rwanda, where wars have produced nearly 4 million refugees, the United
Nations estimated it would need $278 million to take care of them. By
Oct 1999, only 45 percent of that amount had been donated.

Private organizations are also having difficulty raising funds for
African relief operations. According to Mario Ochoa, executive vice
president of the Maryland-based Adventist Development and Relief Agency
(ADRA), which operates relief projects out of its own donations and
under contract with donor governments, "If I were to go now and make an
emergency appeal for, say, Rwanda, for $500,000 for food, I'd probably
get about seventy or eighty thousand" in contributions" (The Washington
Post, Nov 26, 1999; p.A1).

The reasons for the decline are not hard to find. Critics have long said
that foreign assistance was wasted by bloated aid agencies pouring money
into the pockets of corrupt African governments. When the Soviet Union
collapsed, Western powers no longer felt the need to purchase the Cold
War loyalty of such governments. With a less threatening world beyond
their borders, donor nations came under pressure to attend to problems
at home (DeYoung 2000a; p.A1).

Perhaps, the decline in foreign aid is just what Africa needs. As Maritu
Wagaw wrote: "Let Africa look inside Africa for the solution of its
economic problems. Solutions to our predicament should come from within
not from outside" (New African, March 1992; p. 19).

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