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FOREIGN BEING INDESPENSIBLE IN DEVELOPING COUNTRIES IS A FALLACY

Introduction

Aid is defined as transfers to poorer countries. To be able to understand the term aid it’s important to concentrate on net aid, that is, “transfers to poor countries less the amount of reverse flows in the form of repayment of principle on credit extended in the earlier years “Development for assistance for rich countries (DAC, 2005).

Aid also covers a multitude of different types of transfers, of which not all of them go directly to poor countries.

According to the oxford dictionary, Aid refers to financial help as given by richer countries to poorer countries. Aid is categorized into two; Humanitarian and Development aid. While humanitarian aid aims to help short term cases and objectives, for instance emergencies, natural disaster which can be provided inform of essential services and resources to help people in difficulty. This kind of aid is only meant to alleviate suffering in the short term rather than contributing towards the longer term objective like for instance poverty alleviation.

Development aid on the other hand, refers to help a country receives with the aim of the recipient to achieve long-term sustainable growth and poverty reduction. It may be given directly from one to another (bilateral aid) or money may be given by many governments to international organizations such as World Bank, IMF and the United Nations. These International organizations then spend the money on assistance for poorer countries (multilateral aid).

Africa for the last 50years plus has been the biggest beneficiary of foreign aid in the world. Whereas most African countries have gained from the aid most African leaders have taken advantage of the African situation, by conniving with the lenders and instead made its masses victims. It’s important to note that humanitarian aid has benefited most African states and perhaps should be encouraged particularly because it takes care of emergencies and disaster instances, however development aid has crippled Africa’s economies, increased corruption and escalated conflict, as well as encouraged dependency. The richer countries have also used the development aid to exert power on the poor and weak states and therefore through their financial influence manipulated affairs of the poor states.

According, to DAC report 2005, while the average number of donors per country is growing the average project size is shrinking, implying growing fragmentation of aid. Some of the key issues that should be keenly addressed and perhaps have impacted negatively on the effectiveness of aid in Africa are; the mechanisms for information sharing, coordination and planning are not only ineffective but costly. African leaders have abused aid and diverted funds for selfish motives; therefore there is need for donor countries to allocate rules to the recipient country so that aid can be assessed. If indeed these mechanisms exist then they are ineffective.

The role and significance of aid in Africa

We cannot afford to deny the fact that specifically humanitarian aid has had a positive impact on the many lives of communities in Africa. Many initiatives sponsored by USAID have seen many of our young go to school through free education, accessibility to free clean water, in emergency and disaster catered for the homeless shelter and food and many others.

Dambisa Moyo, 2005  “Whatever its strengths and weaknesses, such charity-based aid is relatively small beer when compared to the sea of money that floods Africa each year in government-to-government aid or aid from large development institutions such as the World Bank”

In response to recent doubts over the effectiveness of aid to Africa and the corresponding ‘aid fatigue’, recently influential works and speeches from mainstream liberal instances, like United Nations’ Millennium Project (2005), led by J. Sachs, the World Bank (2002) and the UK-sponsored Commission For Africa have given fresh impetus to the idea that aid can work and is absolutely necessary for the poorest (African) countries, insisting that a case for aid can still be made on very straightforward grounds from the point of view of donors. First, there is the ethical argument of the basic responsibilities of human beings vis-à-vis deprivation anywhere in the world. Secondly, the low cost of the extra effort needed for rich countries to channel substantial resources to very poor countries. Third, less altruistically, the growing security concerns and the costs that state failures, which are often related to poverty and desperation in a globalized context, and which have to be borne by intervening countries, particularly the US. Politically, balancing the costs of costly military interventions with the costs of increasing aid provides a strong ‘moral’ case for aid and perhaps a quicker way of persuading the general public opinion in the West that may be more responsive to security concerns or ‘compassionate politics’. The critical question, however, is who benefits from these two very different expenditure patterns (more aid or more military spending for protracted occupations).

It is also clear that sustained increases in imports (especially capital and intermediate imports, but even food in some cases) and long-term investment in many of the poorest SSA countries are not conceivable without large increases in aid flows in the foreseeable future. Some may reasonably argue that extreme aid dependence can be pernicious per se (Easterly 2001; Moss et al. 2005; Clemens and Radelet 2003). One reason is the alleged lack of absorptive capacities in poor countries and therefore the difficulties in scaling up aid flows targeted to the poorest economies (Clemens and Radelet 2003).

Aid and Debt

If we still got this since the time we started receiving aid then i don’t agree with aid helping Africans and Africa as a whole.

Borrowing in economics sense is healthy and it enables states to implement national program and projects in the interest of its citizens to attain economic growth and sustainable development. However if very strict conditions are imposed on the country that is borrowing and in the future fails to pay its debt in time then that country becomes deeply indebted. This in the future will have economic implications on the recipient, since governments have to divert the biggest percentage of its resources to repay the debt as well as pleasing their lenders. This has affected most African economies since government cannot engage in public investments yet poverty has increased with the largest population in Africa lacking access to basic needs.

Disadvantages of development aid

Many governments in Africa are suffering from the burden of un-payable debt.

Development aid is provided but with  heavy economic conditions imposed on countries in return for new loans which have a huge negative impact , on the  already poverty stricken citizens.

Its also argued that development aid to poor African countries has led to loss of policy space and sovereignty. While many African leaders have prioritized their ambitions to hold on to power ,under harsh economic realities faced in the region. Even with efforts made to establish institutions to cater for the trading blocks in order to pursue regional integration. These countries have been reluctant to implement these institutions making them weak, with the pretext that they have been deprived off their policy space and sovereignty.

What has been done

By the 1980s 1990s, most Africa countries suffered debt crisis and poor economic growth, something had to be done by the donor countries and these are some of the initiatives. Efforts have been made since the early 80s and 90s to solve the debt crisis problem in Africa, and outlined below are some of the initiatives taken up to solve the crisis as well as uplift the economic situation in many African countries. In the early 90s some of the countries admitted and declared inability to repay the debt, although IMF and World bank stepped in to help, conditions through the “structural adjustment system” were imposed. The aim was to alter the structure of how money in each county was spent. The SAP’s, consisted of strict measures designed to help a country repay its debts, through increasing its exports and reducing on their exports. This kind of response was again designed to benefit the richer countries while the poor countries continue to drown in poverty and its related problems. The only way poor countries can come out of the heavy debt problem and poverty is by increasing the aid, shift the aid to more productive sectors like agriculture, energy, increase production, increase importation and decrease exportation as well as strive to meet the global economic competition.

In the mid-90s, the World Bank came up with another new international debt relief scheme called the heavily indebted poor countries (HIP C), through write-offs by official donors. By 2004 countries were receiving debt relief under HIP C. There is sold evidence that countries whose debts they cancelled achieved the scheme achieved its objective, for instance in East. Africa Tanzania, Uganda had their debts cancelled. In Tanzania the debt relief enabled the government to abolish primary school fees leading to 60% increase in attendance. In Uganda, the debt relief led to 2.2millionpeople gaining access to clean water. However, there are still many countries that are not receiving aid simply because they were not able to fulfill the HIP C criteria

The HIP C initiative did not help to cancel debts in Africa at all, because countries still continued to spend most of its resources to repay debts, instead of meeting their basic needs such as education, health and infrastructure.

Although there was an effort, debt relief is yet a limited instrument its estimated that out of 30, 25 African countries have participated in the heavily indebted poor countries (HIP C), initiative, 22 of these countries have reached already their HIP C completion points, indicating full irrevocable disbursement of their relief package. These countries will not receive any more funds in debt relief.

Meanwhile the growing debt crisis in Africa is still a very big challenge to the region economic growth and sustainable development and therefore there is need for something to be done. Below are some of the suggestions that could help countries in Africa overcome the debt crisis and in the future achieve economic growth, development and sustainable development.

Recommendations

Aid is undermining and therefore the form of aid given should change from charity to supportive, community based should support development initiatives of the recipient.

The problem with previous aid is that it has been tied on contracts where the donor imposes on the recipient and time has only proven that it has had negative impact on development initiatives. The conditions and terms should not be imposed on any party, and all stakeholder’s must be involved in setting the terms.

With the emergency of china’s big investment in Africa heavily in infrastructure it will play a potential role to generate potential for the recovery of policy space in many African countries associated with donor- recipient relations in aid flows. Although china has increasingly become key player for some African states inform of Chinese Foreign Direct Investment (FDI) and aid flows, the western world thinks china is taking advantage of Africa’s big cheap labor market to benefit its global economic position. Nevertheless it  is important to appreciate the positive impact china has had on Africa states it has partnered with and this impact has been felt. This may also be seen as an opportunity for Africa to regain its policy space.

African continent is very resourceful and there is so much that has not yet been exploited and utilized in terms of land, labor force, and human capital. Africa’s leader’s efforts should be driven towards tapping these potentials, capabilities among the young people.  More public and private investment should be encouraged in order to reduce future debt crisis. Africa has the highest percentage of the most productive population that is the youth, let’s empower and support the youth in various initiatives.

In order to achieve aid effectiveness, aid should be targeted and directed towards more productive initiatives such as agriculture, food production, food security.  More research and training should be invested in agriculture sector, as well as utilizing technology and innovation.

Provide safety nets to both small scale farmers, minority groups for instance women as well as increased investment in human development.

Governments should work towards achieving political will that will support good governance and economic progress.

African states have made an effort and should continue the spirit to take the lead in their own development. Initiate partnerships at both international and regional levels in order to solve the problems in the region.

Conclusion

Aid, debt and poverty, the relationship is that aid is not what in real sense what it seems to be. We have seen that aid is not charity; it’s a soft loan, grant. Africa continues to suffer the challenge of repaying the debt. Governments have been struggling to pay these debts by diverting the minimal resources to paying the debts; its citizens continue suffering from extreme poverty. It’s not too late something can still be done; African leaders have a big role to play to be accountable to its masses. At a certain point in every country needs financial support but the aid need to be provided in way that it should be able to meet the objectives of the program it’s being funded for without compromising the future interests of its masses.

SOURCE: http://salmaimam.blogspot.co.ke/2014/09/foreign-being-indespensible-in.html

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Kevin Alemba
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