Aid damages Africa

I know there has been quite a bit of talk about this in the blogosphere, but I only just got around to reading it now. It is Der Spiegel’s interview with James Shikwati a Kenyan economist. You can find the full thing here For god sake, stop the aid!, where he talks about how much damage and how little good aid has done for Africa. (Via Catallarchy)

Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

I have talked about this before in Foreign high tech funds to flow into developing world rulers coffers, where the Senegalese president had invented a new scheme to suck money into his hands.

I fear that the Sengalese scheme above would end up killing more local high tech talent and not helping. Shikwati explains how this happened with the hunger aid:

… and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It’s a simple but fatal cycle.

I remember in the 80s I was working with the Eritrean Relief Agency, who explained this whole thing to me. They said that virtually all the grain sent to Ethiopia by Bob (Village Idiot) Geldoff’s Live Aid fraud, wound up being sold in Sudanese markets by Ethiopian army officers. Thus not feeding the people who where starving and providing further money to the Ethiopian army for killing the Eritreans.

The interviewer from Der Spiegel does a good job asking the kind of questions, that any red blooded naive Danish person would ask, eg.:

In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags …

and Shikwati replies:

Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

Of course your average Danish, German, Swede, US liberal would ignore these answers as unpleasant and continue feeding this industry. I don’t see that it will ever stop.

Shikwati is working with his association IREN to make serious change in Kenya. I can only wish him luck.

I have earlier written about the core human behaviour that explains the above in Pitfalls of Philanthropy .