Make International Aid History
Why Africa needs to drastically scale back on aid donations if it desires to take its destiny into its own hands.
Aid to Africa has been sent to the continent from the rest of the international community since the 1960’s. Its blueprints were laid by the World Bank under Robert McNamara - a colossus of a figure in foreign policy and diplomatic circles the world over. I first learnt about him while studying the Vietnam War for Year 10 History Class. You might know and recognize him as the ‘DOD Official’ from video game Metal Gear Solid 3: Snake Eater. Boomers might remember him for his time as the boss of the Ford Motor Company. And many others know him still for his 13 year tenure as President of the World Bank.
Robert McNamara’s role at the helm of this new global financial institution signaled a period where the language and framework that so many of us rely on to discuss international development, really started to take shape. His vision for the World Bank was to use sovereign loans, and relief and support in the form of grants and technical assistance, to kickstart a fight to end global poverty that would sow the seeds of global peace and reduced civil strife.
However, nearly 60 years on and what is undoubtedly trillions of dollars later, the verdict on its purpose and efficacy rages on. If I had to give my take, I would say that aid and multilateral organizations served as an essential intermediary for newly-independent and self-governing nations and the Rich World at a time of great upheaval throughout the Southern Hemisphere. The contribution that international development thought and practice leaders like UNCTAD, the IMF and World Bank, USAID, Oxfam and the Red Cross Society made to outlining and measuring universal parameters for human development is also invaluable. However, international development - aid in particular - has failed to keep up with the times. We need to move on. Here’s why:
It props up failing governments and undermines the will of the people;
Many African nations bear the features and hallmarks of modern nation-states, but in most cases this is nothing more than a mere facade. Many are feudalistic at the core; the rural majorities generally toil away to support the luxuries and dynamism of the urban centres, while most of the urban population are taxed and extorted via the payment of persistent bribes, in order to feed the largesse’s of public sector rackets and political elites. Leaders and governments may change hands, but the taxes continue to multiply and increase while local schools, hospitals, roads and sewage works fall into disrepair.
The system and patterns of corruption and rent seeking across Africa refuse to budge, with international aid having a hand in moulding such a rigid mechanism. Aid essentially acts as a bail-out for corrupt and failing governments who are now shielded from the real, deep-running consequences and wider ramifications of their actions.
What’s worse is that those governments considerably reliant on aid funding, usually come out of it with a reduced sense of autonomy and independence. International aid monies and institutions unknowingly downplay the role and influence of representative government in the eyes of the people, while the place of the citizenry as nationals, workers and taxpayers also loses rank in contrast to US dollar denominated aid packages.
African governments and economies would need to pursue serious market reform in response;
Over USD$50 billion of aid was distributed to Africa from rich countries in 2022. Aid monies were committed to supporting humanitarian efforts, healthcare development, widening access to education, as well as direct government-to-government financial assistance across the continent.
Now, what would happen if Africa were entirely cut-off from this funding today? Does Africa fall into complete mayhem and destitution, do things fall apart from hereon out? I somehow doubt it.
The first few years of adjustment would be testing, but the continent would be served a much needed dose of reality. As there is an argument to say that aid - contrary to its stated goals - actually serves to underdevelop Africa relative to the rest of the world by shielding it from natural and organic market pressures.
In an Africa with no aid, governments and public sector organisations would be forced to finance more of their spending by borrowing on open bond markets where sovereign loan performance is documented, monitored and shared with all market participants in the form of sovereign credit ratings for instance. Here, when sovereign borrowers (governments) fail to repay loans, their credit ratings are downgraded and future financing becomes more restrictive and expensive. Subsequently, a government is more likely to invest money that needs to be repaid into sectors and policy initiatives that’ll give a return and drive the country forward compared to the case where the money is just given away in the form of aid.
In an Africa with no aid, governments would also have to invest more resources into the local citizenry. Without aid in the equation, the role and importance of a nation’s taxbase is no longer undermined and co-opted since the state’s ability to raise and spend funds is much more closely tied to the people. Possibly incentivising governments into investing more into the education, infrastructure and market reforms crucial to expanding production, raising productivity rates, and generating long-term prosperity.
The role of the African Union and other regional organizations within the continent would expand;
International aid - largely financed by European and North American nations such as the USA, the United Kingdom and France - also contributes to rendering the African Union (formerly known as the Organisation of African Unity or the OAU) as a paper tiger. The AU serves as a forum for regional engagement and policy making. It also facilitates negotiations and peacekeeping missions and interventions between and within different African states, as recently illustrated by its role in securing peace agreements within warring factions in Ethiopia.
The AU spearheaded the creation of the world’s largest free trading bloc in the African Continental Free Trade Agreement (AfCFTA) as well. While this agreement is still a work in progress, the fact that the organization has managed to get 47 of the 54 signatories to ratify it is no short feat of achievement.
However, progress could be quicker. And, in many ways, the ubiquitous presence of aid-related organizations could be hampering this rate of change - at least indirectly. Nearly USD$55 billion was directed towards international aid in Africa in 2022, a sum nearly 100 times that of the AU’s total budget of USD$654.8 million in 2023. As with anywhere, attention, energy and manpower flows to where the money is. Meaning a larger share of African intellectual, bureaucratic and diplomatic bandwidth, in the form of African think tanks, government and research departments, are dedicated to securing, dispersing and monitoring international aid throughout the continent at the expense of building and reinforcing its institutional and geopolitical foundation via a regional, localized actor like the AU.
Just imagine what a more agile and specialized AU could achieve with just a tenth of the international aid budget?
An Africa without aid would force the continent to fully prioritize its relationship with the African Diaspora.
That USD$55 billion figure, or USD$53.5 billion to be specific, has been the stand-out stat in this article thus far. But a few more remain: total global remittances (money sent back home to Africa from African migrants abroad) to Africa stood at an astronomical USD$100 billion in 2023, with the amount sent of USD$54 billion for Sub-Saharan Africa alone just about exceeding the continent’s international aid receipts. Why is no one talking about this? Theoretically speaking, how badly does Africa really need international aid in order to survive and thrive - how much juice is really worth the squeeze here?
Zero international aid would incentivize African governments to engage more closely with their diaspora populations, collect better data on everything surrounding it, and double down on efforts to truly monetize diaspora remittances. What if that USD$100 billion was deposited into a regional Pan-African bank and was then lent out at a standard 10-1 ratio? This would inject USD$1 trillion (about a third of Africa’s GDP in 2023) into the economy and its capital markets. But, instead, much of it is siphoned off into meeting immediate consumption needs such as food and healthcare costs, or paying off school fees on a smaller, more fragmented, individual-to-individual.
The Unfulfilled Promise of Aid
Aid—a crutch that morphed into a chain, might have once steadied shaky steps towards progress, but now it leaves a trail of dependency and stifled governance. By cutting the cord we might unveil a harsh, yet a liberating path where markets breathe unaided, governance is reforged in accountability, and nations tap into their truest resource: their people. Africa’s economic renaissance beckons, not through the echoes of aid, but through the vibrant markets and reforms of self-sufficiency.