An African voice on aid

Critical comments from a Kenyan economist James Shikwati on the perverse results of western aid to African states.

SPIEGEL: Even in a country like Kenya, people are starving to death each year. Someone has got to help them.

Shikwati: But it has to be the Kenyans themselves who help these people. When there’s a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program — which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It’s only natural that they willingly accept the plea for more help. And it’s not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa …

… 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.

SPIEGEL: If the World Food Program didn’t do anything, the people would starve.

Shikwati: I don’t think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade [– not aid — ] is vital for Africa. It would force us to improve our own infrastructure, while making national borders — drawn by the Europeans by the way — more permeable. It would also force us to establish laws favoring market economy.

SPIEGEL: 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 …

Shikwati: … and they flood our markets with that stuff. We can buy these donated clothes cheaply at our so-called Mitumba markets. There are Germans who spend a few dollars to get used Bayern Munich or Werder Bremen jerseys, in other words, clothes that that some German kids sent to Africa for a good cause. After buying these jerseys, they auction them off at Ebay and send them back to Germany — for three times the price. That’s insanity …

SPIEGEL: … and hopefully an exception.

Shikwati: 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.

SPIEGEL: The German government takes pride in precisely monitoring the recipients of its funds.

Shikwati: And what’s the result? A disaster. The German government threw money right at Rwanda’s president Paul Kagame. This is a man who has the deaths of a million people on his conscience — people that his army killed in the neighboring country of Congo.

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Nicholas Gruen
2022 years ago

Rafe there’s a lot to this critique, but it’s all a bit ‘pat’ don’t you think. There seem to be some pretty big economic holes in this story. Firstly if the African’s can resell the footy T shirts back to Germany for three times the price, what’s crazy about it. It transfers money to some opportunistic traders in Africa. That’s where this guy wants the money to go isn’t it.

On giving money to murdererous dictators, I agree.

But this outlines ways not to give aid. Isn’t it encumbent upon us as well as illustrating how aid in certain forms doesn’t work, to show how in other forms it does. Where it gets through to local communities, where it helps address health related issues. Where it helps secure clean water. Etc.

Stephen Bounds
Stephen Bounds
2022 years ago

I don’t know. I think we need to acknowledge that aid does encourage a culture of dependency. Poverty in indigenous communities has hardly disappeared despite decades of aid.

However, I think Nicholas has hit the nail on the head in one very important way. *Truly* useful aid isn’t just throwing money, food and clothes over the fence and hoping [insert random African nation] sorts it out for themselves.

Aid must be tangible and targeted and aid donors need to stay involved with the community.

For example:
* Clean drinking water — GOOD
* Medical treatment — GOOD
* Education (in health, business skills etc) — GOOD
* Rebuilding infrastructure — GOOD

* Monetary aid — BAD
* Debt forgiveness — BAD
* Food, manufactured goods donations — BAD

The difference is that “good” aid either rebuilds existing, working systems or lays the foundations for sustainable improvements in the community. It’s also harder to deliver since it requires a manpower committment from the donor country.

By contrast, the “bad” aid Shikwati refers to undermines existing markets by drastically increasing supply pf a commodity. Even if monetary aid isn’t swallowed by corruption and reaches the people who need the money, it does nothing to encourage sustainable economic habits of earning and spending.

The tradition saying is: “Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime.” However, perhaps it should be: “Keep giving a man a fish; and soon he’ll stop learning how to fish for himself.”

Rafe
2022 years ago

Yes in previous correspondence I have made the distinction between good and bad aid.
The really tragic aspect of this is that Shikwati and others should have to keep saying these things after Peter Bauer wrote book after book about bad aid for about fifty or sixty years.

Nicholas Gruen
2022 years ago

Not sure that monetary aid is bad. I suspect it’s got more to do with the ease with which it can be ripped off by baddies – which includes governments (usually) and sides in some civil war or potential civil war.

In their interesting book Imagining Australia, Andrew Leigh et al work up an idea from William Easterly which is that aid be provided to communities in a kind of tender with the quantum of aid designated, and the community then deciding what to do with it. This is bad aid according to Stephen as its in the form of money or goods, but it’s an open process. As Leigh et al suggest, it could be worth experimenting with – and has been being experimented with by the World Bank in Indonesia since 1998.

Mark Pollock
Mark Pollock
2022 years ago

Nicholas,
If you put unearned money into any community, Double Bay or Dhakar, Paddington or Port de Prince, it will attract people who want to get their hands on it asap and who will do the worst things to do so.

Grant aid – money to build a road or an irrigation scheme or a school or a hospital is so much better but even this is problematic. It relieves the usually corrupt government of the neccessity of diverting funds from their own pockets to do these things.

It is disheartening and demoralising to see the starving kids and the shrunken corpses in the glossies and on TV and the liberal heart has a natural inclination to want to help. But we need to get a bit smarter about it. There is too much history to avoid the conclusion that 40 years of aid has only made the problem worse. Nearly all of Africa has gone backwards since the colonial oppressors were kicked out and the moneybags moved in. I can remember the warm feeling I felt when, as a primary school kid, I gave a shilling to help the starving in Biafra. In oil rich Nigeria they are still dying like flies.

I can’t remember the name of the economist who suggested the five useful things that would banish poverty. For what it’s worth, no aid of any kind should be given to any country that does not to some degree try to practice most, if not all of them. And they don’t cost anything to implement and the paradox is that it is unlikely that any aid would be needed for any country that does.

1. Have a reasonably free press. No journalists in jail and some independent media sources. It doesn’t have to be open slather like Britain with 13 or 14 national daily newspapers or the Melbourne Truth, just a couple of independent commentators on what the government is doing with the money it raises. And stop the police shooting editors or producers
2. Have a reasonably representative government. It doesn’t have to be like Italy but it shouldn’t be like North Korea. Dubai, with an absolute monarch, would probably qualify as reasonably representative. Swaziland wouldn’t. Before one cent is handed over, ask for the opposition Treasurer to be produced.
3. Have reasonable free internal markets. No government dictated monopolies on staples like wheat or maize.
4. Have reasonable open external markets. If there is a current shortage in one’s own market then people should be able to source the goods externally at a fair price. Africa is beset by local, famines when there is a plenty, kilometres away, but across some national iron-clad border.
5. OK, number 5 is a bit obscure but I quote it anyway. Reduce the male female imbalance. Apparently the ratio of males to females in Africa is something like 52 to 48 whereas everywhere else it is something like 49 to 51. I suppose this implies a lot of female infanticide and therefore a massive waste of human potential. I am not too sure how this fits in with the rest of the argument, however unpleasant it may be.

Given aid to Africa is a bit like lending money to a junkie. It’s better not to do it until they give up the habits that make them need to borrow the money.