Reasons Why Foreign Aid Doesn't Work for Africa

Throughout life, people have been taught to help others when they need it. The same dynamic occurs with nations and foreign aid. The question is: does foreign aid work for Africa? The truth of the matter is, foreign aid has not been working for Africa due to the dependence on foreign aid of these countries, the bad governance in the countries in Africa, and the debt created by loans and aid does not provide a benefit to Africa and can worsen the situation.

Foreign aid in Africa has not worked out as well as nations across the globe expected it to. In the past forty years, there have been about a dozen countries, mostly in Asia and a larger number of countries in Africa that have been receiving aid from foreign countries. Many of these countries have grown by almost 10 percent of GDP per year, surpassing the growth rates of leading industrialized economies and significantly reducing poverty. At around the same time period, countries in Sub-Saharan Africa who were given foreign aid were not able to generate constant economic growth, and some got worse. This lack of growth in African countries is due to several things that are being done.

To start off, there are many countries in Africa that have become aid-dependent. This dependence has to do with the amount of help that these countries are receiving. As Moyo states, Africa is addicted to aid. For the past sixty years, it has been fed aid. Like any addict, it needs and depends on its regular fix, finding it hard, if not impossible, to contemplate existence in an aid-less world. Aid dependence is usually caused by large amounts of aid given to a certain country. Brautigam and Knack define aid dependence to be a situation in which a government is unable to perform many of the core functions of a government. Countries that are low income are usually aid-dependent, and the operations of the government are likely affected.

Many of the countries in Africa have bad governance which in turn damages progress. There are times when foreign aid affects governance. High levels of aid can both improve or worsen governance. This is because when large amounts of aid get sent to a country, it can weaken institutions rather than making them stronger. Unfortunately, the case with Africa is not on the positive side. In the second half of the twentieth century, the nations in Africa, despite the corruption, were provided with money by the major world powers due to the money obtained in the Cold War. This led to competition between leaders of African nations and a drive to obtain more money from the donors. Despite the environment of corruption occurring in Africa, the nations kept on obtaining more aid from foreign powers. This led to higher levels of foreign aid being given to these corrupt nations. In Africa, higher aid levels are associated with larger declines in the quality of governance and in tax revenues as a share of GDP. Ghana, for example, is one of the most heavily aided African countries where senior officials spend as much as 44 weeks a year facilitating the supervision of the donations. This leaves them with no time for the priorities of their ministries. Having no time for these priorities leads to bad decisions being made by the government, which results in bad governance.

Loans and aid are things that have been given to the nation of Africa, but this help eventually leads to a debt that is hard to repay. Countries in Africa receive large quantities of aid from different countries around the world. The majority of aid given to African countries is in the form of loans which can cause problems. These loans result in African nations having to pay back the same, or even a larger, amount of money to the nations who loaned them money. The stock of Africa’s external debt stood at around $319.9 billion in 1998, with long-term debt accounting for four-fifths of this quantity. The debt burden in Africa is so high that one-quarter of total export earnings go towards paying the debt. The debt of African nations seems to be very difficult to pay for and does not seem sustainable. It seems that the possible ways for African nations to stabilize would be to invest in human resources as well as fully reconstruct agriculture and industry. The problems of commodity dependence, low levels of domestic savings and investment, inadequate external flows and unsustainable debt need to urgently be addressed to find a solution to these problems.

Supporters of foreign aid towards Africa believe that conditionalities will help control the situation. They believe that donors setting rules can determine the success or failure of aid given. On paper, these conditionalities make perfect sense. A World Bank study found that 85% of aid flows were used for purposes other than that for which they were originally intended. Conditionality was ignored in some places, and aid was still flowing, even when the rules had been violated. In other research, there was “no link between a country’s reform effort or fulfillment of conditionality and the disbursement rate of aid fund’s.” This proves that the conditionalities did not matter much when dealing with aid.

In conclusion, Africa has been a big target for foreign aid for many years. This aid, however, has not worked for Africa as much as other regions in the world. This has to do with the aid dependence of the countries, the bad governance within the countries, and the debt that loans and aid create over time. Africa is one of the largest continents in the world but has many problems that do not allow it to develop. Foreign aid only seems to make the situation worse for the nations on this continent. Bombarding these nations with the help that they cannot even afford is not the way to go. Instead, countries across the globe should encourage their development by allowing a more independent Africa.