Stop Aid? or not

The G8 has just reaffirmed its pledge to support malaria and other disease control efforts in Africa and many countries are in the process of developing their Global Fund Round 7 grants. Therefore it is an interesting time to consider a 2005 Der Spiegel interview of Kenyan economist James Shikwati that calls on the industrialized world to STOP AID.

According to Shikwati, “Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.”  Walter E. Williams of George Mason University echoed these views in the Baltimore Examiner on 28 June 2006 when he said, “No amount of Western foreign aid can bring about the political and socio-economic climate necessary for economic growth.”

Shikwati said the problem arises because, “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.”

On the other side is praise for aid. The Global Fund has praised the announcement by the G8 to commit US$ 60 billion for disease control efforts. This may be a way for GFATM to reach its recently announced goal to become a $US 6-8 billion operation annually. Ironically, these efforts are criticized as inadequate. The BBC News reported Bob Geldorf as saying, “This wasn’t serious; this was a total farce… I won’t have it spun as anything else except a farce.” According to BBC, Geldorf added that instead of re-committing to the promises made two years ago, the G8 leaders had to get serious and deliver. Oxfam was reported to analyze that only “$3bn of the money was new.”

bundled-net.jpgSo the question remains – is global development and disease control aid helpful, inadequate or a hindrance? Aid can hinder entrepreneurship as was the case in Nigeria where one donor was working with local textile and pharmaceutical companies to develop net and insecticide bundled packages while other donors started importing LLINs for their programs. Can aid be more effective if there is donor coordination? Can aid succeed if it focuses on technology transfer and trade? Finally, does a performance based approach to aid as practiced by the GFATM really work and make bureaucracies deliver the goods and be accountable? If the answers to these questions are yes, there may be some hope for development aid.

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