Aid, loans, commodity exports and prospects of Africa’s prosperity (1)

QUESTIONS ABOUT CONTINUOUS dependence on foreign aid by African countries are indeed worrisome indicators of past failures that are still prevalent all across the continent. The fact that much of the causes of Africa’s aid dependence are rooted in history is not an excuse for the persistence of aid dependence. This does not also vindicate contemporary political leaders of most African countries as the major causes of aid dependence are governance failure-induced. From authoritarianism, large scale corruption, retrogressive economic policies to policy somersaults which are mostly counterproductive in consequence, many African leaders have been largely culpable. For a continent made up of over 50 different countries of different sizes, with a population currently estimated at 1.46 billion people in 2023, it is a great indictment on the indigenous national and continental leaders – past and present – that aid dependence is still a big issue in sustaining the lives of many Africans.

Africa receives the largest share of global aid, according to the Development Assistance Committee (DAC) statistics of the Organisation for Economic Cooperation and Development (OECD), a Paris-based think-tank. And it backed the claims with figures. Of all the seven continents – Asia, Africa, Antarctica, Australia, Europe, North America and South America – aid to African countries is increasing and reportedly totalled $58.4 billion in 2021, or 33.6 percent of aid, up from roughly $48 billion in 2010. In 2021, 20.7 percent of aid went to low-income countries, 27.0 percent to lower-middle income, 11.7 percent to upper middle income, and 0.1 percent to high-income countries. Drafters and implementers of Agenda 2063 should be worried about the trend and growing magnitude of aid in volume.

In particular, the fact that perennial dependence on external support has not yielded remarkable change over the years should be considered embarrassing to national, regional and continental leaders. What is particularly worrisome about Africa is that most countries do not seem to have any exit plan for aid dependence. Another is the unfortunate reality that much of the overseas aid coming to Africa would have to pass through the official channels of government officials and political heads which are mostly culpable of mishandling such aids, particularly financial and other highly valuable aid items. In addition to the fact that most of the cases warranting requests and demands for aid were primarily caused by them, many have been accused of perpetrating the causes of vulnerability of Africans that led to aid dependence.

By general classification, most countries in Africa are still described as developing or underdeveloped, low income countries requiring further external support. Official Development Assistance or “global aid” involves a transfer of money and resources from predominantly richer countries to developing countries to help fight poverty and support economic development. In some cases, they come in forms of humanitarian support in the aftermath of crises or disasters such as wars and sudden adverse natural events respectively, and cases like these are recurrent and common in Africa. Global aid supports a wide range of projects in many different sectors. Support varies from helping people living in poverty meet basic needs – such as humanitarian aid, health, and emergency food aid – to human capital development support and helping countries develop and grow their economies through aid to education, capacity building, infrastructure, and energy.

It is unfortunate that much of the global aid given to African countries cannot be convincingly accounted for, as handlers have devised methods of misapplying and misappropriating them. So, issues of aid flows, where aid goes and on what it is spent remain rather murky in many cases in Africa as many of the aids are diverted.  It is rather embarrassing that global aid gets mishandled in beneficiary countries whereas even small countries in Europe, America and elsewhere put their money together to help the vulnerable elsewhere, particularly in Africa. For example, Luxembourg, with a population of just about 640,064, that is just a little above half a million, in 2021, is one of the smallest countries in the European Union. It has been contributing to aid donations to Africa for over 30 years, donating $37 million between 1990 and 1999. That was increased to $104 million within the space of time from 2000 to 2009 and to $114 million from 2010 to 2016. It is thus a shame for any political actor of any African country to mismanage funds coming from such committed people from the EU.

By contrast, the US is one of the big donors at individual, national and multilateral levels. At the individual level, the Federation of American Scientists (FAS) has disclosed that, in the past decade to 2023, health assistance has typically comprised approximately 70 percent of annual State Department- and USAID-administered aid. The United States Agency for International Development (USAID) has revealed that, in fiscal year 2022 alone, it has provided more than $6 billion in life saving, multi-sector humanitarian assistance to the people of Africa. In Africa, some countries benefit more from such aids than others. By comparison, three African countries have been competing for the top spot in the volume and amount of aid they have received. In a three-year period of 2014, 2015 and 2016, Ethiopia was consistently the highest aid receiver in Africa, increasing each year, with $3.27 billion, $3.234 billion and $4.124 billion respectively. Egypt followed at first, but decreasing each passing year, from $3.138 billion to $2.499 billion and $2.127 billion respectively while the aid profile of Nigeria was annually on the increase from $2.283 billion to $2.432 billion to emerge the second largest at $2.550 billion in 2016.

The top 10 multilateral donors to Africa, according to the OECD’s DAC statistics, are the following: The largest of them is the International Development Association, contributing 31 percent or nearly one-third of all aid to the continent. The EU Institutions come second with 30 percent contribution. Next is the Global Fund, contributing 11 percent while African Development Fund contributes 10 percent. The Global Alliance for Vaccines and Immunisation comes fifth at four percent while UNICEF was three percent. The Global Environment Facility, UNDP, IFAD and the IMF (with its Concessional Trust Fund) all contributed one percent apiece, while other multilaterals reportedly contributed seven per cent.

Although the COVID-19 pandemic exposed the stark reality of Africa’s vulnerability in many ways, the vulnerability problem should not be used in vain efforts to defend Africa’s poverty. Rather, it should serve as a reason for introspection and prompt correction of the governance failure in Africa. Choosing the path of complacency, many have argued and blamed Western countries for their own social, political and economic woes at home. Rather than looking forward where there are opportunities, they chose to look backward on events of the past, which they cannot change, but from which they can and should only learn from. They ignore the treasure trove within the African continent and fail to recognise the need to industrialise Africa and minimise the shipping of raw commodities abroad in the name of export trade.

One of those who appear to lend credence to what has been peddled as conspiracy theory and accusation of the culpability of Western countries in Africa’s economic backwardness was one Professor Howard Nicholas, an economist, in a presentation he made at the International Institute for Social Studies, The Hague, Netherlands nearly a decade ago. “Sub-Saharan Africa has been fundamental to the global prosperity of the advanced countries,” Nicholas said. “Africa had a role to play. It has a role as a raw material producer. We will not allow Sub-Saharan Africa to escape that. We will do everything to keep Sub-Saharan Africa where it is, also impoverished, absolutely vital to the prosperity of everyone else,” he continued.  “This means all the economic structures, all the global institutions and the economics we teach everyone, is all designed to keep Africa exactly where it is.” Nicholas was not apologetic at all in his postulations and assertions. According to him, “whether it is Europe or US or now China, it’s always the same. We need Africa to be impoverished, because we need those raw materials and we need them that cheap … If Africa does something differently, I assure you that the standard of all those in Europe and North America and Asia is going to fall.”

Although Nicholas posited that this idea of keeping Africa impoverished is by design and that those countries gaining from the awkward situation will keep fighting, it seems like an eye opener for African countries, if only the political leaders are listening or are really determined to do things differently. But he said “that is a big price to pay,” assuring his audience that “the West is not going to allow that without a big fight.” He said “this is what it is fundamentally about.” He faulted the Western universities and academic institutions as being complicit in the issue of Africa’s backwardness, saying “the job of many Western academics is to convince Africans they have to keep doing what they are doing and to show them (that) it’s your fault that you are poor. It’s not our fault.” Now, African leaders have seen where the battle line is drawn. Whether they will continue to sell themselves and the continent short while at the same time going cap-in-hand to beg for help and gleefully accepting the hand-outs in form of aid is a question that deserves unequivocal answers now. If Africa continues to remain complacent about aid dependence without any urge to free the continent from the shackles of poverty, the moment of opportunity to free itself from the strangleholds of exploiters using the veneer of aid donations to cover their exploitation may be eternally missed. The time to reason and do the needful is now or never!