Aid, loans, commodity exports and prospects of Africa’s prosperity (2)

SUSTAINABILITY OF FOREIGN AID to Africa is prone to a lot of challenges as the world increasingly comes under pressure that demands more use of resources in more areas that come under an array of crises. The aftermath of those crises in the forms of those from natural and anthropogenic causes continues to make a lot more demands on agencies involved in overseas aid in response to crises that require humanitarian assistance for the vulnerable. African countries that depend so much on foreign aid could experience sudden implosion without any safeguard measures or exit strategies when aid support from some sources dwindles significantly or ceases entirely. An important point needs to be established, that Africa hardly needs foreign aid if the various countries are well managed by the political leaders at country, regional and continental levels.
A proper redefinition of certain global dynamics is sorely needed. From the UK, The Guardian edition published on May 24, 2017, a story had this headline: “World is plundering Africa’s wealth of ‘billions of dollars a year.’” From the report credited to a coalition of UK and African equality and development campaigners including Global Justice, the rest of the world is profiting more than most African citizens from the continent’s wealth as “more wealth leaves Africa every year than enters it – by more than $40bn (£31bn) – according to research that challenges “misleading” perceptions of foreign aid.’” It stated that aid and loans to the continent are outweighed by financial flows to tax havens and costs of climate change mitigation. It said African countries received $162 billion in 2015, mainly in loans, aid and personal remittances. But in the same year, $203 billion was taken from the continent, either directly through multinationals repatriating profits and illegally moving money into tax havens, or by costs imposed by the rest of the world through climate change adaptation and mitigation. This led to an annual financial deficit of $41.3 billion from the 47 African countries where many people remain trapped in poverty, according to the report, Honest Accounts 2017.
According to the campaigners, illicit financial flows, defined as the illegal movement of cash between countries, account for $68 billion a year, three times as much as the $19 billion Africa receives in aid. African governments received $32 billion in loans in 2015, but paid more than half of that – $18 billion – in debt interest, with the level of debt rising rapidly. This is worrisome as debt is encroaching on the revenues the countries should be deploying to development projects. The extent of impact of all the aid coming to Africa from governmental and non-governmental sources remains debatable, especially since the deployment is subject to a variety of factors. However, a source has provided an insight into what seems like the overriding observation across the continent on foreign aid over the years. Apart from the disclaimer by the UK campaigners that the prevailing narrative where rich country governments say their foreign aid is helping Africa is “a distraction and misleading,” the verdict from the Canadian International Development Agency (CIDA) before its restructuring and repurposing was instructive. CIDA’s assessment was that the $12.4 billion Canada had spent on bilateral assistance to sub-Saharan Africa since 1968 had produced little if any results. It follows logically that a thorough assessment of the interventions of other aid agencies in Africa may have produced similar outcomes and Africa therefore needs to urgently re-examine the place of aid in its socioeconomics and urgently explore local interventions for sustainable development.
Japan, for instance, is one of those countries providing aid for Africa. One of Japan’s methods of engagement with Africa is through the Tokyo International Conference on African Development (TICAD), which the government of Japan has been leading since 1993, co-hosted by the United Nations, United Nations Development Programme (UNDP), World Bank and African Union Commission (AUC). In particular, the TICAD process reflects UNDP’s foundational belief that sustainable development can only happen with the full participation of a range of partners. The Japan International Cooperation Agency (JICA) is an implementing agency of Japanese official development aid (ODA) for the purpose of supporting the socioeconomic development, recovery or economic stability of developing regions. In particular, JICA advances the development of quality infrastructure by investing approximately $10 billion in Corridor development (which includes three geographical priority areas where the Japanese private sector shows high interest), natural resource and energy development, and urban development.
A publication on JICA’s Initiatives on Africa, highlighting progress and achievements in activities for “Investment for the Future of Africa,” revealed yearly increases in loan aid to Africa from 2013 to 2017 under the Yokohama Declaration and Yokohama Action plan arising from TICAD V. Measured in hundred million Yen, it grew from ¥718.06 in 2013 to ¥1,062.17 in 2014, to ¥1688.25 in 2015, to ¥2,667.51 in 2016, to ¥1,665.92 in 2017. These are apart from the annual grant aid of ¥591.31, ¥316.98, ¥480.36, ¥324.37 and ¥595.77 for the years 2013, 2014, 2015, 2016 and 2017 respectively. On technical cooperation, JICA’s assistance profile was as follows: ¥469.11, ¥459.00, ¥450.96, ¥464.70 and ¥472.64 every successive year over the five years. The total annual assistance – loan aid, grant aid and technical cooperation – was ¥1,778.48, ¥1,8388.15, ¥2,589.57, ¥3,456.58 and ¥2,736.33 from the period under review. Overlapping the TICAD V’s Yokohama Declaration was the 2016 Nairobi Declaration and Nairobi Implementation Plan that was designed for 2016 to 2018, which will not be delved into here.
The Canadian International Development Agency (CIDA), established in 1968, is Canada’s lead agency for development assistance to administer the bulk of Canada’s official development assistance programme, providing humanitarian assistance and supporting sustainable development to promote a more secure, equitable and prosperous world. In Africa alone, CIDA works in Ethiopia, Ghana, Mali, Mozambique, Senegal, South Sudan, Sudan, and Tanzania. It rendered considerable humanitarian assistance in Sudan in 2003 during the Darfur conflict. In March 2013, CIDA was dissolved and its responsibilities absorbed by the newly renamed Department of Foreign Affairs, International Trade and Development (formerly DFAIT), thus signalling a change in Canada’s approach to aid, adding commercial and foreign-policy objectives to a programme that was previously exclusively humanitarian. Again, this is one reason for Africa to prepare to be weaned off foreign aid.
The Department for International Development (DFID) was a ministerial department from May 1997 to September 2020 when it merged with the Foreign and Commonwealth Office to create Foreign, Commonwealth and Development Office (FCDO) FCDO. Out of this merger arose the UK Aid, an agency funded by FCDO. Africa takes a chunk of UK Aid funding as three of the top five countries to receive UK aid money in 2022 were from Africa, namely Nigeria, Somalia and Ethiopia. The other two are Afghanistan and Ukraine. Over time, the UK Aid’s bilateral ODA to Africa has been decreasing. The decrease was by £883 million (33.8 per cent) from £2,610 million in 2020 to £1,727 million in 2021 and by £486 million (28.2 per cent) from £1,727 million in 2021 to £1,240 million in 2022, probably the smallest share of the UK’s bilateral aid the continent has received since the 1970s, as the agency felt and responded to the trends in a challenging global context. This underscored the fact that government aid cuts and converging global crises have had a substantial impact on the UK’s ability to deliver on its development goals.
The United States Agency for International Development (USAID) is considered as the world’s premier international development agency and a catalytic actor driving development results. Its presence in Africa has been somehow legendary. In fiscal year 2021, USAID and the U.S. Department of State provided $8.5 billion of assistance to 47 countries and eight regional programmes in sub-Saharan Africa. In fiscal year 2022 alone, USAID provided more than $6 billion in lifesaving, multi-sector humanitarian assistance to the people of Africa as catastrophic drought and torrential flooding continued to affect countries across the continent, leading to catastrophic food security outcomes. The Horn of Africa in particular has been facing the most severe food security crisis in the world, leading to a risk of famine, with 21 million people across the region remaining vulnerable. Other countries, such as China, Russia, Turkey and India are trying to make donations to Africa, further presenting Africa as a chronic aid dependent continent. This needs to change.
Countries are expected to be more effective in the distribution of public goods and social services because of the critical mass of personnel and officials equipped with state powers, which are great enablers of impacts. In Africa, however, the impacts of state authorities on development have been dismally low and their distribution of resources have been grossly inefficient. Many countries have received enormous amounts of aid from many private not-for-profit charities or non-governmental organisations (NGOs) over the years. One of them is Ford Foundation, an agency that has been operating since 1936, operating in the areas of natural resources governance, tax policies and finance and currently with regional hubs in Africa: East, West and South where its grantmaking involves an array of interventions, many of which come in form of core programmes, project supports or programme-related investments (PRI). Another philanthropic charity organisation, the Rockefeller Foundation, founded in 1913, has been operating in Africa since 1966, forming strong ties with African governments, academic institutions, and pan-African entities in the their efforts to improve lives with advances in public health, food, energy, and finance, helping to expand opportunities for poor or vulnerable people and to help ensure that globalisation’s benefits are more widely shared.
The fact that such philanthropic foundations can make some modicum of impact on the well-being of humanity in some places through their funding provides a strong indication on the failure of state actors in their deployment of state resources all across the continent. In 2019 and 2020, approximately $632 billion went to intervention towards financing for climate-related projects around the world. Out of this, only $19 billion came to Africa, with just $2 billion from the private sector. A lot of funding gap in Africa remains to be filled. Another philanthropic organisation that has become influential in Africa lately is the Bill and Melinda Gates Foundation, operating in the areas of intervention in health, nutrition and agriculture sectors. It is an indictment on African governments that such charities are able to generate much more useful and reliable data in many sectors of the countries where they operate than what the governments of such countries generate or disseminate. Quite often, those data generated by these non-state charities become reference data for governments in their official activities. That is rather embarrassing. African leaders need to urgently review the continent’s aid dependence status and make appropriate adjustments to free the continent from continued dependence on foreign aid. It is clear that the status quo is a problem that persists because those who have the wherewithal to make changes have low integrity, poor accountability, feeble political will and low determination to make such changes. The longer Africa depends on foreign aid, the worse it gets for the continent. Something urgent must be done now. Dependence on huge sums of foreign aid should discontinue forthwith, or at least end soon. Let African countries learn to fend for themselves. The leaders have a lot of roles to play in this.