The Sorry Record of Foreign Aid in Africa
For almost half a century the countries of Africa have been awash in aid. Hundreds of billions of dollars have been given to African governments. More billions were lent to these same governments. Countless tons of food have inundated the continent, and swarms of consultants, experts, and administrators have descended to solve Africa’s problems. Yet the state of development in Africa is no better today than it was when all this started. Per capita income, for most of Africa, is either stagnant or declining.
Just a few years ago a World Bank report admitted 75 percent of their African agricultural projects were failures.1 Other aid agencies weren’t any luckier. Operation Mils Mopti in Mali was supposed to increase grain production but the government imposed “official” prices on the grain and had to force farmers into selling their crops at these below-market rates. As a result grain production fell by 80 percent.2 In Senegal $4 million was spent to increase cattle production in the Bakel region. But in the end only 882 additional cattle were being reared there.3
In Northern Kenya, Norwegian aid agencies built a fish-freezing plant to help employ the Turkana people. But after completion it was discovered the plant required more power than was available in the entire region.4 In another aid fiasco, $10 million was spent in Tanzania to build a cashew-processing plant. The plant had a capacity three times greater than the country’s entire cashew production, and the costs were so high it was cheaper to process the cashews in India instead.5
In South Africa over $2 million donated by the European Union was used to stage an “AIDS awareness” play, Sarafina II. While the funds provided a luxury bus for cast and crew, they did little to educate the public about AIDS. AIDS experts condemned the play as a waste of money — it consumed 20 percent of South Africa’s entire AIDS budget — and it contained inaccurate information as well. A heavily promoted showing of the play in Soweto was attended by fewer than 100 people. The play was pulled but the funds were never recouped. The EU insists none of its funds were used on the project, but then-Minister of Health Nkosazama Zuma disputed that.6
Debacles such as these are almost benign. But foreign aid is also being used in patently destructive, and sometimes genocidal, ways. The Marxist dictatorship of Ethiopia’s Mengistu Haile Mariam was a major recipient of donor funds, a portion of which was used to forcibly resettle large segments of the population. One Ethiopian official said: “It is our duty to move the peasants if they are too stupid to move by themselves.”7 Donor funds, earmarked for famine relief, were instead used to buy trucks for the resettlement scheme. Relief aid was also intentionally kept away from some of the most severely affected areas because it suited Mengistu’s regime to starve opponents. Relief ships were held for ransom and charged $50.50 per ton for permission to unload their aid, some of which was confiscated to feed the army. The New York Times reported aid officials believed Mengistu’s regime sold some of the food aid on the world market to finance the purchase of arms.8
But Ethiopia is not the exception. The Congo also sold donated food supplies and used the funds to purchase an arms factory from Italy.9 More peaceful Mauritius took donated rice, which it insisted be of high quality, and diverted it to tourist hotels.10
Donated money is just as likely to go astray. President Mobutu of Zaire managed to build a fortune in his Swiss bank account that was estimated as high as $10 billion.11 Kenyan human-rights activist Makau Wa Mutua lamented: “Since independence in Africa, government has been seen as the personal fiefdom a leader uses to accumulate wealth for himself, his family, his clan. He cannot be subjected to criticism by anyone, and everything he says is final.”12
Zimbabwe’s Robert Mugabe was notorious for his extravagant shopping trips to Harrod’s even if he had to confiscate planes from the national airlines to take them.13 Mugabe’s regime used systematic violence in attempts to stay in power. And according to the Johannesburg Star, his thugs “looted” aid to help finance their attacks. Some $1 million is supposedly at stake. Asger Pilegaard, the EU delegation head in Zimbabwe, demanded an investigation saying: “We cannot accept that the humanitarian aid financed by European taxpayers is not arriving to the people for whom it was originally intended.”14
And while hungry faces are used on posters and in media reports to sell the virtues of foreign aid, it is the hungry who rarely see any of the funds. Poverty may be used to justify the programs, but the aid is almost always given in the form of government-to-government transfers. And once the aid is in the hands of the state it is used for purposes conducive to the ruling regime’s own purposes.
Since moving to black-majority rule in 1980 Zimbabwe regularly received financial aid to promote “land reform.” For 20 years the government used these funds to buy up land, which when “reformed” typically ended up in the hands of the ruling party’s elite. Land that was actually redistributed was turned into communal farms and given to peasants who didn’t have the know-how to run them. Many of the farms were pillaged for any saleable items and then deserted. About one-fourth of the communal farms were so unproductive they required food aid just to prevent the farmers themselves from starving.15
Marxist autocratic regimes were often heavily financed by European governments — especially when those governments were in the hands of left-of-center parties. Italian journalist Wolfgang Achter reported that the Italian Socialist Party gave heavy financial backing to Somalia’s Marxist government of warlord Siad Barre, who used the funds to obtain arms and military advisers.16 Journalist Michael Maren reported that for ten years before the 1992 famine, Somalia was the “largest recipient of aid in sub-Saharan Africa,” but that most of the funds were “lost in the corrupt maze of the Somali government’s nepotistic bureaucracy.”17 Italy alone sent over $1 billion to fund projects in Somalia from 1981 to 1990 even though the regime was murdering its opponents. No wonder the New African Yearbook called Somalia “the Graveyard of Aid.”18
The New York Times reported when President Julius Nyerere of Tanzania announced a radical Marxist program, “many Western aid donors, particularly in Scandinavia, gave enthusiastic backing to this socialist experiment, pouring an estimated $10 billion into Tanzania over 20 years.”19 Swedish economist Sven Rydenfelt wrote: “A decade of socialist agricultural policy had been sufficient to destroy the socioecological system.”20 The World Bank says from 1965 to 1988 the Tanzanian economy shrank on average 0.5 percent each year and personal consumption dropped by 43 percent.21
The Marxist regime of Samora Machel in Mozambique similarly destroyed the country’s agricultural output through price controls.22 But that was just one African nation among many that used this policy — all with the same disastrous results. Professor D. Gale Johnson, in testimony before a U.S. House Subcommittee, said that during the 1950s and 1960s per capita African food production remained relatively constant, but dropped dramatically beginning in the 1970s. “The decline in per capita food production was not due to a lack of resources,” said Johnson, “but to many factors that were primarily political in nature.”23
Many of the problems African nations face today are self-inflicted. Africa is the last major bastion of heavily regulated markets. This has lead to stagnancy and decline. The continent itself is rich in resources, but the incentive to produce has been destroyed by government policies. The West is quite aware of this, but is too timid to do very much about it, and the aid bureaucracy keeps on delivering funds no matter how bad things get. Mengistu continued to receive aid while intentionally starving thousands and thousands of his citizens to death.24 Mugabe slaughtered thousands of opponents in the Matabeleland region of Zimbabwe, but aid continued unabated.25 Even when General Sani Abacha’s military regime in Nigeria, in the face of world opinion, executed human-rights activist Ken Saro-Wiwa, virtually nothing happened. Various Western governments protested by withdrawing their diplomats, but within a few months they were all back in place. The World Bank admitted “almost all” loans are fully disbursed to recipient nations “even if policy conditions are not met.”26 In a 1986 report it said there was no evidence to show significant movement toward freer markets due to aid donations or policy restrictions.27
Various critics have repeatedly pointed out foreign aid not only doesn’t encourage reform but often stifles it. Development economist Peter Bauer said there is an inherent bias of government-to-government aid toward state control and politicization. “Foreign aid,” he argues, “has contributed substantially to the politicization of life in the Third World. It augments the resources of government compared to the private sector, and the criteria of allocation tend to favor government trying to establish state controls.”28
Prior to colonialization Africa had no such thing as the nation-state. It was a collection of hundreds and hundreds of distinct tribal cultures, many of which had long histories of antagonism toward one another. The European colonies merged these diverse tribes into the modern nation-state, which, as long as the central government was controlled by “neutral” Europeans, kept the conflicts to a minimum. When European intellectuals abandoned failed colonialist theories for a Marxist-Leninist theory of imperialism, the Europeans pulled out almost overnight.
What they left behind was a series of artificial nation-states, which now exacerbated age-old tribal conflicts as each group attempted to grab the reins of power before their enemies could.
Meanwhile Europe decided to play the role of financial benefactor and poured aid into Africa. With aid as the primary source of economic power, the role of the state was increased relative to civil society and private industry. All this funding made statist solutions to problems all the more appealing since they could be financed with further grants. Bauer noted one result of that process was the best and brightest in African countries were drawn to the state, like moths to the flame, instead of into private development.
Even when aid does reach the consumer it often comes at a high price for local producers. It is typically forgotten most of the recipient countries have local industries and farms that often cannot survive the influx of “free” goods. The late economist David Osterfeld argued: “Aid has in many places actually destroyed the possibility for sustained economic growth by driving local producers, especially farmers, out of business.”29 Somali Abdirahman Osman Raghemade made the same point regarding medical aid: “Look into drug donations and how they destroyed our developing health system. We once had so many pharmacies here. Pharmacists knew their jobs. Now there are people handing out drugs who are not trained because of the donated drugs from the international community that are so cheap.”30
A priest in Tanzania reported farmers in his region simply stopped producing food because of the availability of free donated food.31 Osterfeld pointed out a study of the U.N. World Food Program’s response to 84 emergencies showed “that it took an average of 196 days to respond” and the European Economic Community took an average of 400 days. Osterfeld quotes agricultural expert Dennis Avery as saying aid was “too late to relieve hunger but in time to depress prices for local farmers who tried their best to respond.”32
While foreign aid may on the whole be destructive to Africa, that does not mean the West is powerless to help impoverished Africans. But before it can accomplish any good in the region it will have to abandon its double standard. Ghanaian economist George Ayittey complained: “White rulers in South Africa could be condemned, but not black African leaders guilty of the same political crimes.”33 Only when African governments are treated on the same moral basis as all other governments will reform and development be possible.
Some have called for the forgiveness of African debts. This would not be a bad thing, but it is quite useless if debt forgiveness is followed by more loans and aid as demanded by many African governments. It has probably reached the stage where debt repayment is impossible anyway. The economies of most African countries cannot produce enough to pay the debts, and never will as long as the same disastrous economic policies are continued.
Neither should the West be taken in by policies such as South Africa’s President Mbeki’s Millennium Africa Recovery Program. Mbeki speaks of development and trade — not aid — but then makes clear he actually expects the West to continue pumping billions in aid into Africa. He wants this aid to come officially without conditions. Considering how “conditional” aid has been spent in the past, the idea of “unconditional” aid in the future is actually frightening. Mbeki’s plan also calls for the money to be spent regionally and not nationally. Mbeki clearly saw himself as the primary conduit through which aid would flow.
What would be far more beneficial to African development would be the lowering of trade barriers. But African farmers will never be able to compete in the world market as long as Europe, for instance, continues to shower subsidies on their own spoiled farmers. Various protectionist groups in the United States, like the trade unions, are pushing for international treaties that include costly “environmental” and “labor” provisions for developing countries. While they cry crocodile tears about the environment and the state of working conditions for the poor of the Third World, they actually seem to be trying to limit competition from those same people. The net result will be a loss of jobs in poor countries in favor of highly paid unionized labor in the rich nations.
The inescapable fact is many African governments are destroying their own economies — often with aid from the West. These same governments simply refuse to listen to advice. Aid will continue to be misspent and good advice will continue to be ignored until the leaders learn, on their own, what results come from their interventions. The only option for the West is one of benign neglect. Bring the consultants, experts, and advisers home and end the aid and the loans.
Trade barriers should be dismantled and African business permitted to compete as it can. One good business contract is worth more to Africa than a thousand consultants, and one new factory has more value than a hundred million dollars of aid. In the end, Africa will have to solve its own problems.
Individuals can help by making micro-loans to individuals in Africa trying to start or expand their own businesses. These loans are now controlled by politicians and are not easily diverted to oppressive military spending. They improve the lives of the individual small business owner which also means better access to goods and services for their neighbors, cheaper prices and increased demand for employment. Micro-loans do what foreign aid was meant to do, without the problems associated with aid.
The problem is not aid per se, it’s aid via the political process which allows corrupt leaders to use the funds to impose tyranny on the people and make the leaders wealthy. Aid can be a good thing, but it is far better managed through legitimate private charities—particularly those with no ideological or religious agenda—or in the form of direct loans to small business owners and entrepreneurs.
A shorter version of this appeared in the Wall Street Journal (Europe) and a slightly different version was published in The Freeman. Footnotes below.
Our one source of income remains payment or donations for the columns that you see here. Please consider either making a one time donation or a monthly donation to help sustain them. The link is below.
- Graham Hancock, The Lords of Poverty (New York: Atlantic Monthly Press, 1989), p. 145.
- James Bovard, “The Continuing Failure of Foreign Aid,” Cato Policy Analysis 65, January 31, 1986; www.cato.org/pubs/pas/pa065.html
- Jennifer Whitaker, How Can Africa Survive? (New York: Harper & Row, 1988), p. 75.
- Whitaker, p. 76.
- Jim Peron, Die the Beloved Country? (Johannesburg: Amagi Books, 1999), pp. 58–61.
- Jim Peron, Exploding Population Myths (Chicago: Heartland Institute, 1995), p. 61.
- New York Times, March 21, 1984, cited in Bovard. Also see David Osterfeld, Prosperity versus Planning (New York: Oxford University Press, 1992), p. 143.
- Agency for International Development, Semiannual Report of the Inspector General, March 31, 1984, p. 32.
- Wall Street Journal, July 2, 1984, cited in Bovard.
- George B. N. Ayittey, Africa in Chaos (New York: St. Martin’s Press, 1998), p. 24.
- Washington Post, September 9, 1991, A20, quoted in Ayittey, p. 33.
- Andy Melone and Andrew Meldrum, “Battered Mugabe hits back as verdict looms,” Guardian Limited (UK), June 25, 2000, http://www.observer.co.uk/international/story/0,6903,336202,00.html.
- Grace Mutandwa, “Veterans invade textile plant in Bulawayo,” The Star, April 26, 2001, p. 5.
- Jim Peron, Zimbabwe: The Death of a Dream (Johannesburg: Amagi Books, 2000), pp. 47–74.
- Washington Post, January 24, 1993, C3, cited in Ayittey p. 54.
- Michael Maren, The Road to Hell: The Ravaging Effects of Foreign Aid and International Charity (New York: The Free Press, 1997), quoted in Ayittey, p. 52.
- Ayittey, pp. 52–53.
- New York Times, October 24, 1990, p.A8, quoted in George B. N. Ayittey, Africa Betrayed (New York: St. Martin’s Press, 1993), p. 282.
- Sven Rydenfelt, A Pattern for Failure (New York: Harcourt, Brace, Jovanovich, 1983), p. 121.
- D. Gale Johnson, “World Food and Agriculture,” in Herman Kahn and Julian Simon, eds., The Resourceful Earth (London: Basil Blackwell, 1984), p. 73.
- Peron, Exploding Population Myths, pp. 57–65.
- Peron, Zimbabwe, pp. 13–14.
- James Bovard, “The World Bank vs. the World’s Poor,” Cato Policy Analysis 92, September 28, 1987, www.cato.org/pubs/pas/pa092.html.
- Peter Bauer, “Western Guilt and Third World Poverty,” in Karl Brunner, ed., The First World and the Third World (Rochester, N.Y.: University of Rochester Policy Center, 1978), p. 162.
- Osterfeld, p. 142.
- Maren, p. 166.
- Bovard, “The Continuing Failure of Foreign Aid.”
- Osterfeld, p. 148.
- Ayittey, Africa Betrayed, p. 279.
- Peron, Zimbabwe, pp. 99–116.