Beyond Aid

H.L. Mencken once quipped that “For every complex problem, there is a solution that is simple, neat, and wrong.”

Kenyan economist James Shikwati would be inclined to agree, and in Der Spiegel he asks the West to stop what he sees as the destructive practice of giving foreign aid to kleptocratic governments.

aid doesn’t lead to greater economic development – quite the opposite. Aid encourages dependency, corruption, and erodes the very values which create a strong society.

Without aid, would Africa face a massive bout of famine? Again, Shikwati notes that the conventional wisdom on this issue is often wrong:

When there’s a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program — which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It’s only natural that they willingly accept the plea for more help. And it’s not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa …

SPIEGEL: … corn that predominantly comes from highly-subsidized European and American farmers …

Shikwati: … and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It’s a simple but fatal cycle.

Like many forms of charity, the intentions of the giver are noble, but the reality is that foreign aid has more to do with assuaging Western guilt than it does with actually helping Africans. So long as do-gooder stars like those who performed at the Live 8 concerts this week can convince themselves that they’re helping, their consciences remain clean. Yet at the end of the day, Africa’s situation has not gotten markedly better despite even more attention lavished upon the continent.

What is the solution? Aid can work, but only aid that encourages indigenous development. As Peruvian economist Hernando DeSoto noted in his brilliant book The Mystery of Capital noted that the Third World has trillions in resources waiting to be tapped. Africa is sitting on millions of tons of natural reasources from gold, to diamonds, to uranium, to oil. Yet because of the kleptocratic governments and utter lack of the rule of law and property rights, these resources go wasted or to governments that plunder them for their own benefits.

Africa has seen a plethora of autocratic, totalitarian, and socialist governments over the years, but never a truly vibrant democracy. Leaders such as President Kwame Nkrumah of Ghana were supposed to create a new form of humanistic African socialism, but ended up creating a continent mired in endemic poverty.

It is time to work with African leaders, especially democratic opposition leaders like Morgan Tsvangiri of Zimbabwe’s Movement for Democratic Change to create a new Africa, based in individual freedom and limited government. Aid and debt forgiveness must not be unconditional, but based on a concrete steps towards a more open and dynamic society. Elsewise the money spend on Africa will only be used to dig the hole deeper.

Shikwati’s solutions seem difficult, even harsh, but the status quo is clearly not working. If throwing more money at the problem were to work, we’d already see some results — yet in those countries that have no embrace democratic reform, the situation is becoming even more dire.

Africa has great resources and even greater human potential — potential that is being systematically wasted by a system of government that promotes a culture of victimhood and a lack of accountability at all levels. If Africa is to escape from its endemic poverty it must embrace the values that great a strong and vibrant society. No one can do that for them — the West can help, but the final choice and the work must come from within. The path to prosperity requires hard work, an entreprenuerial spirit, and a system of governance and civil society to support them. Without those values and systems, aid does more to assist with Western guilt than African poverty.