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Beggars, Warlords and Bleeding Hearts  

“Muzungu! Give me money,” is not an unfamiliar greeting in East Africa when local children approach a white tourist on the street or in the bush. The assumption that a foreigner is going to help you solve your problems is a big part of the problem with foreign aid to Africa.

Since 1970 $300 billion has gone to African governments and countless billions have been raised for various relief efforts. The donors are an eclectic mix of foreign governments and NGOs funded by guilt struck celebrities, billionaire tycoons as well as well meaning middle class bleeding hearts. It’s hard to resist giving to charities after seeing the nightly news images of starving/diseased children and tuskless elephant carcasses.  We write a check and feel better assuming we’ve done our part and the money will actually do some good. The good intentioned money goes to eradicate Africa’s epidemics, its malnutrition and its myriad environmental problems, but the aid has barely made a visible dent in most of these problems.  Some in the world of philanthropy and government ask themselves if Africa would have been better off without the aid. Donor fatigue has set in and less aid is now going to Africa. Many think that’s a good thing.

A growing chorus believes that aid only enriched a few bureaucrats, warlords and agribusiness conglomerates while the folks at the grass roots continued to suffer. Siphoned foreign aid has exacerbated civil wars and propped up dictators and ruling parties with cash, food and other supplies that helped keep them in power. It has also made many Africans dependent on foreign aid robbing their entrepreneurial spirit helping to make them unable to fend for themselves.

land roverFalse Aid

Tusker founder Eddie Frank marvels at the paved roads he drives on in Tanzania paid for by the World Bank while many villages he travels through don’t have drinking water and can’t feed themselves. The trickle down effect of massive aid projects has not reached the people and he labels the large donor programs, “false aid.” Too many boondoggles and mismanagement have muddied the effort. He saw first hand the corruption of foreign aid when he met Emperor Bokassa in the Central African Republic in the 1970s and saw his palace and stable of Mercedes that were funded by French foreign aid. Bokassa spent more on his two day coronation than the entire country’s annual budget.

As a safari guide working in Zambia and Tanzania, Frank has also seen the positive impact that job creation through direct foreign investment can bring. Frank’s Kilimanjaro “on the job” training programs with education and high altitude medical devices have helped develop job skills for young Africans and are far from hand outs. His on the job training program is performance based; otherwise he would be out of business.

Rwanda is now one of the few countries in Africa trying to wean itself from foreign aid replacing it with disciplined entrepreneurship.  Its leader Paul Kagame considers taking foreign taxpayer money and foreign citizen contributions shameful. Since the genocide in 1994, Rwanda’s budget has gone from being 100 percent comprised of foreign aid to 40 percent. It will drop further as long as Kagame’s military regime stays in power.

“”If we allow ourselves always to be helped out and do very little for ourselves, which is without question what other African countries have done, we will develop a mentality to depend on this aid forever. And this goodwill, this support, this aid will come with control. Somebody who feeds you will dictate to you, based on his interests,” Kagame told British writer Richard Grant for his socially conscious travel book, “Crazy River.”

Defunding the Global Fund

In 2002 French AIDs Dr. Michel Kazatchkine thought he had a better foreign aid idea.  He targeted three diseases AIDS, malaria and tuberculosis and for nearly a decade his Global Fund was the most impactful program in Africa, perhaps the world.

Global Fund was able to raise billions after Bill Gates and Bono jumped on board. By 2010 Global Fund was spending upwards of $13 billion in 150 countries including many in Africa. The innovative funding mechanism had countries compete with each  other for grants. Money only went to a country’s health ministry who showed an ability to get things done. Even though the grants went to governments, the results were there. Anti-retrovirals treated 33 million people and the mortality rates in the three target diseases were dropping dramatically. The Global Fund accounted for 10 percent of the world’s funding for HIV.

But in 2011 Global Fund’s wheels and donor support started falling off after a scandal broke in Africa. Over $34 million in Global Funds had gone astray in Mali, Mauritania and Djibouti. There were faked invoices, phony training events at health ministries and money being spent on fine cars, motorcycles and five star hotels. Soon after the scandal broke, funding declined despite Dr. Kazatchkine’s assurances that new controls were being put in place. As funding declined programs were cut and in Nairobi 500 people marched in protest because their health program had ended. Finally in late January 2012 Kazatchkine resigned and was replaced by a fiscal watchdog, auditor Gabril Jaramillo. As Kazatchkine was stepping down Bill Gates was stepping up reconfirming his faith in the program with a new $750 million infusion. Gates was saving face trying to insure that the Global Fund’s good works were not in vain. At the moment Global Fund looks like another sinking ship on the turbulent sea of foreign aid.

Trade Not Aid  

Global Fund’s recent problems obscure some of Africa’s less visible but more sustainable aid programs. They occur on a much smaller scale and don’t invite corruption. Population Services International has come up with an innovative way to keep malaria down and preventing insecticide bed nets out of the black market in Malawi. PSI sells the nets for 50 cents to mothers through rural antenatal clinics. The distributing nurse gets nine cents to keep for herself. PSI has a separate program that sells the nets for five dollars a piece to urban Malawians and profits from those sales subsidize the rural program. In South Africa a former interior decorator, Steven Whiting founded HIVSA in Soweto. The clinic focuses on women with HIV and gives nevirapine to HIV infected mothers so they don’t transmit the disease to their newborns. Support group meetings to help HIV mothers confront the stigma of AIDs has also made Whiting a hero in author William Easterly’s eyes. His book “The White Man’s Burden” chronicles how foreign aid has gone awry.

Ultimately – trade  – not aid is the answer to Africa’s development issues, according to Zambia economist and Oxford and Harvard educated Dambisa Moyo. She stridently argues in her book, “Dead Aid” that foreign aid has destroyed African official’s ability to solve their countries economic and health issues. Bono has become the continent’s defacto economic planner. She quotes one high ranking official, “my voice can’t compete with an electric guitar.”

Moyo’s prescription for Africa’s emergence is the same blueprint used to lift Asia’s living standards. Rev up the economy through direct foreign investment and forget about aid. Make your country less bureaucratic and corrupt and investors will flock especially to Africa with its rich mineral and oil deposits.  Korea, Singapore and China are prime examples how countries can turn themselves around and she applauds China’s increasing role in Africa’s development. Since the Chinese built the Tanzam railway in the 1960s ($500 million for 1,160 miles of track) it has become the continent’s biggest trade partner and investor. In 1991 there were 300 Chinese living in Zambia today there are over 3,000. Angola is now China’s biggest oil supplier. China does give foreign aid to Africa but in tiny amounts compared to the billions being spent on infrastructure and development projects in a broad array of African industries.

“China is our friend and its role is wider, more sophisticated and more businesslike than any other countries,” Moyo argues. “Isn’t it more likely that in a world free of aid, economic life for the majority of Africans might actually improve, that corruption would fall, entrepreneurs would rise, and Africa’s growth engine would start chugging?”

Based on 50 years of foreign aid’s poor record, we think we know the answer.