Africa needs Trade, not Aid

RFH and Chris Heaton-Harris MEP with Thompson Ayodele, Director of the Initiative for Public Policy Analysis in Nigeria

RFH and Chris Heaton-Harris MEP with Thompson Ayodele, Director of the Initiative for Public Policy Analysis in Nigeria

Some people say that Africa needs “A new Marshall Plan” of massive aid to drag it out of poverty and set it on the road to prosperity and self-sufficiency.  Yet they seem unaware that in the last fifty years, Africa has received the equivalent of five Marshall Plans in foreign aid.  Yet many African countries are getting poorer.  Aid breeds dependency.  It undermines self-respect and enterprise.  It creates perverse incentives.  For example, both African leaders and the major aid agencies and NGOs have an incentive to present African countries as poverty-stricken and dependent, in order to maintain the flow of aid.
 
No one, of course, thinks that Oxfam executives sit around and plot ways of keeping Africa in poverty, in order to ensure the long-term survival of Oxfam.  Yet their mind-set — that aid is the solution, not the problem, and that no matter how long we keep failing in Africa, more aid is the only policy — has the same effect.  There is a community of interest between NGOs, African governments, charities in donor countries, and to an extent donor governments, which maintains the status quo and denies Africa the radical solutions it needs.
 
These, at any rate, are the views of Thompson Ayodele, the director of a Nigerian think-tank The Initiative for Public Policy Analysis (www.ippanigeria.org), whom I met at a dinner in Strasbourg on May 4th.  He sees several steps that need to be taken to achieve prosperity and sustainable self-sufficiency in Africa.  First, there is a fundamental need for good governance, transparent laws, property rights and enforceable contracts, without which no free economy can flourish.  This is something that only Africans themselves can deliver, although they could benefit from Western help.  But Thompson’s second criterion depends on the developed world.  We need a commitment to open markets and free trade.   Put simply, poor African producers cannot trade their way out of poverty unless we in the West open our markets to their produce.
 
Here in Europe, the EU’s Common Agricultural Policy, and similar protectionist subsidy régimes around the world (especially in the US), are the problem.  We have not only been closing our doors to imports from developing countries.  We have also been subsidising the export of excess food production from the EU to poorer countries, undermining local farmers and driving them off the land and into big city slums.  There are now some steps to eliminate these export subsidies, but they are too little, too late.
 
Thompson had hair-raising stories of aid programmes in Africa where huge sums have been corruptly siphoned off to local bodies and officials, and of ambitious and grandiose flagship projects that have failed to be completed.  The logical route would seem to be to use aid for projects that directly benefit the economies of recipient countries, and for the donor nations to control the projects in some detail to ensure that the money is actually used for its intended purpose.  But the trend seems to be in the opposite direction: more government-to-government aid, allowing recipient governments at best to patronise their own client constituencies of supporters, at worst to divert aid to military spending, Swiss bank accounts and corrupt personal wealth.
 
Is there any good news amidst this litany of failure and waste?  Thompson points to the mobile phone market, which in Nigeria, and Uganda, and other African countries has created a free market in at least one sector, and allowed African entrepreneurs to get a step up on the ladder of prosperity.  Arguably this one new technology has done more to create jobs and prosperity in Africa than fifty years of Western aid.
 
There is no substitute for trade.  We in the West must stop talking about free trade and start doing it.  Trade opportunities will create entrepreneurs in Africa with proper pride and self-confidence, and with the entrepreneurs, pressure for reforms of governance.  We should forget about aid (except in limited and highly controlled contexts).  We should reject ineffective window-dressing solutions like “Fair Trade” brands.  And instead we should take down our trade barriers and dismantle the iniquitous CAP.

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4 Responses to Africa needs Trade, not Aid

  1. chris southern says:

    Spot on Roger, i have been saying this for years.
    Trade brings wealth to a country, and the nations of the African continent have vast areas of land well suited for crops (not something most people realise!)

    If the western nations of Europe and America wish to help the Nations of Africa, yet not cripple their own farming industries through competition, then why don’t they ask the African Nations to produce bio fuel!
    It keeps the greenies happy and allows Trade to flourish and wealth to go into the development of the African Nations.

    Although the oil companies may not like people wishing to use their own land!

  2. Well said Roger, I have been writing about these issues for sometime now. only yesterday I wrote a blog about vulture funds http://ethnicsupplies.wordpress.com/2009/05/06/third-world-debt-is-rich-pickings-for-vultures/. What I don’t understand is how come the people responsible for taking these decisions can’t see what is going on. Most Africans inclduing myself can tell you that the money doesn’t necessary go to where it, needs to go. And don’t get me started on the Food AID, last summer I was in Uganda and found peas doanted by the Canadian govt to Rwanda on sale in a Ugandan market, to my horror I was to find those same peas in a shop in Isleworth London, this shops caters for the ugandn community in London. When you “dump” free food on the african market it kills off the creativity and farming activity in Africa. soem parts of africa have a lot of food and some don’t . If you really want to help the answer would be to move the food from A-Z. That provides a way for the farmers to trade locally if the issues of international trade markets can’t be resolved.

    If you ahven’t already done so I would recommend that you pick a book called DEAD AID, a really gripping read from Dambisa Moyo

  3. So long as it isn’t the slave trade……
    Or rather, joking apart, so long as it isn’t China which is rapidly entering Africa. I am not at all sure whether the Chinese treat the Africans in the same way that the British Empire did. I was lucky enough to live in West africa for a couple of years in the sunset of the British Empire and was seriously impressed.

  4. Mr. Artur says:

    I feel exactly the same as the main opinion in the post has been brought to an expression. Africa has a great potential and many of the countries are endowed in skill to overcome the barrier from a underdeveloped country to an emerging economy. So many business sectors still need to be developed. It takes a lot of patience and hard work to achieve that but anyways Africa is able to make- I strongly believe that.

    If you read this post and you are interested in moving along your own path for an effective action visit our website and get consulted in the sphere of your interest.

    http://www.salvus-consult.com

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