Voice of Liberty Africa: How Foreign Aid Is Stagnating Developing Nations – Lanre Olagunju



Africa embodies one of the most startling economic ironies, when you consider that in the last five decades, Africa, like a dehydrated camel, has gulped an estimated $1trillion in form of foreign dash from developed nations. It’d be faultless to think that this huge sum must have transformed into wealth, prosperity and development for Africa. Unfortunately, many African nations still wretchedly wallow in starvation and penury.

Prior to the 70s only 10% of Africans were living in poverty. But between 1970 and 1998 when foreign aid was at its peak, poverty rate in Africa skyrocketed to 70%. And it’s important to note that now; it’s as high as 80% in some African countries. This figure makes it clear that aid has caused great setback to the African continent most essentially when you ponder on the fact that the most aid-dependent nations have only exhibited an annual growth rate of minus 0.2 per cent.

Ordinarily one would expect that by now, both the donor and the recipient of these huge funds would be pondering on just one thing- ‘Is aid the problem or solution to the stagnation of developing nations?’  Despite the corruption and mismanagement ravaging Africa I wonder why the west keeps transferring free funds that end up in the account of the political class. What actually do they intend to achieve? On what basis do African nations merit this grants and on what conditions are they given? Could it be that many of these wealthy nations have hidden interest, or do they derive the justification for their existence and relevance from continually seeing Africa in despair and misery despite huge grants?

The British Prime Minister, David Cameron, at the G8 Economic Summit in Davos explained that in 2012, Nigeria’s oil export were worth almost $100 billion which was worth more than total net aid to the whole of sub-Saharan African. “…unleashing the natural resources in this country dwarfs anything aid can achieve and transparency is critical to that” he emphasized. He also pointed to a recent uncovering of $800 million by Transparency Initiative, an oil money discrepancy between what companies were paying and what government was receiving. Therefore, wisdom suggests that demanding accountability and transparency from leaders of developing nations is the way out and mot more aid like some would have us believe. Just recently, former World Bank Vice President for Africa, Dr. Obiageli Ezekwesili insisted that some $67 billion left in the Foreign Reserve and the Excess Crude account of Nigeria has been misappropriated by those who succeeded President Olusegun Obasanjo’s administration under which she served as Minister of Education.

Most times, resources gotten from foreign aid sustain the wrong government in power. Take Zimbabwe’s Robert Mugabe who received some whooping $300million in 2006 from the UK and US government for instance, when western nations keep such diplomatic bonds and release such kind of funds, how on earth do they now demand for accountability?! According to Dr. Dambisa Moyo a Zambian economist, “aid interferes with development because the money always end up in the hands of a small chosen few” she also stressed that placing such huge amounts in the hands of the political class encourage coups, endangers ability to make decision and also entrepreneurship. Moyo strongly feels that aid in some countries fosters civil war. And this actually lends credence to report given by Dr. Napoleoni, when he said $1.6bn out of the $1.8bn in aid received by Ethiopia in 1982–1985 was invested in military equipment.

In 2010, the US offered Pakistan a $7.5billion five years package which was funded under Kerry-Lugar-Berman Act, around that same time, Britain agreed to double donations approaching half a billion pounds a year. An economic expert and prominent social scientist from Pakistan responded by saying “that cascade of cash was the cause of their country's huge problems, not the solution….Aid donors are not helping Pakistan, they are hindering us”

Huge free funds have a way of altering the thinking abilities of political leaders from independently making policies and stand by them. African leaders should and must be accountable to their citizens and not donors who throw in money that aids corruption and stagnation. Recently, the British Prime Minister threatened to cut off aid to Nigeria if same sex marriage isn’t legalised. Well, that buttresses the adage that says he who pays the piper dictates its tune. And that explains why Dr Moyo asked “what kind of African society are we building when virtually all public goods – education, healthcare, infrastructure and even security – are paid for by Western taxpayers? 

Due to corruption, many Africans do not get the benefits of these aid, so the argument that many Africans who are dependent on it would lose their source of livelihood doesn’t really hold water. If Africa would enjoy sustainable growth and development, foreign aid must be drastically reduced. Or can any nation or individual become wealthy and prosperous by begging or being dependent on others?

‘Lanre Olagunju is a regular contributor to the Voice of Liberty Africa Project and also a prize winner with African Liberty. 

Lanre hits hard on the arguments concerning aid to developing countries