Foreign Aid: A Curse or a Blessing for Sub Saharan Africa?

ABSTRACT

According to the reports of Organization for Economic Cooperation and Economic Development (OECD), Sub Saharan African countries top the list of foreign aid recipient. Every year trillions of capital flow to these countries from the developed donor states and international organizations. As surprising as it sounds, these aid often failed to serve its purpose. It did not cause the development that it should have, rather a rise of corruption, debt and downfall has been noticed in most of the Sub Saharan African states in the receiving ends. This paper discusses the relation of foreign aid with rising corruption in these states and intends to disclose how such large disbursements has kept nearly no contribution in development.

 

INTRODUCTION

Sub-Saharan Africa contains 49 of Africa’s 54 states, every one of them aside from the five Arab states on the Mediterranean. In 2010 sub-Saharan Africa was home to around 853 million individuals and the populace extended a lot more before the finish of end of 21st century. In the course of the most recent 50 years, foreign aid moves to governments in Sub-Saharan Africa added up to a surprising $1 trillion.

The point of these aid or donation is roused by altruistic motives, colonialism, and out of personal responsibility to construct political and financial partnerships, improve life and lift individuals out of poor living condition in Africa.

Foreign aid corresponding to administration, have for quite a while been at the focal point of poverty debates concerning Sub-Saharan Africa. States which have indicated better administration have throughout the long term gotten more foreign aid than the ones who have failed to do as such. Assistance from World Bank has additionally been attached to enhancements and fortifying of institutions of global governance. While the positive effect of aid with respect to poverty decrease needs not be overemphasized, in many states aid has not been successful to accomplish its planned reason for aiding the least advantaged in reducing poverty and advancing financial development (Geofrey and Kungu, 2019).

 

What is Foreign Aid?

Foreign aid is the international transfer of economic, military and humanitarian assistance from the donor to the recipient state. The donor can also be an international organization working to ensure benefit of the state at the receiving end. Foreign aid is generally given to the developing states by the core states. It is often considered as one of the most important determinants of development outcomes in the developing states (Williams, 2020).

Foreign aid can be in form of both loan and grant. The loan given by the donor can again be branched into two sections. They are the hard loan and the soft loan. If the the donor state or organization demand for the repayment in foreign currency, it is recognized as hard loan. Again, if the loan is asked to be repaid in the own currency of the receiving state, it is considered as soft loan (Agarwal, 2019).

 

5 types of Foreign aids exist. They are the Bilateral aid, Multilateral aid, Tied aid, Project aid, Military aid and Voluntary aid. The need of the foreign aid that is to be transferred varies from state to state basing on the requirements and policies.

Official Development Assistance (ODA) is the most common type of foreign aid which is provided to ensure development and eradicate poverty (Williams, 2020). Most of the developing states lack the financial condition to promote development and they are often tangled in the curse of poverty. In such cases ODA is highly relied on by the receiving states.

 

Rationale for Foreign Aid

The altruistic process can be either philanthropic or developmental. The humanitarian intention underlies philanthropic aid under emergency circumstances (for instance, aid related to food in crisis situation). The developmental rationale is driven by worldwide poverty-aversion or a respect for supposed “global public goods”, for example, security, reasonable global exchange rules, control of transmittable infections, monetary stability, biodiversity, and climate (Kanbur, Sandler and Morrison, 1999). 

It is not wise to say that the rationale behind providing assistance or aid to the receiving states is entirely altruistic. Besides promoting development there remain several rationales behind providing aid. The non-altruistic rationale is mostly related to foreign policy and commercial motives (Gunatilake, Fabella, and Lagman-Martin). Foreign aid had notable influence in building diplomatic relations, economic ties, cultural manipulation, and also intentions that bind all these motives. It is rather hard to identify the sole reason of providing foreign aid.

 

Read More: Importance of Global Health Diplomacy in COVID-19 Situation

 

Impacts of Foreign Aid in Sub Saharan Africa

Foreign aid can without a doubt debilitate national organizations and compound the issue of destitution and bad governance. This doesn’t imply that aid has no sure effect on society. Much of the time, intervention of the donor in social administrations, particularly in the general health sector, have been tremendously helpful to the recipient. Foreign aid that is effectively conveyed can improve a portion of the cruel impacts of poverty. However, through different mechanisms, contributor projects can likewise deliver negative approach on national institutions (Kalu, 2018).

Aid reinforces corruption in nations where it is already existing to a great extent. Shockingly this is the situation for a significant number of the nations that make up Sub-Saharan Africa. The biggest beneficiaries of foreign aid are in Sub-Saharan Africa, which turns out to be the place where the world’s most minimal positioned nations in numerous regions of governance are, particularly regarding corruption, as indicated by Transparency International. This shows that foreign aid essentially fortifies the measure of assets accessible to the already corrupted elite groups. There is a definite correlation with between the foreign aid and increasing corruption in the Sub-Saharan Africa.

The capital received from the donor countries isn’t disbursed equally among the populace or used to elevate development and to help poor people yet is rather utilized on military equipment, dishonest procurement, white elephant projects and so on. It is additionally utilized by leaders who do not have enough time with policies and need to accomplish them rapidly, for example: expanding the size of the government with government workers (who don’t really contribute much else to the development) to chop down the rate of unemployment.

Another repercussion that is faced by the Sub Saharan African states is aid dependence. These nations have gotten used to accepting such huge amounts of cash that they don’t advance nearby business since they have “free” cash available to them instead. This forestalls any type of progress as far as human turn of events and per capita pay. This aid dependence has made them negligent about own development, rather they are only interested in receiving aid.

 

Initiatives to be taken for building Prosperity in Sub Saharan Africa

To turn the curse of foreign aid into a blessing, the states in the Sub Saharan Africa can consider taking the following steps:

  1. Creating Job Opportunities: Africa has over 200 million of young population ageing between 15 to 24. According to the African Development Bank, this number will double within 2045 creating a shortage of 74 million employment that needs to be built within 2020.

Governments need to make arrangements and proper implementation designs that will take into account a more serious private sector that favors business development, work creation, and the incitement of African economies, for example, sound financial and money related strategies; great administration, and stronger legal executive systems; an improved investment atmosphere, and diminished corruption.

The governments should be investing more on these sectors so that they can create employment for the people of their states. This will further decrease their dependency on foreign assistance.

 

  1. Regional Integration: The African states should be focusing more on building intra-African trade relations rather than solely depending on the western assistance. This will encourage long- term prosperity in the entire continent.

Africa is an extremely resourceful state but it is an unfortunate event that African governments have failed to make proper utilization of this resource. A regional integration among all the 54 states of Africa will create a mutual relation. Due to regional integration good governance, intra-Africa trade, political stability, poverty reduction, etc good impacts will be noticed.

 

  1. Aid Transparency and Access to information: In spite of the fact that aid is the transfer of tax to the disadvantaged from the citizens that are not, data at each stage is restricted to the respective public administration and staffs of the aid agency. In beneficiary states, absence of public data on aid allocations ruins residents from being accomplices in the avoidance and identification of defilement.

The absence of transparency in tasks financed by multilateral and bilateral organizations, has successfully subverted the role of authority in accountability and anti-corruption endeavors. Thus the African states should be more concerned about building aid transparency and hold accountability. This will help the foreign aid from disbursing into the hands of specific opportunist elite group.

 

CONCLUSION 

The Sub Saharan Africa, in spite of getting the most amount of foreign aid, has experienced nearly no economic or financial development. The foreign aid has barely helped the people in need. Rather, the bars of corruption has been raised to great extent. According to multiple scholars and researches based on the disbursement of capital flowing from the developed states, the Sub Saharan African states has not seen development. Most of the states are sinking in debts and tied with corrupted governments. These states should be concerned about building sustainable opportunities instead of depending on the aid.

 

WRITER

Mubassira Tabassum Hossain

Bangladesh University of Professionals

 Reference

Williams, V. (2020) “Foreign aid,” Encyclopedia Britannica. Encyclopedia Britannica. Available at: https://www.britannica.com/topic/foreign-aid (Accessed: December 2, 2020).

Agarwal, P. (2019) Foreign aid, Intelligenteconomist.com. Available at: https://www.intelligenteconomist.com/foreign-aid/ (Accessed: November 19, 2020).

Kanbur, R., Sandler, T. and Morrison, K. (1999) “The Future of Development Assistance: Common Pools and international public goods.” Available at: https://EconPapers.repec.org/RePEc:isu:genres:1629 (Accessed: December 3, 2020).

Gunatilake, H., Fabella, R. V. and Lagman-Martin, A. (eds.) (2011) Foreign Aid, Aid Effectiveness and the New Aid Paradigm: A Review. Available at: http://file:///C:/Users/HOSSAI~1/AppData/Local/Temp/Foreign_Aid_Aid_Effectiveness_and_the_New_Aid_Para.pdf (Accessed: December 9, 2020).

Geofrey, T. and Kungu, J. N. (2019) Foreign Aid in Sub-Saharan Africa Countries: Does Foreign Aid Make a Difference in Development?

Kalu, K. (2018) Foreign Aid to Africa: How Far and How Well?

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