Why is Africa getting poorer?

Daily News Egypt
9 Min Read

CAIRO: There is an African country where 19 population of the population lives under the poverty line, yet whose government donates aid to other African countries. While this country gives the World Food Program in excess of $1.5 million for use elsewhere on the continent, more than 500,000 of its own people are classified as undernourished. The country in question is Egypt. Welcome to the contradictory world of African aid.

Since 1960 Africa has received over half of all aid donated by the west, or some $600 billion. A combination of bad Western policies, kleptocratic regimes characterised by ‘strong men’ rulers and bad governance in general has seen the net result of this aid be that the continent is poorer now than it was in 1960.

An example of all three causes is evident in Chad at present. When the Doba Basin there was found to house significant oil reserves in the mid-nineties, the sense of optimism for the future was palpable. With a life expectancy of 48, only a quarter of the population accessing safe drinking water and adult literacy levels at 34 percent, the prospect of exporting oil on a mass scale seemed to offer genuine hope to the country’s 7 million citizens.

Now, two years after oil production commenced, however, it seems that the curse of “black gold has struck again.

Since Chad is landlocked, a 1000 km long underground pipeline to southern Cameroon was required to export the oil. Due to its economic plight (it is the 11th poorest country in the world) Chad was unable to fund the pipeline itself, so a consortium of oil multinationals offered to pay for most of the pipeline in return for oil concessions. In addition to the multinationals, the World Bank participated through loans to both governments.

The World Bank loans were conditional of strict rules on how Chad would spend the money it received from the pipeline.

The pipeline was finished a year ahead of schedule and during their first year of production, 1994, the Doba oilfields provided Chad with revenues in excess of LE 750 million, boosting the national budget by 40 percent. With production to run at full capacity in 2005, income was set to rise to LE 1.3 billion.

At the end of 2005, however, the President of Chad, Idriss Deby, legislated to change the way the income was spent. The original spending plan developed with the World Bank ensured that 10 percent of all oil revenues were to be set aside in a “future generations account. By 2005, some LE 206 million had accumulated with another LE 130 million set to deposit in the account every year. Deby’s legislation shut down this account and transferred all the accumulated and future funds to the state treasury for use as the government saw fit.

Furthermore, the legislation doubled the amount of money Chad could spend on non-priority sectors (that is to say sectors other than health, education etc.), such as security. The reaction from the World Bank was as predictable as Deby’s initial reallocation had been: the immediate suspension of loans worth more than LE 700 million.

Situations like the Chad pipeline are fuelling a growing consensus in the West that it no longer shoulders the blame for the problems facing Africa. The thought goes that while colonialism and subsequent policies certainly contributed to the situation facing Africa today, penance has been paid in the form of aid and help provided by the west since 1960.

Khaled Mansour, senior information officer for the UN World Food Program in Egypt, says that there are two schools of thought battling for supremacy at the moment.

“If one takes the Rwandan Genocide, on the one hand there is the thought that the genocide was caused by Belgian colonial policy, but the opposing argument says it was as a result of the Rwandans who committed the genocide, says Mansour.

“Some of the blame attributed to colonialism is certainly over-exaggerated and there is undoubtedly a need for better governance throughout Africa. It is for instance not uncommon for a country to simultaneously experience famine in one part and an abundance of food in another part, and this can only be blamed on bad governance, adds Mansour.

Robert Calderisi is a former World Bank official who worked on the Chad-Cameroon oil pipeline. In a recent book, “The Trouble with Africa, he firmly sets up camp in the school of thought that blames Africa for its own troubles. Calderisi is “dismayed but not surprised by what has happened in Chad.

Speaking to the Africa Update Web site, Calderisi said the events surrounding the pipeline “confirm that a tougher, rather than more “understanding, approach to aid is necessary with (African) governments .

Calderisi believes that the problem with African aid has had as much to do with how it has been given as how it has been used. “It appeared honourable to allow governments to make mistakes as they struggled to learn what government was really about. It was only human to overlook the cupidity of African ministers and officials, new as they were to modern life and just this side of poverty themselves.

The USAID given to Egypt every year is a shining example of how Western aid doesn’t benefit the people of a country. Over billions of dollars given over almost 30 years, more than half has been purely military aid.

“These mistakes were natural and perhaps necessary. I suggest that it is now time to learn from these mistakes and manage aid very differently, Says Mr. Calderisi.

By focusing more on rewarding good performers (through more aid) and making life difficult for bad ones, by preventing weapons sales and seizing stolen funds from Swiss bank accounts for instance, Calderisi believes that the West could see their aid used much more resourcefully.

Most would agree with suggestions such as these, but Mansour believes that more is needed. “The three biggest issues facing Africa today are bad governance/corruption, HIV/AIDS and the global trade system. While the first two problems will ultimately have to be solved by Africa itself, there is nothing it can do about the third problem, explains Mansour.

Indeed, until the imbalances in trade are levelled out, it is difficult to see how Africa is to become self-reliant. Likewise, until governments like the one in Chad stop serving their own needs, it is difficult to see the global trade system being changed in any fundamental way.

In the meantime, as the academics discuss which school of thought is the right one and the government of Chad argues with the World Bank over its right to spend its money as it sees fit, poverty kills the children of Africa at the rate of one every three seconds – that’s 100 children killed through poverty in the minutes it took to read this article.

As for why Egypt is providing aid when many of its own people need the money just as badly? That remains a question that many within Egyptian society have attempted to answer.

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