- Who cares?
Africa is developing, many countries quite rapidly. There are four main factors: fewer conflicts, improved governance, better macroeconomic policies, and increased prices of African commodities. Economic growth has to some extent coincided with reduced poverty, though with a strong urban bias. This trend has been visible for more than 10 years. It hardly indicates a “sorry state of affairs” caused by large aid flows as Göran Hydén argues, ignoring the fact that some of the fast growing countries have been large aid recipients for a long time.
To say that Africans do not like MDGs because they have other means of redistribution is odd.
Do Africans not want their families to be fed and have decent housing, their baby boys and girls to live over 5 years and then to get an education, their women to survive pregnancy, and their environments to be sustainable?
During the financial crisis various support packages were launched nationally and regionally. Sweden and other Nordic countries participated in a salvage operation for Iceland, with the explicit statement that Iceland matters also for us. Africa did nothing to cause the global financial crisis, but was affected the most; many countries on the continent are extremely vulnerable to reduction of exports. When will Africa matter, also for us?
Different yardsticks are applied when deciding what to do for the rich and for the poor in a crisis.
In 2007-2008, the US invested almost 800 billion USD to unblock the domestic credit crunch and support production and consumption. Greece just signed a loan from IMF and EU on 700 billion USD with the same purpose. The G-20 has decided to inject money in various institutions, not least IMF and the World Bank.
Most economists and institutions agree that it is vital to maintain credit flows, purchasing power and consumption in order to restart economic growth and curb the effects of the crisis.
But this logic seems to apply only to richer countries. The poor have to manage the situation internally, without international, national or individual shock absorbers.
True, some of the money allocated to the World Bank found its way to Africa, but only a fraction of what was spent in rich countries.
But even the fairly small amounts allocated to African or other poor countries are questioned.
The line of argument is normally the following:
Make Official Development Assistance (ODA) seem enormous. Do not compare with other costs or financial flows. Do not mention that EU’s budget for agricultural or the cost for unification of Germany far exceeds global ODA. Nor that if total aid to Africa had been used for child allowances at the Swedish level, it would all have been spent just on the children of Ethiopia and Kenya.
Then you claim that Africa has not progressed. Do not give figures; just assert this ‘fact’. Given the importance of ODA, this must be the fault of ODA.
But now the picture has changed; Africa is developing, in many cases quite rapidly. There are four main reasons: fewer conflicts, improved governance, better macroeconomic policies, and increased prices of African commodities. Economic growth has to some extent coincided with reduced poverty, though with a strong urban bias. This trend has been visible for more than 10 years.
With this scenario, it is a bit difficult to credibly refer to “ this sorry state of affairs” for which ODA is the main culprit, but Göran Hydén follows that tradition, ignoring that some of the fast growing countries he mentions―Tanzania, Mozambique, Rwanda―have been large recipients of ODA for a long time.
Hydén’s article is full of misunderstandings and ditto conceptions and lacks a main line of argument that could be debated. I am therefore putting my main reservations in bullet form.
- The turnaround in Africa has not come suddenly and unexpectedly; it has been a constant theme in African meetings for more than a decade. It is seen in statistics and reports from e.g. the UN Economic Commission for Africa and the African Development Bank.
- The MDGs seem to be entirely misunderstood by GH. The first one, income poverty reduction, is dependent on growth. “A shift away from poverty reduction to investment in business and jobs” is an utterly strange sentence. Poverty is reduced when there are investments and jobs, generating incomes. Does GH have his own definition of poverty which is not related to income? And the other MDGs do not reflect only what Governments do, but also NGOs, local communities etc as well as the income factor.
- To say that Africans (which ones?) do not like MDGs because they have other means of redistribution is anotherG odd statement. Do Africans not want their families to be fed and have decent housing, their baby boys and girls to live over 5 years and then to get an education, their women to survive pregnancy, and their environments to be sustainable? Why then did the African Union Summit last July adopt an action plan for the improvement of maternal, infant and child health with a commitment to spend 15% of national budgets in an effort to reach these MDGs, and set up an AU task force to track progress to ensure implementation?
- ODA itself seems also to be a subject of misunderstanding. It covers official aid flows, not total financial flows. And why should ODA block investments? One of the main objectives of aid has always been to facilitate investments, not least by reforming the judiciary. Without functioning legal systems, neither domestic nor foreign investors will surface. African financial markets have a great potential for mobilizing domestic capital. But investors must feel safe to invest and reinvest. Today most profits leave Africa, often as illicit flows.
- GH notes that the leaders of some of the fast growing countries – also large aid beneficiaries – have been criticizing aid modalities. For good reasons I might add. GH’s conclusion is that they want aid to be scrapped. But that is not what they have said. Their point is simple, it is better to have the capacity to generate resources through domestic work and production than to be dependent on foreign, sometimes unpredictable, inflows. Who argues against this notion?
- There are enormous challenges ahead: maintain the natural resource base; fight corruption; avoid the natural resource curse; increase domestic resource mobilization, build stronger institutions, deepen democracy. To GH these challenges do not exist, since a middle class is emerging and new donors have entered the scene who do not put conditions and therefore, according to GH, are particularly embraced by African Governments.
- He is bashing in open doors, presumably believing it to be a new observation, when arguing the need for creating a business climate – even if I would like to emphasize the need to formalize and strengthen the informal sector, not only the formal.
- Infrastructure is important, yes, but it is not true that donors have neglected it, although more should have been done, by donors and Governments. But with GH’s perspective on ODA, neglect would have been a blessing, leaving hydro power developments to remittances?
- A central sentence in his article is that “Foreign aid is no more the pillar on which Africa’s future hinges”. If Hydén thought this was the case in the past, he must have been fairly alone in doing so, given the real size of ODA compared to domestic efforts and resources. Who has believed or stated that? He concludes that ODA should be scrapped, but the following paragraph states that this would lead to a new relationship between donors and recipients. Meaning what?
During the financial crisis various support packages were launched nationally and regionally. Sweden and other Nordic countries participated in a salvage operation for Iceland, with the explicit statement that Iceland matters also for us. Africa did nothing to cause the global financial crisis, but was affected the most; many countries on the continent are extremely vulnerable to reduction of exports. When will Africa matter, also for us? We heard of no attempts to bridge the crisis through targeted efforts for African states most severely hurt. In financial terms it would have been peanuts, by comparison.
And Iceland does not need a new “development regime”, to quote GH. They know what they have to do.
So do Africans.