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Too Much of a Good Thing

Choking on Aid Money in Africa

By Erich Wiedemann and Thilo Thielke

Part 2: Part II: Vast Corruption Means Disappearing Aid Money

There is no improvement in sight. In 1964, the year of its independence, Zambia's most important export was copper. Today, 40 years on, copper is still the country's biggest asset. But if the prices fall -- raw material markets wobble up and down like flocks of birds on watering holes in the Serengeti -- the whole country instantly collapses into a major crisis.

In addition to this, industrialized countries put up extra barriers to products coming from developing nations. Although the European Union allows Africans to sell their goods more or less tax free in Europe, the EU's agricultural subsidies have just as catastrophic an effect as any customs barrier.

Cotton from Burkina Faso doesn't stand a chance against subsidized material from Spain. Sugar from Mozambique, Ethiopia or Malawi cannot compete with heavily supported European beet crops. The criticism which Africans direct at Europe and America is "we are so poor because you are so rich."

Africa is certainly owed a lot as a result both of the colonial control of the European nations during the 19th and 20th centuries, and the slave trade between the 16th and 19th century. However as time goes on, the argument becomes less convincing: Forty years after the end of colonial hegemony Nelson Mandela is no longer blaming the whites for underdevelopment, but rather pointing the finger at the local politicians and their cronies.

Getting their house in order

The South African minister of finance, Trevor Manuel, and his Ghanaian equivalent, Kwadwo Baah Wiredu, are all singing from the same song-sheet: Until Africans get their own house in order, all help will be in vain.

And it's certainly true that chieftains, kleptocrats and dictators have always known how to benefit from development aid. The late gun potentate of Zaire, Mobutu Sese Seko, was well off to the tune of at least $4 billion. The former despot of Kenya, Daniel arap Moi, who stood down in 2002, is likewise thought to have swindled $4 billion during his 24 years in office. "When the gravy train passes by, they all jump on," says Ross Herbert of the South African Institute of International Affairs.

James Shikwati, head of the Inter Region Economic Network in Kenya thinks that aid should be funneled into private business, rather than state projects. "Instead of looking at the private sector, where profit guarantees discipline and efficiency, politicians concentrate on governmental projects which are not subject to profit and loss."

The German Federal Ministry for Economic Cooperation and Development (BMZ) has had some pretty positive experiences in financially supporting private initiatives. After all, when companies are affected, they have an interest in cooperating with aid workers -- for example, in the case of the workforce being decimated as a result of AIDS. For this reason DaimlerChrysler and the aid organization GTZ have come together to work on joint project to fight the disease.

However fruitless development aid has shown itself to be so far, the general attitude has simply been to carry on as before. But now the hardboiled new president of the World Bank, Paul Wolfowitz, is modifying this approach. The middle of June he returned from his first visit to Africa, convinced that more money could only make Africa a "continent of hope" if the Africans themselves were more proactive.

"Aid is not the solution"

And now, even the countries which receive aid are coming out with more words of warning. Never before have so many African intellectuals called for an end to the classic type of development aid. "Aid is not the solution," was the headline of the Kenyan newspaper The Standard. According to the paper, aid does not go directly to the people but to "bureaucratic structures."

The worst thing about foreign aid, says the Monitor from Uganda, is that it prevents democratic development and urgently needed reforms. The paper also believes that aid stands in the way of long overdue and highly beneficial transparency in society.

German Chancellor Gerhard Schroeder's commissioner for Africa, the Green politician Uschi Eid, warns against sweeping acts of charity. If the donor countries don't make demands on Africans to act themselves, then they shouldn't expect any reforms -- which could be politically unpopular -- to be carried out. The "massive swing towards more giving," which especially Tony Blair is pushing his summit colleagues to do, she says, will only lead to us "laying double the amount of money on the table, but still not solving Africa's problems."

In Mozambique, at the beginning of the 90s, development aid made up 95 percent of GNP. Statistically the people of Mozambique lived as much off the charity of benefactors as from the results of their own work. Countries like Tanzania and Rwanda, which in the last few decades received more than 80 percent of their GNP in aid, are amongst those whose debt is now being cancelled.

The complete dependence on help from abroad and the World Bank's absurd demands have killed off individual economic incentives. Western therapy for Africa is like giving poison to a sick man. Or chocolate to a diabetic.

Donor country generosity is giving a fatal signal. The message is that it isn't worth paying back loans, as at some point the international community will come along and take the burden anyway. "Those countries who, like us, have always paid their debts have been ignored, while those countries who have simply stopped paying are now getting all the attention," complains the Kenyan minister for planning, Peter Anyang Nyongo.

New wells running dry

Lord Peter Bauer, who was once a professor at the London School of Economics and an advisor to Margaret Thatcher, had already written, 20 years ago, that development aid was "partly one of the reasons for the North-South conflict, rather than its solution."

Again and again aid workers put a lot of time and effort into something, with the end result being a grotesque blunder. For example in the building of wells.

In the past African wells were primitive and not very effective. Modern wells drilled by Western aid workers brought more water in a shorter amount of time. But the high-tech equipment is very complex and requires discipline and expertise -- both of which are in short supply in the continent's neediest regions.

Only last year, for example, Swiss technicians drilled seven deep wells in Southern Sudan, each of which cost €7,000 -- in the meantime five have already run dry. Despite enormous financial investment, the provision of water in, say, parts of the Sahel region has not improved at all over the last 20 years. In fact it has probably got worse.

Mistakes make no impression on the development aid industry. That is due in part to a lack of suitable quality control procedures. Effect analysis, as it is called at the BMZ, does not give any reliable information about a project's efficiency. This is because the ministry monitors itself. Or it lets its procedures be regulated by "independent assessment researchers," who of course want to get hired again later and therefore allow themselves to make, at best, timid criticism.

The main duty of aids workers is to make themselves redundant. Understandably they take their time doing this. "When I started this job I was brimming with idealism," says Bernhard Meyer zu Biesen, head of German Agro Action. "But after I had saved enough money within a few years to buy a house, the relationship I had to my job changed."

It's "development cooperation" not aid

Officially development aid doesn't exist anymore. The BMZ uses the wonderfully colorful term "development cooperation." The rationale being that "the countries and organizations which Germany works with are not recipients of aid, but rather our partners."

Yet the largest projects have come into being almost entirely without input from the beneficiaries. Such as the 203 kilometers of road which connect the Zambian copper belt to the Namibian port of Walvis Bay.

So that it didn't look like charity, the Zambians contributed 4.1 percent of the $30 million road, which was financed by the German Bank for Reconstruction. But just before the road was to be inaugurated, at the beginning of 2004, the government in Lusaka announced that it wouldn't pay.