Aid Must Help People, Not Governments: The Best Way to Keep Africans Poor Is to Continue Handing Money to Political Elites Who Suppress Development. the Imperative Is to Rebuild Society and Business, and So Make Rulers Accountable, Argues Moeletsi Mbeki

By Mbeki, Moeletsi | New Statesman (1996), July 4, 2005 | Go to article overview

Aid Must Help People, Not Governments: The Best Way to Keep Africans Poor Is to Continue Handing Money to Political Elites Who Suppress Development. the Imperative Is to Rebuild Society and Business, and So Make Rulers Accountable, Argues Moeletsi Mbeki


Mbeki, Moeletsi, New Statesman (1996)


After more than US$400bn of overseas aid, channelled through African governments, the African people are on the whole poorer now than they were 30 years ago. Will doubling aid and channelling it through those selfsame governments change anything?

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It is expected that the G8 leaders will approve at Gleneagles what Gordon Brown has called "a modern Marshall Plan for Africa". But the Marshall Plan for rebuilding Europe after the Second World War was driven by the principle of strengthening democratic institutions and free markets, using existing skills and putting money into productive investment. Whereas the Marshall Plan produced the intended results in Europe and Japan, the hugely vaster sum of aid to Africa has failed to produce results either in economic performance or the welfare of the people. Why is this?

One of the little-known facts about Africa is that it is a major exporter of capital. The World Bank estimates that by 1990, 39 per cent of sub-Saharan Africa's private wealth was held outside Africa; for south Asia, east Asia and Latin America, the figures were 3 per cent, 6 per cent and 10 per cent, respectively. According to another estimate, for the period 1970-96, capital flight from 25 sub-Saharan African countries was $193bn, growing to $285bn when interest was taken into account. This money is made up of the savings or surpluses produced by the efforts of Africans or siphoned off from the aid pump, and it represents lost investment and lost opportunities for entire economies and millions of people.

There is a strong underlying assumption in the UK-sponsored Commission for Africa report that strengthening the state will lead to development. Throughout most of Africa, strengthening the state has led to more oppression, less accountability and greater underdevelopment. Since independence, political elites have suppressed or prevented the development of the civic institutions that strengthen society and provide a balance to the power of the rulers: not just an independent judiciary, civil service and news media, but popular groups such as churches, chambers of commerce, trade unions, universities and, of course, opposition parties.

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One reason why South Africa has become one of the most mature democracies in Africa is that such institutions pre-date apartheid and could not be eradicated by the rule of a police state: these institutions not only survived but struggled against the system and eventually brought it down. Nigeria, on the other hand, does have elections, but it will take a long time to rebuild its institutions. Under military rule and one-party states such institutions, where they existed, were crushed. The primary focus of aid must be to rebuild these institutions--all the elements that hold society together and make governments accountable.

The more the African political elites consolidate their power and the more aid they get, the poorer Africans will become and the more African economies will regress or, at best, stagnate. The Swedish economist Fredrik Erixon has noted the inverse ratio between aid and growth and shown how aid diverts money from productive activity to inefficient statist projects. Aid has actually held development back. Politically, one of the unintended consequences of foreign aid is to make African governments even less accountable to their people because they do not need their taxes and therefore their consent: instead, their budgets come from aid donors who demand little accountability in return.

For any of the current initiatives to have a meaningful impact on Africa, they need to focus on support for the development and protection of the private sector and civil institutions. All modern schools of political thought, from Marx and Lenin to Hayek and Friedman, agree on at least one thing: the private sector is the driver of modern economic development. Like people everywhere, Africans want security and comfort, but the great majority of Africans face daily hunger, homelessness, threats of violence, actual violence, and starvation.

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Aid Must Help People, Not Governments: The Best Way to Keep Africans Poor Is to Continue Handing Money to Political Elites Who Suppress Development. the Imperative Is to Rebuild Society and Business, and So Make Rulers Accountable, Argues Moeletsi Mbeki
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