Tag: development-finance

  • Who is writing Africa’s present? Who will write Africa’s future? (2)

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    As I sit behind my computer this evening, I have stepped into the shoes of “an African mother”. The one who is tired of seeing a cycle of mediocrity, the one who wonders, “Is this how this child is going to live his/her life?”

    I’m thinking in my mother tongue, Yoruba, “O ye ki o gbon ju gbogbo eleyi lo. Se aimokan mokan lo n se e ni, abi ago lo n da e laamu?” (You are supposed to be wiser than this. Are you oblivious to the world around you, or are you just plagued with foolishness?)

    How must Africa begin to rewrite her present and future in a figurative context? I promised to write about this in the second part of this post. If you missed the first part, or you want to read through again, you can read it here.

    To get my point across, I will begin with the USAID situation. In late February, the Trump Administration announced that it was cutting 90% of the United States Agency for International Development (USAID)’s foreign contracts. This brought a forceful halt to many of the U.S.-funded programs abroad, with both the private and government sectors taking the heat. In Kenya, for instance, the National Treasury Cabinet Secretary “warned” that the USAID cuts will create a KSh 52 billion deficit that will affect key sectors like health, education, and food security in the 2024/2025 fiscal year. Other countries like South Africa, Malawi, Lesotho, and Nigeria have also been dealt a massive blow in the treatment of HIV patients, a service for which they depended heavily on the U.S in the past.

    In the heat of the situation, I picked up a newspaper in Nairobi with a shocking caption. On the front page, it said African governments should build shrines to worship the US in Africa. As I imagine they had hoped to, they got my attention—the attention of the proud, no-African-slander-is-permitted African like me.

    As I read the article, I realized what must have prompted that catchy headline. Splattered across the article’s page were huge amounts of money that the US has donated to Africa over the years, as well as other evidence of how US aid has contributed to crucial aspects of development and public service delivery in many African countries.

    “So?… Did we not know this before?” “But yeah, he has a point….” “Maybe, but not a point strong enough to use such slanderous language as to suggest that African governments should worship the US”. My mind had this brief debate with itself.

    Meanwhile, apart from the United States, countries such as Sweden, the Netherlands, France, Germany, Finland, and the United Kingdom announced bilateral aid cuts in 2024. The European Union has also announced cuts of 2.06 billion USD in overseas aid from 2025 to 2027. It does not take a prophet to realize that the aid ecosystem is being rattled, and that any country or organization that continues to depend on aid is setting itself up for painful disappointments.

    Before I go further, I’d like to introduce you to the premise upon which my thoughts in this post will be based. Indeed, this is the premise upon which many of my thoughts about development (of any society at all) are based.

    People make systems. The structure and output of any system are a product of the inputs of its people.

    You may quote me.

    Why do many countries in Africa still depend on aid?

    Because of my inclination to allude to history, I’m tempted to delete “still” and ask why African countries depend on aid at all. Yet, I will plead that you allow me to skip this for now. It is, on its own, a critical and lengthy topic to which I would gladly dedicate a different post, or a series of posts.

    The issue with aid in Africa is not about whether it has yielded any positive results. Indeed, as the news article author calling for US worship suggests, denying the benefits of foreign aid is impossible if we view things objectively. Areas such as public health, education and human welfare in general have significantly improved in Africa thanks to foreign aid. However, at what cost does this aid come? And why does it not end?

    Mrs Daniels is the lecturer who taught me the course “Evolution of the Contemporary International System and Organization” during my undergraduate studies. I think it was in her class where I first heard the term “soft power“. My curious teenage self found this term very interesting. Actually, almost everything I learned in class then was interesting to me. As I became more and more interested in Africa’s development process, I began to see the role of soft power in keeping many African countries in the status quo.

    “Come, let me give you these crumbs from time to time to get you to do what I think is best, for you and for me. You also have to use what I give you in the way that I think is best. The bulk of whatever I give you will also return to my territory. Procurement, for instance, has to be done mostly from my territory.” Foreign aid is not charity. It is an essential and strategic instrument of soft power for the donor countries.

    I assure you that using the term “crumbs” has no underpinning of ingratitude on my part. Actually, foreign aid usually amounts to less than 1% of the national budget in many of the donor countries. So, many donor countries use so little (at least from their end) to get so much. So much control, power, influence, etc.

    I firmly believe that the same rules that govern regular human interactions also govern the relationships between countries at the highest levels. I must reiterate this because many jargon terms, such as “high-level dialogue” and “diplomacy,” are regularly used, sometimes giving the impression that international relations and foreign policy exist in a different world.

    I also imagined this in the early days of my undergraduate studies. During the holidays, I would often find myself stuck on the Al Jazeera channel, frustrating my brothers, who usually preferred more entertaining channels, as I tried to truly understand how international relations worked differently and what the “hidden rules” that governed the sector were. How wrong I was. International relations is an offshoot of fundamental, regular human affairs.

    Here is an example to drive home my point. To answer the question, “Why do many African countries persistently depend on aid?” Consider the following scenario.

    If you have a family for which you are responsible – children to cater for, a spouse to support, siblings, aged parents, etc.- to what extent would you let an external party continuously take responsibility for their wellbeing? It is understandable when you face financial struggles and need external support for a short time. But wouldn’t it be grossly irresponsible to expect this outsider to care for your dependents indefinitely while you take no active steps towards self-sustenance? What happens when this person changes their mind all of a sudden? What becomes of your dependents when you have outsourced your responsibilities for so long?

    Isn’t this the story of aid dependence in many African countries today?

    To further drive home my point, I will make reference to the scriptures.

    1 Timothy chapter 3, verses 2-7, discusses the qualifications of an “overseer.” Verse 3b states that an overseer “must be free from the love of money (not greedy for wealth and its inherent power—financially ethical).”

    Verse 4 – “he (or she)must manage his (or her) own household”.

    Verse 5 – “(for if a man (or woman) does not know how to manage his (or her) own household, how will he (or she) take care of the church of God?)”

    You may replace “the church of God” with a country, a county, a local government, etc. One problem with many people elected as public officials in Africa is that they have not been adequately vetted to demonstrate their capacity to manage their own affairs. How can we then ascertain their ability to manage a geopolitical entity?

    We do not know whether they are free from the love of money, whether they even understand personal financial management, yet the economy of a whole nation is committed to them. Why won’t they borrow recklessly? Why won’t there be mismanagement and embezzlement of public funds? Why won’t the government commit budgetary blunders?

    Crucial, commonsensical points painted irrelevant by politics.

    Speaking of borrowing, I will now turn to briefly discuss the debt issue in Africa.

    What about debt?

    In March, I attended the Public Financial Management (PFM) Village Program, hosted by Budget Talk Global and Bajeti Hub— a CSO working to advance transparency and equity in budgeting processes in Kenya —at the People’s Dialogue Festival in Nairobi. During the Question and Answer session, a woman representing one of the counties stood up to ask a question. She said that under normal circumstances, when a person cannot repay a loan, you do not continue to lend them more money. At least, you let them pay what they owe before they are given another loan. So she asked, Why does Kenya keep getting more loans when it has been unable to pay off its existing loans?

    It mattered that this woman asked this question. She was probably trying to understand why it was so difficult to apply common sense in this situation. Why do highly indebted countries continue to get more loans, especially when there are no development outcomes to show for such loans? Perhaps, the conditions are a bit different when it comes to commercial loans, but what about organizations like the International Monetary Fund (IMF)? Why do they fail to properly audit how countries use loans and take necessary actions thereafter?

    It is also important to discuss loan conditionalities. Organisations or countries that lend money usually have a set of conditions (in the form of policies) that are supposed to ensure that countries that borrow money can overcome the troubles that led them to seek loans in the first place. In the case of the International Financial Institutions (IFIs) like the IMF, the trend in the policies (conditionalities) they recommend is worrisome. With the IMF, in many cases, the policies are usually heavily based on austerity measures“tax the people more, and reduce government spending”. This is a recipe for disaster without properly contextualizing each country’s situation. The fancy term for such an approach is “the global policy approach”, the not-so-fancy term is called “the one-size-fits-all approach”. In another post, I will elaborate on these issues.

    Loans are not bad in themselves. Debt, really, is not a big deal. At the micro level, individuals and businesses borrow money and resources to meet a particular need or to drive growth. At the macro level, countries in every region of the world borrow money. Some of the chief lenders to Africa are debtors themselves. The important questions to ask are, what are the loans borrowed by African countries used for? Are they being used for ghost projects? Are they being used to service existing loans? What are the conditions attached to these loans?

    Debt is not the enemy; unsustainable debt is the enemy of Africa’s development.

    How to rewrite Africa’s present and future

    Africa’s present and future cannot be rewritten without funding. Development has to be financed, and he or she who pays the piper dictates the tune. African governments must focus on generating the right type of financing without jeopardizing their sovereignty and duties to their people. More attention should be paid to effectively generating internal revenue, and I am not just talking about taxation. What about effective governance of natural resources? What about value-added exports?

    Importantly, rewriting Africa’s present and future will not come simply by ‘sloganism’, or noisemaking (with due respect to the purposeful noisemakers). It requires targeted, strategic, and steady institutional overhauling. It requires having the right people with the right vision, motives, and, importantly, people with strength of character. People who understand Africa’s problems and what is at stake. People who have the required intelligence and foresight to draft workable solutions, and who will recruit the right people and the right resources to execute them.

    Africa needs leaders. People who have not yet been able to lead themselves have no business leading Africa, at whichever level. Africa’s problems are too numerous, and the continent requires solutions too urgently to take such a gamble.

    The views expressed in this post are mine. I have chosen this unconventional method of writing and explaining Africa’s development process to make this information accessible to a larger audience outside the development sector. My goal is that the everyday African can understand the continent’s development process, be more educated to make demands from their governments, and contribute to the development process of Africa themselves.

    I hope you had a good read. Please leave a comment below and let me know what you think. Of course, you are welcome to disagree with any of my points. Let’s discuss!