Foreign Aid in Africa: A Short Term Solution to Long-Term Issues
Trade Inequality, Corruption, Aid Dependency & Factors that Hinder Socio-Economic Development in Africa 
We usually believe that that billions of dollars in aid sent from prosperous first world American and European countries to developing African nations have helped to reduce poverty and increase growth. Unfortunately, that is not the case. In fact, it is the inverse effect. Over the past five decades, more than $1 trillion in development-related aid has been transferred from wealthy first world countries to countries all throughout the African continent. Has this assistance improved the lives of Africans? No. Across the continent, the recipients of this aid are not better off because of it. Why is Africa a continent that receives such a wide spread of investment, yet remains the only continent in the world stuck in a cycle of dysfunction and stagnant decline? There are other variables that have a relationship with foreign aid that also prohibit and hinder the growth and development that is required and needed to lead to overall stability. Variables such trade inequality and corruption are significantly related to the egregious amounts of foreign aid being put into Africa as opposed to invested into. A cycle of aid dependency has been created over time that has had sever direct, indirect, short-term and long-term on the people of the communities that make up the many nations in Africa as a whole. Instead of being included in the international conversation of globalization and new age development, Africa is on the outskirts, still receiving astronomical amounts of foreign aid, and showing little development and progress.
Not all aid is bad, however all aid is warranted either. What exactly is aid and what different kinds of aid are there? Humanitarian or emergency aid, which is assembled and dispensed in response to catastrophes and disaster. Unpredictable catastrophic events are unexpected and can warrant a vast amount of help and support from outside forces. Emergency aid is important when recovering from a disaster and could have a positive economic effect when employing citizens to participate in the recovery process. Specifically, recently in 2011, the Horn of Africa experienced what the United Nations estimates is the most severe food security challenge in Africa for 20 years. More than 13 million people in Somalia, Kenya, Ethiopia and Djibouti were in need of urgent assistance. Famine was declared in six regions of Somalia as well. Though food security has improved, the situation remains delicate and uncertain, particularly in Somalia. Therefore, it is not proven whether or not that particular aid assistance has had any positive or negative effect on the recipients’ and country’s overall socio-economic development. Humanitarian aid is a distinct and helpful solution to help stabilize the situation and help move people away from danger but the solution is only short-term. What happens after relocating? Are they provided jobs or skills to help improve their lives and communities? Also in West Africa, since the end of the 80’s, multiple conflicts have plagued West Africa and triggered massive humanitarian crises in Liberia, Sierra Leone, Guinea and Ivory Coast. The region as a whole has displayed a vast number of refugees that have further weakened host countries by increasing unemployment and poor health conditions that are already handicapped by low levels of development. “The region still remains prone to shocks such as epidemics, droughts and floods. These crises are regularly assessed by the Humanitarian service of the Commission and funding is provided based on the needs and the magnitude of the emergency.” (European Commission, Coastal States of West Africa). Therefore, though honorable and noble, it requires more than relocating displaced refugees to promote actual long-term growth and stability. The website Euopora.eu, blatantly presents the fault with foreign aid on their website by stating, “Disaster relief and emergency assistance are almost by definition short-term. EU-funded operations generally last for less than six months but the EU wants to ensure that, when humanitarian aid is withdrawn, either, the people it has helped are able to cope by themselves, or there is another form of longer-term development assistance available for them. The risk is that nothing is in place after humanitarian relief is phased out.” Humanitarian aid puts forth good efforts as a jump-start but there is risk involved.
Other types of aid that are heavily distributed all over Africa is charity based aid compiled mostly of small Non-Government Organizations (NGO’s) which is dispersed by charitable organizations to institutions or people on the ground, schooling programs etc. For example, according to the NGO website (NGOnewsafrica.org), in Ghana the PAAJAF Foundation (Providing Adolescents & Adults with Jobs for Advancement in the Future) is a non-governmental organization that has presented roughly 60 books worth $40 USD to pupils at the Gbawe Methodist School in Accra. The objects included exercise books and pencils as prizes for articles the students wrote about Human Rights during their After School program (Nkabom – Children’s Network) which supports 36 pupils. The headmistress, who presented the books to students, said the donation was to encourage students to keep writing and motivate them. Recently on December 19 2011, the United Nations general assembly following intensive lobbying by nonprofit organizations felt there was need to set aside a day when the world can recognize girls’ rights while still reflecting on the unique challenges they face around the world. October 11 2012 mark the first International day of the Girl child. Tanzania, Plan International and Children’s Dignity Forum (CDF), non-governmental organizations, will be holding two separate events. The objective of the network is to raise awareness on the harmful impact of child marriages by encouraging discussions at the community, national and international level. Although child marriages in Tanzania are ingrained in tradition and culture, the Ending Child Marriage Network in Tanzania is a positive step in the right direction. Governments, civil society and UN agencies are working together to end child marriage; further commitment and resources are required to accelerate action that will empower girls and scale up successful interventions’. These are small examples of charity-based aid that are deemed noble and helpful, however they are very small steps in the right direction. These are programs and activities that should be invested in by the people of the surrounding communities as opposed to foreign aid. These programs should not be limited to only one school and thirty-six students. It should be as wide spread as possible, extending the opportunity to everyone who can participate. Though they are helpful initiatives, these chartable acts only have a strong impact on the individual level and unfortunately, it is not a strong platform for promoting overall collective growth on a national level.
The other type of aid is systematic aid also known as government-to-government aid, which is very prominent and very problematic in Africa. Systematic aid is payments made directly to governments either through government-to-government transfers, or transferred via institutions. Systematic foreign aid creates a cyclical mess, in which tyrannical regimes are given money to help their community, which they then use to prop themselves up, further entrenching corruption and poverty within the government, therefore resulting in calls for more aid for the suffering citizenry. Ironically, systematic aid does promote growth, that is, the growth of corruption and power of authoritarian ruler. This particular type of aid was very popular around the time of the Cold War when most Africa countries were establishing their independence. There is a complacency and dependency that has developed in these regions of Africa during the time, where the elite and power-holders and citizens too sometimes were perfectly content with basking in the inept status quo of systematic aid. Famine was also a major issue in a lot of Sub-Saharan Africa in the mid 80’s which called for foreign assistance and it was poured into Africa in many forms including emergency, charity-based, systematic, and multilateral aid. “The more aid poured into Africa, the lower its standard of living. Per capita GDP of Africans living south of the Sahara declined at an average annual rate of 0.59 percent between 1975 and 2000.” (Ayodele 1) This is an example of the inverse effect of aid. The things on the declining route should be increasing to reflect prosperity.
Below are some graphs and charts that illustrate the proportions of foreign aid that are put into countries all over the world. The U.S. Overseas Loans and Grants defined obligations as a binding agreement that will result in outlays, immediately or in the future and defined disbursements as amounts paid by federal agencies, by cash or cash equivalent, during the fiscal year to liquidate government obligations. The United States has the highest obligation on a global scale. Businesses account for the lowest obligation and disbursements. Sometimes these agencies’ disbursements exceed their obligations such as U.S NGO’s, businesses, U.S. Business and other agencies such as church and faith based organizations, universities and research institutes and public and private partnerships. This illustrates how much money is devoted to foreign aid and how many different places it is coming from.
Further analyzing the pie graphs, Sub Saharan Africa received the most of U.S. obligations in 2010. Of the 51 countries that received over $100 million in economic assistance, 20 were in Sub-Saharan Africa. Ironically, Asia was only 2 percent behind them yet the relationship, perception and dynamics are vastly different from Africa. Twenty-one U.S. government agencies funded foreign assistance. Five of the twenty-one U.S. government agencies account for 86% of complete economic assistance. The proportions and ratios even appear extreme. The five primary U.S. government agencies are the U.S. Agency for International Development (USAID), State Department, U.S. Department of Agriculture (USDA), Department of Defense (DoD) and the Millennium Challenge Corporation (MCC). When taking into consideration how many people work for all agencies who provide aid who are listed and not listed, it shows a large number of people make a living by providing Africa with foreign aid assistance. Thousands of people make a living by continuously making foreign aid funds available to African countries and other countries throughout the world. These facts contribute the cycle of the aid dependency problem in Africa, because many people depend on providing aid as a means to live. “Their livelihoods depend on aid, just as those officials who take it. For developmental organizations, successful lending is measured almost entirely by the size of the donors lending portfolio, and not by how much aid is actually used for its intended purpose.“ (Moyo 54) The conditions for which aid is negotiated displays how much risk is involved in all aspects of foreign aid. Success should depend on the conditions of the region nearly a year after the aid has phased out. Factors that would improve overall growth and stability and improve conditions of poverty should be variables that determine if aid was used successfully.
Foreign aid is not the sole reason for the demise of many African States. Foreign aid is again, related to a number of variables that directly and indirectly relate to foreign aid. Corruption is a variable that heavily associated with aid. Corruption has existed prominently across the African continent for many years and it has a long history in Africa. “Others estimate that of the US$525 billion that the World Bank has lent to developing countries since 1946, at least 25% (US$130 billion has been misused.” (Moyo 52) There are different kinds of corruption that affect the productivity and growth of the state in many ways. Negative corruption is monies from aid that are illegally obtained and re-invested in themselves and offshore, not having a positive effect or any effect on the people in the surrounding communities. “With aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments – providing them with freely usable cash. These corrupt governments interfere with the rule of law, the establishment of transparent civil institutions and the protection of civil liberties, making both domestic and foreign investment unattractive.” (Moyo 49) Corruption and foreign aid are closely related. Typically, many of the monies that are initially obtained come through a form of foreign aid. Corruption is a major problem in many developing countries and sometimes it can lead to foreign aid funds being diverted from its intended purpose. Corruption stagnates growth and cripples whatever established political system is in place. “In February 2005, Nigeria’s police chief, Inspector General Tafa Balogun, was forced into retirement after investigators probing money laundering allegations found $52 million hidden in Balogun’s network of 15 bank accounts.” (Ayodele 2) This is a clear example of negative corruption. None of the funds that are illegally obtained are being reinvested into the local economy. “… The World Bank has lent to developing countries since 1946, at least 25 percent (U.S. $130 billion) has been misused. Vast sums of aid not only foster corruption – they breed it.” (Moyo 52) This clearly displays how mismanaged foreign aid is. It is the mismanagement of foreign aid, which hinders the success in Africa. If aid was properly administered with secure guidance and approved processes, the risks would decrease and the funds would inevitably be spent and invested accordingly. Positive corruption however, is monies from aid are illegally obtained yet re-invested back into the community, having a direct positive impact on people in the community. For example if a government official takes illegally obtained funds and goes to a local dealership and buys a car, it has a positive affect because the car dealer will most likely take the money and support his family and purchase food. By purchasing food and other small groceries from the local communities, money will flow to places where it is really needed. The table below displays areas in which monies are wasted. All of the areas listed are affected directly and indirectly foreign aid. Corruption accounts for a significantly large portion of lose in the causes of Africa’s loss of money. Actually, capital flight, food imports, military and arms expenditures and civil war damage combined does not even account for half of the funds lost in corruption.
Another closely related issue to foreign aid is trade inequality. Having a sturdy trading system is critically essential to a growing economy, increasing the GDP and helping job growth as well as number of other things to help establish the state. As opposed to being so deeply invested into foreign aid, a healthy trade system would be an alternative to help improve overall development. However, the trading system in Africa is critically impaired and at a low performance rate. The system of global trade is compromised in favor of first world countries such as the United States and Europe. Africa needs to be included more in the conversation pertaining to globalization. Globalization is the process of incorporating all economies of the world with the intention of ensuring the free movement of goods, services, labor and capital, across national and international borders. “Globalization has been defined as the expansion of economic activities across national borders to such an extent that the appearance is given that the world is an open trading village in which national states have no role to play and in with no national boundaries exist.” (Reddy 1) This would indicate there would be an equal playing field for all participants, unfortunately, that isn’t so. America and Europe dominates the trading industries in all different areas. However, things are not evenly disturbed throughout the world and some countries are favored over others because many reasons ranging from contracts. Trade inequality appears only to have negative effect on long-term growth as opposed to the short run. International trade is arguably an essential for developing countries aiming to narrow the technology gap with developed countries because it allows them to earn foreign currency and purchase foreign technology. “Trade is only an aspect of the wider development process. Macro and micro studies cast doubt about the generalizations on the trade and poverty debate, indicating considerable heterogeneity in the welfare impacts of trade and trade reforms, with both winners and losers in the process.” (Santos-Paulino 15) Countries with higher levels of human capital tend to exhibit higher rates of growth and development, inevitably producing more investment within the country. The countries also tend to face natural barriers that increase the costs of trade, such as poor overland transport infrastructure to distant large markets. South Africa re-entered global markets after Apartheid ended in the early 1990s. The country had previously faced economic sanctions, which created severe foreign exchange shortages and forced the government to restrict imports and encourage exports through a complex system of tariffs and subsidies. South Africa also has experienced substantial employment and income declines resulting from trade reduction with the EU and the US. A large share of these declines occurred in the non-tradable sector and resulted from income-induced effects. Small examples of trade inequality include exports to the US of leather Products from South Africa account for less than 0.5 percent of total exports to the US. The United States and the European Union sometimes refuses to reduce or eliminate subsidies, especially on agricultural products. Also, sometimes tariffs as high as 500% are sometimes imposed by the US, EU and Canada on products which include beef, dairy products, vegetables, fresh and dried fruit, cereals, sugar and tobacco, as well as prepared fruit and vegetables. “Since states can change different import duties or impose different standards on goods coming from different countries, it can be harmful to states and individuals from other states that trade with such nations.” (Reddy3) The trade playing field isn’t fair for Africans and they are shunned from possible opportunities in the United States and in Europe. “It is bizarre that shipping a car from Japan to Abidjan, in Ivory Coast, coast US$1500, whereas moving it from Abidjan to Addis Ababa, in Ethiopia cost US$5000.” (Moyo 124) This is not good for promoting socio-economic development and growth for African people. However, The World Trade organization has established guidance for a healthier multi-lateral trade system to help trade flow freely. Some of the guidance includes lowering trade barriers through negotiations, discouraging unfair practices such as dumping and subsidies and providing incentives such as extra time for countries to fulfill necessary obligations.
Foreign direct investment is a small component related to trade and foreign aid. Foreign direct investment is an investment into a country made by a company or another country either by purchasing a company in the country or by expanding operations of an existing business in that country. One might argue that Africa as a whole needs a lot more FDI than foreign aid. “While many would argue that Africa is coming from a low base – its one billion people command a mere two per cent of world trade and it attracted little more than three per cent of the $1.12 trillion in global foreign direct investment in 2010.” (Moyo 2) Interestingly enough, China is Sub-Saharan Africa’s largest source of FDI. “Between 2000 and 2005, Chinese FDI to Africa totaled US$30 billion. As of mid-2007, the stock of China’s FDI to Africa was $US100 billion.” (Moyo 105) However, again, Asia receives nearly as much as foreign aid as Africa, so this would indicate there are vast differences in their policies and the way they manage their internal and external funds. “In 2006, the US$37 billion that Africa received as official foreign aid was more than twice the continent’s foreign direct investment, and today Africa attracts less than 1 percent of global capital flows, down from almost 5 percent a decade ago.” (Moyo 98) This clearly shows the transparent relationship between foreign aid and foreign direct investment. Anyone and any country would prefer to be invested in rather than aided. Clearly, the ratio of FDI to foreign investment should be more balanced instead of foreign assistance exceeding investment. Not only is FDI critical because it can contribute towards actual growth and development instead of stimulate more so like foreign assistance, but it can also boost the so called non-tradable sector as well. FDI can create employment as well as promote a healthy trade system that overall would call for investment. FDI can also help with poverty’s decline in Africa as well if overall socio-economic and financial growth and development was to occur as a result of FDI if properly administered.
Though China is Sub-Saharan Africa’s primary sources of FDI, their interests don’t necessarily lie with the interests of the people. In Zambia, there has been a lot of FDI put into the mining industry. There are other niche market industries in other African regions that China has put FDI into such as the copper industry in both Zambia and Democratic Republic of Congo, the iron and platinum industry in South Africa, the textile industry in Lesotho and railways in Uganda just to name a few. These industries are the top performing most prominent industries in the respective regions and if properly managed, a lot of profit can come out of it for both China and Africa combined. Sometimes the bad working conditions that exists in China are brought over and practiced throughout Africa which can be sometimes anti-productive and harmful to the people. The Chinese have been known to disregard the local environment and labor laws that caused protests by the Zambian miners. Unfortunately, the situation ended badly and many miners were shot, injured and killed in Zambia for protesting.
On a better note, China has established a substantial meaningful relationship with Africa that benefits both of them in the short and long-term. There are now yearly and quarterly summits that take place, involving influential people and leaders from both countries as a way to network and accomplish great things. For example, there is the Sino-African summit that first took place in Beijing November 2006.
There are other alternatives to helping the country fundamentally develop other than foreign assistance. After covering the obvious alternatives such as trade and foreign direct investment, other channels exists such as volunteering programs and micro-finance investment funds (MFI). MFI’s are specialized financial intermediaries that receive and channel micro finance investments into the industry at hand as the main objective. This sort of financial tool is fairly new and is growing popularity in the globalized markets. AfriCap is the first micro-finance investment fund for Africa. According to their website (Africapfund.com), it was established in 2001 as a private equity fund based in Mauritius. It eventually transformed into an MFI focusing on young African financial institutions that serve low-income communities with limited access to banking services. Currently, they have thirteen major investments in 11 African countries such as Cote d’Ivoire, Niger, Burkina Faso, Senegal, Sierra Leone, Cameroon, Malawi, Mozambique, Tanzania, and South Africa Volunteering is a positive thing in Africa. This is a step in the right direction because this isn’t just a lump sum of money in the form of foreign assistance handed over to a semi-trusted political regime in Africa. This is small way to promote socio-economic growth and development at the individual and collective level. The establishments made by AfriCap in the African regions previously mentioned are all backed by investors ranging from prominent groups such as the European Investment Bank, Swedfund, Finnfund, the international finance corporation along with a few others. MFIs are criticized as institutionalized way of loan sharking and taking advantage of poor people by imposing interest rates and other formal financial tricks. However, since the popularity of MFIs are increasing the competition amongst them is increasing as well which overall affects interest rates, bringing them down, making them more affordable for the people.
Another alternative financial component is remittances. Remittances are monies transferred by a foreigner to his or her home country. Remittances are playing an increasingly larger role in the globalized economy. The African Diaspora extends to many places such as the United States, United Kingdom, Caribbean, France, the Netherlands amongst many other places which would be a positive thing for Africa because many of these countries are first world countries with strong currencies. Like all other variables previously mentioned such as trade, FDI, MFIs, and corruption, remittances are related to all of these things. “Remittances can play an important part in financing a country’s external balances, by helping to pay for imports and repay external debt. As remittances tend to be more stable than other capital flows, in some countries banks have used them to securitize loans from the international capital markets – that is, to raise overseas financing using future remittances as collateral, thereby lowering borrowing cost.” (Moyo 134) Remittances is a financial tool that does not make a significant difference on an individual level, however, collectively, the impact is fairly considerable. The monies that are sent and collected make its way into the local economies, which is fundamentally better and different from that of foreign assistance, which does not necessarily ever get to the people in some cases.
The Peace Corps is a program that has been helping nations for years. Specifically in Africa, the volunteers work in the areas of education, business development, agriculture, HIV/AIDs and the environment. These are all very crucial variables in creating a healthy function strong state. According the Peace Corps website (peacecorps.gov), many of the programs administered by the Peace Corps require many volunteers and a lot of time in order for there to be some visible results. For example in Zambia, there have been nearly 1,450 Peace Corps volunteers in a program that was established nearly ten years ago in 1993. Currently there are nearly 300 volunteers in Zambia specifically working on community development, education, health and business amongst the people. Some volunteers are trained and taught the necessary languages to work more effectively. The Peace Corps program in Uganda was established as early as 1964 and remains open to date, which approximately 1,200 volunteers serving up until now. Currently there are roughly 150 volunteers there focusing on community economic development, education and health. In Rwanda interestingly enough, less than 400 volunteers have served there since the program was established in 1975. However, in Rwanda it seems to have been two separate programs established, one occurring from 1975-1993 and then 2008-present. Vastly different from that of Zambia and Uganda, the prime focus in health and education development in Rwanda and there are only 161 volunteered currently serving there. There are a number of Peace Corps programs still up and running throughout various African countries such as South Africa, Kenya, Ethiopia, Swaziland, Madagascar, Namibia, Burkina Faso, Cameroon, Botswana, Togo, Ghana, Senegal, Liberia, Jordon, Morocco, Tanzania, Mozambique, Benin and Lesotho. As for other countries such as Guinea-Bissau, Cote D’Ivoire, Mauritania, Nigeria, Sudan, Libya, Democratic Republic of the Congo, Gabon, Chad, Tunisia, Republic of the Congo, Somalia, Zimbabwe, Eritrea and Burundi have been closed. Programs in Mali and in Niger have been temporarily suspended. The Peace Corps is another small piece to the entire puzzle. There have never been Peace Corps programs established in Western Sahara, Angola, Algeria, Burundi, Egypt, and Saudi Arabia as of yet. They would not be able to stimulate and promote development and growth alone with only a few hundred and a few thousand making an effort to make things better. The impact is small but the impact is significant. Obviously, the Peace Corps would not be able to replace foreign assistance, but this goes to show there are other things out there besides foreign aid.
The state cannot be established and cannot prosper if there is no progress, development, political and economic growth. Foreign aid is a supplement of dependency that prevents the state from growing collectively. Countries develop and grow due to trade, innovation and business. There isn’t a country in the world that has prospered being solely dependent on aid as a source of development. Because aid has been so prevalent in associating itself with Africa, it is hindered and convoluted alternative solutions such as global trade and foreign direct investment. What has also been compromised is the perspective of the African continent. It is pity that most people have when looking from the outside in, inspiring our desire to donate so much. Some people do not perceive Africans as adequate business partners because of this aid culture that has been created. The perception of Africa has been tainted by continuous open-ended deals to supply Africa with foreign aid assistance and the slighted results that have surfaced. Politics is loaded with uncertainty especially about capital, labor and productivity drive growth. For example, 50% of the people in Uganda are under the age of 15 and like most growing populations in the world, the younger working middle class is a rapidly growing group. Development should be the main objective in these countries and attention should be taken off aid as the solutions to all problems. China is investing in Africa and all around the world and seizing opportunity that the western world and Europe has been ignoring. Aid is necessary in certain situations, especially humanitarian/emergency aid in response to a disaster. However, Africa is bombarded and overwhelmed with foreign aid. However, systematic aid is not compulsory for most countries and has had little to no effect on directly influencing socio-economic development. This type of aid should be curved and closely analyzed in regards to the direct and indirect effects there are on the surrounding communities. Corruption, agriculture, exports and imports are all related to aid and development. Alternative solutions to aid dependency for socio-economic growth and development can all be found in agriculture, trade and corruption prevention. As we get further into the millennium with so many things rapidly changing in the emerging global market, foreign aid and investment is slowly transforming and undergoing reform. Just on December 14th, a memo from my workplace (a prominent global investment bank) was emailed to everyone regarding an environment and social finance forum. I was surprised to see what the memo read: “Historically, Sub-Saharan Africa has been considered more of a target for aid rather than investment. With most Sub-Saharan Africans still living in poverty on less than $2 per day, many people have questioned the effectiveness of trillions of aid dollars doled out over the last 50 years in achieving economic growth, arguing for more investment and less aid. Years of widespread corruption, political unrest, and news footage filled with images of famine, war, and civil insurrections paint a challenging picture for investors. But Sub-Saharan Africa is multi-faceted, and these portrayals by the press mask an emerging investment opportunity getting more attention from institutional investors who see it as the biggest frontier market opportunity, even when compared with Asia, Latin America and the Middle East.” Finally, Africa is being included more and more in the international conversation about globalization. Aid is not a bad thing, and it is very helpful in many situations, however, it appears the structure of foreign aid for Africa is mismanaged and has a lot of critically high risk involved the entire process from determining how much aid is going to given, who receives the funds, how the funds are delegated, and finally spent. Because there are so many different variables involved in each of those processes, the risks that are involved are so high and dire, that foreign aid reform is necessary. Poverty is something that is closely related to all things previously mentioned such as corruption, trade inequality and FDI. Poverty’s close relation to these variables is the fact that poverty is directly affected by the variables’ status. Poverty is the true measurement of a states’ success. If poverty is prominent and every other person counted is associated and/or affected by poverty, clearly the state needs to improve. A lot argue whether or not foreign aid reduces poverty in Africa. “Africa lags behind all other regions in progress to date. About half of Sub-Saharan Africa’s 750 million-plus people still live on less than one dollar a day, a figure that has been static since 1990, whereas in South Asia it dropped from 39% in 1990 it 30% in 2001 and is dropping further…” (Hyden 1)This information perplexes me when comparing these figures with the pie chart seen earlier in this paper. The U.S. economic assistance in 2010 distributed to Asia was only 2% less than Africa, yet the improvement in stabilizing and developing the state vastly differs that from of Africa? Why? Clearly, the foreign assistant funds are being mismanaged in Africa. Foreign aid should not be discontinued in Africa because although the difference is small, a difference has been made because of foreign aid. It appears the developmental system in Africa is severely compromised. A cycle has been created with foreign aid in Africa, which prevents and hinders significant growth for the states collectively. Foreign aid, foreign direct investment and trade are all convoluted. Democracy is something that has been promoted in Africa for many decades, and there have been small successes with implanting democracy in countries throughout Africa and foreign aid can definitely attest to some of that success, however democracy does not necessarily mean socio-economic growth and development for the people on and individual level. Democracy and foreign assistance has a positive relationship however there isn’t a significant direct effect on state development and growth. Aid contributes to democracy by focusing on the countries electoral process as well as improving the civil liberties, education and per capita income. All of these things, like democracy, foreign aid, FDI and trade have to work cohesively together in order for there to be some significant results. How can Africa wean itself off aid when all of the alternatives such as FDI and trade are just as complex as aid is? Everything needs to be taken into consideration and audited in some way. Many of the risks in foreign aid has been identified therefore it should not be considered as the number one go-to solution to all of Africa’s problem. In the globalized economy, there new financial tools are emerging, new relationships forming between countries. The opportunities in Africa are there and desperately waiting to be taken advantage of.
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MizzRebelution 