For decades African governments have largely depended on Western donors to fund everything from community latrines to public universities. Admittedly, some societies could not have survived to this day had it not been for foreign aid.
The African growth model based solely on foreign aid has so far not delivered the promises it was hoped to deliver. Actually, it has done more harm than good.
One will agree with me that foreign aid has served to promote oppressive regimes rather the everyday African people. Politicians in the category of Sani Abacha of Nigeria and Mobutu Sese Seko of Zaire/Congo eventually stacked the money in foreign banks which is then loaned back to Africa. Others do it in mild way by using the money to feed their cronies and families and have enough to send even children of their friends to world-class universities abroad. Opening markets to African goods and services will not solve the entire problem but at least leave some power in the hands of the ordinary people. It is time that Western donors stop handing out billions of dollars in humanitarian and economic to dictators in Africa and then turn death ears and blind eyes to their deeds.
I believe, however, that it is time for us to begin to look at a different growth model for the African economy that depends less on foreign aid. This new model in my opinion should be based on open markets where African goods and services have free access to western markets. Growth in China, and to some extend India, have largely been dependent on the access of goods and services from these geographical regions into the western markets.
When we talk about goods and services, most readers will ask ‘what can Africa deliver? Well, it’s actually a lot. I’m not talking about Kenya or Senegal exporting cell phones and laptops to the US next year. But what about a system that makes it attractive for the US manufacturer to import raw materials from the African farmers, if that is what we bring to the market at this period in time.
Let us consider some figures. In 2001, the US approved about $4 Billion in subsidies to nearly 25,000 cotton growers in the US for cotton crop that was worth only $3 Billion at the world marker price. Other figures I came across pointed out that a single cotton grower in a mid-western US state received $6 million in subsidies, which is larger than the combined annual earnings of 25,000 cotton farmers in Mali. (For your information, the $4 Billion government subsidy is also more than one third what the US spends on the nearly 1 billion people on the African continent).
This policy makes it unattractive for manufactures to import raw materials from Africa and other developing countries
This system is being perpetrated not only by the US but also by the European Union and China, which is destroying the livelihood of countries like Mali, Senegal, Chad, and Benin which are all major cotton producing countries. A recent study by UNCTAD-India pointed out that if the US were to do away with some of these subsidies, farm output will decline by nearly 40%. Although we would pay more at the grocery story in the US, it will spur up more imports from Africa and other developing regions which will generate enough foreign exchange the fund their community development activities.
This is not advocating for a loss-loss situation for the US and Europe. In fact, it’s more than a win-win case. Western countries have more to gain than lose.
The African Growth and Opportunity Act (AGOA) were enacted to do just this. AGOA provides duty-free access to the U.S. market for a wide range of products from eligible African countries, while spurring African governments to make their countries attractive to U.S. investment. I think this is the type of initiative that needs an injection of momentum and expansion.
