Open Access to Developed Markets Vital to African Development

For many years, 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.

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

Share

Foreign AID feeding oppressive regimes in Africa

We have being arguing that an open access to western markets is  more in the African interests than aid. This article by Prof Mariam is the exact reason why foreign aid alone is not the way forward for Africa. KAM

Feed them and bleed them

Prof. Alemayehu G. Mariam

“Western donors continue to hand out billions of dollars in ‘humanitarian’ and ‘economic’ aid to Ethiopia’s Zenawi regime each year, turning a blind eye to the fact that their handouts are propping up a repressive dictatorship”

The helping hand that feeds Ethiopians is the same hand that helps bleed Ethiopia. Every year, the US, the UK, Germany, the Netherlands, Canada, Japan and other Western countries hand out billions of dollars in ‘humanitarian’ and ‘economic’ aid to the regime of dictator-in-chief Meles Zenawi in Ethiopia. Every year, these donors turn a blind eye and a deaf ear to the notorious fact that their handouts are used to prop up and fortify a repressive one-man, one-party totalitarian dictatorship.

Today, Western donors have collectively embraced the proverbial principle to ‘see no evil, hear no evil and speak no evil’ of what their ‘aid’ money is doing in Ethiopia. Last week, Human Rights Watch (HRW) pried open Western donors’ eyes to see the havoc their aid money is wreaking in Ethiopia and unplugged their ears to hear the truth about the evil they are helping to spread throughout that poor country.

In a report entitled, Development Without Freedom [1], HRW sketched out the architecture of a vast kleptocracy (government of thieves) whose lifeblood is continuous and massive infusion of foreign aid. The report represents a devastating indictment of Western donors and their client regime for crimes that, if committed in the donor countries, would constitute Class A felonies: ‘Led by the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF), the government has used donor-supported programs, salaries, and training opportunities as political weapons to control the population, punish dissent, and undermine political opponents–both real and perceived.

Local officials deny these people access to seeds and fertilizer, agricultural land, credit, food aid, and other resources for development. Such politicization has a direct impact on the livelihoods of people for whom access to agricultural inputs is a matter of survival. It also contributes to a broader climate of fear, sending a potent message that basic survival depends on political loyalty to the state and the ruling party.’ HRW charges that Zenawi’s regime has used Western aid to benefit its supporters by giving them special access to micro-credit (small loans designed for poor households) loans and benefits under the productive safety net program (multi-year cash payments to those vulnerable to famine to avoid disaster from food shortage emergencies).

The regime has misused state educational facilities for political purposes and engaged in systematic political indoctrination of students, repression of teachers and purging of individuals who are unwilling to support the ruling party from their jobs. In sum, after 19 years and ‘investing’ US$26 billion in ‘aid’, the crowning achievement of Western aid in Ethiopia is the establishment and entrenchment of a one-man, one-party totalitarian state! The Western donors refuse to accept any responsibility for the misuse and abuse of their aid money in Ethiopia; and the conspiracy of silence to cover up the ugly facts uncovered by HRW continues. A few days after HRW released its report, a gathering of vulturous poverty pimps known as the Development Assistance Group (DAG) representing donor states issued a statement denying the undeniable. ‘We do not concur with the conclusions of the recent HRW report regarding widespread, systematic abuse of development aid in Ethiopia. Our study did not generate any evidence of systematic or widespread distortion.’ [2] DAG co-chair Samuel Nyambi was manifestly dismissive of HRW’s findings when he arrogantly proclaimed that ‘development partners have built into the programmes they support monitoring and safeguard mechanisms that give a reasonable assurance that resources are being used for their intended purposes.’

In DAG-istan, what HRW found and reported simply could not happen. HRW made it all up! The report is all lies and fabrications! The fact of the matter is that it is in DAG’s self-interest to bury the truth and keep covering it up even when the truth it is exhumed for public display. For DAG to acknowledge any part of the HRW evidence is tantamount to self-incrimination. They could never admit that the things HRW reported occurred under their watch. As the HRW reports demonstrates, DAG and the donor countries ‘have done little to address the problem [aid abuse/misuse] or tackle their own role in underwriting government repression… even though they recognize [civil and political rights] to be central to sustainable socioeconomic development.’ Huddled together in DAG-istan, the poverty pimps have collectively resolved to continue to do their usual aid business in Ethiopia because ‘broad economic progress outweighs individual political freedoms’.

In ‘their eagerness to show progress in Ethiopia, aid officials aremeles zenawi shutting their eyes to the repression lurking behind the official statistics.’ They say ‘their programs are working well and that aid was not being ‘distorted.’ They refuse to carry ‘out credible, independent investigations into the problem.’ The ‘donor country legislatures and audit institutions [have failed] to examine development aid to Ethiopia to ensure that it is not supporting political repression.’ They refuse to ‘wake up to the fact that some of their aid is contributing to human rights abuses’ in Ethiopia. The Western donors have ignored calls to ‘seriously weigh the impact that their funding has on bolstering repressive structures and practices in Ethiopia.’ They are unwilling to do a ‘fundamental re-thinking of their strategy.’

THE PEOPLE OF ETHIOPIA VERSUS WESTERN DONORS When I wrote my commentaries ‘Speaking Truth to Strangers’[3] this past June and ‘J’Accuse’ last November [4], I argued that in a perfect world Western donors in Ethiopia could be prosecuted for being accessories before and after the fact to the crime of first-degree ‘democricide’, gross human rights violations and for aiding and abetting Zenawi’s kleptocracy. The recent HRW report furnishes a fresh boatload of damning evidence for use in the criminal conspiracy case of ‘The people of Ethiopia versus Western donor countries’ to be tried in the court of international public opinion and in the consciences of all the taxpayers in Western countries shelling out their hard earned money to support one of the most brutal dictatorships in the world. The silent conspiracy between the Western donors and Zenawi’s regime operates on a couple of simple premises. The Western donors in their chauvinistic view believe there are two social classes in Ethiopia. One class consists of the large masses of poor, impoverished, illiterate, malnourished and expendable masses who will not amount to much. The other class consists of the tiny class of elites who maintain a lavish life style for themselves and lord over the masses by manipulating the billions given to them to strengthen their chokehold on the political structure and process. The silent conspiracy is sustained by mutuality of interests. The Western donors want ‘stability’ in Ethiopia, which often means the absence of internal strife that will not undermine their economic and political interests in the country. They want regional ‘stability’, which means having someone who could be called upon to patrol the neighbourhood and kick the rear ends of some nasty terrorists. For those addicted to aid, it’s all about more aid, more free money to play with. As long as the Western donors meet their dual objectives, they do not give a rat’s behind about what happens to their aid money or what harm it does to the Ethiopian masses. When confronted with the truth about the misuse and abuse of aid money as has been documented in the HRW report, the donors will deny it (‘we have built in safeguards, it couldn’t happen), play it down (‘nothing to it’), ignore it (‘nor worth commenting’), excuse it (‘it’s not as bad as it seems’), rationalise it (‘we’ve got to work with the government’), and wax legal about it (‘there is a sovereignty issue’); and to fool the people occasionally, they will come out in public, put on a show of feigned outrage and pontificate about democracy, the rule of law and the rest of it. After all is said and done, they go right back to business as usual.

ETHIOPIA: THE POTEMKIN VILLAGE A Potemkin village is ‘something that appears elaborate and impressive but in actual fact lacks substance.’ Western aid has reduced Ethiopia to a Potemkin village. It’s all a facade, a smoke and mirror show complete with illusions and sleights of hand. DAG is full of it when it counterclaims against HRW’s findings[5]: ‘The aid provided by members of the DAG in Ethiopia is transforming the lives of millions of poor people through basic services such as healthcare, education and water, and long-term food security. Our programmes are directly helping Ethiopia to reach the Millennium Development Goals.’ In their annual dog and pony show, these poverty pimps have been singing the same old song for years: ‘We are saving lives in Ethiopia by the millions. Imagine how many millions would have perished but for aid; how many children would have not gone to school. See the clinics and hospitals that aid has built.’

They challenge us to look at how much economic development aid has brought to Ethiopia: ‘Behold the shiny glass buildings. See all of the fancy roads that snake over the hills and valleys. Look at all of the universities we helped build. Look at the double-digit annual economic growth. Aid money made all that possible.’ What they don’t tell is the fact that many of the shiny buildings have little running water and many more stand unfinished or vacant. The universities have few books and educational materials and even fewer qualified instructional staff. The hospitals and clinics have few doctors and virtually no medical supplies or equipment to care for 85 million people. Ethiopia has one of the highest HIV prevalence rates in the world. Inflation has made it impossible for the vast majority of Ethiopian families to meet their basic needs. The poverty pimps say nothing about the fact that famine and hunger stalks a third of the Ethiopia population year around. As to ‘double digit’ economic growth, it is all made up by Zenawi’s regime.

Share

Africa Needs an Open Access to Western Markets, Not Aid

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.

Share

Turkish PM: Africa needs trade more than aid

In his address to EU-Africa summit held Monday in Libya, Turkish Prime Minister Recep Tayyip Erdogan said that African countries need trade, investment, technical and scientific cooperation more than assistance. Erdogan is the guest of honor at the summit meeting.

We find this encouraging because last week we presented an article proposing a shift from the AID model to more trade and accessible  western markets.

You may read the article from here

We will welcome your opinion on this or an alternative veiw.

Share

The Currency wars: when two elephants engage in a wrestle fight…

 Governments across all continents are doing whatever they can in order to avoid ever using the ‘R’ word in any briefing. I mean the RECESSION.

That itself is not a bad thing. They way they do it could have damning unintended consequences on developing nations, especially those in Africa.
The US and China have been in a tug of war for a while regarding currency manipulation by the latter. Perhaps in order to show its disapproval of the Chinese policy, the US Federal Reserve announced it was pumping over $600 billion into the US economy. Several countries were swift to register their disapproval of the US move but similar or alternative policies with similar effects are being employed by all big economies.
Let us call it  the Cold ‘International Currency’ War. The big guys will surely find a way to resolve it among themselves either by sitting around the table or by indirect punitive measures as is already happening.
We often say that ‘when two elephants fight, it is the grass that suffers’. If Africa’s fragile economies get caught up in the middle of this tug of war, the consequences are obvious. And it would not be the first time Africa will have to suffer the consequences of a currency war. In fact currency war indirectly led to the rise of Hitler and hence the second world war in which 1000s of African military were drafted to fight for their colonial masters and never came back home.
This time, I doubt it will be a war of the armies. It will be a war around kitchen tables and markets across Africa. My fear is that if policies that allow cheap money to flood the markets are unguarded and go viral, they may leave African countries with no borrowing power, less export potential, and dependent on imported goods. A few days ago, I wrote my opinion here on what is needed to really lift the African economies to the level always talked about: it is open access to western markets of African goods and services. Cheap western money will have the direct opposite effect.
Currently, the Bank of Japan, the US federal Reserve, the Bank of England the European Central Bank are competing with one another in pumping out billions of electronic money into their economies. This is no different from the race to build the first nuclear bomb. This policy which they call quantitative easing [The term quantitative easing (QE) describes a monetary policy used by some central banks to increase the supply of money by increasing the excess reserves of the banking system] is flooding fragile economies with the wrong kind of investors leading to unexpected rise in exchange rates, again. African economies are caught up in the middle of the war among the giants.
Many African countries have made significant progress in creating a more business-friendly environment to promote local investment as well as foreign direct investment. Undeniably, many African countries have made impressive progress towards political and economic stability, too. I applaud the World Bank’s move to promote the African economy with press releases and even YouTube videos. Currently some analyst rate the African economy with the highest return on foreign investment. Annual foreign direct investment flow in Africa rose from $9 billion in 2000 to 62 billion in 2008. Currency policies that will be at war with such an enviable trend are very unwelcome.
By the way, is it not about time that we got a globally empowered body to police financial policies of all nations: the US, Europe, China, and others, to ensure a uniform playing field?
 
Share