“The Heart That Mocked Them, and the Hand That Fed”: How Aid in Sub-Saharan Africa Does Not Help but Harms

“The proverb warns; 'Don't bite the hand that feeds you.' But maybe you should, if it prevents you from feeding yourself.”- Thomas Szasz  (Haythum)

In February 2010, Dr. Jeffrey Sachs, Director of the Earth Institute at Columbia University, gave a passionate web-address to ask students at the University of Alberta to vote yes on the Millennium Villages Referendum, which asked for mandatory donations from each student toward the project. In his address, he passionately claimed, “I believe you will find it a thrill to…end poverty in our time” (Sachs 2010). Listening to his address on the eve of the University wide referendum, I was both bemused and interested in his exhortation. For the longest time, the “children dying of hunger in Africa” has become a cliché best used at dinner-tables with kids who won’t eat their dinner.  His address made me wonder: is it really possible to end poverty through aid? I began to investigate and discovered that the impact of aid on poverty in sub-Saharan Africa was a much more serious and complex issue than Sachs seemed to imply. In this essay, I will argue that aid has not helped to alleviate poverty in sub-Saharan Africa, and that aid has actually had a number of negative effects on alleviating poverty in the region. I will argue this by first examining central terms and concepts key to the discussion and then how poverty is on the rise in Africa even as the aid influx increases. Subsequently, I will discuss that not only does aid not help alleviate poverty, but it actually deepens the problem through its serious economic and political effects.

The discussion around aid and poverty is polarized for many reasons, not least of all because of the sincerity of well-meaning, ordinary people as well as the absolutist polemics of high ranking intellectuals. In the midst of the passionate rhetoric of those involved, it is important to define key terms and concerns before launching into the central argument of this essay. The first term that is crucial in this discussion is the term “poverty”. While often tossed around to include other abstracts like education and literacy levels, it is important to describe exactly what we mean by “poverty”. Obviously, this pursuit illustrates the power dynamics at play, as the developed nations choose, “how poor is poor”; in a sense, we must recognize that integral bias that results from our outsider perspective (Collins 35). That being said, there are multiple approaches used by economists and social scientists in defining poverty. Complex formulae are often used in quantitative measures to establish a functioning “poverty line”, like the money metric approach (Pansters et al 21). More useful, perhaps, is a more qualitative method that concentrates more on subaltern experience and perception, especially in sub-Saharan Africa, inasmuch as the more empirical approaches are constantly debated, seem to lack a human face, and are perceived as being used to mask the “grim reality of the situation” (Collins 56). In this essay, poverty will be used to indicate, “the absolute deprivation of the resources needed to sustain human life” rather than relative poverty (Collins 32). It will indicate the lack of minimum income level required for the, “provision of basic material needs-food, clothing, and shelter” (Steckley and Letts 54). This is the “orthodox definition of poverty” (Thomas 473), in accordance with the UN definition of absolute poverty, who define it as, “a condition characterized by severe deprivation of basic human needs, including food, safe drinking water…and shelter” (Gordon 3).

            The second key term to understand is “aid”. Broadly speaking, aid can generally be divided into three distinct categories; emergency aid, charity-based aid, and systematic aid (Moyo 7). Systematic aid, is further divided into another two categories: bilateral aid, which is when financial resources are directly given to governments either by other governments, and multi-lateral aid, when governments receive financial resources through international institutions like the World Bank and the International Monetary Fund (Moyo 7). This essay will be ignoring emergency and charity based aid as they are much smaller and less significant players than systematic aid (Glennie 27, also see Appendix 1).  Instead, this essay will concentrate on the total net aid influx from systematic aid in general, and will not overly differentiate between bilateral aid and multilateral aid. There are several reasons for considering bilateral and multilateral aid together.  Firstly, it is an approach used in a vast number of academic sources and studies by people like Moyo, Collier, and Easterly because it makes the effect of aid far easier to study. Secondly, the way aid works, whether through bilateral or multilateral means, often appears to be similar. While many scholars have criticized, and rightly so, the conditionalities imposed by the World Bank, it is questionable about how much impact those conditionalities actually have on the way that aid is delivered and do not seem to matter much in practice, since, “as much as 85 percent of aid flows were used for purposes other than that for which they were initially intended” (Moyo 39). Thus, I will not be examining the question of conditionality in this essay, but will instead focus on total systematic aid flows into sub-Saharan Africa.

            One important indicator of poverty levels that I will be using focuses on examining the country’s growth rate. While obviously not always representative (Glennie 78), a country’s growth rate is often closely correlated to poverty alleviation (Staub). Other scholars argue that increasing growth is a bad measure to directly determine whether poverty is decreasing, since there can be growth while poverty levels stay stagnant (Boccanafuso and Kabore). Overall, though, growth rates are a good measuring tool to see how whether a country is going in the right direction of poverty alleviation (IMF 39), and I will be using it as such.

            Another concern that must be addressed in advance, especially in the aid debate, is the question of causation. According to philosopher Karl Popper, while there is really no such thing as “absolute reliance” in terms of causality, we can come definitely negate and correlate things through induction (Popper). Thus, while it is impossible for me to prove that aid is the sole cause of some of things I will be examining, I will attempt to show the correlation between aid and poverty.

             Having examined key terms and some of the basic methodological underpinnings of this essay, I will now examine whether aid has helped alleviate poverty in sub-Saharan Africa. Most studies seem to point to the fact that poverty is increasing in sub-Saharan Africa. Sub-Saharan Africa’s average per capita income is roughly US $1 per day, which is lower than it was in the 1970s (Moyo 5), and is a far cry from the US $652 per annum that UNICEF claims is the bare minimum needed to purchase enough food to survive in sub-Saharan Africa (Stover 3). In a broader measure, it is estimated that between 1981 and 2002, the number of people in sub-Saharan Africa living in poverty nearly doubled (Moyo 5). Sachs articulates more conservative numbers, but still acknowledges that the number of people living in 1981 in extreme poverty was far lower than the number in 2001 (Sachs, End of Poverty 23). The number of impoverished people has increased, according to a report by the US Department of Agriculture, by 53% since 1992 (Doherty). Sub-Saharan Africa’s annual population growth does not account for this frightening rise of poverty, as it is barely at 2.8% (United Nations 2008). Other statistics are even more worrying; a recent United Nations report claimed that, “One person in two lives in extreme poverty in sub-Saharan Africa” (United Nations 2005). Further studies show that at least 300 million Africans are malnourished, with not enough food to eat (Mepham and Lorge ix). It is also expected that the number of impoverished people in Africa will dramatically increase in the next decade (Murithi 5).

            Parallel to this growing poverty, aid inflow has been increasing (Appendix 2). Approximately US $1 trillion had flowed into sub-Saharan Africa since the 1940’s in the attempt to alleviate poverty, but the number of impoverished people has only grown (Moyo 35). This has been acknowledged by economists through various studies, like the famous research paper publicized in The Economist by Peter Boone, who found that aid financed consumption more than anything else (Easterly 45). William Easterly, economist at NYU and outspoken critic of current aid policies, shows a direct correlation between increasing aid and decreasing GDP (Appendix 3). According to Harvard economist Dambisa Moyo, “Clemens et al (2004) concede no long term impact of aid on growth…Hadimachel and Reichel find a negative relationship between savings and aid” (Moyo 46). One study often quoted by pro-aid economists contradicts these assessments, however, is the Burnside-Dollar academic study done on behalf of the World Bank. The study appeared to indicate that, “aid could accomplish great deeds” (Easterly 47) and that, “aid can be effective in any country” (Easterly 47). According to Moyo, though, “in later empirical work, the Burnside-Dollar result failed to stand up to scrutiny”, a view shared by other IMF researchers like Raghuram Rajan and Arvind Subramanian (Moyo 40 and Easterly 49). Even in the best of conditions under the scrutiny of hundreds of economists and aid workers, aid does not appear to have helped alleviate poverty in a lasting way. Jeffrey Sachs’ pet project in Sauri, Kenya, claims to be a success story for “smart aid” (Millennium Promise), yet reports hinted at financial incentives for workers to keep quiet about anything wrong with the project, a clear indication that things may not be going as supposedly well as they are supposed to be (Rich).

In spite of the mounting evidence that aid does not appear to have resulted in palpable and lasting poverty reduction in sub-Saharan Africa, aid is still increasing to Africa. Mirroring the quote by Bob Geldorf, “Something must be done…whether it works or not” (Glennie 9), the amount of aid is once again skyrocketing (Glennie 12). At the G8 Summit at Gleneagles, a commitment was made to write off more than US $1 billion of African debt and to increase aid spending to US $128 billion (BBC). President George Bush increased development aid from $1.3 billion in 2001 to $5 billion by 2005 (Frist). Ironically, the amount of people living under the poverty line actually increased during that time (Wroughton). Clearly, aid is not helping, and increasing it to even more astronomical levels, based on Paul Collier’s study among others, is also unlikely to help. Collier’s study postulated that there has been a colossal 1% growth increase in Africa over the last forty years through the $US 1 trillion investment of aid (Collier 100). However, the same studies by Collier show that as aid increases, Africa receives diminishing returns; in essence, “when aid reaches about 16% of GDP it more of less ceases to be effective. Africa was close to that level at Glengales” (Collier 100).  

            Some, on the other hand, claim that even if aid is ineffective, “the price is small” (Oxfam). Though aid is not working at alleviating poverty, what harm can it do?  I will argue in opposition to this position that aid actually makes the poverty situation worse through negatively impacting both the economic and political situation in sub-Saharan Africa. Economically, aid has a multi-faceted impact on Africa’s economy, specifically through three important effects:  the micro-macro paradox, “Dutch disease”, and aid-dependency. The micro-macro paradox, as explained by economists like Paul Mosely (Quibria 7), is when, “a short term intervention may have few, discernable, sustainable, long term benefits” (Moyo 44). Moyo gives an excellent real-life example:

“There’s a (local) mosquito net maker in Africa…he employs ten people (who) have to support upwards of fifteen relatives…enter Western governments to collect and sent 100 000 mosquito nets to the affected region…With the market flooded with foreign nets, our mosquito net maker (and his employees) is promptly put out of business….in a maximum of five years the majority of the imported nets will be torn” (Moyo 44)

  

The micro-macro paradox is superbly relevant when examining the aid situation; while aid often appears to have initially to have a number of positive effects in the extreme short term, when looking at the long term, negative effects become apparent. This has happened in many countries in sub-Saharan Africa when influx of “free” European or American food drives already impoverished local farmers out of business. In Malawi, for example, millions of tons of US food aid drove a large sector of the agricultural industry into the ground, thus severely damaging a portion of Malawi’s economy (Beaubien). Without a strong agricultural industry, it is difficult to imagine how a country like Malawi can hope to feed its starving citizens.  

            A second negative economic effect of aid results from what economists call “Dutch disease”. Originally termed after economists observed the effects of North Sea gas on the Dutch economy, Dutch disease occurs when, “the resource exports cause the country’s other export activities to become unprofitable. This makes the country’s other export activities uncompetitive” (Collier 39). In the aid context, Dutch disease means that increases in foreign aid depresses exports, which further limits the economic prospects and livelihoods of ordinary African people (Pratti and Tressel). When governments accept foreign cash, the local currency gets stronger, resulting in the detriment of the export economy, which was the exact situation that occurred in Kenya (Moyo 62). Since competiveness decreases, there are adverse effects on “export sector employment (usually in the form of a decline in…the manufacturing sector) and ultimately growth” (Moyo 63). While some economists, like David Roodman, argue that the net effect of Dutch disease is positive (since it essentially makes the country “richer” through foreign cash), other studies have fairly conclusively demonstrated that Dutch disease has an adverse effect on growth, and by proxy poverty (Rajan and Subramanian 1). In Uganda, for example, Dutch disease has caused the shilling there to rocket at high rates, drastically lowering the income of many Ugandans involved in the export sector (Atingo-Ego ii). As a result, poverty is increasing rapidly in Uganda, with more than 61% of the population classified as impoverished (Ahikire 105).

            The third, and possibly most economically disastrous, economic consequence of aid is through aid-dependence. Since aid makes up at least 13% of the GDP of the average sub-Saharan country, countries tend to become heavily reliant on that aid to sustain themselves and their people (Moyo 65). Almost 75.2% of Sao Tome’s GDP, for example, comes directly from aid (Nation Master). This makes it incredibly difficult to imagine development and poverty reduction without aid, as aid is such a significant part of the economy. Thus, aid is never quite enough to remove a significant portion of the population from poverty (in Sao Tome’s case, 33% of people continue to live in extreme poverty), but the governments are completely dependent on aid to combat it (IFAD). To quote Moyo, “Aid engenders laziness on the part of the African policymakers…Because aid flows are viewed as permanent income, policymakers have no incentive to look for other ways…(to) development” (Moyo 66). Aid dependence, then, is when aid serves as a force for, “lessening of self-reliance the part of the recipient” (Lancaster and Wangwe 10). A “culture of aid-dependence”, is created, where agency to reduce poverty is transferred away from the African people to Western celebrities and politicians. Easterly refers to this as the new “White Man’s Burden”, in reference to the famous Kipling poem. He further notes that aid-dependency takes away from the capacity of African entrepreneurs, citizens, and politicians as “Searchers” to pursue home-grown solutions that will have lasting effects to alleviate poverty (Easterly 29).

            On the political front, aid has serious effects on poverty in both the way in which aid supports corruption and how aid can exacerbate conflict. Corruption is one of the more powerful ways in which aid further exacerbates poverty problem. It has now become fairly common-knowledge that many sub-Saharan African governments willfully steal aid and set it aside for their own personal use. More than US $131 billion that the World Bank has given in aid to Africa disappeared in a cloud of corruption and kleptocracy (Moyo 52). Stories abound about how leaders like Mobuto of Zaire leased Concorde jets to fly his daughter to her wedding, while millions of people in Zaire languished in poverty (Moyo 22). Aid creates the possibility of gains for unscrupulous officials with little prospect of any significant consequences. In Zambia, for example, President Mwanawasa embezzled more than US $80 million (Moyo 53). Yet even after this became public knowledge, Mwanawasa’s regime, received upwards of US $1.5 billion from the World Bank, simply because of the enormous pressure from institutions and people to “end poverty” through aid (Moyo 53). Aid tends to actually increase corruption, as indicated in studies done by Alesina and Wider (SMoyo 52). Not only do the aid donors know about the intense corruption, but they often end up supporting it. For example, when Sani Abacha of Nigeria embezzled aid money away in Swiss banks, the Swiss government refused to return the money in a post-Abacha government, in spite of Swiss courts ruling that the banks had an obligation to do so (Collier 136). Paul Collier also studied numerous French development agencies who bribed African officials in order to have the development plans put through; in other words, French citizens were tax-subsidizing corruption (Collier 137). Other studies show similar results, indicating that organizations like the World Bank were willing to turn a blind eye to corruption as long as their development plans went through (Glennie 71).

Corruption also has a direct impact on poverty levels. Corruption appears correlated to a lower per capita income and a 1% decrease in net foreign direct investment (Moyo 51). From a more long term perspective, it is more difficult for the citizens of sub-Saharan countries to choose to change their governments to ones actually committed to poverty reduction as long as the current, corrupt governments are kept afloat by aid money. To quote Moyo, “With easy access to cash, a government remains all powerful, accountable only (and only then nominally) to its aid donors…(and not to) a well functioning civil society” (Moyo 58).

            Aid also appears to be a significant instigator in civil war. According to Collier, low income per capita makes civil war more likely and that civil conflicts are often fought over precious resources in order to offset that poverty (Collier 20). Aid flow can quickly become those resources when mismanaged, as they often are; contributing to the development of civil war and conflict (Walters). Michael Maren, for example, makes a convincing case that the civil war in Somalia of the 1990s was one fought over aid (Moyo 60). He claims that relief aid in 1979 helped bolster the corrupt government of Siad Barre, and that through the dumping of aid commodities in a classic micro-macro paradox, Somalia was driven into a state of serious famine in 1991 and 1992 (Hansch). Later on, as the US forces attempted to get rid of Barre and his faction, Somalis fought to secure the vast aid supply of US $4 billion that had entered their country, and is today largely unaccounted for (Hansch). While clearly not the cause of the entire conflict, aid was a significant factor in the Somali civil war. Ironically, while emergency aid saved thousands of lives during the war, systematic aid helped to cause the war. Aid can also further exacerbate the brutal nature of war, as aid supplies are stolen and used to further the war machine. In Somalia, for instance, up to half of the current aid flow is diverted from its intended purpose and instead used to arm various militant groups (Lederer). In Ethiopia, according to a BBC report, millions of dollars used to try to help famine victims went to buying arms for rebel groups (Economist). Furthermore, aid workers, in a war-torn country where accountability and transparency are extremely low, can also directly further contribute to the suffering of innocent people involved. For example, in the Congo, peacekeeping forces providing aid were found to have sexually abused many Congolese women and children; what was even more disturbing, however, was how widespread the system of abuse was and how so few of the perpetrators have been brought to justice (Ross). While the sexual-abuse scandal was obviously not directly related to poverty, it illustrated the fact that aid workers are not always involved in directly helping people in conflict situations. In a broader measure, civil wars and conflicts have not only an enormous cost in human life, but also serve to impoverish more people. Collier estimates that the cost of an average African civil war is US $16 billion, leaving the country around 15% poorer than it would have been, making the lives of already impoverished individuals even more difficult (Collier 27).

            In order to better understand how these factors come together, I will be briefly analyzing the country of Botswana. In the 1960s after independence, Botswana was a relatively poor country with aid being an enormous component of its economy (Easterly 28). Poverty rates were extremely high, with more than half the population living on less than a dollar-a-day (Konopo). However, Botswana, as it attempted rapid free market reforms, sliced away at their aid flows. Utilizing their rich natural resource of diamonds, Botswana was able to grow at an outstandingly fast rate, unlike similarly resource-rich Nigeria. The difference was aid. As Botswana’s aid share eventually decreased, their capital growth sprang to 6.8%, “one of the fastest growth rates in the world” (see Appendix 4 and Moyo 38). Per capita growth domestic figures showed an increase from US $1600 dollars in 1980 to almost US $10 000 in 2010, significantly reducing the levels of poverty in Botswana. While poverty is still a concern, their stable government and forward thinking economy allows Botswana to further combat poverty, and the Botswana government fully expects to cut their poverty rates in half by 2015 (Konopo). Of course, while some economists have attributed Botswana’s growth to the initial aid, the evidence appears to be against them. Not only did other countries with similar economic resources fail to complete an aid generated economic boost, but the empirical data seems to demonstrate that only as Botswana pulled away from aid were they able to grow; to quote Moyo, “Botswana succeeded by ceasing…aid” (Moyo 38).

            In the same way that Shelley’s famous verse about, “the heart that mocked them, and the hand that fed” created the image of a legendary, but ultimately broken, statue of the ancient Egyptian pharaoh (Shelley), the hand of aid has not helped to alleviate poverty, but has made it worse. Economically, aid serves to foster a micro-macro paradox, encourage Dutch disease, and create aid-dependence. Politically, aid can help shore up corrupt governments and contribute towards conflict. It is truly essential that we critically analyze and ponder about how our aid is working in order for it to succeed. The world certainly has an ethical responsibility to help impoverished countries, especially since the developed world may have had a hand in putting sub-Saharan Africa into poverty. However, answers are not precisely clear as to what form that aid would take. Rather than reducing things down to British Prime Minister Gordon Brown’s statement that, “Let us double aid to halve poverty” (Glennie 7), or working to finance Sach’s “Big Push” to end poverty, maybe what we need instead is a “Big Rethink".

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