The seven deadly sins of aid.

Author:Okaru-Bisant, Valentina
Position::GUEST COLUMN
 
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Far from assisting developing nations to break out of the cycle of poverty, aid - at least in the form it usually takes in Africa - creates dependency and discourages local development initiatives. This month's Guest Columnist ponders on how aid can become a genuine tool of emancipation for Africa.

Proponents of financial and technical aid point to a few isolated success stories of aid to support the argument that its continuation is the solution to Africa's economic development problems.

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But evidence demonstrates that financial and technical aid has emasculated Africa's economic development and there is an urgent need to move from financial aid dependency to trade interdependency.

Aid that is targeted to governments, or communities that governments select, has stifled the long-term sustainable development of most nations in the African continent.

In the last half-century, developed nations have given more than $2.3 trillion in official development assistance. During the same period, Africa received $813bn. Between 1960 and 2003, African countries received $600bn in financial and technical aid, but the continent remains the poorest part on the planet, despite its substantial natural resources and developmental potential.

The continent continues to be trapped in a vicious cycle of financial dependency. Empirical research demonstrates that there is no link between financial aid and economic growth. For example, despite all the aid inflows, from 1975 to 2000, GDP per capita in sub-Saharan Africa fell at an average annual rate of 0.6%. African countries lost ground in the 1990s, despite receiving aid equivalent to an average 12% of their GDPs.

Sierra Leone's standard of living dropped 5% a year from 1980 to 2002 although it received aid equivalent to 15% of its GDP. Over the same period, Zambia became poorer at an annual pace of 1.8% of GDP, despite assistance equal to 20% of its economy.

Contrast with Asia

In contrast with African nations, East Asian nations that were poor in the 1960s and 1970s have since achieved spectacular growth. The success of Asian nations has been attributed to the fact that they opened their markets and had sound trade and tariff policies and practices. The most open nations experienced an average annual growth of 5% during the 1990s, while the world's closed nations grew by just 1.4% a year.

But some African nations have very protectionist policies. While the rich nations cut their average tariffs by 84% between...

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