Is it worth it? A focus on Africa - PowerPoint Presentation

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Is it worth it? A focus on Africa

Foreign Aid

And what it does for AfricaSlide2

The world in a nutshellSlide3

Sub Saharan AfricaSlide4

In sub Saharan Africa there are:

Massive population increases – 186 million in 1950 – 988 million in 2016.10 countries with the most extreme poverty (less than $1.25 a day)

One in three who are malnourished.

589 million without electricity. Kerosene a major cost.

32% who have no access to clean water.

35% of the world’s refugees come from here.

Less than 20% of women have access to education.

More than a million die of malaria

.

But 1 in 2 have cell phones and new lights being distributed.Slide5

Types of Aid

Bilateral – Government to government – strategic? Often used to bolster the military at home.Multi lateral – World Bank, IMF, UN – less popular because it is less strategic but probably more effective..

Tied aid – money must be spent in the donor country. Tied aid amounts to about half of all aid. Very often food aid. It means the food cannot be bought locally.

Project Aid – funding for specific project – hospital, school, agriculture etc

Disaster relief - $28bn in 2015 world wide.

Military – arms sales (2015). US $36bn, Russia $10bn, Sweden $5.5bn, France $4.4, China $2.2bn. The US provides $3 billion a year to Israel.Slide6

Aid to Africa – the facts

2014 - $135 billion in aid of plus $30bn from NGOs

$50bn lost in corruption yearly.

9% of that money is spent on refugee programs

Less than 1% of health spending reaches the villages in Chad.

Total income of 48 countries in Africa is little more than that of Belgium

Donor of the year - China

UN Target 0.7% met only by Scandinavia, Holland, the UK and LuxembourgSlide7

Short term aid until govt aid arrivesSlide8

Arms sales to developing countriesSlide9

Differences between NGO and Government Aid

80 - 85% of aid comes from governments – 15 – 20% from NGOs.NGO aid tends to be social aid aimed at the common people.

NGOs tend to be non profit organisations but can access govt funding.

NGOs work with the people rather than for the people.

NGO Aid has no specific time limit whereas Govt aid usually does.

NGOs run by volunteers – money raised by public donation.

Examples :

Caritas

Child Fund Australia

The Fred Hollows Foundation

Oxfam

Save the Children

World VisionSlide10

The role of NGOs

NGOs deliver humanitarian assistance and services more directly but still experience problems:

The donation of material goods can be problematic as they are difficult to transport and in the case of clothing can be climatically and culturally inappropriate.

Humanitarian aid funds have traditionally only funded short-term emergency relief rather than longer-term disaster prevention strategies.

Humanitarian aid is most effective when local communities, local NGOs and grassroots organisations are primarily responsible for coordinating and conducting needs assessments in their respective areas. 

Are audited – World Vision 84% of money gets through.Slide11

In favour of aid

The economic and moral reasons for giving foreign aid:

Basic human decency.

To make up for economic exploitation of the past.

Improve the country’s international image.

Creates a market for donor goods.

Build positive working relationships with other governments.

Promote the conditions for peace and stability, because many governments genuinely believe we’ll be safer and happier when everyone else is safe and happy.

Allows poor countries to invest rather than just save.

Helps skilled work/technology exchanges (e.g. Green revolution of the 1960s).

Micro financing makes a difference on the ground. Mohammed Yunus Nobel Peace prize. In India $485 limit.Slide12

So should we give aid at all? for

Moral argument ( Norway earns per capita 600 times that of Burundi) – 2004 Tsunami in Asia.

Humanitarian aid – illnesses controlled – measles, river blindness, HIV/AIDS, TB

Economic development worked in Korea, Indonesia, Thailand and Malaysia.

Targeted aid works – COD AID – Norway and UK set targets – governments start with their own money and then aid kicks in.

Good for all of us – Norway sets deforestation targets in Brazil(satellite monitoring) – UK $157 for every student that finishes high school in Ethiopia

Donors to do fewer projects (Norway on how to manage an oil boom rather than tropical medicine).

Go the whole hog – not just vaccines but fridges and jeeps as well.

On their way – 50% now have mobile phones

Dangerous to let poor countries fall behind.Slide13

against

According to critics, foreign aid does not promote faster growth but may in fact hold it back by substituting for domestic savings and investment.

The aid is generally focused on the growth of the modern urban sector. Therefore it increases the gap in living standards between the rich and the poor in Third World countries.

If the aid given is concerned with unproductive fields or obsolete technology, it will have the effect of increasing inflation in the recipient country.

The biggest objection is that donor countries interfere in the economic and political activities of the recipient country.

Loans often used to increase imports/ paying off debt.

Creates dependence on aid.Slide14

Africa – China’s colony?

Over half of China’s foreign aid goes to Africa.China is trading a few things that it does quite well — like infrastructure and consumer goods — for the things that it lacks at home. Oil, copper, iron ore, bauxite and nickel. Financing large scale infrastructure.

China has a centralised economy and therefore bargains as a whole not a multitude of companies – African countries at a disadvantage.

China not a colonist say the Chinese – no different from the Europeans?

A small elite benefits in Africa – particularly in mineral rich regions – China does not care. $65 Million stadium in Mozambique.Slide15

But in Africa they have

90% of the world’s cobalt90% of the world’s diamonds and chromium

50% of the gold

50% of the phosphates

40% of the platinum

40% of the hydro capacity

30% of the uranium

8% of the petroleum

And millions of acres of rich, untilled soil.Slide16

Africa is not poor but poorly managed

Govt by vampires – use govt for personal gain – keys to the treasury. Money sent to foreign havens. Money recovered from OS and then stolen again (Nigeria).

Those exploited move to underground economy. No taxes raised – state paralysed. Those left out start civil war often with a few followers.

Instability – no foreign investment.

Print money (Zimbabwe).  A loaf of bread then cost as much as 12 new cars could have cost 10 years before. Prices doubled every 25 hours, which gave Zimbabwe the second-worst hyperinflation in history, behind post-war Hungary

Cosmetic reforms to satisfy donors.Slide17

Printing money - A record – this equals $US1Slide18

Major impediments

Resistance to reform from rulers and hangers on ( tribal elders/ clan chiefs/ the army, intelligentsia)

One trick economy – no chance to plan. Subject to vagaries of international market (e.g. PNG and the coffee crop)

Over reliance on natural resources – Nigeria and Oil (leads to corruption,(Malaysia 1MDB and Najib

R

azak) Mobuto Sese Seko of Zaire stole at least $5bn, civil wars etc). Borrowing at the wrong time etc (Indonesia)

Tropical environment (leaching, diseases, poor soils – no glaciation etc.

Landlocked countries – 15 of them in Africa.

Over exploitation of resources (Burundi, Nepal etc) and environmental degradation.Slide19

An unbalanced economy vs. a balanced one

MalawiGermanySlide20

It can work

the World Bank projects that global poverty will have fallen from 902 million people or 12.8 per cent of the global population in 2012 to 702 million people, or 9.6 per cent of the global population, this year.Slide21

Against

Aid often serves national interest (Peru and Mormons) Europe gives aid to countries that halt migration. US aid if you fight radical Islam. Australia - most aid goes to PNG

.

Exhaustion of good will in the West?

Debt

repayments are $20bn a year- health and education miss out

70% of the public purse is aid money in

Africa.

More money now sent home via remittances than aid

. Are they starting to look at alternative sources of money?

Corruption steals an estimated $150bn a year. In 2012, Ugandan Prime Minister Mbabazi apologized to the United Nations when his aides embezzled more than $13 million of aid money. A 2015 report found that more than $100 billion in aid to Afghanistan had been wasted or stolen by "kleptocrats”.

Charity is misplaced Malawi 2102 - $1.17bn - $30m stolen, investigator shot and documents stolen. Trust gone.Slide22

Corruption and culture

Corruption a family or clan/tribal matter.

Corruption used to keep someone in power (e.g. Mercedes Benzes for the police. Corruptees then tied to the powers that be as without them the “gravy train” will stop.

A means of self enrichment – Mobuto - $5 Billion, Abacha ( Nigeria ($

2-5Bn)

Corruption – “our time to eat” PNG.

Corruption an outcome of poverty/ poor wages or no wages – police esp at risk.

Bribery is seen as a “thank you” in many countries.

Corruption often give power to the moneyed not the capable.

Failure to pay quickly can mean a relative dying in hospital or a clever child failing an exam .

Leads to problems with coups and peaceful transition of power.

“To be African is to be corrupt” – Somalia – 50% of population need food aid – 50% stolen by warlords. Education the answer

? Botswana’s newspapers.Slide23

Poor governance

Start up time for business in Cameroon – 426 days (South Korea – 17 days)

Aid often kills local business (e.g. Mosquito nets)

Food for peace programme dumps US surplus wheat and kills off local farmers livelihood.

War – in Africa war is mainly about control of govt money – the aid budget.

Aid is often open ended – that always fails.

As long as aid continues govt just has to pay the army and no need to raise taxes.

Most SSA Countries do not publish proper budgets.

Those who have aid for a limited time succeed ( China, Botswana, India etc) – Marshall plan in Europe 1947.Slide24

But the most important factor is the quality of the institutions in that country

Example – Nogales ( which is half in Arizona and half in Mexico)Slide25

Nogales – what both have in common

The same ethnic mixThe same geographic and climatic environment but:

In Arizona they have:

People are more productive because

They have private property rights

Enforceable contracts that re predictable

Opportunity to invest

Have control over their own money

An open exchange of currency

Because in Arizona

Higher average income

Higher life expectancy

Better health facilities

Better roads

More frequent and democratic electionsSlide26

Coffee BreakSlide27

What do we in Australia do?

90% goes to the Indo Pacific region

e.g.. PNG, $477 m – Indonesia $323m and the South pacific.

$5bn total in 2015.

Performance based – no longer use the Blue book.Slide28

How our aid comparesSlide29

Australian aid abroad

The public already donates $4.3 billion a year for development aid! This is through the Australian Governments tax-payer funded aid budget.

But half of this money is spent on highly paid consultants and training, much of which, according to Canberra’s own review of Australian Aid to Papua New Guinea, has “simply made little difference” 

 the official objective of Australia’s Aid program is to “to assist developing countries reduce poverty and achieve sustainable development, in line with national interest.”

For example aid money has been used to fund controlling ‘irregular’ immigration and upgrading of detention facilities in Indonesia;

and training Burmese intelligence officers and counter-terrorism workshops.Slide30

Case study – 2004 Tsunami

Australian Government donates $1billion.Half of that was loans.

20% reached affected areas.

Donations lost through corruption;

misspending on areas that are not of prime concern or sensitive to the needs of affected communities at the time; and,

late arrival of assistance.Slide31

Aceh 2005 and 2014Slide32

Case study PNG

Receives $500 million annually from Canberra. Most of it is unaccounted

for despite tied nature of projects.

In exchange for not forcing the Manus island issue?

Money wasted on middlemen and expensive consultants working in the foreign aid industry.

Too many advisors / contractors – should be given concrete tasks not just giving advice.– take skills with them back to Australia. Taking the jobs of the locals? Police only in advisory capacity as well.

Despite 15 years of continuous growth, PNG still has one of the lowest levels of GDP per capita in the region.

2017 Australia rejects PNG request for aid to be budget aid

. 68% of PNG budget is Australian aid.

Australia cannot afford to have it fall apart. HIV/AIDS, malaria TB, border crossings, shared border with Indonesia etc. Chinese interest in? A growing population – 22 million by 20250 – unsustainable?Slide33

And a change in tack?Slide34

Australia cuts its aid in 2015 -17

Six OECD countries – Denmark, Luxembourg, the Netherlands, Norway, Sweden and the UK – have met the United Nations target to provide at least 0.7% of their national income as foreign aid.

Australia is at 0.23% at the moment. 23 cents in every $100.

2015 – 20% cut. 50 programmes cancelled or altered.

2016 – a further $224 million cut. Three-quarters of aid to Sub-Saharan Africa was cut. Money to our impoverished neighbour Indonesia was reduced by almost 220 percent, while war-torn Afghanistan lost more than half of its funding.

Cambodia was the exception – a refugee deal?Slide35

Perhaps?Slide36

And aid to East Timor?Slide37

Child sponsorship

Good – very marketable, emotional response. The face of the village :heavy in Admin costs.

Helps the child but not the village? One but not the others?

Child gains an education but has to leave because there are no local jobs

Nevertheless it does greatly increase school retention rates and better employment opportunities according to research.Slide38

Child sponsorshipSlide39

Cambodian orphanages

In 2011, a UNICEF report found the number of orphanages in Cambodia had increased by 75 per cent and the number of children being institutionalised had nearly doubled.

This was despite the fact nearly 80 per cent of those 100,000 children were not orphans. Orphanages create orphans.

Some orphanages are a business, an industry that trades on emotion - they convert the guilt and sympathy of wealthy voluntourists into money. To do this, the orphanages need orphans. There aren't enough orphans, so poor families have been persuaded to give up their children, sometimes with a cash or simply a promise to feed the children.

Geraldine Cox and Sunrise Children’s villages drama.Slide40

Sunrise villagesSlide41

Sunrise advertising – the ethics of it?Slide42

Guilt tourism and slum tours

Tourists paying to hand out food.

Taking local jobs??

Local organisations have to upgrade facilities– look after

them.

No checks on volunteers working with children.

Work they do is often unnecessary but the funding is

not.

Orphanage tours.

More about the West than about the poor?

Madonna and the African 5 year

old twins

adopted in Malawi. Their father and family are still in Africa and still poor.Slide43

Slum TourismSlide44

Loans as aid

IMF and World Bank offer loans to the poor countries but on conditions.This often means privatising their economies and allowing western corporations access to their mineral wealth.

e.g. Ghana – needed a loan but were subsidising rice growers in the North of the country. IMF insisted subsidies stop – loans were given and money used to import rice from the West.

State loses control over its own economy?

IMF packages have also been associated with negative social outcomes such as reduced investment in public health and education. Into deregulation and privatisation of nationalised industries.

Dominated by the G8 and not much input from recipient countries.Slide45

Debt forgiveness

Africa largely debt free after independence in the 1960s. Then in the 1980s they went on a borrowing binge. By the mid 1990s they owed more than their annual GDP.

The money came mainly from foreign governments not bankers to develop roads, power plants, ports etc.

Corruption, natural disasters, wars, bad policies, and bad luck made it impossible for African governments to keep up with debt payments without cutting basic services to their people.

The image of rich countries forcing poor ones to cut down on schools and hospitals became an embarrassment.  Creditors came together and African countries got softer deals.

one by one, over the past 15 years, 30 African countries have seen their debts almost-entirely forgiven. However in Ghana, Uganda, Mozambique, Senegal, Niger, Malawi, Benin debt levels are creeping back upSlide46

Eurobond issues – mature in 2021-2025 – then $4bn annually to repaySlide47

Debt forgiveness

 the discipline brought about by the process to qualify for a debt write-off — a discipline that was new for Africa — came in handy when, starting in the mid-2000s, the prices of oil, gas, and minerals began to climb and the technologies to look for natural resources got better and cheaper.

Suddenly

, African governments had much more money to spend, and new offers to borrow — this time from private bankers.

They could have gone on a borrowing binge again. So far, they haven’t.

Africa has grown on average about 5% a year. The proportion of Africans living in poverty has been falling for more than a decade. Cautious optimism is in order despite graft.Slide48

Reading guideSlide49
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