5 January 2013

East Africa: Aid Is Complicated - Its Myths and Conflicts


In 2012, there were a couple of interesting developments in the aid industry in East Africa and I do wonder whether they will eventually trigger a bit more substantive change away from the let's-fling-cash-at-it business as usual.

Uganda had a bit of a run in with donors when Ireland found that several millions of hard currency had gone safari via the prime minister's office.

Nothing out of the ordinary, you'd think (and the PM did the equivalent of wrinkling his nose over the thought that he'd actually be handling cash, so you see, he can't have been involved in any of this, and in any case, it was just an accounting issue).

And then there were allegations that Uganda, as a sort of underpublicised junior partner to Rwanda, had also been involved in the mutiny and rebellion in Eastern DRC, also not much appreciated by major donors.

I bet Museveni can't wait to tell donors to fly a kite once the country's oil industry starts making money, but he'll be stuck with them for a few more years, not the least because he currently seems to be his own worst enemy when it comes to developing the oil sector.

And he's reasonably safe in the knowledge that at least the US quite like the Ugandan troops in Somalia - going back to a tacit trade off a few years ago when Uganda was the only country willing to send troops to Somalia in return for a bit of acquiescence on governance and democracy.

Rwanda was hit a bit harder by the Eastern DRC maneno, mostly because the country was a bit more obviously involved. Several donors also cut back on aid to Rwanda, and the country then set up a diaspora fund to help offset the cuts, all the while accusing donors of undermining Rwanda's services to the poor. Also cue general complaints about sovereignty and stuff.

I don't necessarily object to strings attached to aid: if your cousin asks you to borrow money, or to be helped out with a donation, then you might want to insist that the money actually goes to school fees and not to evenings at the bar.

In the case of countries, this is of course more complex, and strings attached may be well intended, but possibly not well informed. Still: there is no right to a freebie.

If the kind of vile anti-homosexual legislation that Uganda has drafted is repulsive to the tax payers (including gay ones) whose taxes pay for aid, then I think they are entirely justified to react. Take it or leave it, and ideally, don't get into a situation where 'leave it' isn't an option.

But of course aid isn't just a generally well-intended if sometimes misguided endeavour to help. Most profoundly, it's an industry. And that needn't be a bad thing: I am doubtful of relying on volunteers to provide what can be very technical and professional inputs.

Pay peanuts and you get monkeys. But as an industry, it responds to certain incentives: jobs and careers and portfolios and influence are attached to it - see Uganda, despite years of evidence of corruption.

At its most simplistic, if aid did what it claims to intend, i.e. remove poverty, a great many poverty alleviation experts would be out of a job.

I also very much doubt that aid can do much to lower corruption - and often, corruption, not lack of cash as such, is the real problem. This reminds of the argument that Dambisa Moyo made in her book 'Dead Aid' - a book that I had desperately wanted to like, but that I ended up finding superficially researched and analytically flawed.

She said that governments should borrow commercially rather than rely on aid and the strings attached. But unfortunately there is also absolutely no guarantee that borrowing commercially will ensure that money is invested responsibly.

In fact, if a government is well run and invests prudently and transparently and without corruption, then using donations and concessionary loans would probably be better for the country as it keeps financing costs low.

I liked this quote from the Spectator: 'Like other pseudo-religions, aid has its owns myths, iconography, priesthoods; its state and private elements; its conflicts between fundamentalists and moderates; its guardians of purity, its true believers and cynical hucksters, its genuine saints and its ruthless bureaucrats.

And it offers believers an almost spiritual sense of their own goodness -- which goes some way towards explaining their extreme reluctance to listen to the evidence against it.'

The Spectator article also raises this point, driven by several years of economic crisis and sluggish or negative growth in industrialized countries and yet more rounds of budget cuts: 'In a modern democratic nation state we rightly expect our rulers to put the citizenry first, especially those in greatest need -- not to prioritise humanity in general.

This is particularly relevant if they know, and they do know, that the money they pour into foreign countries is all too often wasted or stolen.'

So yes, like Facebook says, it's complicated. Incredibly complicated, and far more complicated than Dambisa Moyo made it out to be (or I can capture here).

But I do wonder: Will we see any credible donor action on corruption this year, or is that massive machinery beyond redemption? And is the persistent euro crisis maybe finally a useful kick in the behinds of governments everywhere, north and south?

The writer is an independent country risk analyst.

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