Aid Has Been Largely Ineffective in Promoting Development in Africa - Coursework Example

Aid Has Been Largely Ineffective In Promoting Development in Africa Discuss. Table of Contents Table of Contents 2 Introduction 3 Critical Analysis 9Conclusion 12 References 14 Introduction Promoting development through aid in Least Developed Countries (LDCs) is considered as a catalyst that can bring transformation and generate conditions, which will help the poor people to rise from their existing living standards and make their lives healthier, productive and beneficial to a society. The dawn of last decade has observed extraordinary success rates in some of the LDCs, but the developmental conditions prevailing in African nations still remains miserable. In the past 60 years, the continent has received an estimated amount of $1trillion in terms of developmental aid from the rich foreign nations. Yet, the actual per capita income of an average household residing in Africa is less than what it was back in 1970s. In this regard, more than 50% of the population in Africa nearly 350 million people are identified to live on an income of less than $1 dollar a day (1Shah, 2015). Hence, assessing and evaluating the impact of aid provided by rich nations to the African countries has created controversies among the interested parties. The chief concern behind such vital issue is the lack of agreement amid academics, practitioners, doctors and policymakers (1Shah, 2015). In this context, the essay addresses the relationship between aid provided by the rich nations in Africa and its implications. The essay further outlines the viewpoints of several important African nationalists and authors, who are disappointed by these movements and concluded that aid overall was unable to target and promote development in the continent. Ineffectiveness of Aid Provided in Africa The official development aid is provided to the African government from several foreign governments for better growth of the overall economy. The African countries are offered with adequate support, but the development as well as growth in Africa is identified to a minimal extent. In this regard, evidences have been inculcated through various sources depicting the ineffectiveness of foreign assistance in the African countries. Based on the studies, it has been identified that foreign assistance generated mixed outcomes. Some of the researchers concluded that financial aid had negative impact on development. Studies also suggested that there had been no change on the development of African countries during aid. The table below outlines the financial aid provided to various nations, where it can be observed that ‘Sub-Saharan Africa’ (SSA) nations received the highest amount of foreign aid (1Shah, 2015). Despite the fact that the African countries have been receiving the highest percentage of funds since the last decade, the truth is that development is stagnated and opportunities for growth in these countries have rather declined. SSA nations are witnessed with no improvements in their ‘per capita incomes’ between the periods of 1965 to 1999. Even though Africa has been deprived of deficiency in income growth rates still, it made continuous improvements in their education and health systems (Shah, 2015). One of the major drawbacks encountered is related to the reduction in life expectancy rates among the residents of the country. The continent encountered the problems of a fall in the standards of living and rise in the poverty levels. The aid beneficiaries have not been provided and utilized on the basis of strong policies that led to the deterioration of institutions along with the involved donors, who never established an agreement amid them and beneficiaries, which further slowed down the process of development. At the time of Cold War assistance provided by foreign countries to the suffering nations in terms of foreign aid, were mainly supported by geopolitical objectives, instead of poverty reduction aims. Due to the absence of agreement between the involved parties and their diversified motives, the aid was unable to administer the issues of poverty, health and development. Initially, the donors focused their attention on the segregated and left behind assignments, rather than on the overall development mechanism. This problem was to be examined by the policy based lending from the donors. The prescribed format of lending involved a complex procedure and engrossed formulas for depicting them. They ignored the requirement of classifying nations for creating, designing, appraising and executing the reforms (Goldin & et. al., n.d., pp. 31-33). In addition, foreign assistance had its own limitations. Donors formulated the idea that provisions of lending would replace the ownership of reforms by the nation. The nation benefitted by foreign aid was not much obligated while implementing reforms. In addition, none of the parties was interested in implementing reforms and alleviation of issues. The policymakers failed to adhere to the significance of institutional and governmental reforms and focus on the societal investments for strengthening trade and macro-economic goals. Therefore, unstable governance led to degradation of growth standards and implementation of economic reforms. African nations faced situation of a dwindling economy with a continuous fall in the value of its export quality products, thereby initiating disinvestment process by the foreign investors because of high risk of incurring losses. Even though the recent policies have progressed, but the governance had failed to amend the transitions required for successful application of reforms. In this context, ineffective alignment of the governmental policies with foreign aid programs led to a major challenge while implementing reforms (Goldin & et. al., n.d., pp. 31-33). UN Council at the time formulating the list of LDCs found that 34 nations from the African continent itself served the topmost position in the list. From the initial stages, foreign aid has been provided by the UN and the World Bank Development Fund to the African countries. The funds provided to the African nations have been expended in projects that are not involved in any kind of sustainable development. These aids were consumed by the local government officials for the fulfilment of their personal requirements. Foreign aids were considered as additional benefits to the annual budget proposed by the government. Although these nations were offered a whopping $170 billion in terms of foreign aid, but the living standards of African people fell at a rate of 2% on an annual basis. When these statistics were compared to the earlier statistics of 1970’s, it has been identified that the condition of African economy has further gone down (Orjiako, 2001, p. 31). In this respect, deficiency of capacity creation has been related to political instability due to which underdevelopment has been witnessed in the economy. From the last few decades, the African nations were experiencing situations of aggressive social conflicts. Some of the factors were prolonged situations of disarray, political insecurity and collapse of the existing governance. One of the factors leading to instability among the nations was the continuous change in the existing government structure, which created chaos among the distribution of financial aid. Another negative consequence of financial aid was that it had an effect over the macroeconomic policies, which in turn led to economic imbalances. Foreign aid has been affecting the actual rates of exchange and export sector’s competitiveness. Uganda, an African country has been witnessed to establish a central bank for mitigating the limitation of organizational efficiency and accordingly, prevent foreign assistance from hampering the nation’s competitiveness levels. With an increase in foreign aid, the governments in African nations started expending in an adequate manner. Additionally, public expenses are addressed with the help of these aids. This led to the creation of imbalance in the macroeconomic status of the nations. Some of the investments made by these countries were through utilization of foreign aid. Furthermore, a decline in the competition levels led to unemployment and poverty owing to which foreign assistance play an important role for the development of the overall economy of the nations. In addition, it exacted a depressing outcome over the value of infrastructural mechanisms and civil services. Foreign aid has been also affected by corruption rates prevailing in these nations. Poor governance structures and state officials took bribe as a part of their earnings from the foreign aid. It led to a rise in the cost of projects and their maintenance costs that were to be financed through foreign aid. In this context, many studies depicted that high level of corruption in a low economy can lead to the ineffectiveness of foreign aid (Wilkie, 2008, pp. 39-41). United Nations Development Program (UNDP) defined dependency of foreign aid in three different ways that include mild, chronic and diminishing dependency. Mild dependency on foreign aid signifies that continuous provisions in receiving foreign aid does not provide any opportunity for prohibiting the negative factors and increasing development in the African nations. Chronic dependency on foreign aid referred to a situation where the foreign aid are used for new or for develop the existing obstructions that abolishes the positive outcomes. Diminishing dependency on foreign aid refer towards the situation where foreign aid helps in eliminating the factors that prohibits the development of a nation. Additionally, the varying interests of the donor nations in the African nations created a negative impact on the governments’ financial spending thereby triggering imbalances in the nation. Furthermore, enmity among the donor nations emerged as a problematic situation for the recipient nation, as it led to the establishment and adoption of differential foreign aid strategies that hampered the expectations of the recipient nations and their economy. Many of the theorists and other strong contenders challenge the issue of development dialogue created by the foreign aid nations. The theorists revealed that the procedure of development is fundamentally defective in nature. The continuous flow of foreign aid in African countries has definitely led to expansion, but it is harmful for such nations, as it creates a situation of difference in the economic capacity among these nations. It has been recognised that a political regime had a negative impact on the African countries, as it reflected ambiguity between the government and citizens (Yalçin, 2011, pp. 2-6). In medical sector, elimination of AID had led to establishment of huge markets, which had led to inflow of capital in the country, and hence, the investment was utilized for multiple purposes. In response to this, research studies conducted worldwide made it clear about the fact that foreign aid never went in the proper hands because of corruption (Yalçin, 2011, pp. 2-6). Critical Analysis Foreign aid referred to the exterior interference by the foreign nations that served as a precondition for economic achievement of the recipient nation. Foreign aid could only be productive when it is implemented in a positive economic environment. Foreign aid can be effective only on fulfilment of prerequisite conditions such as political environment, reduced corruption rates and governance conflicts. Eradication of poverty is not an easy task. Even researchers noted that foreign assistance has been unsuccessful, if are held with the argument that foreign aid has been leading to the creation of bureaucracy in disseminating foreign aid. Foreign aid had restricted investment of incentives in Africa, particularly in those circumstances when the recipient nation held the idea that it will be requiring further assistance because of poverty related issues. This situation was popularly known as the ‘Samaritan’s Dilemma’. Some researchers enlightened their arguments by focusing on the negative impact on the competitive structure of the recipient nation and its manufacturing units, and termed the situation as ‘Dutch disease’. Others, through their empirical analysis of facts concluded that foreign aid would never be effective, as it had a weak relationship with alleviating poverty, fine governance and democratic structure of the nation (Andrews, 2009, p. 12). The responsibilities of donors and the way they should assist the nations where development issues are still prevailing. The donors can take a big leap towards success of foreign aid in Africa. The donors must be able to understand the political framework of a nation and its formal and informal mechanisms. Donors must also support in the formulated interventions in such nations where poor governance structure has led to a continuous increase in violence and insecurity of its citizens. Donors must consider a procedure, which promotes an affirmative societal change. Donors also need to deal with the institutional weaknesses by keeping an eye over the logic of political governance and the manner in which it must work. Donors should also aid the poor in the transformation process that will ensure installation of democracy in the nation. Finally, donors should progress the awareness of continental government structures in African nations and facilitate supply of aid effectively (Cammack, 2007, pp. 606-612). According to Moyo (2005: p. 29), the flow of foreign aid in African nations has been identified to be ineffective. In this regard, three important issues that related to a complaint on how the western nations were patronizing the African states. In addition, several issues are described based on which foreign aid has affected the African nations in terms of corruption among others. The ways and alternative suggestions on how African nations should deal with these aids in the future are also identified, so that development can be promoted in the nation. Contextually, the main concern was to throw light on how the western nations were making use of Africa as a source for their own promotional activities. Africans would have better developed themselves rather than taking foreign assistance. The official aid supplied by the rich nations that was directed to African nations was also criticised, as foreign aid fails to deliver a nation’s developmental growth process and further leads to corruptions in fuel sector, make democratic situations incapable, restricts the savings of local people, leads toward inflations and creates uncompetitive environment for the African nations. The author classified aid agencies and donor nations as corrupt autocrats. Additionally, the donor nations are recognised to be inconsistent between them as to who will serve the recipient nations (Moyo, 2005, p. 29). The article published by Onbeing (2009) implied that foreign aid is received by the helping nations for the development of schools and hospitals, so that growth can be witnessed in the overall economy. In addition, foreign aid has been identified to be devastation, which may affect different promotional projects in an immense manner. In the article, it has been also identified that African citizens feel themselves limited to a compilation of their wants. In this regard, it can be recommended that power and willingness to aid the African nations was dangerous and would be considered as ‘hard power’. It would lead to unplanned circumstances by the west countries by affecting the best efforts of African nations (Onbeing, 2009). Alesina & Dollar (1998: pp. 7-9) examined the pattern of distribution of foreign aid received from several donors belonging to various nations. In this context, foreign aid was affected by political and strategic scenario of the nation, even higher than the political performance and economic necessities of the recipient countries. The authors held the view that political coalition was a chief determinant of foreign aid. It has been argued that democratized nations received higher amount of foreign aid in relation to use of ‘Ceteris Paribus’. The authors contended that foreign aid has been impacted by political circumstances and further outlined the behaviour of donors (Alesina & Dollar, 1998, pp. 7-9). According to the study conducted by Moss (2011: p. 171) implied that ‘Diamond Theory’ having ‘geographic determinism’. The author further elaborated that geography would not be an important variable in case of two countries had alternate GDP rates. In this respect, lower density of human population was a factor that triggered economic problems, leading to costlier transportation and public services. Subsequently, overview on demography had developed where huge birth rates are recognised as reasons of poverty along with underdevelopment (Moss, 2011, p. 171). Van de Walle (2001, p. 188) outlined the issues why African nations had stalled in an economic crisis from the late 1970s. It has been revealed that active mechanisms relating to African nations explained the incapableness of overcoming hindrances instead of the outside pressures. The African nations including pressure groups were being prevented from making use of reforms, which has privileged of the nation for adopting clientelism, but lower capacity of the nation had resulted in wastage of reforms. Further, the governance in the African nations never believed that foreign reforms would ever be effective in future, which led to the manipulation of reform mechanism (Van de Walle, 2001, p. 188). In this respect, Dunning (2004: p. 411-414) argued about the importance and shift in the moral hazards had diverted the concentration from another process that adjoined foreign aid with the political governance in Africa nations. In this regard, focus has been made on geopolitical aims of donors that had lowered the trustworthiness of risks in supplying foreign aid due to the implementation of democratic reforms (Easterly, 2006; Dunning, 2004, p. 411-414). Easterly (2006) outlined the inefficiency of western nations in alleviating worldwide poverty issues. The author noted that by excellent condemnation of the economic policies in the Western nations would be effective against the African countries. Easterly (2006) also elaborated the fact that the western nations should focus on themselves rather than other countries, because it has been unable to make use of its own resources (Pritchett, 2010, p. 18-21; Yale University, 2010; Riddell, 2007). Conclusion From the above discussion, it can be comprehended that the ineffectiveness of foreign aid in African nations has hampered the continents’ developmental progress. In addition, various issues and reasons have been identified about the ineffectiveness of Africa in promoting development with the assistance of foreign aid in Africa. In this regard, it has been identified that there are various factors based on which the continent has been ineffective in utilising the adequate amount of foreign aid provided by different nations. The most important factor accountable for the ineffective promotional development is corruption. It has been identified that foreign aid had exaggerated the problems of African nations by suspending the political reforms. Moreover, other factors responsible for the ineffective use of foreign funds are irregularity of government regulations, misalignment of policies and inappropriate governance structure. References Alesina, A. & Dollar, D., 1998. Who Gives Foreign Aid To Whom And Why?. Working Paper 6612, National Bureau of Economic Research, pp.7-9. Andrews, N., 2009. Foreign Aid And Development In Africa: What The Literature Says And What The Reality Is. Journal of African Studies and Development, Vol. 1(1), pp. 008-015. Cammack, D., 2007. The Logic of African Neopatrimonialism: What Role for Donors? Development Policy Review, Vol. 25, No. 5, pp.599-614. Dunning, T., 2004. Conditioning the Effects of Aid: Cold War Politics, Donor Credibility, and Democracy in Africa. International Organization 58, pp. 409-423. Easterly, W., 2006. The White Mans Burden: Why the Wests Efforts to Aid the Rest Have Done So Much Ill and So Little Good. Oxford University Press. Goldin, I. & et. al., No Date. The Role and Effectiveness of Development Assistance. A Research Paper from the Development Economics Vice Presidency of the World Bank, pp. 1-90. Moss, T. J., 2011. African development (1st or 2nd Ed). Lynne Rienner. Moyo, D., 2005. Dead Aid. Chapter 4 Aid is not Working, Vol. 29, No. 47. Onbeing, 2009. 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