Spiegel International has an interview with Kenyan economics expert James Shikwati about foreign aid. They seem shocked that his main plea is for foreign governments to stop sending aid.
SPIEGEL:Mr. Shikwati, the G8 summit at Gleneagles is about to beef up the development aid for Africa…
Shikwati: … for God’s sake, please just stop.
SPIEGEL: Stop? The industrialized nations of the West want to eliminate hunger and poverty.
Shikwati: Such intentions have been damaging our continent for the past 40 years. If the industrial nations really want to help the Africans, they should finally terminate this awful aid. The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor.
Foreign aid money is an inefficient transfer of tax dollars from the middle class in developed countries to the corrupt governments of developing countries and seldom (if ever) results in an improvement to the underlying problem in the developing country. In fact, in the case of food aid, it leads to even more famines.
SPIEGEL: Even in a country like Kenya, people are starving to death each year. Someone has got to help them.
Shikwati: But it has to be the Kenyans themselves who help these people. When there’s a drought in a region of Kenya, our corrupt politicians reflexively cry out for more help. This call then reaches the United Nations World Food Program — which is a massive agency of apparatchiks who are in the absurd situation of, on the one hand, being dedicated to the fight against hunger while, on the other hand, being faced with unemployment were hunger actually eliminated. It’s only natural that they willingly accept the plea for more help. And it’s not uncommon that they demand a little more money than the respective African government originally requested. They then forward that request to their headquarters, and before long, several thousands tons of corn are shipped to Africa …
SPIEGEL: … corn that predominantly comes from highly-subsidized European and American farmers …
Shikwati: … and at some point, this corn ends up in the harbor of Mombasa. A portion of the corn often goes directly into the hands of unsrupulous politicians who then pass it on to their own tribe to boost their next election campaign. Another portion of the shipment ends up on the black market where the corn is dumped at extremely low prices. Local farmers may as well put down their hoes right away; no one can compete with the UN’s World Food Program. And because the farmers go under in the face of this pressure, Kenya would have no reserves to draw on if there actually were a famine next year. It’s a simple but fatal cycle.
Like with domestic welfare, a hand up is what’s needed, not a hand out. NGOs like KickStart and their MoneyMaker irrigation pumps provide actual poor people with the tools they need to get out of poverty. Traditional foreign aid is just money being sent from bureaucrats to other bureaucrats who stash it away in offshore accounts.
Holy crap, X. I may actually agree with you.
Why is it so incredible that you agree with me? Just because we disagree on other foreign affairs topics?
Bravo on this, particularly the mention of the KickStart and the wonderfully named Moneymaker. A shipment of these, subsidized or not would be much better than a shipment of food. Anything that increases the radius of land that a subsistence farmer can farm, and the crop density he can grow in it through meaningful irrigation, is wonderful, I think an unqualified plus.
I would be curious to see a thesis in a few years on the political-economic impact of such devices, i.e. whether the increase in farmer productivity through such appropriate technology leads to increased respect for property rights and an increase in property formalities and title registration infrastructure.
This article seems related:
"The Globalizer Who Came In From the Cold".
"In 1999 the World Bank fired Stiglitz, The World Bank's former Chief Economist. He was not allowed quiet retirement; US Treasury Secretary Larry Summers, I'm told, demanded a public excommunication for Stiglitz' having expressed his first mild dissent from globalization World Bank style.
http://www.ezania.net/library/articles/globalizer/
I've been under the same impression for a long time.