Dead Aid.......

The collecting tins are out again, this time for yet another East African famine appeal. There will be TV hotlines to take our donations and endless pictures of starving infants.

So what is to be done?                                     

Ethiopia was once a green country that could feed its people. For many years now, neither has been the case. Why? I suspect that there is a whole catalogue of reasons. One is deforestation. I have seen this at first hand in African countries. In Zamfara, bordering Niger and getting towards the desert belt the cutting-down of huge, mature trees was truly shocking. There was no forestry management, no selection, and no replacement programme – just destruction. I am pretty sure that in ten years time, the farms in that region, that seemed quite prosperous, will be no more.

In Malawi under Banda, cutting down indigenous trees without a permit was a serious crime and the forests were well preserved. Each year there was a National Tree Planting Day when every family was obliged to plant one tree. When the old man was deposed this discipline vanished overnight. The forests were invaded for charcoal; on one occasion I drove past a large area of woodland in the morning; when I returned in the evening it had gone – totally!

One effect of deforestation was that the rivers and streams feeding Lake Malawi now began to run freely, carrying topsoil into the Lake. This had two effects. Without trees to bind the thin soil layer it rapidly disappeared and the land became infertile. The soil began to silt-up the southern end of the Lake were it flows into the Shire River. This affected navigation on the lake itself and in the river. The reduced water flow in the Shire began to affect the hydro electric power station at Walker’s Ferry which is the main source of power for the region. The silting in the lake encouraged the growth of vegetation which brought bilharzia with the snails feeding on the water plants. The vegetation also meant the proliferation of hippo in a densely populated area.

In such ways are formerly prosperous areas brought down to subsistence only.

Then there is the issue of over-population. The main cause is poverty. When countries begin to prosper their birth-rate goes down. Children are the only social security in poor countries. Forget about birth control. Even if free condoms are available, as in South Africa, as long as people remain poor they will continue to have children. The logic is devastatingly simple. If aid is to do any good it must be devoted to sustainable (an over-worked word used in its proper context, for one) economic development. Development almost invariably follows infrastructure. Those of us who have worked in Africa and other poor areas have seen businesses springing up literally overnight alongside new-road building. Restoring the Benguela Railway (which the Chinese are doing in return for vast quantities of Angolan oil) will provide a continuous rail link from the Atlantic to the Indian Ocean.

(Scarcely had I written the above when the Economist did a piece in similar vein. It makes the sound point that infrastructure aid went out of favour years ago as a consequence of loony prestige projects, corruption, and poor maintenance. For these reasons I have previously stressed that e.g. railways should be set up as companies, not government entities, the donor should retain a golden share, and management should be controlled by the donor).

In similar vein but requiring no capital investment a necessity is to create a business-friendly environment in beneficiary countries. This means going through the statute book and chucking out stuff that gets in the way of creating and running a business. It means a judicial system that deals with commercial case speedily and properly. It means solid legal backing for contract and for the sanctity of title.

Any chance of this happening? Not a lot. I was on a law reform project in Africa. Both I and my partner, a Cambridge don with vast expertise, zoomed in on the need for a business-friendly approach in any reform programme. The donor cut out every single reference in our project design.

So how effective is food-aid? Not much. Here is the scenario. A large consignment of maize is shipped-in under a food-aid programme and handed over to the home government to distribute. Very soon this starts to appear on the market. The effect is to depress local prices so the farmer does not plant because it is not worth his while to grow for more than subsistence. The next year there is a drought, but no buffer stock of maize because it was not grown. Bring on the next famine.

Corruption? A big factor in economic development if it becomes an uneconomic overhead i.e. the official gets too greedy. Corruption is a cycle. Its root cause is very low pay for civil servants, often so low as to not provide a living. Pay is low because the tax take is low. The tax take is low because with foreign aid accounting for perhaps 60% of the budget there is little incentive to improve revenue collection efficiency. And aid money cuts the fiscal nexus between rulers and ruled.

Any answers? Well, Dombisa Moyo in ‘Dead Aid’ reckons that all aid should be time-limited e.g. governments should be told that they will be helped for, say, 5 years, and then not a penny more.

But then aid brings control, does it not? And Britain’s aid budget is the  highest in the world by a long chalk on a GDP basis. That should cheer up the 15,000 servicemen being made redundant.