Saturday, January 26, 2013
Africa should just say, "No".
I am reading Jonathan Glennie, The Trouble with Aid: Why Less could Mean More for Africa (London: Zed Books, 2008) now. He makes a good argument that African countries would be a lot better off rejecting foreign aid and loans and the conditions attached to them than accepting them. Often the loss of revenue from eliminating tariffs or privatizing state industries is far greater than the aid money which more often than not is a loan that has to be repaid with interest rather than a grant. The loss of tariff barriers and the privatization of state industries has led to a lot of indigenous African products being driven out of their own domestic markets by cheaper and heavily subsidized foreign products. Why is it that the Netherlands is allowed to dump subsidized chickens in Ghana, but Ghana is prohibited by the IMF and the powers standing behind it from raising tariffs on these chickens? (Glennie, p. 54). Using tax payer subsidies for the export of agricultural goods to foreign countries which is standard practice by the US and EU is not consistent with free trade. These subsidies are a far greater interference in the world market due their large size and negative effects than any tariff or nationalization by African countries. If the political will could be found Africans would be better off rejecting most aid and its conditions and instead crafting policies designed to boost the production of indigenous goods.