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  January 2, 2017

What's Wrong with the Current Aid Model for Africa(1/2)


PERI's Leonce Ndikumana discusses his recent report that finds what drives Western donors isn't always what's best for recipient countries
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biography

Leonce Ndikumana is Professor of economics and Director of the African Development Policy Program at the Political Economy Research Institute (www.peri.umass.edu) at the University of Massachusetts at Amherst. He is a member of the United Nations Committee on Development Policy, Commissioner on the Independent Commission for the Reform of International Corporate Taxation, a visiting Professor at the University of Cape Town, and an Honorary Professor of economics at the University of Stellenbosch, South Africa. He has served as Director of Operational Policies and Director of Research at the African Development Bank, and Chief of Macroeconomic Analysis at the United Nations Economic Commission for Africa (UNECA).


transcript

What's Wrong with the Current Aid Model for Africa(1/2)SHARMINI PERIES: It's The Real News Network. I'm Sharmini Peries coming to from Baltimore.

Africa as a continent is often subject to a stigma, as a poverty-stricken, a dependent land. Its own leaders often reinforce the stigma of development dependency. Yet it is a resource-rich continent with an incredibly self-reliant and capable population with each country having its own challenges and specificities.

Western donors often spend billions of dollars over many decades on aid to Africa -- how has this aid contributed to helping African countries escape poverty? To what extent has aid been spent to promote the interest of the donors rather than those of the recipients? Does research on these questions take into account the perspectives of recipients in Africa themselves? To answer these questions we're being joined by Leonce Ndikumana. He has recently published a paper together with Lynda Pickbourn titled "The Future of Aid Effectiveness in Sub-Saharan Africa: A Research Agenda." Leonce Ndikumana is a Professor of Economics at the University of Massachusetts Amherst and the Director of the African Development Policy Program at the Political Economy Research Institute. He is also a member of the UN Committee on Development Policy. He has just returned from Senegal and Kenya. Thank you so much for joining us, Leonce.

LEONCE NDIKUMANA: Thank you very much for the opportunity.

SHARMINI PERIES: So, Leonce, this is a very important question. I know when I was doing my graduate work these questions kept coming up but I felt that nobody actually effectively answered the recipients' point of view or had any, really, besides some qualitative examples, had very little quantitative measures. So tell me why you took up this question in your research paper.

LEONCE NDIKUMANA: Thank you very much. This is, again, a very fundamental research question but also has important policy implications. As you indicated, if you combed the literature -- and there is a lot written about aid, aid to developing countries, aid to Africa -- what you find is that it's very hard to find a conclusive evidence on how much aid has produced in terms of development outcomes, whether aid has helped developing countries overcome poverty. But what is also clear is that when you look at the individual countries' specific sectors, specific projects, it is possible to find -- and you do find -- many pieces of evidence of where aid, when it is well-targeted at the micro-level, at the sector level, has actually good positive results.

So, there is this paradox where, at the aggregate level, it's hard to find convincing evidence that aid generally has positive outcomes -- at the macro-level. But then when you look at the micro-level, you do find that when it is well-targeted, well-managed, it does have positive effects, in the sense that when it is well-utilized to build schools, provide school lunch, you do find higher enrolment rates. When aid is used to combat malaria by providing mosquito nets, you do see a decrease in malaria infestation.

So that's the paradox we have to deal with. And the reason why we wanted to write this report is to see how to guide future research, focusing on Africa -- on how we can get more knowledge about what is the impact of aid, in what conditions, what circumstances does it produce positive results so that African countries can actually learn from there? Because, as you indicated, many of them are dependent on aid. So, in the next foreseeable future, they will need to use aid more efficiently so they can get good outcomes. Because if they keep doing the same thing, business as usual, they will get the same results.

SHARMINI PERIES: Now, Leonce, as you mentioned, a great deal of research already exists on aid effectiveness and the value for money. What is missing in the research on aid to Africa or what questions are being omitted on the question of aid?

LEONCE NDIKUMANA: Yes. I think this is, again, the essential question, the one billion question -- if the work on aid effectiveness, which is couched in the corners(?) of value-for-money on the part of donors, is actually confronted with the existential question about what value and whose value?

So if you were talking about bankers lending money out, for them, the value is very clear -- it's the bottom line, is profit. But for donors they worry about many, many things. In addition to financial viability, which is important for donors to remain in operation, they also worry about their own institutional reputation. And that's why donors will hesitate to go into countries where they find there is more risk, which sometimes defeats the whole purpose of aid. If you are the donor in the development aid business and you are not willing to go into risky sectors, risky countries, then you might declare yourself as a bank -- you're not a development institution.

But then you have the other dimension for donors is that they have to be guided by development outcomes. So aid is going to be measured against particular development outcomes -- and this is where the question comes. Who is defining these development outcomes? Is it the donors or is it the recipients? And even once you have defines the development outcomes, how do you measure effectiveness? Is it because a country has achieved a particular absolute number, absolute target, or is it because a country has made sufficient progress between the time that the aid is provided and when the evaluation is being done? All these questions cannot be answered using aggregate macro-level analysis. That's the point we're trying to make.

SHARMINI PERIES: And, Leonce, the issue of treating the continent as a whole is, of course, a misconception. I mean, this is misconception that goes back to colonialism in the sense of even novel Rudyard Kipling's The Dark Continent, of course, reinforces the idea -- not only racist ideas in that -- but also that the continent as a whole as something that is inherent in the continent, rather than looking at the specific problems and trying to address them.

So researchers lump the African countries all together and treat it as a continent. What's the problem with that?

LUANCE NDIK KIMANA: There is a problem and your question had the reason for concern about this kind of treatment, is because it concludes on a very negative, pessimistic assessment that nothing can work in Africa. If you consider Africa as one country and you are looking for aggregate indicators of outcomes of aid, you will not find it. You'll have a hard, hard time finding them because you are putting together countries with different economy structures, different geographies, different institutions. If you throw together countries which are in conflict, or overcoming conflict, you will have different outcomes of aid because in the countries in conflict the focus is trying to stop the war, minimize death tolls and so on, so most of the aid will be humanitarian aid.

In a stable country, aid can be used actually for investment to increase capital accumulation, to build social infrastructures, in that context it will have a much larger effect on growth, investment and so on. But, in fragile states, the outcomes are going to be measured in terms of peace-building and state-building, institution-building. Unfortunately, in the economic ... those are very, very hard to measure so that if somebody goes to evaluate aid with the lenses of quantitative measures of development in terms of growth, investment, savings and so on, you will not find them. You'll not find them in a country that's trying stabilize its political system, economic system after conflict. But yet aid in that context is still very important.

SHARMINI PERIES: Right. And then one point that you emphasize in your article is to ensure that you have a recipient perspective -- and that's actually more important than the donor perspective on how effectively the money is being spent. While results are important, we also need to integrate a recipient's perspective, explain that.

LEONCE NDIKUMANA: Yes, that's a very important point. One, is once we decide that we want to measure aid effectiveness by asking the question of whether it has helped to achieve particular goals, then the question is who determines the goals, who defines the goals? So, the idea of including country perspective is to say that even as we design development... as donors designs development programs that will be assisted by development aid, the point we try to make is that recipients should be in the driver's seat to determine the national development agenda, the national development priorities. Because the country itself knows better what it needs. It's not the role of development donors to come and dictate the objective of national development strategy. Because the aid will be just as effective if it is has helped the country to achieve its national development goals. And I insist on national – therefore, has to be determined by the national development policy makers.

SHARMINI PERIES: All right, Leonce, much more to talk about on your paper and this question of how we look at research questions in assessing development effectiveness. I would love it if you could join us again for part two of this interview.

LEONCE NDIKUMANA: Thank you very much, it will be my pleasure.

SHARMINI PERIES: And thank you for joining us on The Real News Network.

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