Sunday, 07 April 2013 21:38

AID HAS FAILED TO END POVERTY IN SUB-SAHARAN AFRICA: Case study data paints a bleak picture of aid projects in the region

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Abstract

There is intense debate on the role of humanitarian aid in the quest to reduce and eventually eliminate poverty around the world. Aid has had positive impact in other parts of the world. In sub-Saharan Africa, the impact of aid on poverty reduction has had mixed and contested results. The majority of aid funded projects in the region have not met with success. There has been no poverty reduction in the region. A new approach to funding poverty reduction projects in the region is needed.

 

Introduction

Sub-Saharan Africa has been mired in extreme poverty for decades, the enthusiasm of the 1950s, the years of the end of colonialism, replaced by a sense of doom six decades later. The region, despite long decades of development aid, estimated at over US$1 trillion, still remains the poorest in the world, and is the lowest income bracket, pegged at “US$765 Gross National Income (GNI) per person per annum,” (BBC, 2013, Moyo, 2009). In fiscal year 2013, sub-Saharan Africa will be the recipient of more than a third of all development aid (OECD, 2013).

The distribution of humanitarian aid to sub-Saharan Africa is admirable and a duty for rich countries. Development scholars and advocates differ on how the aid is used and on whether aid is making a positive or negative impact in the region.  There is a class of scholars who advocate for the total elimination of all foreign aid to sub-Saharan Africa, arguing that the more than US$1 trillion that has been given to the region over the last 60 years has not changed anything.

 Moyo (2009), the noted economist and scholar from Harvard and Oxford, is one of those arguing for the elimination of aid to the region. After US$1 trillion has been spent,  “ real per-capita income today is lower than it was in the 1970s, and more than 50% of the population -- over 350 million people -- live on less than a dollar a day, a figure that has nearly doubled in two decades,” Moyo (2009) wrote in her book Dead Aid (2010). Moyo (2009) and other development specialists like her believe that aid to sub-Saharan Africa has promoted a dependence cycle, corruption by Africa governments, has hindered economic development and increased poverty. The distribution of aid to Africa is the number reason why poverty remains pandemic in the region, they argue.

Shantayanan Devarajan, the chief economist for the World Bank for sub-Saharan Africa since 1991, rejects the argument that aid is bad for the region. In fact, Devarajan (2009) and other economists at the World Bank are demanding that aid to the region must be increased. In direct contradiction of the claims that aid hurts sub-Saharan Africa development, Devarajan (2009) argued that “the relatively modest sum spent on aid to Africa in the past decade was at least partly responsible for the continent’s rapid growth.  From 1998-2008, aid to Africa was increasing and economic growth was accelerating (to over 6 percent in 2007); poverty was declining and human development, especially primary school completion rates and the spread of HIV/AIDS, was improving.”

Moyo (2009) and Devarajan (2009) represent the deep chasm that exist when discussion about aid to Africa are conducted. Where some see no change, others see great change. Where some claim that poverty has been reduced thanks in part to aid, others think that poverty rates have actually increased. In order to answer the question of whether aid to sub-Saharan Africa is responsible for poverty reduction, it is imperative to examine the projects on the ground that are supported by aid. The evaluation of the projects would allow one to judge if the project has had a positive impact on the intended community or not.

Methodology

In this paper, a random selection of case studies was evaluated. The evaluation centered of the direct outcomes of the aid funded projects to the surrounding communities. The success or failure of the project would be judged based on the impact of the project on the poverty rates of the community in which the project was implemented. This setup made it possible to determine if aid to sub-Saharan Africa contributed to the perpetuation or elimination of poverty in the region.

Case Study 1: Chad and the oil

The United Nations Development Program (UNDP) ranks Chad, a country of around 11 million people in central Africa, as the sixth least developed country in the world (UNDP, 2013). Chad is worse off compared to other countries in sub-Saharan Africa, boasting a Gross National Product (GNP) per capita rate of US$180 compared to the regional average of US$490 in 1995 (World Bank, 2013). More than 80% of the country’s population lives in poverty. United Nations Children's Fund (UNICEF) data indicates that child mortality is worse today than in 1990 and that only 25% percent of the population is literate (Polgreen, 2008).

The country’s economic and development status has made it a magnet for humanitarian aid agencies. Chad is a country where many humanitarian agencies have worked diligently for decades to improve the country’s human development index (HDI).  Safer Birth in Chad (SBC) has worked to reduce child and maternal mortality while Africare has been working on development projects in Chad for several decades (SBC, 2013; Africare, 2013). SBC and Africare are two examples of many humanitarian aid agencies, both domestic and foreign funded, working to improve the lives of the people in Chad.

The discovery of oil in southern Chad heralded a new dawn in the country’s economic development. The oil could only be profitable to the country if it could be exported overseas. The oil could not be easily exported overseas because Chad is a landlocked country. In the year 2000, a consortium of oil companies led by ExxonMobil agreed to pay part of the cost of the construction, via Cameroon, of a $4.2 billion 665-mile pipeline to the Atlantic Ocean that would transport the oil (Polgreen, 2008). Sensing an opportunity to directly help the people of Chad, the World Bank and its partners joined in on the venture, agreeing to pay a significant part of the pipeline construction fees.

The World Bank, one of the largest humanitarian development aid agencies, agreed to fund the pipe construction on the condition that the government of Chad would invest more than 80% of the oil royalties in development projects aimed at poverty reduction. The World Bank, whose motto is ‘working for a world free of poverty,’ was adamant in a project assessment document supporting the construction of the pipeline. The bank wrote: “The objectives of the project are to increase Government expenditures in Chad on poverty alleviation activities and to promote the economic growth of Chad and Cameroon through the private sector-led development of Chad's petroleum reserves and their export through Cameroon,” (World Bank, 1999). When the pipeline was complete, and with the Chadian government awash in cash, the consortium of aid agencies led by the World Bank envisaged a future where new roads, hospitals and schools would be built for the benefit of the people of Chad. These activities would put the country on a road to poverty reduction and, possibly, elimination.

In 2008, more than five years after the pipeline had been completed, five years during which the government of Chad received more than $1 billion per year in oil revenue, the World Bank announced that it was ending its involvement in the project, a project it had championed ten years earlier. The capitulation by the World Bank and its partners was the penultimate confirmation that the project had failed: the construction of the pipeline and the subsequent accruement of billions of dollars in the government of Chad’s coffers did not lead to the reduction of poverty in Chad. In fact, the opposite happened: the people of Chad had become poorer (Polgreen, 2008).

The postmortem of the $4.2 billion debacle in Chad makes for a somber reading. The World Bank officials, in abandoning the project, stated that the project failed because the “Chadian government failed to comply with the key requirements of this agreement. The government did not allocate adequate resources critical for poverty reduction,” (Polgreen, 2008). What had happened in reality is that instead of investing in development project to reduce poverty as had been hoped for, the Chadian government had instead chose to use the oil wealth to buy weapons and outfit its military in order to fight an insurgency in the south of the country. The lack of investment in development meant that the no poverty reduction could occur. The instability in the country had instead made the people poorer.

Case Study 2: Kenya and the fish

The Norwegian Agency for Development Cooperation (NORAD), with an annual budget of $4.8 billion in fiscal year 2012, is one of the largest international humanitarian agencies in the world (Branaan, 2013).  NORAD, whose vision is to eliminate poverty in all its manifestations, has supported many aid projects in sub-Saharan Africa for decades. The core objectives of NORAD include “helping to empower recipient countries to achieve their own development goals and being an instigator of public debate on development assistance and development,” (NORAD, 2013). These objectives of NORAD are noble and mirror those of many international humanitarian aid agencies doing development work in sub-Saharan Africa.

Lake Turkana, believed to be the world’s largest alkaline lake, is found on the northern reaches of the Great Rift Valley in northern Kenya (Yuretich, 1979). The lake contains a mere 50 species of fish, but supports them in great numbers (Kolding, 1993). The Kenyan people that live on the shores of Lake Turkana endure some of the highest rates of poverty recorded anywhere in sub-Saharan Africa (Keane, 2006). NORAD sensed an opportunity to eliminate poverty by allowing the people living on the shores of Lake Turkana to exploit the many natural resources offered by the lake.

NORAD administrators believed that the exploitation of the fish in the lake would eliminate poverty in the villages around the lake. A pilot fish processing plant, built at a cost of US$152 million, was constructed on the lake shore and was completed by the late 1970s. The fish caught from the lake would be processed, packaged and exported, earning the local communities millions in cash.  The cash would lead to the construction of roads, clinics, schools, and other amenities that would make poverty a thing of the past in surrounding communities.

 According to all forms of evaluations, the fish processing plant built by the Norwegians was a failure. “Twenty years on, the Kaalokol fish factory is another page in Africa’s catalog of reminders that successful aid requires more than just money and good intentions. Apart from a few dried fish sometimes stored here by local fishermen, the factory is unused,” wrote Cocks (2006) in a damning assessment of the project.  “Aid workers blame several factors for the failure of the project: poor consultation with communities, a lack of monitoring progress, Turkana’s economic remoteness, a pastoral way of life unsuited to fishing and a diplomatic row between Norway and ex-president Daniel arap Moi.”

Analysis

There is intense debate on the role of humanitarian aid in the quest to reduce and eventually eliminate poverty around the world. Aid has had positive impact in other parts of the world. In sub-Saharan Africa, the impact of aid on poverty reduction has had mixed and contested results. The majority of aid funded projects in the region have not met with success.

The distribution of humanitarian aid to sub-Saharan Africa is admirable and a duty for rich countries. Development scholars and advocates differ on how the aid is used and one whether that aid is making a positive or negative impact in the region.  There is a class of scholars who advocate for the total elimination of all foreign aid to sub-Saharan Africa, arguing that the more than US$1 trillion that has been given to the region over the last 60 years has not changed anything.

The Chad oil pipeline to the Atlantic Ocean and the Norwegian funded fish processing plant on the shores of Lake Turkana are part of the evidence that aid to sub-Saharan Africa does not play a role in poverty reduction. There are countless examples where aid to the region has been a total failure, with billions of dollars wasted on projects that have not translated into poverty reduction (AP, 2007).

A new approach to funding poverty reduction projects in the region is needed.
International aid agencies, when developing blueprints for poverty reduction projects in sub-Saharan Africa must keep in mind that there is corruption in the region, there is little accountability, there is instability, and finally, there is always change, both bad and good, in the region. Most importantly, there is one constant: the people, the villagers are always there. It is only with the recognition of these facts and others that whatever aid should always be channeled toward the villagers, the people who are supposed to benefit from the projects.

Using this approach, the World Bank, instead of making the corrupt Chadian government the custodian of the oil royalties, they could have setup an external authority to administer the money. The administrator would have had many options to choose from in order to reduce poverty in the country. The administrator could give Chadians direct checks every month, thereby spurring economic activity in the country. In Qatar, citizens get checks from the government, proceeds of oil, which has allowed the country to have one of the lowest poverty rates in the world (Treisman, 2010).

Other aspects to consider when developing poverty reducing projects include an in-depth analysis of the society in which the project has to be implemented. The Norwegians would not have met with failure on the shores of Lake Turkana had they spent a few moments assessing the culture of the beneficiaries of the fish processing plant. A study would have shown that the villagers in the region were nomadic people, who are not known for fishing. This would have prevented more than $152 million going to waste.

In the final analysis, it is safe to conclude that aid to sub-Saharan Africa has failed to make a significant impact in the reduction of poverty. Banning all aid is not the answer. The failure of many aid funded projects had nothing to do with the aid itself, but the way the projects were implemented. A better approach to the way the aid is distributed and used has the potential to end poverty in the region.

Works Cited

1.       UNDP, 2013. Country Profile: Human Development indicators. Accessed from: http://hdrstats.undp.org/en/countries/profiles/TCD.html on 02/28/2013.

2.      SBC, 2013. About us. Access from: http://www.saferbirthinchad.org/about-us/ on 02/28/2013.

3. Africare, 2013. Africare-Chad. Accessed from: http://www.africare.org/our-work/where-we-work/chad/index.php on 02/28/2013.

4. Polgreen L, 2008. World Bank Ends Effort to Help Chad Ease Poverty. The New York Times, 2008. Accessed from: http://www.nytimes.com/2008/09/11/world/africa/11chad.html?_r=1& on 02/28/2013.

5. World Bank, 2013. Chad Poverty Assessment: Constraints to Rural Development. Accessed from: http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,,contentMDK:20204304~menuPK:435735~pagePK:148956~piPK:216618~theSitePK:430367~isCURL:Y~isCURL:Y,00.html on 02/28/2013.

6. World Bank, 1999. Cameroon - Petroleum Development and Pipeline Project. Accessed from: http://documents.worldbank.org/curated/en/1999/06/441882/cameroon-petroleum-development-pipeline-project on 02/28/2013.

7. Braanen B, 2013. Bistand. Accessed from: http://klassekampen.no/60001/article/item/null/bistand on 03/01/2013.

8. NORAD, 2013. About NORAD. Accessed from: http://www.norad.no/en/about-norad on 03/01/2013.

9. Yuretich, R. F. (1979). Modern sediments and sedimentary processes in Lake Rudolf (Lake Turkana) eastern rift valley, Kenya. Sedimentology, 26(3), 313-331.

10. Kolding, J. (1993). Population dynamics and life-history styles of Nile tilapia, Oreochromis niloticus, in Ferguson's Gulf, Lake Turkana, Kenya. Environmental biology of fishes, 37(1), 25-46.

11. Keane F, 2006. Life among Kenya's Turkana nomads. The BBC World Service. Accessed from: http://news.bbc.co.uk/2/hi/africa/6158738.stm on 03/01/2013.

12. Cocks T, 2006. Kenya's Turkana learns from failed fish project. Accessed from: http://www.redorbit.com/news/science/456246/kenyas_turkana_learns_from_failed_fish_project/ on 03/01/2013.

13. BBC, 2013. Poverty. Accessed from: http://news.bbc.co.uk/2/shared/spl/hi/africa/05/africa_economy/html/aid.stm on 03/01/2013.

14. OECD, 2013. Aid. Accessed from: http://www.oecd.org/investment/stats/aidstatisticsstatisticsbyregion2012aidataglance.htm on 03/01/2013.

15. Moyo D, 2009. Why foreign aid is hurting Africa. Accessed from: http://online.wsj.com/article/SB123758895999200083.html on 03/01/2013.

16. Devarajan S, 2009. Why aid to Africa must increase. Accessed from: http://blogs.worldbank.org/africacan/why-aid-to-africa-must-increase on 03/01/2013.

17. AP, 2007. Examples of failed aid-funded projects in Africa . Accessed from: http://www.nbcnews.com/id/22380448/#.UTKCAjnh_IX on 03/01/2013.

18. Treisman, D. (2010). Oil and democracy in Russia (No. w15667). National Bureau of