My Beauty Best Teacher

Reuben Abraham follows up on the absorptive capacity debate "...since the Marshall Plan worked, surely a similar initiative will work in Africa too. Well, let's look at the numbers first. If this idea were in fact true, Africa would have been well developed by now, given the trillion dollars that have been poured into the continent in the last 50 years (by way of comparison, the Marshall Plan consisted of $13 billion worth of assistance, or $130 billion, once you adjust for inflation). In fact, most of Africa is substantially worse off today than when aid first started to flow in. Instead, the money has been frittered away on such development projects as clearing the jungle in the middle of the Congo to build a new runway on which the Concorde could land to ferry Mobutu and his family to Disneyland and France. No prizes for guessing where the money to clear the forest, lease the Concorde etc came from.
So, what is the difference between post-war Europe and Africa which explains this discrepancy? Well, it links directly to the absorptive capacity issue. Japan, Germany etc were well functioning countries with solid institutions (legal system, education system, banking system etc) before they were visited by the horrors of the war. So, an infusion of capital could be put to use easily and efficiently to rebuild the institutions destroyed by war. It was simply a matter of getting trained teachers or bankers back to work, rather than training an entire cadre from scratch. By contrast, when the Belgians left the Congo, there were exactly 17 college graduates in a country the size of western Europe. To imagine that a country with 17 college graduates could absorb large infusions of aid (without any institutions in place) just because Germany and Japan (which were superpowers before the war) did so is bordering on the insane..."
via Zoo Station

Glenn Hubbard writes in FP:

In all rich countries, the development of a thriving business sector came before physical and social infrastructure. In fact, the Marshall Plan worked because it made loans to European businesses first, which then paid money back into a national pot to fund commercial infrastructure. Africa has already demonstrated its potential for achieving the same. In telecommunications, for example, Africa has become the first continent where cell phones outnumber land lines, thanks to many excellent African entrepreneurs (and the many terrible government land-line systems). Besides, businesses that have a stake in the maintenance and viability of a given project are bound to be far more apt at building and maintaining infrastructure than aid agencies, which have been trying to do it and failing for the past 40 years. Given that many parts of the continent still lack basic roads, water systems, electrical grids, and more, isn't it time to retire the current, aid-driven system?

Glenn Hubbard writes in FP:

In all rich countries, the development of a thriving business sector came before physical and social infrastructure. In fact, the Marshall Plan worked because it made loans to European businesses first, which then paid money back into a national pot to fund commercial infrastructure. Africa has already demonstrated its potential for achieving the same. In telecommunications, for example, Africa has become the first continent where cell phones outnumber land lines, thanks to many excellent African entrepreneurs (and the many terrible government land-line systems). Besides, businesses that have a stake in the maintenance and viability of a given project are bound to be far more apt at building and maintaining infrastructure than aid agencies, which have been trying to do it and failing for the past 40 years. Given that many parts of the continent still lack basic roads, water systems, electrical grids, and more, isn't it time to retire the current, aid-driven system?

David Blair writes "...Nigeria's rulers have already pocketed the equivalent of six Marshall Plans. After that mass theft, two thirds of the country's 130 million people - one in seven of the total African population...Mallam Nuhu Ribadu, the chairman of the Economic and Financial Crimes Commission, set up three years ago, said that £220 billion was "squandered" between independence from Britain in 1960 and the return of civilian rule in 1999...The stolen fortune tallies almost exactly with the £220 billion of western aid given to Africa between 1960 and 1997. That amounted to six times the American help given to post-war Europe under the Marshall Plan..."

William Easterly writes on the rebirth of utopianism"...it is in 2005 that utopia seems to have made its big breakthrough into mainstream discourse. In March, Columbia University Professor Jeffrey Sachs, celebrity economist and intellectual leader of the utopians, published a book called The End of Poverty, in which he called for a big push of increased foreign aid to meet the Millennium Development Goals and end the miseries of the poor...British Chancellor of the Exchequer Gordon Brown likewise called in January for a major increase in aid, a “Marshall Plan” for Africa. Brown was so confident he knew how to save the world’s poor that he even called for borrowing against future aid commitments to finance massive increases in aid today...We have already seen the failure of comprehensive utopian packages in the last two decades: the failure of “shock therapy” to convert the former Soviet Union from communism to capitalism and the failure of IMF/World Bank “structural adjustment” to transform nations in Africa, the Middle East, and Latin America into free-market paragons. All of these regions have suffered from poor economic growth since utopian efforts began...With all the political and popular support for such ambitious programs, why then do comprehensive packages almost always fail to accomplish much good, much less attain Utopia? They get the political and economic incentives all wrong. The biggest problem is that the rich people paying the bills do not share the same goals as the poor people they are trying to help...ree markets and democracy are far from an overnight solution to poverty—they require among many other things the bottom-up evolution of the rules of the game, including contract enforcement and fair political competition. Nor can democratic capitalism be imposed by outsiders (as the World Bank, IMF, and U.S. Army should now have learned). The evolution of markets and democracy took many decades in rich countries, and it did not happen through “big pushes” by outsiders...The problems of the poor nations have deep institutional roots at home, where markets don’t work well and politicians and civil servants aren’t accountable to their citizens. That makes utopian plans even more starry-eyed, as the “big push” must ultimately rely on dysfunctional local institutions..."
Via Bullets and Honey

Forbes reports on The Aid Trap by R. Glenn Hubbard & William Duggan:

In The Aid Trap,Hubbard and Duggan argue that the answer has been under our noses since the end of World War II. They propose that the U.S. government make direct loans to businesses and then direct the repayments of principal to host governments for use in building roads, electric grids, schools and the like. This was how the Marshall Plan rebuilt Europe after the war.

Moeletsi Mbeki recently stated that "...The best way to keep Africans poor is to continue handing money to political elites who suppress development...the Marshall Plan pulled Europe and Japan out of the doldrums that followed WWII because it was driven by the principles of strengthening democratic institutions and free markets. Most African aid, however, has been provided under the erroneous assumption that strengthening the state will lead to development...Concerts and conferences help focus attention on Africa’s extraordinary economic and health-related problems. Even Bono’s group, DATA (Debt, AIDS, Trade, Africa) demanded that rich nations open their markets, quota and duty free, to African exports, remove agricultural subsidies that hurt African farmers, and allow African nations to harness the power of trade in their own way to maximize poverty alleviation and economic growth...",CFACT.

Last week on TV I watched for the uncountable time The Lord of the Rings: The Two Towers. This movie was my favorite out of the three (although The Bridge of Khazad-dûm in one and the Battle of the Pelennor Fields in three rival it). Although I love the movies, just like I loved the original Star Wars, there are some parts of the movie I don't like, and so I was glad to find a LOTR companion to match the excellent piece that the Weekly Standard's Jonathan V. Last put out on the Star Wars called The Case for the Empire. It is high time that the LOTR was analyzed in a similar manner, and I think that this piece by Salon's David Brin does just that. Do I really believe this stuff? Probably not, but it is fun reading. Enjoy!

J.R.R. Tolkien -- enemy of progress: "The Lord of the Rings" is lovingly crafted, seductive -- and profoundly backward-looking. Why not look at things through the Dark Lord's eye for a change? Here are the best parts (only about 1/3 of the whole article)- I highly suggest you read the whole thing here:

Of course there is much more to this work than mere fantasy escapism. J.R.R. Tolkien wrote his epic -- including its prequel, "The Hobbit" -- during the dark middle decades of the 20th century, a time when modernity appeared to have failed in one spectacle of technologically amplified bloodshed after another.

LOTR clearly reflected this era. Only, in contrast to the real world, Tolkien's portrayal of "good" resisting a darkly threatening "evil" offered something sadly lacking in the real struggles against Nazi or Communist tyrannies -- a role for individual champions. His elves and hobbits and über-human warriors performed the same role that Lancelot and Merlin and Odysseus did in older fables, and that superheroes still do in comic books. Through doughty Frodo, noble Aragorn and the ethereal Galadriel, he proclaimed the paramount importance -- above nations and civilizations -- of the indomitable Romantic hero.

Millions of people who live in a time of genuine miracles -- in which the great-grandchildren of illiterate peasants may routinely fly through the sky, roam the Internet, view far-off worlds and elect their own leaders -- slip into delighted wonder at the notion of a wizard hitchhiking a ride from an eagle. Many even find themselves yearning for a society of towering lords and loyal, kowtowing vassals.

Wouldn't life seem richer, finer if we still had kings? If the guardians of wisdom kept their wonders locked up in high wizard towers, instead of rushing onto PBS the way our unseemly "scientists" do today? Weren't miracles more exciting when they were doled out by a precious few, instead of being commercialized, bottled and marketed to the masses for $1.95?

Putting aside cultural superficialities, on every continent society quickly shaped itself into a pyramid with a few well-armed bullies at the top -- accompanied by some fast-talking guys with painted faces or spangled cloaks, who curried favor by weaving stories to explain why the bullies should remain on top.

Only something exceptional started happening. Bit by bit, the elements began taking shape for a new social and intellectual movement, one finally capable of challenging the alliance of warrior lords, priests, bards and secretive magicians.

In this conflict, J.R.R. Tolkien stood firmly for the past. Calling the scientific worldview "soul-less," he joined Keats and Shelley, Sir Walter Scott, Henry James and many European-trained philosophers in spurning the modern emphasis on pragmatic experimentation, production, universal literacy, progress, cooperative enterprise, democracy, city life and flattened social orders.

In contrast to these "sterile" pursuits, Romantics extolled the traditional, the personal, the particular, the subjective, the rural, the hierarchical and the metaphorical.

By the turn of the century, Romanticism was fast losing all vestige of its initial empathy for the concerns of common folk. One solitary artist -- or entertainer or lost prince or angry poet -- loomed larger in importance, by far, than a thousand craft workers, teachers or engineers (a value system shared today by the mythic engine of Hollywood). Just as in Homer's time, 10,000 foot soldiers mattered less than Achilles' heel.

This fits the very plot of "Lord of the Rings," in which the good guys strive to preserve and restore as much as they can of an older, graceful and "natural" hierarchy, against the disturbing, quasi-industrial and vaguely technological ambience of Mordor, with its smokestack imagery and manufactured power rings that can be used by anybody, not just an elite few. (Recall the scene where Saruman turns away from the "good" side and immediately starts ripping up trees, replacing them with mining pits and smoky forges. The anti-industrial imagery could not be more explicit.)

Consider the rings. Those man-made wonders are deemed cursed, damning anyone who dares to use them, especially those nine normal humans who tried to rise up, using tools to equalize and then usurp the rightful powers of their betters -- the High Elves.

The nine Ringwraiths aren't just evil henchmen and cardboard monsters. In my opinion, they are among the most important figures of the epic. Tolkien himself calls them tragic figures and dwells on their background. These fallen mortals -- men who were hauled into service to the "dark side" -- can be looked upon as cautionary figures, conveying the universal lesson that "power corrupts."

On that much we can all agree. But I think there's more to the Ringwraiths. To me, they distill the classical Greek notion of hubris -- a concept that Romantics often embrace -- the idea that pain and damnation await any mortal whose ambition aims too high. Don't try putting on the trappings or emblems or powers that rightfully belong to your betters. Above all, don't try to decipher and redistribute mysteries. In other words, exactly the same morality tale preached in "Star Wars." Romanticism has come full circle, now unctuously praising the very same lords -- the über-men -- that it started out bravely opposing.

Were any orcs or "dark men" offered coalition positions in King Aragorn's cabinet, at the end of the War of the Ring? Was Mordor given a benign Marshall Plan? I think not.

In fact, J.R.R. Tolkien was himself far more critical of the situation portrayed in his universe than any but a few of his myriad readers ever chose to notice. Certainly more self-critical than most of his contemporary readers or those watching the new film trilogy.

In several places, Tolkien openly stated his authorial judgment that the elves who made the Three Rings were ultimately to blame, having set the stage for tragedy in Middle Earth. They made their own rings (preceding Sauron's One Ring) in order to control the world, stopping time and preventing change, forbidding anything to die and decay and thus blocking the potential for new growth. In an oft-quoted letter, Tolkien wrote:

"They wanted to have their cake and eat it: to live in the mortal historical Middle Earth because they had become fond of it ... and so tried to stop its change and history, stop its growth, keep it as a pleasaunce." There are moments scattered throughout LOTR when Tolkien seems to be warning that Romanticism can lead one down the road to genocide. He was disturbed to see the Nazis, for example, embrace many of the same Nordic mythic stories and symbols that he used as source material.

In other books, like "The Silmarillion," Tolkien went deeper into this self-exploration, even going so far as to cast an analytical eye upon the elvish hierarchs of Middle Earth, in much the same way that Isaac Asimov reevaluated his Second Foundation and the meddlesome-patronizing robots of his famed science fictional universe. (This is the kind of self-examination the "Star Wars" cosmos desperately needs, alas, while there's still time.)

Indeed, many academics have cited the obvious parallel between the retreat of the High Elves in LOTR -- who abandon Middle Earth to return "west across the sea" -- and the dissolution of the British Empire that began with the emancipation of India about the same time that Tolkien was writing his epic. In fairness, J.R.R.T. did not rail against this change: He saw it as regrettable but inevitable -- like the end of his mythical Third Age, an approaching time of iron, when aloofly noble figures like Elrond and Galadriel must go back whence they came.

But those self-critiques never had the widespread readership or influence of the original LOTR. And ultimately, Tolkien could never bring himself to cross the gap that another Oxbridge don was writing about at roughly the same time -- the infamous "two cultures" gulf that C.P. Snow mapped between the world of science and the world of the arts.

Try as he might, and even confronted with the blatant Romantic excesses of Nazism, Tolkien could not escape his own deep conviction that democratic enlightenment and modernity made up the greater evil. That hated trend, he feared, would ruin all the beauty that he found in tradition. In aristocratic-mystical hierarchies. In the ways of the past.

The urge to crush some demonized enemy resonates deeply within us, dating from ages far earlier than feudalism. Hence, the vicarious thrill we feel over the slaughter of orc foot soldiers at Helm's Deep. Then again as Ents flatten even more goblin grunts at Saruman's citadel, taking no prisoners, never sparing a thought for all the orphaned orclings and grieving widorcs. And again at Minas Tirith, and again at the Gondor Docks and again ... Well, they're only orcs, after all.

Lev Grossman made a similar point in a recent Time Magazine article, when he asked, "Where are the women? Peter Jackson filled out Liv Tyler's role for the movies (it's much less prominent in Tolkien's version), but the Fellowship is still as much a boys' club as Augusta National."

Let's not ignore but instead openly acknowledge the underlying racism and belief in aristocracy that J.R.R. Tolkien wove into the books, without even much attempt at subtlety. Nor do I much blame him. He couldn't help it, coming from the imperialist and class-ridden culture that raised him.

Moreover, the characters whom the reader comes to know best -- Frodo, Sam and even the king-in-waiting, Aragorn -- are themselves not very snooty or racist. Aragorn has an easygoing, common touch -- much like Luke Skywalker, the only unpatronizing Jedi. The snootiest and most relentlessly aristocratic characters in LOTR stand off in the wings -- for example, the preachy, secretive and patronizing elf-lords Elrond and Galadriel, coaxing maximum effort from their allies while letting others do the fighting for them. (I'd point out endless parallels with a fellow named Yoda, but that would stir up too many hornets at once!)

Obsession with either past or future can almost define a civilization. Worldwide, most cultures believed in some lost golden age when people knew more, mused loftier thoughts and were closer to the gods -- but then fell from grace. Under this dour but recurrent worldview, men and women of a later, coarser era can only look back with envy, hearkening to remnants of ancient wisdom. Recognize this motif? It drenches every page of "Lord of the Rings." It is the old classic, the eternal verity -- the worst of all human clichés.

Only a few societies ever dared to contradict this dogma of nostalgia. Our own scientific West, with its impudent notion of progress, brashly relocated any "golden age" to the future, something we might work toward, a human construct for our grandchildren to achieve with craft, sweat and good will.My point? Well, LOTR is obviously an account written after the Ring War ended, long ago. Right? An account created by the victors.

Mired in grinding poverty and social destitution, Africa cries for help. A cacophonous galaxy of rock stars, anti-poverty activists, and heads of state are calling on the G-8 countries to cancel Africa’s $350 billion crippling foreign debt and double aid to the continent. British Prime Minister Tony Blair will make aid to Africa the centerpiece in Britain's presidency of the G-8 meeting in Gleneagles, Scotland in July. Live 8 is planned for July 2. After meeting with President Bush on June 10, modalities are being worked out to cancel at least $34 billion in debt of 27 of the world’s poorest nations, mostly African. Will this African Marshall Aid Plan work?

Africa’s plight follows a ten-year attention deficit cycle. Every decade or so, mega-plans are drawn up and rock concerts held to whip up international rescue mission for Africa. Acrimonious wrangling over financing modalities ensues. Years slip by, then a decade later, another grand Africa initiative is unveiled. Back in 1985, there was Live Aid and a “Special Session on Africa” held by the United Nations to boost aid to Africa. Then in March 1996, the U.N. launched a $25 billion Special Initiative for Africa. In September 2005, the plight of Africa will again take center-stage at a U.N. conference with clockwork precision. Expect another major initiative for Africa in 2015.

Helping Africa of course is noble but has now become a theater of the absurd – the blind leading the clueless. A recent IMF study estimated that Africans in the diaspora remit $32 billion annually back to Africa, with the main destinations being Ghana, Nigeria, and Kenya. About $7 billion is sent to southern Africa (Ghana News Agency, Accra, May 31, 2005). The amount Africans abroad remit back exceeds the $25 billion Tony Blair seeks to raise.

Nigerian President Olusegun Obasanjo says corrupt African leaders have stolen at least $140 billion (£95 billion) from their people since independence. The World Bank estimates that 40 per cent of wealth created in Africa is invested outside the continent. Even the African Union, in a stunning report last August, claimed that Africa loses an estimated $148 billion annually to corruption – or 25 percent of the continent's Gross Domestic Product (GDP). Rather than plug the huge hemorrhage, African leaders prefer to badger the West for more money. And the West, blinded by its own racial over-sensitivity and guilt over the iniquities of the slave trade and colonialism, obliges. This is the real tragedy of Africa.

Between 1960 and 1997, the West pumped more than $450 billion in foreign aid – the equivalent of four Marshall Aid Plans – into Africa with nothing to show for it. Contrary to popular misconception, foreign aid is not free but a soft loan. Outright debt relief and massive inflow of aid without any conditionalities, safeguards or monitoring mechanisms is absurd. It is akin to writing off the credit card debt of a drunken sailor and allowing him to keep the same credit cards. No African government has been called upon to give a full public accounting of who took what loan and for what purpose since many of Africa’s foreign loans taken in the past were misused and squandered. No government official has been held accountable; instead, irresponsible past borrowing behavior is being rewarded.

More distressing, much of the new aid money will flow directly into an African government budget – a huge black maze of vanishing tax receipts, extra-budgetary expenditure items, perks and off-budget “presidential privy accounts,” redolent with graft, patronage and waste. Over the past few decades, African budgets have careened out of control. State bureaucracies have swollen, packed with political supporters. Back in 1996, 20 percent of Ghana's public sector workforce was declared redundant by the Secretary of Finance and Guinea’s 50,000 civil servants were consuming 51 percent of the nation's wealth. In Kenya, civil service salaries take up half the budget; in Uganda, it is 40 percent. Zimbabwe has 54 ministers; Uganda with a population of 35 million has 70, while Ghana, with a population of 22 million, has 88 ministers and deputy ministers. With bloated bureaucracies, soaring expenditures and narrow tax bases, budget deficits have soared.

They are covered with World Bank loans and foreign aid (Ghana’s budget is 50 percent aid-financed and Uganda’s is 60 percent). If the aid is insufficient, the rest of the budget shortfall is financed by printing money. Even when is aid available for “budgetary support”, there is no guarantee that it will be used productively to generate a return to repay the soft loan. It could well be “consumed” when it pays for the salaries of civil servants. Writing off Uganda’s debt does not eliminate the aid dependency. In fact, when the World Bank canceled $650 million of Uganda’s debt in 1999, the first item President Yoweri Museveni purchased was a new presidential jet!


British Prime Minister thinks he can cajole or browbeat African leaders into curbing corruption and ensuring that resources released by debt relief are put to some good use – such as increased spending on education and health care. But the push for good governance and reform must come from within – from African civil society groups, organizations and the people. However, in country after country, chastened by diabolical restrictions, these groups have no freedom or political space to operate.

Carlos Cardoso, an investigative journalist, was murdered in November 2000 for uncovering a bank scandal in which about $14 million was looted from Mozambique's largest bank, BCM, on the eve of its privatization. The official in charge of banking supervision, Antonio Siba Siba, was also murdered while investigating the banking scandals. Such was also the fate of Norbert Zongo, a popular journalist in Burkina Faso, who was gunned down on Dec 13, 1998, while investigating official corruption. In September 2001, President Isaias Afwerki closed down all the independent media and arrested its staff, quashing calls for democratic reforms. In all, the government shut down eight private newspapers and arrested its journalists, picking them up in their newsrooms and homes and from the streets. They were held in a central jail until April, 2002, when they threatened to begin a hunger strike to protest their detention. They were then transferred to an undisclosed location.

In neighboring Ethiopia, President Meles Zenawi, a member of Tony Blair’s Africa Commission, just held fraudulent elections. Anticipating public outrage, he banned street demonstrations for one month and assumed full control of the country’s security forces. When the opposition rallied to protest the results dribbling in, the police opened fire, killing 26; opposition leaders have been placed under house arrest. Witness the election machinations in Egypt.

The paucity of good leadership has left a garish stain on the continent. Worse, the caliber of leadership has distressingly deteriorated over the decades to execrable depths. The likes of Charles Taylor of Liberia and Sani Abacha of Nigeria even make Mobutu Sese Seko of formerly Zaire look like a saint. In an unusual editorial, The Independent newspaper in Ghana wrote: "Most of the leaders in Africa are power-loving politicians, who in uniform or out of uniform, represent no good for the welfare of our people. These are harsh words to use on men and women who may mean well but lack the necessary vision and direction to uplift the status of their people (The Independent, Ghana, July 20, 2000; p.2).

The crisis in leadership remains a major obstacle to poverty reduction and has many manifestations. It is characterized, among others, by the following dispositions and failings: The "Big Man" syndrome, subordination of national interests to personal aggrandizement, super-inflated egos, misplaced priorities, poor judgment, reluctance to take responsibility for personal failures, and total lack of vision and understanding of even such basic and elementary concepts as "democracy," "fairness," "rule of law," "accountability," and "freedom" -- among other deficiencies. In some instances, the leadership is given to vituperative utterances, outright buffoonery, stubborn refusal to learn from past mistakes, and complete absence of cognitive pragmatism.

Believing that their countries belong to them and only them only, they cling to power at all costs. Their promises are worth less than Al Cappone’s. They stipulate constitutional term limits and then break them: Angola, Chad, Gabon, Guinea, and Uganda. African leaders themselves drew up a New Economic Partnership for Africa’s Development (NEPAD) in 2001, in which they inserted a Peer Review Mechanism (PRM), by which they were to evaluate the performance of fellow African leaders in terms of democratic governance. What happened? To be fair, they acted in reversing the “military coup” in Togo in February but went on vacation when elections were stolen in Zimbabwe and Togo.

Ask them to cut bloated state bureaucracies or government spending and they will set up a “Ministry of Less Government Spending.” Then there is the “Ministry of Good Governance” (Tanzania). They set up “Anti-Corruption Commissions” with no teeth and then sack the Commissioner if he gets too close to the fat cats (Kenya) or issue a Government White Paper to exonerate corrupt ministers (Ghana in 1996). To be sure, multi-party elections have been held in recent years in many African countries but the electoral process was so contumaciously manipulated to return incumbents to power. Four such “coconut elections” have so far been held this year: Zimbabwe, Togo, Congo (Brazzaville), and Ethiopia.

Ask them to place more reliance on the private sector and they will create a Ministry of Private Enterprise (Ghana). Ask them to privatize inefficient state-owned enterprises and they will sell them off at fire-sale prices to their cronies (Uganda). Or ask them to move a foot and they will demand foreign aid in order to do so. In 2003, some 30,000 ghost names were discovered on the payroll of the Ministry of Education, costing the government $1.2 million a month in salaries heisted by living workers. When Ghana demanded foreign aid to purge the payroll of these ghost names, Japan coughed up $5 million.

The reform process has stalled through vexatious chicanery, willful deception, and vaunted acrobatics. Only 16 out of the 54 African countries are democratic, fewer than 8 are “economic success stories,” only 8 have a free and independent media.

No amount of debt relief and increased aid will help Africa until Africa cleans up its own house. But the leadership is not interested in reform. Thus, without new leadership and genuine reform, debt relief and increased aid would compound Africa’s problems and more African countries will implode. The continent is stuck in a veritable conundrum. What can Western donors do?

Smart aid would do one of two things. One, bypass the vampire state and target the people, who produce Africa’s real wealth. An African economy consists of three sectors: the traditional, informal, and the modern sector. The people who produce Africa’s real wealth – cash crops, diamonds, gold and other minerals – live in the traditional and informal sectors. Meaningful development and poverty reduction cannot occur by ignoring these two sectors. But in the 1960s and 1970s, much Western development aid was channeled into the modern sector or the urban area, the abode of the parasitic elite minority. Industrialization was the rage and the two other sectors – especially agriculture – were neglected. Huge foreign loans were contracted to set up a dizzying array of state enterprises, which became towering edifices of gross inefficiency, waste and graft. Economic crises emerged in the 1980s and billions in foreign aid money were spent in an attempt to reform the dysfunctional modern sector. Between 1981 and 1994, for example, the World Bank spent more than $25 billion in Structural Adjustment loans to reform Africa’s dilapidated statist economic system. Only 6 out of the 29 “adjusting” African countries were adjudged to be “economic success stories” in 1994. Even then, the success list was phantasmagoric. Ghana, declared a “success story” in 1994, is now on HIPC life-support system.

At some point, even the most recklessly optimistic donor must come to terms with the law of diminishing returns: That pouring in more money to reform the modern sector is futile. Greater returns can be achieved elsewhere – by focusing on the traditional and informal sectors.

Second, smart aid would empower the African people (African civil society groups) to monitor how the aid money is being spent and to instigate reform from within. Empowerment requires arming the African people with information, the freedom and the institutional means to unchain themselves from the vicious grip of poverty and oppression.

Africa already has its own Charter of Human and Peoples’ Rights (the 1981 Banjul Charter), which recognizes the right to liberty and to the security of his person (Article 6); to receive information, to express and disseminate his opinions (Article 9); to free association (Article 10); to assemble freely with others (Article 11); and to participate freely in the government of his country, either directly or through freely chosen representatives in accordance with the provisions of the law (Article 13). Though the Charter enjoins African states to recognize these rights, few do so. When President Thabo Mbeki called on June 3, President Bush should have handed him a signed copy of this Charter to be delivered to President Robert Mugabe of ‘Zimbabwe.

The institutional tools Africans need are an independent central bank (to assure monetary stability and stanch capital flight), an independent judiciary (for the rule of law), a free and independent media (to ensure free flow of information), an independent Electoral Commission, an efficient and professional civil service, and a neutral and professional armed and security forces.

Recent events in Ukraine (November), Ghana (December), Zimbabwe (March), Lebanon (April), and Togo (April) unerringly underscore the critical importance of these institutions. Without them, President Bush’s plan to spread democracy may stall. Democracies are not built in a vacuum but in a “political space” in which the people can air their opinion, petition their government without being fired on by security forces and can choose who should rule them in elections that are rigged by electoral commissions packed with government goons.

On May 13, thousands of Egyptian judges, frustrated by government control over the judiciary, agitated for full independence from the executive in their oversight of the electoral process. “The institutions are presenting Mr. Mubarak with an unexpected challenge from within, one that will be difficult to dismiss. The fact is, major changes in this country are going to come out of those institutions, not from the streets," said Abdel Monem Said, director of the Ahram Center for Strategic Studies in Cairo.

In the past 24 years, Egypt has received more than $55 billion in U.S. aid in direct government-to-government transfers. Smart aid would assist civil society in instigating institutional reform. Since this approach carries some risks, the same objective can be achieved by funneling aid through diaspora Africans and their organizations, as was the case with Soviet dissidents during the Cold War.

Africa’s long term growth prospects do not lie in rock concerts and increased dependency on Western aid but on the ability of the African people or civil society groups to instigate reform from within. Assistance to such groups – both at home and abroad – constitutes much smarter aid to Africa than all the LIVE AID concerts Bob Geldof can organize.
______________

The writer, a native of Ghana, is a Distinguished Economist at American University and President of the Free Africa Foundation. His new book is Africa Unchained (Palgrave/MacMillan). This article is culled from his May 10 testimony before the Standing Committee on Foreign Relations of the Senate of Canada.

Richard Dowden a Director of the Royal African Society writes "...As the momentum for Live 8 gathers pace and the pressure on international leaders to deal with Africa's problems mounts, Richard Dowden argues that aid is not the answer.Many argue that aid creates a situation of dependency When a tsunami hits or war creates refugees, the victims can do with some help to get back on their feet wherever they are.Humanitarian relief aid will always be needed when disaster strikes.But the evidence that aid can transform whole societies and lift millions out of poverty is unconvincing.It can only speed up a process that is already happening.When we see scenes of destitution from Africa we assume that we can change things by sending money.But if aid could make Africa prosperous, it would have done so by now.Despite nearly a trillion dollars of aid since independence in the 1960s, much of Africa is worse off now than it was then.Much of that aid was spent by outsiders without consultation with Africans and with little understanding of Africa's ways or needs.Today the continent is full of abandoned projects: wells in the wrong place, factories without a fuel supply, roads that were not maintained.Impoverished by politics But UK Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown are proposing to double aid to Africa, promising a Marshall Aid plan, like the help America gave Europe at the end of the Second World War.The comparison is false.In 1945 there was peace in Europe and armies of disciplined and skilled workers stood ready to rebuild. All that was needed was the cash.Africa has rich resources but has been impoverished by bad politics - including our own policies.Africa's nation states that crammed old societies into artificially created countries have not produced effective governments.
It is impossible to deliver education and better health to Africans without working through those governments.The African countries that are well run, South Africa and Botswana for example, do not need aid.At the other end of the spectrum are countries like Somalia and Democratic Republic of Congo which have collapsed as nation states and do not have any effective administration. It is impossible to use development aid there.Those in the middle that are not doing too badly, like Mozambique, Tanzania and Uganda, are already receiving around 50% of their budgets from aid.That makes them more dependent on Western aid donors than they were in colonial times.Aid creates and sustains unequal relationships. Talk of partnerships is false.As one western diplomat in Africa put it to me recently: "We like it when they take ownership of the programme but we mean our programme. We don't like it if they start having their own ideas."No shortcut the aid business is an industry with its own dynamic.Much of it is spent in the donor countries in the form of consultancies and goods.For the recipient it creates dependency, undermines self-reliance and ultimately breeds resentment.There is no short cut to development. Only Africans themselves can bring change to Africa.States have to raise taxes and spend them productively in order for their countries to develop.Aid creates and sustains unequal relationships When state institutions are functioning in support of the people and the economy, there may be a case for helping with specific short term assistance but unless and until the local systems are in place and there is real commitment, aid will be wasted.At present lack of capacity and corruption prevent even basic services being delivered in most of Africa.Outsiders can run one-off projects like immunisation programmes but development has to be done by the people themselves.
Better alternatives Giving aid feels good but there are better ways to help Africa.We must pursue policies that create a fairer system of trade. Current policies and practices in Europe and America damage Africa's chance of earning its living in the world.We must end agricultural subsidies that distort prices allowing cheap food to be dumped in Africa and ruining farmers there. We must lower tariffs and trade barriers to allow Africa to trade more processed goods.We must stop encouraging Africa's brain drain, luring the best educated and talented out of the continent to fill jobs in the West.The British government could also do something about arms flowing into Africa.Weapons that kill in Africa's wars may not be made in Britain but arms dealers base their operations in London and are largely unregulated.
And London has become the laundry of choice for money laundering because Britain applies one of the weakest banking scrutiny systems in the world.We need to start treating money stolen by corruption in the same way as drug money or terrorism funds..."