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A powerful shift in the politics of African aid

Schoolchildren stand in front of a Canadian-funded water tank that provides clean water to their village in the Thyolo district of southern Malawi.

Erin Conway-Smith/Erin Conway-Smith

Stephen Harper and his flunkies took a fair amount of heat before last month's Group of Eight summit in L'Aquila, Italy, for allegedly nixing Canada's commitments to Africa. Allegedly indeed. As it turns out, Canada is one of the few countries to have kept its commitments - even Bob Geldof has said so. In L'Aquila, the Prime Minister scolded other Western politicians for not keeping theirs.

What Mr. Geldof and his sidekick Bono probably don't know is that once Canada's African commitment - which rose from $1-billion (U.S.) five years ago to $2.1-billion in the fiscal 2008-09 year - is finished, the continent will pretty much drop off Canada's aid map. Wealthier Latin America will be the new focus.

Mr. Harper has said Latin America is to become the new aid sweet spot. But the Conservative government has never come entirely clean on why Latin America makes more sense than Africa, other than the boilerplate line about Latin America being in Canada's sphere of influence - that is, more or less in the same time zone as Ottawa.

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If you have read Dead Aid, a short, punchy, best-selling book by Dambisa Moyo, you might get an idea of what the Canadian government was really thinking when it nudged Africa off the funding cliff.

I have no idea whether anyone in the Prime Minister's Office or at CIDA, Canada's overseas development agency, has read the book, which came out a few months ago. But it doesn't matter. What Ms. Moyo says is an open secret among donors, developing-world economists and politicians who know a thing or two about aid: Giving freebies to Africa has done no measurable good and may even be making a bad situation worse.

Ms. Moyo is well qualified to talk about the African aid fiasco. Born and raised in Zambia, she holds a doctorate in economics from Oxford and was a World Bank consultant. Until recently, she was part of Goldman Sachs's macroeconomics teams, specializing in sub-Saharan Africa. To learn about Africa's woes from an African, instead of an aging white professor in England or New England, is refreshing.

Africa has received about $1-trillion (U.S.) in development aid in the past 50 years and the spigot is still wide open. Ms. Moyo argues that the endless loot has created a culture of dependency, promoted the growth of bureaucracy, turned corruption into national sports, and triggered inflation. It has damaged business and industry. Aid hasn't contributed to job creation.

She tells the story of an African mosquito-net producer with 10 employees who made 500 nets a week. Mosquito nets can be a matter of life and death in Africa, where malaria is rampant. Thinking he was doing the right thing, a Hollywood movie star, name undisclosed, sent 100,000 mosquito nets to a malaria-prone region. The local net producer couldn't compete and promptly went out of business (Canada's Rick Mercer and Belinda Stronach, by the way, are big proponents of buying nets for Africans through the Spread the Net campaign).

Ms. Moyo says Africa's reliance on aid, instead of taxes, has destroyed the idea of accountability. If the countries had a real tax base, they would have some say in how the money is spent, and who is qualified to do the spending. In a recent interview with Reason magazine, she said African leaders "spend the vast amount of time courting and catering to donors because they are the ones that determine whether they live or die."

Corruption is an enormous problem in Africa. U.S. Secretary of State Hillary Clinton last week [Aug. 14]wrapped up an 11-day African tour, during which she urged the countries to fight corruption. In her book, Ms. Moyo devotes a lot of space to the corruption nightmare. She cites estimates that say at least 25 per cent of the $525-billion lent by the World Bank to developing countries has been "misused," that is, stolen.

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Her proposal is a form of shock therapy: Cut aid to Africa within five years. She thinks this would effectively force the basket-case African countries to develop their own economies, learn to trade, create a tax base, get a credit rating and issue debt. Some African countries, notably South Africa and Botswana, are well along this path already and rely little on aid.

Dead Aid has no shortage of critics, among them Jeffrey Sachs, director of Columbia University's Earth Institute. He argues that aid for agriculture, health, education and infrastructure should be scaled up. Pulling the plug would ensure even more poverty and lead to many deaths, he has said.

The trouble is, there is little reason to believe that funnelling more money into Africa is doing the Africans any favours. One-trillion dollars later and much of the continent is still struggling, while many other parts of the world, such as Southeast Asia, are thriving. Three decades ago, Burundi and Burkina Faso had higher per capita incomes than China.

Canadians still need to know why Latin America has won the Canadian aid sweepstakes, and what it intends to do with the money. A lot of people, especially the Europeans, think Canada is punishing the poorest people on the planet by shifting its focus elsewhere.

Maybe Stephen Harper thinks sticking with Africa would be the equivalent of throwing good money after bad. If so, he should not be afraid to say so. The idea of cutting off Africa's aid pipeline for the sake of Africans is hardly a radical idea any more.

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About the Author
European Columnist

Eric Reguly is the European columnist for The Globe and Mail and is based in Rome. Since 2007, when he moved to Europe, he has primarily covered economic and financial stories, ranging from the euro zone crisis and the bank bailouts to the rise and fall of Russia's oligarchs and the merger of Fiat and Chrysler. More


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