Reason’s Hit and Run pointed us to this interview with James Shikwati, a young Kenyan economist with a distinctly non-Geldofian view of direct aid to Africa. Highlights:

Shikwati: … The countries that have collected the most development aid are also the ones that are in the worst shape. Despite the billions that have poured in to Africa, the continent remains poor. … Huge bureaucracies are financed (with the aid money), corruption and complacency are promoted, Africans are taught to be beggars and not to be independent. In addition, development aid weakens the local markets everywhere and dampens the spirit of entrepreneurship that we so desperately need. As absurd as it may sound: Development aid is one of the reasons for Africa’s problems. If the West were to cancel these payments, normal Africans wouldn’t even notice. Only the functionaries would be hard hit. Which is why they maintain that the world would stop turning without this development aid.

…SPIEGEL: Would Africa actually be able to solve these problems on its own?

Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there’s a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn’t do all that poorly either.

… SPIEGEL: What are the Germans supposed to do?

Shikwati: If they really want to fight poverty, they should completely halt development aid and give Africa the opportunity to ensure its own survival. Currently, Africa is like a child that immediately cries for its babysitter when something goes wrong. Africa should stand on its own two feet.

(A bio of Shikwati says he is a founder of East Africa’s first free-market think tank, which sounds like a great idea deserving of support.)

Is he just an isolated contrarian? The Economist had an excellent article about Africa last week. In “The $25 billion question” they reviewed the various fads in development economics that have led to much of the $450b poured into Africa over the last 40 years going to waste:

Source: The Economist, June 30, 2005.
While the article wraps up with some examples of low cost, high return projects that do work, they also conclude with a statement that aligns with Shikwati’s thoughts:

Tales of corruption, grand and petty, sap the will of donor governments and their taxpayers, who feel their generosity betrayed. But the poor, like everyone else, further their interests as best they can. They do not sit idly by, waiting for a big push. They struggle and cope; some hustle and scheme. It is often only such tenacity that gets them by.

Shikwati’s may be a voice in the wilderness of statist, aid-dependent Africa, but he is on to something. Immediately after the second World War, the Philippines, Vietnam, Taiwan, South Korea, et al, were not very different from contemporaneous Africa (according to The Economist’s chart above, Africa was better off). Sixty years later they aren’t even on the same playing field.

What made Asia outperform Africa? Asian governments were obsessed with economic growth, entrepreneurs, and exports. That is definitely not Africa’s political culture.

The Africa vs Asia comparison falls in the same category as North vs South Korea, or East vs West Germany. Africa is not failing to grow because of insufficient aid, or donor mistakes that can be corrected going forward. Just as with East Germany or North Korea, Africa is stuck because the predominant political-economic model is flawed.

So is Shikwati right about canceling all aid? No, for many of the high-ROI programs save lives. But that aid aside, he’s right in that the rest of it does not matter.

So it comes down to asking whether the tribalist, statist, corrupt culture can be killed quicker if there is aid, or if there is none. I don’t know the answer. But if there is going to be aid, it should always seek to push Africans towards entrepreneurship and markets. A project for several generation, yes — but one which experience shows is the way out of the poverty trap.

Update: just after this piece was posted, Max Boot’s LA Times column went up. He addresses these same issues and concludes:

This entry was posted on Friday, July 8th, 2005 at 12:15 am by A Senior Administration Official and is filed under Big Thoughts. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.