It may sound harsh, but the time of dilly dallying around the lack of performance when it comes the application of foreign aid and achieving ROI on this investment. In my last article we also provided research proof that Africa’s history is taking the continent further into development quagmire. South Africa is set to lose aid from the United Kingdom in 2015 and has lost the top spot for fastest growing economy on the continent to non-other than Nigeria.
Over the last 20 years through trade liberalisation cost sub-Saharan Africa $272 billion. Without trade liberalisation as the price to aid, including loans and debt relief, SSA would have had sufficient surplus to wipe out debt with pocket change to vaccinate every child and have them go to school. This intriguing research leads to only one conclusion – Africa does not have the calibre vested in economists in advisory capacities to take Africa into the future. Effectively aid pays for the loss cause by trade obligations and conditions. In signing these agreements, is it possible that someone economists could not count? Or who benefited from such aid is another crucial question, but it does not need a genius.
Let’s offer you this prime example from 2005 – history tells the true story;
The Economic of Failure, 2005
Disturbingly, according to OECD DAC statistical records, since aid began to flow into Africa in the 1960s a grand total of $502 billion to sub-Saharan Africa, which is worth about $866 billion in today’s prices. It would be incorrect to correlate this to the value of dollars today or to assume that the measures of population were the same. The rich culture of rural life was also drastically different and self-sustenance was the order of the day under colonialism.
Seemingly the sanguine forecasts suggest that the MDG income poverty target will not be achieved in sub-Saharan Africa until 2147, some 132 years late. This was to reduce poverty in half from the status quo of the 1990’s by 2015.
One of the missing links is my speculation, that development aid to Africa has no process in the form of a supply-chain development. In the corporate world and the link between SME arena – is the supply-chain development and optimisation platforms. Where use correctly, we are seeing SME’s growing into the next level of trade revenues and thus creating space for the lower and smaller businesses to fight to take their place. It is with this concept in mind that foreign donor aid should be performance based! Performance that would then directly link into foreign direct investment – because the sectors will be developed and the reality of ROI on FDI can begin.
Considering aid, the SME sector in South Africa has suffered a similar fate – where the issuing of grants to small businesses has become the order of the day – weak business concepts, no need to return the investment in any form or kind and limited and experience monitoring and evaluation for benchmarking and progressive purposes.
The next curse to non-performance on aid investment is the global economy. The IMF forecasts have again subdued growth targets and this will have a ripple effect on even Africa due to the nature of the supply shocks. Even though Africa is rich in resources, economic growth for trade partners consequently will slow trade investment with Africa – forcing a supply cost instead of a demand cost to resources – altering budget targets and under achievement of development goals where already Africa has a funding gap of $40 billion annually.
Gatekeepers of Inferior Performance
Squarely, African leaders cannot escape the blame for allowing neo-colonial exploitation continued over the years to reduce many of their people into paupers in their own countries and across Africa till this day. In no way am I against the competence of the West. However, I do not think that the West offers the best development models for Africa. Yet, till this day we adopt their (the West’s) advice on development models and we use their experts. Where lies Africa yet in the quagmire of poverty.
Even with international experts developing our development models, Africa has little to show for it. We have been trained by their experts, but the model implementation is inferior. Are we paying the West to train us (the wrong people) – they probably know it – then we have to pay them to help fix it again. This is two revenue out-streams!
I’ll bring Black Economic Empowerment into the fold here. This is South Africa’s model for equal distribution of wealth, probably the biggest failure of South Africa’s post-apartheid democracy. Corporates through legislation are forced to surrender through a BEE transaction – shareholding to a “black” consortium or black shareholders. The black consortium though has to pay the current value of that shareholding. In all instances at the very least, this has hundreds of millions of rands – moving into the billions of rands. So what exactly did the white man lose, nothing! He gained way more than what he was able to take as part of racial group. What did the black consortium get – debt? Come the global recession of 2008, so many of the BEE deals in South Africa suffered as a result, losing on the depreciated value on incurred losses for this period.
Africa’s Poor Innovation Record
These are the world’s top innovations according to a 2013 report Cornell university, INSEAD, and the World Intellectual Property Organization. Regionally, Mauritius and Seychelles beat South Africa on the African continent. Regional winner, Mauritius, achieved 40th globally and has shown an impressive improvement of 13 places from 53rd in 2013. Sub-Saharan Africa’s performance on the GII:
| Mauritius | 40 | 1 |
| Seychelles | 51 | 2 |
| South Africa | 53 | 3 |
Sub-Saharan Africa accounts for almost 50 percent of countries with the status of “innovation learner”.
The global economy, given the rife sovereign and domestic challenges still in the Arab countries, the Russia, Europe and US sanctions – impact on trade, China’s cost of deadly pollution, the increase in natural disasters around the world and the impact on insurance costs and the total cost of wars – not to mention the cost of repairing post war infrastructure will all impact the MDG’s.
We have yet to include the ongoing corruption and cost of outflows through illegal deals into tax havens. All in all, Africa continues to lose more than what it makes – in what it recognized as – Africa’s now or never moment in time.
