Easing the burden of aid on Africa

Western governments seem to be following China's lead in investing in the continent – and that's good news

"Our love affair with Africa is over," a Western foreign policy adviser staying at The Melville House told me as we clinked wine glasses one rainy evening a fortnight ago. He represented a Scandinavian country but his account of the rethink going on in his government over development aid to Africa mirrored the views of a North American guest I'd talked to on the same subject a few days earlier.
"It's the end of an era," one of them explained. "After so many years of providing money to African governments without seeing results from it, we are changing course."
The reasons for this shift in Western policy have been debated for decades but culminate in a single word: corruption.
"Our taxpayers are tired of wasting their donations on African leaders who spend the support given directly to their governments on themselves and their favourites. With good intentions betrayed in Oslo, Copenhagen, London and Amsterdam over many years, Europe's citizens have watched African presidents buy aeroplanes for their own use rather than assist the poor or improve infrastructure.
Post-colonial sensitivities meant we agreed in the past not to interfere in African decision-making, but it has been very irritating for us to watch our money being squandered. We don't want to do it anymore."
To bypass Africa's generally corrupt leadership, my policy-making guests explained that - humanitarian aid aside – Western governments were considering micro-financing options, infrastructural investments along the lines of Chinese policy in Africa, as well as working through corporates that obey international rules of transparency.
Fascinated by their Western perspectives, I have since read a related African book:  Dambisa Moyo's Dead Aid.
She asks why the majority of sub-Saharan countries "flounder in a seemingly never-ending cycle of corruption, disease, poverty and aid-dependency" despite having received more than US$300 billion in development assistance since 1970.
Her answer is that African countries are poor because of the aid.
Despite the West's well-meaning belief that the world's rich should help its poor and make poverty history, she contends that "…aid has been, and continues to be, an unmitigated political, economic and humanitarian disaster for most parts of the developing world."
Over the past thirty years, the most aid-dependent countries have exhibited an average annual growth rate of minus 0.2 per cent, according to Moyo. Between 1970 and 1998, when aid flows to Africa were at their peak, the poverty rate in Africa rose from 11 per cent to an astonishing 66 per cent.
Why? Moyo believes it is the result of non-emergency loans and grants having the same effect in Africa as the discovery of a valuable natural resource like oil. "It's a kind of curse because it encourages corruption and conflict, while at the same time discouraging free enterprise".
One of the direst consequences of concessionary aid in Africa is the legacy of debt repayment faced by bankrupt countries after their leaders have nicked the loans and grants. Moyo agrees with my Western guests that more and better aid should be given to poor countries but emphatically not via the governments of corrupt leaders.
She concludes: "Although the Dead Aid thesis might be controversial, it carries an important message. The lives of billions rest on getting the right financing solutions to the problems of developing nations. After more than five decades of the wrong diagnosis, it is time now to turn the corner and take the harder but indisputably better road."
Like my foreign affairs guests, Moyo reckons China's policy of large-scale direct investment in infrastructure is an important part of the way forward, (China having invested US$900 million in Africa in 2004, compared with just US$20 million in 1975).
The Scandinavian policy-maker told me that, while Western governments were afraid they might not be able to withstand Chinese competition in their trade relations with Africa, there was grudging recognition that China has a long-term perspective that includes an interest in good governance on the continent, "…having burnt their fingers in Congo".
He revealed: "There was a shift in the Western debate around 2007, at a time when climate change policy was evolving, and our discussions started to focus on big European and American companies as agents of change. They had been bribing Africans and making public officials corrupt so there was a need for more corporate responsibility.
"But there was also a growing debate, especially in cases where Western companies are partly state owned, that what's good for the Western company in Africa is also good for the donor state. NGOs or civil society could continue to implement and improve social policies while corporate companies complying with international standards would conduct infrastructural development."
Surprisingly, and contrary to the popular view of a menacing China with its orgiastic embrace of market mechanisms ruthlessly plundering Africa's resources, Western approaches to the concessionary aid dilemma seem to be converging with China's policy of economic rather than quasi-political engagement on a troubled continent.  
In fact, I got the impression from my guests that there may soon be a traffic jam on the road to Damascus, as a wag once described a similarly unexpected international foreign policy u-turn.
So although Africa's romance with the West has gone sour, a new era that recognizes the long trade marriage between Western countries and African governments as a purely economic institution (albeit driven by Chinese pragmatism) will help to promote prosperity on the continent.

It will certainly be more beneficial to ordinary Africans than the Western handouts of the past, and may improve governance.  "Indeed, some African leaders are already asking for investments through big companies rather than for government loans," said my Scandinavian guest as we I clinked our glasses again.