Saturday, June 04, 2005

What Africa really needs

Aid, isn't that what they need?

Well what can be said about aid to Africa? It just keeps growing without accomplishing very much. Aid should be a short term thing to overcome a specific problem such as a drought. It hasn't turned out that way, Africa now recieves billions of dollars per year in aid and yet millions die every year from malnutrition and disease. We are told just a little more aid will solve the problem.

No it won't. The aid going to Africa hasn't solved the problem in the past, isn't solving the problem now and will not solve the problem in the future.

So where is all this aid money going? Well, Malawi spent £1.7 million of it on 37 top of the range S class Mercedes-Benz limousines for it's president and ministers in 2000. Then there are all the civil wars in Ethiopia, Liberia, Mozambique, Rwanda, Somalia, Sudan etc. How does aid cause this? If people who were previously subsistence farmers are being fed, they don't have to spend all of their time tending crops and can instead use their time to rise up against their government. Civil war.

All aid does is produce corruption and finance war.

Subsidies

We in the EU subsidise our food production heavily through the Common Agricultural Policy. This has historically meant that farmers have produced excesses of food which is then purchased by the state at a guaranteed price. The more they produce the more money they made. Of course there is no market for all of this excess food within the EU so it is exported to other countries at extremely low prices, African countries in particular.

These subsidised food exports actually have the effect of devastating Africa's own food producers, they simply cannot compete with food which is essentially dumped on their markets and they certainly cannot export to markets where domestic producers are so heavily subsidised. With very limited domestic production, it is hardly surprising that during drought conditions millions of people will die from starvation requiring billions in aid to keep them alive.

You could say that Europe's farmers are killing millions of Africans every year. American agricultural producers are also heavily subsidised so American farmers are also complicit in the African deaths.

On a slightly brighter note, the CAP is being reformed so that farmers are no longer paid for produce that nobody wants. They are now being paid for doing nothing, so they will just be a drain on the EU purse rather than actively destroying other countries markets. Hopefully this is a limited step towards real market conditions.

Debt

Africa has accumulated large debts, billions. Nothing compared to 1st world countries but more than they can afford to pay. Should they be written off? Well if the debts are simply written off, what's to stop them simply going out and borrowing more in the full knowledge that the western tax payer will finance the debt when it's written off by their government a decade down the line?

No, leave the debts where they are and don't loan any more money but don't make the situation worse. The debts shouldn't be written off but the interest should be levelled at zero percent. There is no point lending to someone who can't afford to pay you back, especially if you will not allow him to trade his way out of debt.

Tariffs

Thankfully the EU has been dropping the import tariffs on African goods, making it easier for their exporters to produce goods and sell them to the EU. America and Japan (the second and third largest markets) on the other hand have very large import tariffs on African goods making them costly and undesirable. In addition the African countries themselves have tariffs between countries making exports from one country expensive in another nearby.

All of these tariffs reduce trade and make it difficult or impossible for African producers to sell any excess produce. There is therefore no incentive to produce more food than is needed locally and when the weather is poor and production plumets there is no spare capacity and a very limited import mechanism.

What Africa really needs

The solution to African poverty is clear. It is free and fair trade.
  1. They need free and fair trade with the EU and America.
  2. They need an African Union which will allow free trade between African countries, applying continent wide import tariffs to countries which apply import tariffs to their products.
  3. They need subsidies to be removed from American and EU exports or they need to fight these subsidies within the context of an African Union by giving their own subsidies to match.
  4. Most of all, they need good, stable and scrupulous government and that means getting rid of aid.

2 Comments:

At Friday, June 10, 2005, Blogger Tritone said...

Oh man, at first I thought it said "Aids, isn't that what they need?" and I was quite shocked. Ha-ha!

 
At Monday, June 13, 2005, Blogger Richard said...

Here is my idea for Africa.

Instead of giving let's say, one African country, $10 Billion to do with as they please, we should get groups of experts together that can do the things they want. So for example, dig them 500 wells all over the country, or build 50 bridges, or 50 projects for self-supporting farms, or anything without actually giving them money.

Just giving these nations money is useless, they just end up wasting it or spending it on their military. Real projects that help the people are what not only them, but we, NEED. Helping them to support themselves without asking the West for aid all the time will change the face of Africa.

 

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