Roben Farzad's (BusinessWeek columnist) article titled Can Greed Save Africa?, reignited debate on the 'Aid to Africa' imbroglio, and, intensified discourse on the topic of aid-effectiveness.
He quoted the following interesting statistics (from a study conducted by William R. Easterly, an economics professor at New York University):
Problem 1) Learned helplessness
Decades of racially oppressive colonial rule, civil strife and state failure have had a toll on African Infrastructure, and African people.
Most aid programmes target infrastructure, education and nutrition. Some address health care issues, especially those related to HIV/AIDS... But it seems that there are no initiatives that focus on improving the mental health of African people.
People who go through oppressive colonial rule, civil strife and state failure; are bound to have mental and emotional scars that need healing. These 'scars', if unattended to, may have adverse effects on the well-being of individuals and society as a whole.
New age authors like James Ray, believe that a person's situation in life is a reflection of their mental state. Similarly, a society's collective 'situation' is a reflection of the society's collective mental state. Hence, a contracting economy, increasing HIV/AIDS infections and a galloping crime rate, may be reflections of a society's unhealed mental and emotional scars.
I believe that Africa's problems can easily be solved by average African Joes and Janes, without any external assistance. Why don't they solve their society's problems? Answer; Learned helplessness--a psychological condition in which a person has learned to act or behave powerless in a particular situation, even when he/she has the ability to change his/her unconfortable or even dangerous circumstance.
So, whats the solution for the learned helplessness problem?: Aid programmes should focus the majority of their efforts and resources, on identifying and addressing the underlying psychological causes of Africa's problems i.e heal the mental and emotional scars of African people.
Problem 2) Lack of Access to Capital
My travels across the African continent have given me a valuable insight: Africa's most recent generation, born between 1978 and 2008, is; relatively well-educated, tech-savvy, ambitious, entrepreneurial, smart, passionate and it also has an awareness of global trends and events. I call it Africa's Star Generation, because it has the potential to change Africa for the better through its entrepreneurial drive.
Unfortunately, the transformative effect of this generation may fail to be realized, because it lacks access to risk based capital and specialized business expertise--critical elements for the success of the Star Generation's new ventures. Africa's banking and micro finance industry is highly conservative and lacks innovation: the sector prefers to confine its services to 'blue-chips' that invariably; have collateral (asset rich balance sheets), have a proven track record of success and operate in traditional lines of business e.g mining, agriculture and the manufacture of fast moving consumer goods. This denies the Star Generation access to capital and their right to participate in the economy. Dejected, the entrepreneurial generation relocates to developed countries, where it joins the growing ranks of middle-class immigrants of African origin--that remit hard currency to Africa. This limits the economic development of Africa and restricts Africa from participating in the 'tech-age' economy.
So, how do we solve the capital access problem?: The Democratization of access to capital through legislative instruments and financial technology!
Don't you think I should become the secretary general of the United Nations? :-)
He quoted the following interesting statistics (from a study conducted by William R. Easterly, an economics professor at New York University):
- Between 1960 and 2007 (a period of 47 yrs), Africa received a 'total of USD625 billion in foreign aid'. This translates to an aid disbursement of approximately USD247 million per country per year.
- Between 1976 to 2000 (a period of 24 years), 'Africa's share of global trade dropped to 1%, from an already negligible 3%'. This shows that Africa is becoming more of a net importer of commodities: a sign of African countries' declining (production) comparative advantage.
- 'The U.N.'s scale of human development, which considers health, education, and economic well-being, ranks 34 African nations among the world's 40 lowest'. This means that Africans generally have the lowest welfare in the world!
- Aid doesn't influence economic growth: Foreign aid may have a neutral/negligible effect on economic growth in recipient countries. Hristos Doucouliagos and Martin Paldam's working paper titled Aid effectiveness on Growth: A Meta-Study, suggests that foreign aid has an insignificant effect on economic growth in recipient countries. Therefore, this implies that Africa's declining comparative advantage, could be driven by other factors that have no connection to foreign aid; e.g civil strife, corruption, e.t.c
- There are flaws in the conception, design and execution of foreign aid programmes: I suspect that foreign aid fails to stimulate economic growth & enhance social welfare in Africa because of inaccurate diagnosis of Africa's problems, and, because the programmes are poorly designed. J. Orlin Grabbe, in his speech titled In Praise of Chaos (presented to the Eris Society on 12 August 1993), stated that 'handing out free food in "refugee" camps in Somalia leads to a greater number of starving refugees, because the existence of free food attracts a greater number of nomads to the camps, who then become dependent on free food, and starve when they are not fed'. This example illustrates the adverse effects of 'poorly designed' aid programmes.
Problem 1) Learned helplessness
Decades of racially oppressive colonial rule, civil strife and state failure have had a toll on African Infrastructure, and African people.
Most aid programmes target infrastructure, education and nutrition. Some address health care issues, especially those related to HIV/AIDS... But it seems that there are no initiatives that focus on improving the mental health of African people.
People who go through oppressive colonial rule, civil strife and state failure; are bound to have mental and emotional scars that need healing. These 'scars', if unattended to, may have adverse effects on the well-being of individuals and society as a whole.
New age authors like James Ray, believe that a person's situation in life is a reflection of their mental state. Similarly, a society's collective 'situation' is a reflection of the society's collective mental state. Hence, a contracting economy, increasing HIV/AIDS infections and a galloping crime rate, may be reflections of a society's unhealed mental and emotional scars.
I believe that Africa's problems can easily be solved by average African Joes and Janes, without any external assistance. Why don't they solve their society's problems? Answer; Learned helplessness--a psychological condition in which a person has learned to act or behave powerless in a particular situation, even when he/she has the ability to change his/her unconfortable or even dangerous circumstance.
So, whats the solution for the learned helplessness problem?: Aid programmes should focus the majority of their efforts and resources, on identifying and addressing the underlying psychological causes of Africa's problems i.e heal the mental and emotional scars of African people.
Problem 2) Lack of Access to Capital
My travels across the African continent have given me a valuable insight: Africa's most recent generation, born between 1978 and 2008, is; relatively well-educated, tech-savvy, ambitious, entrepreneurial, smart, passionate and it also has an awareness of global trends and events. I call it Africa's Star Generation, because it has the potential to change Africa for the better through its entrepreneurial drive.
Unfortunately, the transformative effect of this generation may fail to be realized, because it lacks access to risk based capital and specialized business expertise--critical elements for the success of the Star Generation's new ventures. Africa's banking and micro finance industry is highly conservative and lacks innovation: the sector prefers to confine its services to 'blue-chips' that invariably; have collateral (asset rich balance sheets), have a proven track record of success and operate in traditional lines of business e.g mining, agriculture and the manufacture of fast moving consumer goods. This denies the Star Generation access to capital and their right to participate in the economy. Dejected, the entrepreneurial generation relocates to developed countries, where it joins the growing ranks of middle-class immigrants of African origin--that remit hard currency to Africa. This limits the economic development of Africa and restricts Africa from participating in the 'tech-age' economy.
So, how do we solve the capital access problem?: The Democratization of access to capital through legislative instruments and financial technology!
Don't you think I should become the secretary general of the United Nations? :-)
