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The Failure of Foreign Financial Aid in Sub-Saharan Africa


By Chinedu A. Okoye

Sub-Saharan Africa comprises of 48 out of the 54 African countries and it sits on vast amounts natural resources. The development of sub-Saharan Africa is very crucial in the elimination of poverty, famine, terrorism, local ethnic and religious conflicts, disease outbreaks in Africa and by extension other parts of the world. But since we have woefully failed in our development agenda, we have turned to foreign financial assistance to tackle Africa’s problems. The foreign financial aid that comes into Sub-Saharan Africa are not only from individual government to government aid programs but also from international development programs such as the world bank and the international monetary fund (IMF), which acts as a channeling intermediate between the donor governments and the recipient governments. Foreign financial assistance may be used to promote economic development, fund or monitor elections, facilitate judicial reforms, assist the activities of human rights organisations and labour groups, alleviate suffering from natural disasters, the HIV/AIDS epidemics and destructive civil wars.

With all the efforts and impacts of foreign assistance given to Sub-Saharan Africa, one can say that the level of progress is low compared to the huge amount received for instance, the statistics of the foreign aid budget to Nigeria is huge but same cannot be said of the influence it is making. The continent as a whole receives roughly $50 billion of international assistance yet, instead of promoting economic growth and drastically improving the living conditions of the 600 million people who live below the poverty line, this aid boosts those in affluence and penury keeps escalating. So many questions are left unanswered. Is financial aid beneficial to the donor more than the recipient? Is there any conspiracy for Sub-Saharan African countries not to develop? Here are some reasons why foreign assistance failed to support arguably the world’s richest continent – in terms of natural resources.

Corruption: This is an evergreen problem in Africa especially in Sub-Saharan African countries. It is very unfortunate that foreign aid is synonymous with rampant corruption in Sub-Saharan Africa. The countries in Sub-Saharan Africa have widespread corruption cases hence, these huge sums of aid money only strengthen it. We can easily say that foreign assistance simply reinforces the amount of resources available to already corrupt elite groups of people. There is a clear correlation between increased aid and statistically significant increase in corruption. The money is not distributed evenly among the population to help the poor or used to promote growth but is instead used on white elephant projects, dishonest procurement or even worse, used to purchase military equipment.

Dependency: These donor countries prefer the Sub-Saharan African countries to be reliant on them. The low economically developing countries have grown used to the huge sums of money they receive for development. They do not promote local investment because they have the flow of so-called free money at their disposal instead. This prevents any form of improvement in terms of human development and per capita income hence, there is increasing reliance on foreign countries. The recipient country can as well become heavily indebted to the donor. According to the Brookings Institution, nearly 40% of sub-Saharan African countries are at risk of slipping into a major debt crisis, and the "number of African countries at high risk of/or in debt distress has more than doubled from eight in 2013 to eighteen in 2018." The region’s aggregate debt-to-GDP ratio rose to 46% in 2017, up from from 23% in 2008.

Economic and political pressure: The donor countries still want to exert political and economic influence on Sub-Saharan African countries. They simply attach conditions as they give out financial assistance. The donor would often tie the recipient to purchase products from specific countries or only from the donor. It compels these developing countries invest precious resources in expensive options which could otherwise have been used in other situations. Furthermore, the recipient then has less control in decision-making on how the aid money is spent. In addition, the very nations that typically promote free-markets and less government involvement in trade, commerce, etc., ensure some notion of welfare for some of their industries. Politically, the donor countries will rather support leaders that will dance to their tune. These leaders may try to be lenient with entities or corporations owned by the foreign donors, hence the economy of the donor keeps growing at the expense of local industries.

Can Sub-Saharan Africa’s development be improved? Of course, it can. If foreign assistance cannot be of great help it should not also serve as hindrance to development. The Sub-Saharan African countries should have a thorough and complete policy on how to be self-reliant. Local and infant industries should be encouraged so that citizens can become creators of wealth and creators of enterprise. Decent economic management matters more than foreign financial assistance for developing countries. Stable and strong institutions would ensure the proper utilization of aid funds if needed. There must be supreme emphasis on building strong, vibrant, responsive, and effective governance structures if we want to propel Sub-Saharan Africa’s development. Without these structures in place, the wealth within developing countries and the aid coming in will all amount to naught.

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