Earlier today I had the pleasure of visiting the Africa Area Studies program at the Foreign Service Institute where I gave a talk on the basics of foreign aid to Africa. I and a great time and got to share overly honest slides like the one below.
The students are in an intense, short program but seemed up to speed on major issues and asked great questions. I especially enjoyed one linking possible issues of aid dependence (and related governance concerns) to oil dependence.
The slides for the talk are available to download here.
I’ve recently had a few people ask me about the idea that “Africa” is growing quickly and that aid is increasingly becoming irrelevant to development in Africa. While the “Africa Rising” narrative is a pleasant antidote to the strong pessimism of the 1990s, it can lead to wishful thinking about the decline in the importance of aid to Africa.
The simple fact its that relative to local resources, Africa still receives a lot of aid. The figure below shows net ODA to countries in Africa over five year intervals. The amount of aid is expressed as a fraction of local government spending.
First, note that we don’t have data on central government spending in many African countries. Second, note that aid plays a very large role in many countries. Of the 21 countries reporting data in 2010, donors spent about as much in the recipient country as did the local government. Keep in mind too that the local government spends money on both investments and consumption (wages of civil servants) while donors focus on investments only. In many African countries, donors still vastly outspend recipients when it comes just to investments.
Here is a similar figure that examines Kenya and Ethiopia over time. These are countries that we think of now as relatively well functioning with comparatively good governments, and again aid plays a pretty large role in both countries.
Donors spend about 1/5 as much as the Kenyan government and donors frequently outspend the Ethiopian government. Note also that even in these countries we do not have a compete time-series.
Africa’s recent economic growth is excellent, but it will take more than a few years (or decades) of economic growth to change the fundamental pictures above.
In their reporting on cashgate, the CS Monitor bizarrely calls Malawi a model state. If by “model” they mean a state that should be imitated, then I don’t know anyone who thinks this.
When thinking about the “cashgate” scandal in Malawi, it is important to remember that there is very little that is new here. Aid has been diverted in Malawi for a long time. What was new was the idea that Joyce Banda was serious about cutting down on graft and reducing the privileges of the President (e.g. selling the jet). That might still be true. It is probable that the activities falling under cashgate started before her time and it is possible that she was unaware of them.
I’ll give one quick example of aid diversion in Malawi. This one comes from my dissertation and happened under Muluzi in the mid-to-late 1990s. When Muluzi won the election in 1994, education enrolment in Malawi was terrible (around 67% of primary age school kids were in school). Muluzi responded to this by removing schools fees, and thereafter an additional one million children entered the school system. The system did not have the money to respond to this influx, and after a short time lag, donors responded with money to build new schools and supply materials.
The contracts for school construction went through the Ministry of Education, and were largely awarded to close contacts of UDF politicians. These contracts were awarded without bidding and were often paid upfront. The contractors took the money and didn’t build the schools (although they sometimes built the foundation). The World Bank gave 11.8 million USD for school construction during this time and aimed to build and furnish 1,600 new classrooms and 75 new schools. In the end, they actually built 858 classrooms (including 340 which were “unfinished”) and 59 schools (just under half were furnished). They spent all of their money.
The Bank’s Implementation Completion Report makes for a fun read (really). For example, it goes on about how “the Government failed to provide the necessary oversight”, “accounts were not well maintained”, and “records were not properly kept.” At one point the Bank notes that under the local implementing agency “there was virtually no supervision of works on site or management of the on-going contracts certificates and performance” and that they were “not following the contractual procedure and their valuations resulted in over compensation to the contractors.”
In all, the Bank spent all of its resources and managed to produce about 1/3 of its expected outputs. The Bank wasn’t unique here. Other donors were taken in too but they aren’t as transparent. I won’t get into it, but we know that the cash went to UDF politicians (because the ACB eventually busted the scam. See here, gated). The point is that this was in 1999. Malawi was (and is) known for this kind of graft and the only thing that was new under Banda was the idea that some of these trends might have changed. That is looking less likely now.
I’m happy to announce that I’ll be spending the 2013–14 academic year at American University’s School of International Service. It will be nice to be able to stay in DC and keep working with such great colleagues and I’m really excited to be teaching courses on African political economy, African politics, and international development. I’ve posed the syllabi for the fall courses on my teaching page.
This semester I’ll be presenting a poster on foreign aid politics in Kenya at APSA on Friday, August 30th at 2pm. I’ll also be presenting work on the impact of colonial institutions on education in Ghana at ASA on November 23rd. If anyone wants to meet with me at either conference, be sure to send me an email or a message on twitter.