As Ghana Extricated Itself from Aid Dependency?
Ch # 1- Debates surrounding Aid Dependency
The aid is generally financial help provided by wealthier or developed countries to underprivileged or developing countries. In other words aid can be defined as deliberate transfer of resources in terms of cash, food and any other kind of help, from one country to another un-prosperous country. Aid is given with an objective to benefit the receiving country: whether it is given for the development of human resources, or it is given for the development of education sector, given for the purpose of military, given for the infrastructure developments etc. The main motive is to help humanity globally for every financial/ foreign aid.
"Dambisa Moyo (2009) argued that, Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased. Aid has been, and continues to be, an unmitigated political, economic and humanitarian disaster for most parts of the developing world."
The picture below shows lending by Ghana from World Bank:
D:\My Work\Work\freelance\Raheem's task\Dissertation- Aids dependency\materials\ghana lending-.png
There are commonly three broad types of aid:
Humanitarian Aid
Development Aid
Food Aid
Humanitarian aid is usually given by governments, individuals or organizations for short term in order to help communities who are in trouble due to natural disasters or emergencies (like: wars). The natural disasters or emergency affected communities are assisted by providing necessary services and resources immediately possible. The main objective of humanitarian aid is to relieve the sufferings of communities for the period of short term until each of natural disaster victims being assisted or moved towards normal way of life as were living before occurrence of natural disasters.
The provision of help that is being provided as humanitarian aid are but not limited to, essential services like, food to prevent starvation, clothes, medicines and other any necessary items by countries, organizations, individuals or aid agencies. Furthermore funds are also provided to affected country by the governments of other countries so that victims in need are dealt better.
Development aid is usually given by developed countries with an aim to achieve long term sustainable economic development and for reduction in poverty. The funds can be given directly to another country, known as bilateral aid. In addition, governments of developed countries normally provide funds to international organizations like United Nation, World Bank and Asian Development Bank etc. Afterwards these international organizations provide funds for the purpose of developments in developing countries, know as multilateral aid. It is important that development aid should be distinguished from humanitarian aid; as development aid is for the purpose of assistance in long term economic development and poverty reductions projects while humanitarian aid is for ease of sufferings and is short term in nature.
The Government of Ghana has initiated few projects last year with the help of World Bank. These are shown below:
Project Title
Country
Project ID
Commitment Amount (USD Million)
Status
Approval Date
Ghana Partnership for Education
Ghana
P129381
75.50
Active
OCT 11, 2012
Ghana Fourth Agriculture Development Policy Operation
Ghana
P122808
50.00
Closed
MAY 15, 2012
Ghana - PPP Project
Ghana
P125595
30.00
Active
MAR 27, 2012
Additional Financing for Ghana Urban Water Project
Ghana
P129544
50.00
Active
MAR 27, 2012
Ghana Commercial Agriculture
Ghana
P114264
100.00
Active
MAR 22, 2012
Poverty Reduction Support Grant (PRSG-8)
Ghana
P127314
100.00
Closed
JAN 26, 2012
Food aid is the distribution of foods to the countries and individuals who are in shortage of foods specifically. According to US Food aid and security, approximately 925 million people across the globe are suffering from food shortage. Normally, people in Somalia and most of African countries are suffering from starvation that is badly affecting the morality and human health within local communities. Furthermore, around 16,000 children are dying due to hunger and its related causes. Therefore food aid is provided by individual agencies, international organization agencies and countries to fight the shortage of foods in neglected countries. Moreover, it can be given as to take necessary actions, so that not only food crisis is being overcome in short term but in long term it could increase the living standard of society at large, until and unless food aid is no longer needed. Currently efforts are being taken globally by World Food Programme to fight against food crisis by distributing food in necessity to considered necessary countries.
"World Food Programme- Ghana says that
Eighty percent of the poor live in the Northern, Upper East and Upper West Regions. Thirty-six percent of children under five in the Upper East Region suffer from chronic malnutrition and 34 percent of the people in the Upper West Region are food insecure."
Criticisms
However, there are some debates going on regarding aid. Some groups believe that aid is usually misused or used solely for political purposes rather than humanitarian and development purposes. But according to majority of think tankers, humanitarian aid is vital and must be provided to victims at all cost, in order to grant temporary shelter and emergency care to victims affected by natural disasters or wars particularly.
Dambisa Moyo (2009) argued that, while there are obvious and fundamental merits to emergency aid, criticisms can be leveled against it as well as against charitable giving. Charities are often criticized, with some justification, for poor implementation, high administrative costs and the fact that they are on occasion coerced to do their donor government's bidding - despite the obvious lack of relevance to a local context.
Further, some group thinks that by only providing financial aid, wealthy countries are totally failed in poverty reduction within underprivileged countries. However aid has played important role in poverty mitigation in Sub-Saharan African countries especially Ghana, but it has resulted in number of severe problems which needs to be concentrate on. Firstly the funds are usually mishandled which results corruption in recipient and provider both countries. In addition, the recipient countries slowly and gradually starts to be dependent on aid, as they feel that foreign aid is the only solution for all problems, and becomes reluctant in making efforts to reduce the poverty and improve the economic conditions. Lastly, for the repayment of debt and interests, the recipient countries would have to utilize their own natural resources and increase the generation of revenues internally by increasing tax rates and cuts in subsidies, hence they are being wrapped in fierce cycle of aid dependency day to day.
One of major criticism on foreign aid is that it promotes corruption within recipient country and nation suddenly falls into cruel cycle of aid. In addition, aid helps corrupt leaders to make corrupt governments and they left with freely usable foreign aid cash. These corrupt leaders mostly interfere with basic rights of civil citizens, with rule of law, protection of civil liberties and transparent civil institutions such as courts. These are the main reasons that make aid unattractive for underprivileged countries.
With having huge amounts of aid, only fewer investments are made for the benefit of local citizens, which not only severely stops the economic growth within country but it increases the poverty level as well. As poverty increases, the corrupt government asks for more foreign aid from donors which consequently further decrease the poverty instead of mitigation in poverty level. Therefore country goes into viscous cycle of aid, that block off the investments and insists a culture of aid dependency. There are usually few projects initiated by corrupt governments for the welfare of local citizens which are not completed at time of left uncompleted due to shortage of funds. In other words projects are only initiated for the corruption purposes and not for the benefit of civil citizens.
The main goal of Africa and particularly Ghana is to mitigate the poverty and long term sustainable economic growth. But due to the presence of corruption this cannot occur easily because there are many ways in which corruption plays main hurdle role. With the presence of corruption and corrupt governments many investors local and international both cease their investments, off course no investors would risk their money in a country where corruption is at peaks. Thus corruption not only limits the investments but leaves citizens jobless, that results in more increase in poverty and inflation. Therefore, many schools of thoughts have called aid as a silent killer of economic growth.
There are some wrong perceptions in developed countries regarding aid, as development agencies believe that aid assist in building long lasting, strong and civil service. Moreover they think that foreign aid is most effective tool for reduction in poverty which in fact is not in real.
Hjertholm and White (2000) says that "Aid is an international operation channelling tens of billions of dollars to developing countries each year and employing hundreds of thousands of people in a multitude of organisations"
One of another main drawback of aid dependence is that governments usually lose the sight to develop and implement its own development policies. The reason is that the donors actually insist the recipient countries to employ the donor's policies and procedure. In other words, the governments of recipient country become so active with donors that they fails to develop and implement their own alternative development policies.
Another disadvantage of aid dependence is that it distorts the relationship between government and citizens of recipient country. The reason is that governments would not concentrate on local citizen's basic necessity problems such as education, health, food and water, rather governments would be focusing on relation with its donors and their policies. Hence this undermines the normal relationship of governments with its citizens, where citizens held responsible and accountable for not delivering its main duties. As a consequence there would be less pressure on governments to emphasize on its budgets to be accountable and transparent.
It is almost impossible for governments and citizens of recipient countries to focus on long term economic development projects that can create sustainable economic growth within country. One reason is that aid recipient countries and citizens have become reactive instead of pro-active. They just react on to short term requirements, and always think that aid is the only solution for those requirements.
On the other hand, developments aid is mostly used by misguiding tool by developed countries, as it is used to exercise power over poor countries and makes the developing countries dependent on developed countries for aid. Whereas according to some groups of thoughts, development aid is necessary for underprivileged countries in order to support their economic activities so that they are able to get rid of aid dependence in future.
Most groups of thought would agree that, sometimes food aid is roughly managed in these considered necessary countries and have created problems by depressing crop prices, disrupting local markets and hence discouraging food productions. Furthermore, food aid is used as political tool by local politicians in some countries, due to which food is being misused and sold in markets instead of providing it to victims of food shortage, this is known as food politics.
