Over the past 60 years at least one trillion dollars of development-related aid has been transferred from rich developed countries to the underdeveloped countries of Africa. Between 1970 and 1998, when aid flows to Africa were at their peak, the poverty rate in Africa actually rose from 11 percent to a staggering 66 percent. However, per capita income today is lower than it was in the 1970s, and more than 50 percent of the population, over 350 million people, lives on less than a dollar a day, a figure that has nearly doubled in two decades (Dead Aid). Foreign aid is problematic; in reality it is not free. It is a bondage that is difficult to escape. Just as a drug addict finds it difficult to live without a constant supply of drugs, African nations find it difficult to live without the aid. They do not know how to severe the ropes bonding them to the grip of foreign aid. African countries owe about 20 billion dollars in debt repayments per annum that will most likely not be met (Dead Aid). African countries continue in cyclic dysfunction due to the foreign aid that has locked these countries into many more years of debt.
Adding to the dysfunction of African governments and economies, charities and organizations donating to Africa is a popular humanitarian trend. It is inherent to human nature to want to aid those less fortunate, but this desire is also defeating those it is designed to help. "Millions march for it, governments are judged by it, celebrities proselytize the need for it," (Moyo). Demands for more aid to Africa are exponentially rising, with sponsors pushing for doubling the roughly $50 billion of international assistance that already goes to Africa each year. Unfortunately, evidence demonstrates that aid to Africa has made only the rich richer, the poor poorer, and the economic growth slower. The aid trend has left and adverse effect on African countries, and instead put them in an economic disparity. They are more debt-laden, more inflation-prone, more vulnerable to the unpredictable action of the currency markets, and more unattractive to higher quality investment. Aid has increased the risk of civil conflict and unrest. It leads the way to corruption through the lucrative black markets. Over 60% of sub-Saharan Africa's population is under the age of 24 and with few economic prospects there is great cause for concern (Moyo).
"Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world," (Moyo). Growth of developing economies depends to a large extent on their own economic policies (Economides). Evidence shows that foreign aid has not raised growth rates in the typical poor country. A country that receives foreign aid has no incentive to better its citizens. Many political leaders live lavishly while the rest of the country is in shambles. "It is clear that the incentives for corruption are stronger in a decentralized government than in a centralized one. Moreover, any piles of money that become available through commodity windfalls or foreign aid are more likely to be stone in a decentralized weak government than in a strong centralized one," (Easterly). There is no strong evidence to demonstrate that foreign aid is conducive to the improvement of the distribution of income if the quality of the countries institutions is taken into account (Chong). Studies have shown that the real uses include, misuse of money or favors for private gain, inappropriate exchanges of money or favors for undue influence or power, and violations of public interest or norms of behavior for special advantages or self-serving purposes (Easterly).
Some economists argue that foreign aid is vital to the development of democratic nations. In the article, "Does Foreign Aid Promote Democracy", it is believed that aid can possibly contribute to democratization of an underdeveloped country. Democratization is influenced by several underlying factors. These include economic development, the county's history and its civil society. When aid is given to establish a democratic country, it provides technical assistance for the development of the electoral processes, creates a checks and balance system of governing by strengthening the legislature and judicial branches as checks on the executive branch, and establishes civic awareness through a free press, education, and increased per capita income. Research has demonstrated that these areas are necessary for democratization. Knack argues that aid can modernize society by helping increase literacy, increasing GDP or the country's wealth, and by increasing incomes. It is further believed that aiding education is a vital part to the democratization. Aid can also be given indirectly to help developing countries. This may come in the form of investments, education, and teaching farming practices rather than just giving the government money to hopefully disperse to its people. Aid can come from organizations such as the American Peace Corps. This organization is a form of foreign aid, but instead of handing over money to developing nations, the Corps supplies knowledge and expertise of its citizens. The idea behind the Corps comes from the old proverb, "Give a man a fish, feed him for a day; teach a man to fish, feed him for a lifetime." Even though building schools or supplying food is critical for many nations, training their teachers or helping them learn advanced agricultural techniques could have a far more reaching impact that would last for decades (Grabianowski).
One of the goals of giving foreign aid to underdeveloped and developing countries is to spur or accelerate the existing economy of that country. Once the economy of that country steadily begins to show growth, the aid is seen as incentives to continue its growth. On the contrary, foreign aid transfers can distort incentives, and hence hurt growth by encouraging rent seeking as opposed to productive activities. Rent-seeking, a term coined by Anne Krueger of Stanford University and former chief economist of the World Bank, means legal theft. Government lobbying is legal but when this lobbying redistributes wealth from one to another and changes the economic output of goods and services, it is corrupt. George Economides constructed a model of a growing small open economy. Within this model were two effects from foreign aid transfers: a direct effect and an indirect negative effect. The positive effects of higher transfers allowed the financing of infrastructure while the indirect negative effect of high transfers produced rent-seeking competition by self-regarding individuals. The economic growth impact of both direct and indirect aid was examined jointly with the rent-seeking behavior. The test model included a cross section of 75 aid recipient countries. There was evidence that aid has a direct positive effect on growth, but this finding was significantly lessened by the adverse indirect effects relating to rent-seeking activities. This was especially indicative of recipient countries with large public sectors. Direct aid can provide band-aid solutions to lighten immediate suffering, but it does not support long-term sustainable growth. Sustainable growth will come from the country's main resource - its people rather than continuous foreign aid. When aid it is given, then Instead of feeding money to the government to disperse to the selected recipients - planners, it should go to individuals, "little plans," and experimental or piecemeal approaches. With no easy answer for economic development, "success is more likely to go to 'seekers,' rather than 'planners,' particularly to those willing: to try experiments, based upon past experience, to help poor people lift themselves up" (Werlin).
An obvious criticism of aid is its links to rampant corruption. Aid flows destined to help the average Africans just do not reach them. Most aid goes to the government rather than the private sector organizations or individuals. This strengthens the government rather than bolstering the economic growth of the country. The governments of many underdeveloped nations do not respond to its citizens with any sort of accountability as to where the money is spent. Without this accountability or visible economic growth, democracy and freedom are not seen as viable measures. Corruption not only comes in the form of favors or money lined pockets, but also comes as the form of political This To clarify this, in a hearing before the U.S Senate Committee on Foreign Relations in May, 2004, Jeffery Winters, a professor at Northwestern University, argued that the World Bank had participated in the corruption of roughly $100 billion of its loan funds intended for development of underdeveloped nations.
One sub-Saharan country that had broken the aid dependency is Ghana. Ghana in its revolt against Britain set sails for a new endeavor, but this trip was not easy. It saw various leaders try to take it in positive direction, however, this direction abounded in corruption. The rich got richer and the poor got poorer. There were numerous over throws and lost promises. Finally in 2000, Ghana began its road to prosperity. It saw a true democracy unfold, and with this, its aid dependency weakened. It began to make use of its own marketable wealth - rich natural resources, primarily minerals; its agricultural products, primarily cocoa; and its industrial base (Ghana). It began to use what it had rather than what it was given to its own advantage. The pro-market government had been found. Ghana's economy has grown five percent for several years now and is primed to grow seven percent this year (Chong). Ghana has one of Africa's best road networks, airport, and the government is currently modernizing the country's railways and ports (Chong). Farmers and fishermen now use mobile phones to communicate with their agents and customers across the country to find the most competitive prices. This translates into numerous opportunities for self-sustainability and income generation - which, with encouragement, could easily be replicated across the continent (Moyo).
Countries should implement Ghana's strategies for establishing a centralized democratic government and for lessening a dependence on foreign aid. The public is being educated about civil rights and civic duties, especially the basis of constitutionalism. Aid that leads to rampant corruption has to stop. Ghana still realizes there is corruption within its economy but as Ghana has come to realize what is necessary to be self sustaining in an economic market, necessary steps to ensure a more stabilized economic future with minimal corruption have been taken. In an undercover video, Enemies of the Nation, Anas Arumeyaw Anas exposed the corruption of cocoa smuggling. As a result of this exposure President John Atta Mills declared to win the fight against corruption. This has brought about the commitment to passing the Freedom of Information Bill, outfitting and providing logistics to the security services, the conversion of the Serious Fraud Office to the Economic and Organized Crime Office and increasing its powers, the purchase of 25 new vehicles for State Attorneys and a policy of non- interference in the workings of investigative and quasi-judicial bodies (State Institutions). According to the International Transparency Index, Ghana has established anti-corruption rules, built a database and library on corruption and raised awareness of anti-corruption and integrity issues on nationally broadcast media. These are steps seen going in the right direction.
Failed attempts to democratize African countries can be attributed to foreign aid. Cross-sectional studies have found little if any correlation between aid and growth; however, aid transfers have been shown to hold nations down in a cyclic dysfunction of inflation, corruption, disease, and poverty. Aid as a gift with no strings attached makes one lazy and dependent upon it. Aid as a loan forces one to produce at least enough to consume and repay. If humanitarian efforts, both government and private sector, could realize foreign aid is not a boon but truly a hindrance, the continent could have a chance to break free from the chains of dependence and debt. If more countries follow Ghana's implementations of self-sustainability, its war on corruption, its placement of the steps to decline foreign aid, its support for the evolution of strong institutions of governance, and its pressure for legislative reform, they too can prosper.
