Forty Years of Misdirected Aid to Africa
In the year Obama was born, Kenya had higher per capita income than South Korea. Why did one nation prosper from foreign aid and the other stagnate?
December 27, 2009 - 12:24 am
The international development community seems unmindful of past evaluations of aid to Kenya. For decades, three countries in Africa were designated sites for aid from Denmark. Then in the late 1990s, Kenya was finally dropped because of its poor human rights record. In 2007, the Canadian Senate conducted a two-year review of its aid agency, CIDA. It concluded that Africa is the only continent in the world not to have benefited from the last forty years of significant global growth, and that CIDA has failed to make a foreign aid difference in Africa.
Many aid organizations are based on the aspiring premise that aid monies affect health outcomes. However, empirical studies by the World Bank, WHO, and the International Monetary Fund negate this assertion. In 2007, the IMF determined that “despite the vast empirical literature considering the effects of foreign aid on growth, there is little systematic evidence on how overall aid affects health, and none at all on how health aid affects health.” Policies dependent on the assumption that aid monies can have a positive effect on Kenyan health needs totally ignore past experience.
Today, Kenya’s per capita income is $1,600; it is $27,600 in Korea. Korea has entered the OECD community of donor nations; Kenya is a wholly owned subsidiary of the donor community. If the donor community is to overcome its 40 years of failure in Africa, then it needs a new business model. It needs to enable governments to lower the cost of doing business and create environments that are attractive for private sector growth and investment. It also needs to increase institutional infrastructure.
The example of Kenya and South Korea reveals aid organizations’ failure to properly evaluate what has worked and what doesn’t. There needs to be more analysis and reporting on evaluating international aid assistance. The world can not rely on international aid agencies repeating past mistakes. The international development community needs to respond to President Obama’s challenge and understand its mistakes. It needs to begin to look at success models and replicate what has worked, not what continues to fail.