Africa is the world’s most aided region; yet economic growth has been disappointingly low. Africa’s share of foreign aid has been no less than 30 per cent of the overall donor aid commitments to developing countries. The geographical distribution of aid is the result of independent allocation decisions of a large number of bilateral or individual donors and multilateral agencies. Such decisions are also contingent on factors such as bilateral donors’ national political, economic, security and other interests and objectives as well as the mandate and governance of multilateral agencies.
A number of factors explain the poor outcomes and limited sustainability of aid in Africa. The organisation and management of the aid relationship is a particularly important one, including the dependence of Africans on that aid. The current popular nostrums for solving the problem of aid effectiveness in Africa – selectivity, ownership, sector investment programme and more aid – are as yet inadequate and often contradictory. Much more work and honest discussions such as this essay project, which seeks to engage youths to identify their vision on effective aid and development, is very much appreciated by teeming proactive youths. Activities such as these needs to occur before the problem of aid effectiveness can be tackled in Africa and other places. This short essay seeks to highlight aid relevance and its developmental focus and brings out what I envision to address the question of aid effectiveness and development, with a specific focus on Africa.
Most studies on aid effectiveness combine a sample of countries from Africa with others from the developing world. Arguably such an approach does not fully capture the reality that Africa is quite unique in its socio-economic orientation compared to other developing regions in Asia and Latin America. Though diverse structures exist among African countries, there are sufficient basic features common to countries on the continent to make a macroeconomic study involving all of them a desirable activity.
Historically, Africa’s development context appears to be an aid-dependent one, and with the New Partnership for Africa’s Development (NEPAD) calling for additional capital flows to improve growth levels on the continent, and the attainment of the UN’s Millennium Development Goals partly conditioned on aid inflows, there is a new urgency to evaluate the effectiveness of aid. In my opinion, I believe there is a positive and statistically significant effect of aid on growth. Aid increases investment, which is a major transmission mechanism in the aid-growth relationship.
Notwithstanding the numerous aid given to developing economies to improve their socio-economic levels, nations dependent on donor supports are still lagging behind in meeting the targets set in the millennium development goals (MDGs) by 2015.
Most aid given to countries are loaded with stringent conditionalities that do not readily meet their development focus. I am of the view that aid is most effective when it supports countries’ own development efforts and policies. An effective aid regime should be built on the principle of country ownership and increasing mutual accountability, and a focus on tangible results. Aid implementation by countries should follow a collaborative nature between governments and donor agencies in support of specific sectors that require development focus. There should be recognition that sustainable development and poverty reduction should be the core purpose of aid. To continue reading Kindly find attached in the box.net widget, a full pdf copy of the essay written by the Senior Editor, Solomon Elorm Allavi, for free download! Enjoy reading!!