The State of Aid in Africa

Posted on April 04, 2009. Filed under social-justice

This is a fascinating article about the state of aid to Africa. The author argues that it’s destroying the continent.

[...] evidence overwhelmingly demonstrates that aid to Africa has made the poor poorer, and the growth slower. The insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets and more unattractive to higher-quality investment. It’s increased the risk of civil conflict and unrest (the fact that over 60% of sub-Saharan Africa’s population is under the age of 24 with few economic prospects is a cause for worry). Aid is an unmitigated political, economic and humanitarian disaster.

How much of the aid to Africa actually gets to the needy? Not much, I don’t think.

As recently as 2002, the African Union, an organization of African nations, estimated that corruption was costing the continent $150 billion a year, as international donors were apparently turning a blind eye to the simple fact that aid money was inadvertently fueling graft. With few or no strings attached, it has been all too easy for the funds to be used for anything, save the developmental purpose for which they were intended.

Recently, I’ve become interested in microfinance in Africa, via a site called Kiva. Kiva pools investor funds, and then makes loans to businesspeople to help them develop their businesses and try to build a real economy. I’ve been talking with some employees of Blend about sponsoring Kiva as a company – making systematic loans to business people to try and help them build a sustainable economy and effect real change.

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