Weaning Ghana off Foreign Aid: Is it Possible?
7/1/2009 9:40:36 PM -
Africa remains the world’s most aid-dependent and indebted region. Despite the programmes of debt relief which became significant in the 1990s and the increased commitment to fostering prosperity in Africa and Ghana to be specific by developed countries and donor agencies (including the World Bank and IMF), extreme poverty still has a firm grip on the majority of the people. It still remains a mystery why the economies of countries in Africa have seen no significant improvement and continue to grow worse with the increase in foreign aid. According to the World Bank Annual Report 2008, Africa received the highest Bank Group support, at more than $7.2 billion in loans, grants, equity investments, and guarantees, which is a record for the region. The continent, however, remains the poorest with regards to the little progress made in enhancing the livelihoods of the chronically poor. It, therefore, stands to reason that Africa is entangled with the struggle that goes beyond the ordinary strategies employed in development efforts of an economy. This makes the development quest of Africa and Ghana in particular virtually a myth considering the fact that foreign aid has been the pivot around which the economies of almost all African countries revolve. Presently, economies in this region have been completely built in a way which seems impossible to perform and make meaning without foreign aid. The economy of Ghana believe it or not has been shaped to fully depend on foreign aid from the World Bank, IMF and donor countries and agencies for an improved budget in a fiscal year. This explains why it would be the greatest task ever at attempts to wean Ghana off foreign aid.
The Underlying Issues
The West has spent $1 trillion on aid to Africa over the past four decades "But no nation has ever attained economic development by aid" says former Goldman Sachs banker Dambisa Moyo, author of the new book 'Dead Aid' (Rwanda Rising: A new Model of Economic Development, article by Business journalist Jeff Chu). The statement made by Dambisa Moyo really raises upwelling concerns considering the best pro-poor approach for development in Ghana . The bare bones of foreign aid remains that the aid in its nature does not result in economic development but several factors and conditions in the recipient country account for the successfulness of these aids. It is these favourable conditions which has the propensity to accelerate growth that are ostensibly missing in Ghana
In 2001, a World Bank Report, "Re-thinking the East Asian Miracle", re-analysed the "East Asian Miracle" it had identified in 1993. The 1993 study had argued distinctive Asian characteristics motivated and fueled economic growth despite the loans made available by the United States and the International Monetary Fund. In East Asia ;
1. Successful countries had strong governments that managed stable business environments by such measures as keeping inflation low. Their tax structures distributed some of the growth rewards throughout communities. Domestic savings increased.
2. Governments encouraged export competitiveness that led to partial global integration.
3. Education programmes focused on primary and secondary education for both boys and girls as a priority over prestigious higher education for a few. (Source: Michael Bradshaw, George W. White, and Joseph P. Dymond in Contemporary World Regional Geography)
It is clear that several factors came into play in East Asia before their miracle which will serve to be a hallmark in the history of the world economy. With regard to the context of the African region and down to Ghana , there, as a fact, exist no distinctive features that are capable of efficiently utilizing the foreign aid received. Purportedly, government (public) officials seek only for their welfare without regarding the plight of the chronically poor. Politics has simply been detached of significant livelihood empowerment strategies for the poor but rather been financially advantageous for the few so-called patriotic officials in government. Significantly for Ghana , businesses in the export sector are ameliorating and it only needs modern technology to act as catalyst in making products competitive in the world market. The task still lies ahead for Ghana to set the pace and cause miracle in Africa . Ghana can attain economic development by less depending on aid and switching to the localization of industries that will serve to provide a solid foundation for competition in the world market. The central problem has been the fact that strong government is diluted in Ghana by virtue of the stake of corruption in the attitude of officials mandated to serve the country. Certain pragmatic government initiatives to be undertaken are often neglected at the national, regional and district level with the fear that the government would lose votes in the next general election when such initiatives are implemented. So, the central question remains that 'Is it possible to wean the country off foreign aid?' especially based on what Finance Minister Dr Kwabena Duffour has earlier said that the support from the World Bank was strategic in meeting the medium to long term targets of the new administration.
Rising from the ashes
It is very crucial for our development that Ghana gets a rude awakening of the fact that receiving the aid is just not enough to cause the country to make strides in development. The best strategy would be nurturing the country to gradually detach her from the overdependence of foreign aid which has practically served no usefulness to our development efforts but rather increasing our external debt. Local economic development which makes efficient use of a country's local resources should be given the top priority. It is important to know that it is a complete disaster to cling the progress of the economy to foreign aid which has been very inconsistent and rendering the country unstable. This is our woe. Politics in the country should be strongly linked to pro-poor strategies that can enhance the livelihoods of the people. The saga surrounding corrupt government officials and ex-gratia issue are not the distinctive attitude that can propel the country to rise from the ashes. It goes without saying that indeed, Ghana can set the record straight again to be the first African Tiger when the right attitude is exhibited by our leaders and officials and all Ghanaians in responsible fields of endeavours. The incumbent government can boldly start this approach which holds a lot of promise by weaning the country off foreign aid to possibly clamp down on external debt. This will serve to create a stable and resilient economy for a favourable business environment. With the non-traditional exports (NTCs) putting up better performances in the first quarter of 2009 (increase in exports revenue from 238.95 million dollars in 2008 to 316.71 million dollars, a growth of 32.54%) clearly gives the indication that Ghana has a lot of prospects to make the economy viable for increased export. The shift of focus of the country to depending on the available prospective local resources and domestic revenue base can result in the realization of the objectives towards growth and prosperity for the people. The pragmatic measures to cause development should involve building corruption-free havens to equitably distribute the national cake for the benefits of development to trickle down to the grassroots. The recent budgetary support of 1.2 billion dollars from the World Bank with excessive strings has indeed presented challenges to the government as to the next line of action.
“…It was with the sincere support, deep understanding and full cooperation of the vast majority of the Malaysians that we succeeded in defending our economy against the deliberate attempts by certain forces to destroy it. We had to do it on our own without resorting to IMF or World Bank or other countries' help…” A statement by Hon. Dato Seri Dr Mahathir Bin Mohamad of Malaysia in Chicago, USA following his LARIBA Life Time Achievement Award on September 1, 2000.
This is what gives a clear case for Ghana in emulating what has been successfully implemented elsewhere in Malaysia whom we started with by gradually weaning ourselves off foreign aid. We can make it with the available local resources and harnessing our aptitude for identifying sustainable local income generating opportunities for local development, particularly for the poor. It is time for the country to take a hard look at itself and decide whether we want to move forward in the needed direction and how we can do so. We can also do it on our own and definitely significant development will be realized.
Indisputably, the development of Ghana and Africa as a whole is not dependent on the availability of foreign aid but rather the proper preparations of the local conditions including the resources available and significantly the right attitudes adopted by the leaders and all the people. The solution to the menace of poverty does not lie in foreign aid that comes to the country but rather harnessing the advantages local conditions offer. It is, therefore, prudent for the incumbent government to set the ball rolling by accepting the challenge of weaning the country off aids that are usually accompanied with tough pre-requisites believed to be a help leading to dependency. Who gains or who lose is not the relevant issue now but how to utilize efficiently and effectively local resources and incorporating the local people to result in growth. Let us hope for increased commitment of the government towards local economic development for the empowerment of the local people and we can make it happen. Weaning the country off foreign aid is a recipe for an independent and resilient economy and the articulation of the contemporary ideas for development.
The author, Stephen Yeboah is in Department of Planning, KNUST- Kumasi Email: [email protected]