The Need for a Shift in Africa’s Orientation
An examination of the history of monetary inflow to Africa will reveal a process of supplementary resource allocation to social services. While Africa was, is and will be in dire need of monetary inflow dedicated to the provision of such services, directing the resources to such a limited scope does not serve the best interests of the continent.
If you try something and it does not work the logical thing to do is stop, figure out why it did not work, make the changes you think will make it work and then try again. If this approach is used but the idea continues to produce results that are not in keeping with the stated intent then it is time to go back to the drawing boards and rethink the entire thing. It may be the approach and the goal are not aligned or that there are elements in the process that have not been fully understood.
When people make a reactive decision they normally make it within the context of a result that is encapsulated by the event that triggered the situation requiring the decision. The decision is focused on the result of an occurrence which has created a perceived imbalance that must somehow be brought back into balance.
If a pedestrian is hit by a car the immediate decision is to go to the aid of the pedestrian and if possible restore them to the state they were in prior to the collision – a presumably physically healthy adult. Administer first aid, stabilize them and provide higher levels of medical services as needed to restore the balance which is good physical health. In this case the result is an injured pedestrian, the event is the collision between a moving vehicle and the pedestrian and the situation involves able bodied and competent (to make sound decisions) bystanders confronted with the decision on what to do about the poor sod bleeding on the side of the road. Their natural inclination is to come to the aid of the stricken person.
Taking this a little further, suppose that collisions between vehicles and pedestrians are not infrequent at this place. If this is the case then it is probably the best place to be a pedestrian unfortunate enough to come into violent contact with a moving vehicle because there would likely be plenty of people around with experience making the decisions necessary to restore pedestrians back to their original condition. While it is comforting to know that there are competent and experienced people in place to recognize the event understand the result and handle the situation to the positive benefit of the injured party the decisions and actions taken do nothing to address the occurrence of the events.
The existing structure of foreign aid to Africa amounts to opening a clinic at that location, placing observers by the roadside and assisting in the decision making to either get the injured pedestrian from the roadside to the clinic or bring the medical personnel out of the clinic to the roadside.
A logical observer would realize that while the need is being met a deeper examination is required to determine if it is possible to eliminate the need. A look into what generates the need may reveal several obvious things. The location of frequent collisions is at a point where a rural farmers market flanks a straight and level section of a busy road. The road happens to be paved and the market is located on that road at a point between two metropolitan regions where a major river crosses the road making it a natural location for a trading area or a market. So far everything is logical. There is commercial activity in two metropolitan areas, they are linked by a paved road which facilitates speedy transportation between them. The road crosses a river that runs through an agricultural region and is a natural transportation route for good produced by farmers. The intersection of the road and the river make a logical transfer point for produce destined for markets in the metropolitan regions.
Being an agricultural area, the region receives a lot of rain. Most of the accidents happen during or immediately after the rain. The rain makes the road slippery and reduces visibility for the drivers. They don’t see the pedestrians in time, hit the brakes but because the roads are slick, they are unable to avoid colliding with the pedestrians.
Under the circumstances – neither the road nor the river are going to be moved – it is likely that there will continue to be large numbers of people in the location and a high level of vehicle traffic passing through the area. If a bypass road were created to route traffic around the market it is probable that traffic flow through the market would be reduced but enterprising merchants would simply relocate their establishments wherever the heaviest traffic flowed and the crowds would follow so the collisions would continue. While a good and workable idea, it only temporarily alleviates the problem and does nothing to eliminate the collisions.
If the currently straight road were modified to include an enforced low speed zone that would bring the speed of passing vehicles down to a rate of travel that would allow drivers and pedestrians to see each other well before a crisis situation developed. If the idea was taken to the next logical step and the road was further modified on both ends of the market with a series of progressively sharper curves followed by speed bumps through the market the introduction of these physical impediments to vehicular speed would essentially eliminate the collisions. This is a good and workable idea that eliminates the need while allowing the market to continue to flourish. It not only makes the market safer but in slowing traffic down may actually increase the amount of trade since passers by would be able to see the wares and perhaps be tempted to spend a little money.
Rather than providing aid as a reaction to existing events, a deeper examination must be conducted. Africa is continuing to receive the observers and people in the clinics when what it really needs is the road modified such that the need for the clinic is eliminated.
Africa is receiving handouts when what she really needs is investment. Africa has been receiving foreign aid for almost fifty years and all she has to show for it is a continued slide down the slippery slope of poverty and destitution. The stated intent of the aid is to help Africa move out of its current situation into one where it is no longer dependent on hand outs from generous nations. After a few years of providing foreign aid and seeing that there was no improvement to the situation the aid was intended to alleviate it would seem logical that the providers of aid would go back to the drawing boards and rethink what they were doing and trying to understand the reason for failure and figure out a way to make it work.
It is beyond any reasonable observer why industrialized nations continue to pour millions of dollars in aid into Africa each year when it is painfully obvious that although they temporarily better the lives of the few they touch, they are not really providing long term benefits. They are pretty much handing food down to a person stuck in a trench rather than offering a hand with which to pull them out of the trench so that they can hopefully make meaningful contributions to society at large.
Africa’s debt has reached such a high level that the vast majority of the foreign aid provided is used to pay the interest on the debt while leaving the principal untouched. What is the point for the receiving countries? The banks that loaned African countries money are located in the donor countries so the governments of the donor countries are essentially paying the interest obligation on the loans – artificially supporting huge loan portfolios that really should be written off because under the current structure there is no way any African country will ever have even a faint hope of paying off the debt owed to the donor nations. If the donor governments are going to simply protect their banks why then do they not simply stop sending money to these poor countries? There really is no point in the poor countries spending so much time and so many resources flying officials all over the world negotiating aid packages each year if the money is never going to leave the donor country.
If the donor countries continue to pay the interest without lending additional funds this would place the receiving countries in the position to begin paying down the debt. With each passing year the principal would be reduced and that reduction would lead to smaller interest payments in each successive year. Under the current structure the money used to pay the interest is added to the principal and interest is charged on it in successive years. It seems like an easy way for banks in the donor countries to make money. Hundreds of millions of dollars guaranteed to be paid each year with the principal growing. This is the same as buying a house, receiving money from the bank to assist with the interest on the loan and then having that assistance added to the mortgage thus extending the payment period far beyond the original thirty years and guaranteeing the bank additional income at the expense of the borrower in the event the borrower remains liquid.
There is additional aid reaching African countries that is not used for debt relief. Instead it is used for things such as digging wells to provide clean drinking water, building clinics to extend some amount of medical care to rural areas and tracking locust patterns in an effort to coordinate spraying and avoid hunger that follows swarming. This kind of aid is constructive and should continue. If African countries are put in a position where they pay down the principal and the debt load on the continent is eased, local governments will soon find themselves in a position to provide those services themselves without need for help from outside.
The banks are a little short sighted on this matter. The interest they continue to receive, while guaranteed, will not grow at a rate that would be acceptable to any Wall Street fund manager. If the banks instead pressed their governments to focus their efforts on providing ready access to capital for local businesses, those businesses would borrow, invest and grow at a healthy rate. The donor governments are also short sighted because they are taking hard earned tax payer money and stuffing it in the pockets of banks that really did not earn it. This does not make sense for the tax payers, it does not make sense for the donor governments and it does not make sense for the receiving nation.
The donor governments should be working in the interest of the tax payers. What would be in the interest of the donor nation tax payers would be the creation of an environment in Africa where businesses determine it is safe to invest. When businesses invest in plant and equipment they also need people to fill positions, they create jobs. Jobs provide incomes for individuals and families. Those individuals and families are provided disposable income. That income is used to purchase goods and services and the more people employed the higher the demand for goods and services. Employed people with disposable income are a ready market for goods and services from the donor nations as well as goods and services developed at the local level to meet the needs of an employed population. Banks would receive much higher income and higher rates of growth if investment and employment were driven by market demand rather than government hand outs.
Government hand outs hurt industries and damaged industries do not grow jobs and low or no job growth leads to low or no demand for goods and services, increased unemployment and a slide down the slippery slope of poverty. It drives nations to the position where they need help to simply provide basic services such as water and medicine.
There should be a joint effort between Africa and donor nations to move away from a situation of dependency on hand outs to a climate of investment because investment yields returns on invested capital while hand outs simply provide today’s dose of medicine. Put Africa on a path towards growth and foreign aid will become a footnote in history books.
If you try something and it does not work the logical thing to do is stop, figure out why it did not work, make the changes you think will make it work and then try again. If this approach is used but the idea continues to produce results that are not in keeping with the stated intent then it is time to go back to the drawing boards and rethink the entire thing. It may be the approach and the goal are not aligned or that there are elements in the process that have not been fully understood.
When people make a reactive decision they normally make it within the context of a result that is encapsulated by the event that triggered the situation requiring the decision. The decision is focused on the result of an occurrence which has created a perceived imbalance that must somehow be brought back into balance.
If a pedestrian is hit by a car the immediate decision is to go to the aid of the pedestrian and if possible restore them to the state they were in prior to the collision – a presumably physically healthy adult. Administer first aid, stabilize them and provide higher levels of medical services as needed to restore the balance which is good physical health. In this case the result is an injured pedestrian, the event is the collision between a moving vehicle and the pedestrian and the situation involves able bodied and competent (to make sound decisions) bystanders confronted with the decision on what to do about the poor sod bleeding on the side of the road. Their natural inclination is to come to the aid of the stricken person.
Taking this a little further, suppose that collisions between vehicles and pedestrians are not infrequent at this place. If this is the case then it is probably the best place to be a pedestrian unfortunate enough to come into violent contact with a moving vehicle because there would likely be plenty of people around with experience making the decisions necessary to restore pedestrians back to their original condition. While it is comforting to know that there are competent and experienced people in place to recognize the event understand the result and handle the situation to the positive benefit of the injured party the decisions and actions taken do nothing to address the occurrence of the events.
The existing structure of foreign aid to Africa amounts to opening a clinic at that location, placing observers by the roadside and assisting in the decision making to either get the injured pedestrian from the roadside to the clinic or bring the medical personnel out of the clinic to the roadside.
A logical observer would realize that while the need is being met a deeper examination is required to determine if it is possible to eliminate the need. A look into what generates the need may reveal several obvious things. The location of frequent collisions is at a point where a rural farmers market flanks a straight and level section of a busy road. The road happens to be paved and the market is located on that road at a point between two metropolitan regions where a major river crosses the road making it a natural location for a trading area or a market. So far everything is logical. There is commercial activity in two metropolitan areas, they are linked by a paved road which facilitates speedy transportation between them. The road crosses a river that runs through an agricultural region and is a natural transportation route for good produced by farmers. The intersection of the road and the river make a logical transfer point for produce destined for markets in the metropolitan regions.
Being an agricultural area, the region receives a lot of rain. Most of the accidents happen during or immediately after the rain. The rain makes the road slippery and reduces visibility for the drivers. They don’t see the pedestrians in time, hit the brakes but because the roads are slick, they are unable to avoid colliding with the pedestrians.
Under the circumstances – neither the road nor the river are going to be moved – it is likely that there will continue to be large numbers of people in the location and a high level of vehicle traffic passing through the area. If a bypass road were created to route traffic around the market it is probable that traffic flow through the market would be reduced but enterprising merchants would simply relocate their establishments wherever the heaviest traffic flowed and the crowds would follow so the collisions would continue. While a good and workable idea, it only temporarily alleviates the problem and does nothing to eliminate the collisions.
If the currently straight road were modified to include an enforced low speed zone that would bring the speed of passing vehicles down to a rate of travel that would allow drivers and pedestrians to see each other well before a crisis situation developed. If the idea was taken to the next logical step and the road was further modified on both ends of the market with a series of progressively sharper curves followed by speed bumps through the market the introduction of these physical impediments to vehicular speed would essentially eliminate the collisions. This is a good and workable idea that eliminates the need while allowing the market to continue to flourish. It not only makes the market safer but in slowing traffic down may actually increase the amount of trade since passers by would be able to see the wares and perhaps be tempted to spend a little money.
Rather than providing aid as a reaction to existing events, a deeper examination must be conducted. Africa is continuing to receive the observers and people in the clinics when what it really needs is the road modified such that the need for the clinic is eliminated.
Africa is receiving handouts when what she really needs is investment. Africa has been receiving foreign aid for almost fifty years and all she has to show for it is a continued slide down the slippery slope of poverty and destitution. The stated intent of the aid is to help Africa move out of its current situation into one where it is no longer dependent on hand outs from generous nations. After a few years of providing foreign aid and seeing that there was no improvement to the situation the aid was intended to alleviate it would seem logical that the providers of aid would go back to the drawing boards and rethink what they were doing and trying to understand the reason for failure and figure out a way to make it work.
It is beyond any reasonable observer why industrialized nations continue to pour millions of dollars in aid into Africa each year when it is painfully obvious that although they temporarily better the lives of the few they touch, they are not really providing long term benefits. They are pretty much handing food down to a person stuck in a trench rather than offering a hand with which to pull them out of the trench so that they can hopefully make meaningful contributions to society at large.
Africa’s debt has reached such a high level that the vast majority of the foreign aid provided is used to pay the interest on the debt while leaving the principal untouched. What is the point for the receiving countries? The banks that loaned African countries money are located in the donor countries so the governments of the donor countries are essentially paying the interest obligation on the loans – artificially supporting huge loan portfolios that really should be written off because under the current structure there is no way any African country will ever have even a faint hope of paying off the debt owed to the donor nations. If the donor governments are going to simply protect their banks why then do they not simply stop sending money to these poor countries? There really is no point in the poor countries spending so much time and so many resources flying officials all over the world negotiating aid packages each year if the money is never going to leave the donor country.
If the donor countries continue to pay the interest without lending additional funds this would place the receiving countries in the position to begin paying down the debt. With each passing year the principal would be reduced and that reduction would lead to smaller interest payments in each successive year. Under the current structure the money used to pay the interest is added to the principal and interest is charged on it in successive years. It seems like an easy way for banks in the donor countries to make money. Hundreds of millions of dollars guaranteed to be paid each year with the principal growing. This is the same as buying a house, receiving money from the bank to assist with the interest on the loan and then having that assistance added to the mortgage thus extending the payment period far beyond the original thirty years and guaranteeing the bank additional income at the expense of the borrower in the event the borrower remains liquid.
There is additional aid reaching African countries that is not used for debt relief. Instead it is used for things such as digging wells to provide clean drinking water, building clinics to extend some amount of medical care to rural areas and tracking locust patterns in an effort to coordinate spraying and avoid hunger that follows swarming. This kind of aid is constructive and should continue. If African countries are put in a position where they pay down the principal and the debt load on the continent is eased, local governments will soon find themselves in a position to provide those services themselves without need for help from outside.
The banks are a little short sighted on this matter. The interest they continue to receive, while guaranteed, will not grow at a rate that would be acceptable to any Wall Street fund manager. If the banks instead pressed their governments to focus their efforts on providing ready access to capital for local businesses, those businesses would borrow, invest and grow at a healthy rate. The donor governments are also short sighted because they are taking hard earned tax payer money and stuffing it in the pockets of banks that really did not earn it. This does not make sense for the tax payers, it does not make sense for the donor governments and it does not make sense for the receiving nation.
The donor governments should be working in the interest of the tax payers. What would be in the interest of the donor nation tax payers would be the creation of an environment in Africa where businesses determine it is safe to invest. When businesses invest in plant and equipment they also need people to fill positions, they create jobs. Jobs provide incomes for individuals and families. Those individuals and families are provided disposable income. That income is used to purchase goods and services and the more people employed the higher the demand for goods and services. Employed people with disposable income are a ready market for goods and services from the donor nations as well as goods and services developed at the local level to meet the needs of an employed population. Banks would receive much higher income and higher rates of growth if investment and employment were driven by market demand rather than government hand outs.
Government hand outs hurt industries and damaged industries do not grow jobs and low or no job growth leads to low or no demand for goods and services, increased unemployment and a slide down the slippery slope of poverty. It drives nations to the position where they need help to simply provide basic services such as water and medicine.
There should be a joint effort between Africa and donor nations to move away from a situation of dependency on hand outs to a climate of investment because investment yields returns on invested capital while hand outs simply provide today’s dose of medicine. Put Africa on a path towards growth and foreign aid will become a footnote in history books.
posted by Bongo at 9:18 PM
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