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July 8, 2005
Does Aid Hurt Africa's Entrepreneurs?
Posted by Mike Hofman at 12:42 PM
In an intriguing Q&A in the German magazine Der Spiegel, a young Kenyan economist makes the case that the steady flow of Western aid to Africa actually hurts countries there by propping up inefficient bureaucracies and undermining markets for homegrown food and locally made textiles. I don't know much about African economics, so I can't vouch for the ideas contained in the piece (here's the link to it.) But still, it's an interesting read and raises questions not just with respect to the aid that G8 countries send to Africa, but also about how policy makers everywhere (including the U.S.) attempt to solve economic problems.
For additional information of Africa's entrepreneurs, check out the documentary Africa: Open for Business which is getting a decent amount of attention in global entrepreneurship circles. I saw the film at a screening held by the Africa-America Institute in New York with my colleague Nicole Gull, who previously blogged about it here.
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I agree with the notion that Aid to Africa is not entirely without its shortcomings. For one, in many instances, the donors get to decide how their funds are to be used. I understand perfectly well the logic behind the donors' insistance on deciding how the funds get spent, considering the levels of corruption in most African governments. I, however, would like to see a situation where the donors deal increasingly with the private sector if at all we must have aid. In my opinion, what Africa needs is for the rest of the world to help it become more competitive by doing away with the subsidies they afford their farmers. That way, African countries which on average have agriculture contributing a third of the GDP will have a chance to grow economically.
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