why foreign aid is hurting africa samantha brian adam alan
TRANSCRIPT
Why Foreign Aid is Hurting Africa
Samantha Brian Adam Alan
Kibera, Kenya
• 1 million people crammed together in 1 square mile
• Live in filth and absolute poverty
• So………
Where is the money?
• United Nations agency a short distance from Kibera?
• Africa receives $50 billion in aid per year
• Past 60 years---over $1 trillion in aid
• So why isn’t Kibera and Africa prospering?
Where is the money?
• Debt repayments about $20 billion per year
• Where do they get this $20 billion from?– Take it out of expense accounts for education
and healthcare
• Some debt is cancelled, but they only received more aid
Result
• IMF cautioned donors to be careful in the amount of aid they give African countries
• Report “Aid Will not Lift Growth in Africa”
Where is the money?
• So where is all the aid going to?– Corruption– Supporting bureaucratic governments and
organizations
• African Union estimates corruption costs Africa $150 billion per year
• Zaire: – Creditors can’t get money back– Yet, IMF gave Zaire a massive loan– Past President stole over $5 billion
• Malawi:– President embezzled $12 million
• Zambia:– President stole from health, education, and
infrastructure and pocketed it himself.
Bad for Economy
• “Free” money means inefficiency and keeps government in power
• Taxes?
• No way to raising finances yourself
• FDI? A lot of red tape and lag time
• Puts African citizens out of jobs– Example Mosquito nets
Bad for Economy
• Food aid vs. African farmers
• What they should do?– Aid money African farmer Feed people
• Money into a country increases home prices good expensive to export
• What they should do?– Issue bonds
A first….
• Ghana
• Pro-market movement
• Increased use of mobile phone
• More opportunities for citizens
Conclusion
• Issue bonds to raise cash, rather then depend on free money
• Raise capital in other markets
• Creative attractive “FDI environment”
• Increase trade