Africa has received trillions of dollars in foreign aid for development in the continent, why then is there so much hunger and underdevelopment? There is indeed an imbalance in Africa's foreign aid and loan structure; but what is it?
There is a universal law of balance that affects all of us. It basically states that here is a direct relationship between the action you take now, and the results yielded later. You will agree that this law is simple, transparent and relatable; but are we as Africans truly conscious of it, especially when it comes to satisfying our short-term desires without taking into consideration the long-term effects of our actions.
It is obvious that there is an imbalance in Africa's Foreign Aid and Loan Structure. This is because, despite the amount of loans and foreign aid Africa has accessed since the last five decades, there is no tangible development in the continent. Also, there are hardly any evidence-based achievements that can be tied directly to the acquisition of these foreign aids.
In addition to the recent $60 billion pledge to Africa by China earlier this year, Africa has gotten more than $200 billion from China alone since 2015 in direct and indirect investments.
Also, financial reports from the World Bank reveal that Africa receives an average of $100 billion from the World Bank yearly; coupled with the IMF, donors and philanthropists like the Bill and Melinda Gates Foundation, etc. Africa has received trillions of dollars, yet there is no tangible development to show and we continue to live in abject poverty.
Among the many questions economists find hard to answer are: What total amount of loans does the continent need? And do beneficiary countries have the structural requirements to successfully pay off debts without experiencing financial problems?
The answer is simple: The financial administrative structures across Africa are not transparent enough to allow for proper accounting of state finances.
For instance, the IMF and World Bank loan facilities in the 1980s intended for industrializing the continent were a monumental failure due to the lack of transparency in recipient countries.
Within a short period of acquiring billions in loans, most governments could not balance their books. And instead of creditors demanding that existing loans be paid back, they gave out more loans.
Eventually, governments could neither keep up the debt service nor point to successful development projects, and creditors had to cancel the debt through the Multilateral Debt Relief Initiative in 2005.
Unfortunately, as it was then, so it is now. In fact, China is drowning the continent in more debt through its indiscriminate loans.
For instance, Nigerian President Muhammadu Buhari asked China for a $380 million loan to build a power plant just weeks after his administration announced the disbursement of $322 million.
The funds had been recovered from the Swiss bank account of former military dictator, Sani Abacha, who is believed to have stolen them from the treasury during his years in office.
As to why Buhari cannot use the recovered money to finance this project rather than redistributing it to the poor – just ahead of an election – and seeking a loan from China is a question resonating among nearly all African leaders.
Credit: Excerpts from an article on African Liberty were included in this article
Image Credit: Open Source
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