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Africa Needs Trade, Not Aid

Current Affairs

Africa Needs Trade, Not Aid

Oxfam and Save the Children have blamed the international community for allowing thousands of lives to be lost in last year’s East African famine. But a Ugandan academic, Prof Augustus Nuwagaba, says if the world changed the current economic order that robs Africa of the ability to trade on equal terms on the world market, the continent would not need donor aid and could look after itself, even through crises like the East African famine.

Western nations were the first to respond when the United Nations officially declared famine in the Horn of Africa in mid-2011, where about 13 million people were said to be at risk of starvation and death due to severe drought. The United States, through its aid agency USAID, pledged $68m towards relief efforts in the region, the British government contributed about £90m to the project, in addition to the £57m raised by the country’s Disasters Emergency Committee (DEC), and the aid agency of the Irish government, Irish Aid, set aside 5m euros for the East African crisis.

Development aid organisations in the West were also quick to seize the opportunity to intensify their campaigns for more donations towards rescuing the millions of people affected. Goal, the Ireland-based aid organisation, announced in July 2011 that it had allocated €250,000 towards ameliorating the hardships faced by those caught up in the disaster.

The UK-based Oxfam said it expected to raise about £50m in donations to address the famine in the drought-stricken region: “This is the worst food crisis of the 21st century and we are seriously concerned that large numbers of lives could soon be lost,” said Oxfam’s humanitarian director, Jane Cocking. On 17 January 2012, Oxfam and Save the Children released a report that blamed the international community for allowing thousands of lives and millions of pounds to be lost in the East African famine because of a “dangerous delay” in the response to the disaster.

A “culture of risk aversion” meant the international community failed to take decisive action on early warnings, causing a six-month setback in the relief effort, the report, entitled A Dangerous Delay, said.

According to the two aid agencies, a likely emergency was forecast by sophisticated early warning systems as early as August 2010 but the full-scale response was not launched until July last year, when malnutrition rates in parts of East Africa had gone “far beyond the emergency threshold”.

Barbara Stocking, chief executive of Oxfam, said impoverished communities were still “bearing the brunt” of a failure to mount an effective response.

“We all bear responsibility for this dangerous delay that cost lives in East Africa and need to learn the lessons of the late response,” she said, adding: “It’s shocking that the poorest people are still bearing the brunt of a failure to respond swiftly and decisively. We know that acting early saves lives but collective risk aversion meant aid agencies were reluctant to spend money until they were certain there was a crisis.”

The Oxfam chief was supported by Justin Forsyth, chief executive of Save the Children: “We can no longer allow this grotesque situation to continue; where the world knows an emergency is coming but ignores it until confronted with TV pictures of desperately malnourished children,” he said.

Some estimates have put the death rate during the famine at between 50,000 and 100,000, with more than half of that number under the age of five. Oxfam and Save the Children therefore urged governments around the world to sign up to a Charter to End Extreme Hunger, a joint-agency initiative which wants countries to take concrete steps to prevent future catastrophic disasters.

But a prominent Ugandan political economist has questioned the rationale for the aid-giving, saying that Africa does not need aid but trade. Prof Augustus Nuwagaba said that what the continent required was the restructuring of the skewed global economic system which foster disasters such as the famine in the Horn of Africa, stressing that in its current form, the system only serves to perpetuate Western economic interests at the expense of Africa.

Western donor nations, Nuwagaba said, should relinquish their stranglehold on global institutions such as the IMF, the World Bank, and the World Trade Organisation.

“There is a conspicuous inadequate voice of African countries in key global institutions like the World Bank, IMF and WTO. This exclusion constrains African countries from favourably competing in global trade,” the Ugandan said while speaking at the 9th Annual Lecture of the Africa Centre in Dublin, Ireland.

He said contrary to the widely-held view about donor support to Africa, the continent currently spends more money servicing its debts than it receives in aid.

The Makerere University academic stated that the present state of poverty and underdevelopment in Africa could largely be traced back to the socioeconomic and political trajectories of the continent, which, for the most part of the last 500 years, have been characterised by slavery, colonialism, and economic marginalisation.

“The trade policies of North America and the European Union have been seriously characterised by market imperfections manifested in subsidy regimes and quotas,” said Prof Nuwagaba. “These have created the unfair leverage of European and North American producers over their competitors on the world market. Similarly, the issue of quotas has curtailed the marketing capacity of developing countries’ products and services.”

Nuwagaba’s position is also underscored by the United Nations’ MDG Gap Task Force Report, 2011. In it, the world body expressed its scepticism about the willingness of WTO member states to adhere to the September 2010 Millennium Development Goal Summit negotiation which guaranteed UN member nations an unfettered and equal access to the global market.

Since the negotiation, member nations of the elite G20 group have not only gone on to introduce 141 protectionist measures to shield their domestic economies, but about 70% of these measures were put in place by Western donor nations to harm the commercial interests of Africa and other developing countries.

For example, according to the UN report, Western nations have brought in such restrictive trade measures as tariff increases, export taxes, subsidies on textiles and clothing, leather, sugar, and cereal grains specifically targeted at the growing economies of Africa and the developing world. The report also highlighted the unequal power relationship between creditor institutions such as the IMF and the World Bank when it comes to negotiating debt default, saying that these institutions often use such opportunities to negotiate the best deals, plunging the debtor nations further into economic difficulties.

The UN report also indicated that 13 of the 19 countries currently listed by the latest IMF-World Bank Sustainability Framework as being in dire financial straits are in sub-Saharan Africa.

Aid organisations contacted for comment on the allegation of channelling development aid to economically unviable social sectors in Africa refused to comment. The spokesperson for Goal, Carmel Drumgoole, said: “Pressure of work on our senior staff makes it impossible for Goal to accommodate your request.”

Several attempts to elicit information from Oxfam drew a blank.

But United Nations Development Programme (UNDP) finance expert, Gail Hurley, revealed that while there was a phenomenal growth in investments in Africa’s social sectors in the period 2000 to 2009, rising from $20.7bn to $64bn, investments in the economically viable construction, mining, manufacturing, and industrial sectors were abysmally low in the same period, increasing only marginally from $1.2bn to $2.2bn.

“Increases in the overall aid envelope over the last decade have tended to go towards the social sectors,” she said, “while aid to agriculture, forestry, fisheries and the productive sector has remained largely stagnant.

“In dollar terms, investments in industry, mining and construction remain far from the amount needed to support development in the world’s poorest countries,” she added.

The UNDP finance expert said Africa, and the other developing regions of the world, deserve significant representation in the World Bank and the IMF, particularly when it is considered that the policies and strategies of these institutions directly impact on their economies.

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