African Intellectuals: Part 1 Andrew Mwenda

An important phenomenon in the public debate about development aid and Africa are african intellectuals with a critical attitude towards development cooperation. They have in common that they mostly blame domestic governments for Africas poor development performance after independence. Examples include:
Andrew Mwenda, Uganda, Economist
James Shikwati, Kenya, Economist
George Ayittey, Ghana, Economist
( Wole Soyinka, Nigeria; Tajudeen Abdel Raheem; Michael Cheye, Kenya, political scientist; Axelle Kabou; Roger Tangri; Chika Onyeani; I haven't read the works of the persons in brackets, so I do not know if putting them into one category with the others is completely correct. And the list is far from being complete)

Whenever an assault on development aid is launched, be assured that the attack will be accompanied by an interview or by an op-ed from the intellectuals mentioned above ( or they use the usual suspects in the west like William Easterly).

Nevertheless the points all these "aid-critics" raise, deserve our attention.
Andrew Mwenda wrote a text for the Cato Institute: "Foreign Aid and the Weakening of Democratic Accountability in Uganda". Furthermore you can read an interview in German on http://www.weltwoche.ch/artikel/?AssetID=15091&CategoryID=82 (and just today the Wirtschaftswoche published an interview with him).

His arguments

Andrew Mwenda distinguishes beween external and internal factors that cause underdevelopment in African countries. Needless to say that Mwenda emphasizes on domestic impediments. One important remark: He admits that aid can bring humanitarian relief and can save lives, but he does not believe in the idea that aid can support long-term development of a society. "Until internal problems concerning domestic policies and institutions are adressed no amount of Western assistance will bring Africa out of poverty."

First, he analyzis the impact of foreign aid on domestic reforms: The motivation for aid is that governments in Africa lack the necessary resources to finance health care, education and so on. The example of Uganda shows that the fiscal priorities of an aid dependent budget are wrong (50% of Budget is aid financed):

• It undermines tax collecting efforts of the administrations. No incentives to reform or to work more efficient.
  
• The accountability of African regimes is weaker because the private sector does not finance the state. The pressure of the population on the administration to provide good public services will be weakened.
• It leads to distortions on the expenditure side: Aid agencies finance the social sector, while African governments spend their money on military and public administration (patronage).

The second point he makes is that debt relief does not work. It provides the wrong incentives for governments. It leads to moral hazard if governments can expect that their debts will be cancelled and it is a punishment for good financial behaviour. Furthermore governments that deserve debt relief should not need it, because they would have pursued already a sustainable debt policy. (Well in his Cato text his arguments against debt relief are not really convincing. I like Will Easterly on this point who demands that two conditions must be met for debt relief:

It must be a unique action. You have to communicate credible that you will never do debt relief again. Otherwise moral hazard becomes a problem. The one time debt relief has to be big enough to solve a debt crises.)

To be continued with James Shikwati and George Ayittey.