Aid and Africa's Development

James ShikwatiDirector Inter Region Economic

Networkjames@irenkenya.org

www.irenkenya.com

Clip on the Africa that is marketed to the World

http://video.google.com/videoplay?docid=-148128464412302806&q=poverty+africa+aid&pr=goog-sl

Confronting a situation by use of vision

A sense of how the world works e.g. a primitive belief about what causes leafs to float, tides to rise, earthquakes, floods, drought, famine will determine one's vision

A vision is one's sense of causation (based on Thomas Sowell's book “A conflict of Visions: Ideological Origins of Political Struggles”)

Constrained Vision

Constrained Vision: views human nature as inherently limited both morally and intellectually/human beings as tragically limited creatures whose selfish and dangerous impulses can be contained only by social contrivances (e.g. governments/religion/International Aid agencies etc without which life would be solitary, poor, nasty, brutish and short)

Constrained vision - Africa

An individual's/African's own knowledge alone is grossly inadequate for social/corporate decision-making and even for his personal/private decisions

Knowledge is predominantly experience – transmitted socially through tradition/individual rationality is limited

Unconstrained Vision

Unconstrained Vision: Views human nature as having potential extending far beyond what is currently manifested

Has no limited view on human knowledge or of its application through reason/always insist on validation

Background - Africa Tribalism and “National Cake” mentality jeopardizing economic

prosperity in Africa Aid facilitating corruption and “rent-seeking” by interest groups Foreign Aid has made Africans to focus less on the resources

available and created an erroneous belief that Africa is poor Aid suffocating African ingenuity/creativity and entrepreneurship The dependency culture created by paternalistic relationship with

Africa Public enterprises expanding corruption and the state/easier for

the state to police private enterprise than for the state to police itself

$60 billion to fight disease But…

African governments prevent access to health care and medicine development by:

1. Taxes and tariffs of up to 55% on imported medicine

2. Low pay and poor conditions in government run hospitals

3. Government regulating growth of insurance industry

4. Exactly how much to Rich Countries “mine” away from Africa?

I want to add value to my productive abilities

Who benefits from Aid

For every one dollar sent to the poorest countries in aid, $1.30 is sent back to the leaders as debt repayment.

Africa spends over $14.5 billion dollars yearly repaying debts it receives only $12.7 billion in aid.

Excluding South Africa Sub- Sahara Africa spend US $11 billion on arms in 1998

Aid and corruption

Africa losses $148 billion on corruption annually In October 2003 United Nations drew up

the Convention Against Corruption to tackle these very problems.

So far it has been backed by only 27 countries - 14 of them African. Not one G8 country has signed up - a fact that is unlikely to be a matter of coincidence. Far more likely a reason is that the G8 has too much to lose by ending corruption in Africa.

Examples of Aid Failure: Roads A report from the Commission for

Global Road Safety says The World Bank and other international funding agencies which receive money from the British government are spending $4bn (£1.99bn) a year on building unsafe roads in poor countries which contribute to the heavy toll of deaths and injuries among children and young people

Example: Pesticides

Janice Jensen, a chemist at the US Environmental Protection Agency (EPA) estimates that some 7000 tonnes of surplus pesticides have accumulated in Africa. Morocco, with more than 2000 tonnes, and Sudan, with more than 1000 tonnes, have the largest stocks. In 1987, Japan sent Sudan a shipment of methyl bromide, a corn fumigant, that was larger than the projected ten-year demand for the chemical. Sudan will have to get rid of the excess.

Country Examples: Malawi The £1m donated to the National

Democratic Institute (NDI) project from US funds was used solely to pay its staff in Washington DC.

Over the four years of the project, the DFID donated £3m to it. Of that, £586,423 was spent on hotels in Malawi for the MPs and the NGOs. Another £126,062 was spent on meals.

An ex-staff member said computers, notebooks and other stationery had been bought in Washington DC and flown over rather than bought locally

Tanzania 1970s-80s: Half-baked – In the mid-'70s, Canada

built a huge automated bakery in Dar Es Salaam, Tanzania. The bakery not only undermined the small local bakeries already operating, it also undercut demand for indigenous crops and created a demand for Canadian wheat.

The bakery began baking bread in 1976, five years later than planned and cost Canadian tax payers $1.7 million-- 3 times as much as the original budget. The bakery has gone down as one of the most famous examples of inappropriate foreign aid in modern history

Ethiopia

Aid shipments destroy grain prices In 2003, the UN donated 1.5 million tons of grain to

Ethiopia, but the aid was more of a blessing to farmers in the donor nations than to those in Ethiopia. Farmers in the Ethiopian highlands earned only $25 for each ton of grain that it cost them $50 to produce, because free imports were destroying grain prices on the open market.

A joke by farmers in Ethiopia "It is not the rains in Ethiopia you need to worry about, but whether it rains in America or Canada." (Food aid cereals that drive African farmers out of productivity)

Kenya

Norwegian agency in the 80s built a fish-processing factory now abandoned and decaying on the shores of Lake Turkana in northwestern Kenya. It built a fish-freezing plant and set about teaching Turkana's largely pastoral communities how to exploit the lake's fish stocks to bring hard cash into the poverty-stricken region Twenty years on, the Kaalokol fish factory is another page in Africa's catalogue of reminders that successful aid requires more than just money and good intentions.

The jetty built for pastoralist/fishermen high

and dry (L. Turkana)

Commercializing Entrepreneurship in Africa

African Positive Highlights Alieu Conteh established one of the fastest growing mobile

phone services in central Africa. He put up his cell phone network using scrap to weld a tower together because no foreign manufacturer would ship a cell phone tower to the airport with rebels pounding cities. His ingenuity led to the present day Vodafone Congo.

Kenya’s Moses Makayoto: his inventions include the famous “mama safi” (clean mother) detergent produced using local resources.

Salim Amin a media entrepreneur from Kenya - upcoming 24 hour pan-African news and current affairs channel. In Salim’s words, “We have to educate the rest of the world as to the power of this wonderful continent.”

Story of Vodafone D.R. Congo

Alieu Conteh established one of the fastest growing mobile phone services in central Africa. He put up his cell phone network using scrap to weld a tower together because no foreign manufacturer would ship a cell phone tower to the airport with rebels pounding cities. His ingenuity led to the present day Vodafone Congo.

In Alieu's words www.africaopenforbusiness.com

"We are number one in Congo. We have forty-nine percent market share. The week that we launched we had 35,000 people lineup. At two years of operation we are about 850,000 subscribers. We realized that the mama in the market, going around selling bananas, she has about ten or twelve dollars worth of bananas. If that lady were able to buy a scratch card for two dollars we’d revolutionize the market. When we did the two dollar card our sales tripled."

Selected Opportunities in Africa

Famine over 200 million people in Africa face

hunger and food insecurity The 1992-2001 El Nino-related

drought in Eastern Africa cost the Kenya economy alone about $2.5 billion

Selected Opportunities in Africa

Diseases-Malaria An estimated 300 to 500 million

malaria cases are reported each year

Malaria related costs and lost GDP deprive Africa of $12 billion per year

Business fighting Mosquitoes -Indoor Residue Spraying(IRS)

Busy Urban life offers endless opportunities

Use Culture to Build Confidence to boost

business thinking

Create Passion to do Business among

the Youth

Clip on Doing Business in Africa

http://www.youtube.com/watch?v=jVm_2AmnK-s

Kenya Examples of Private Responses to Needs – Expanding the pie

Garbage Collection City Street Lighting Cell Phone Business liberating the poor

Example: Garbage Collection

Nairobi produces an estimated 1,500 tonnes of garbage a day, only about 360 tonnes or 25% is collected

Of these NCC accounts for 22% while the private companies account for 32%

NCC provides 9% of door to door waste collection services while private companies provide 52%

City Council Garbage Trucks

Public Service in Garbage Collection

Garbage Disposal

Private initiatives turning garbage disposal into lucrative business

Transport It is estimated that the the private

transport industry in Kenya controls over 80% of passenger transportation . It provides 80,000 direct jobs and 80,000 indirect jobs.

The industry pays Kshs 1.09 billion per annum in government taxes

Matatu – Private urban & rural transit system

Private Street lighting The private street lighting initiative has improved

the quality of lighting in the streets of Nairobi  This will enhance security to the city residents as

they can venture out at night with reduced fear The project is generating employment opportunities

for Kenyans, more than 100 Kenyans have been directly employed.

The project is also involved in the rehabilitation of street children with  More than 60 former street children earning their livelihood by cleaning up the street poles and maintenance of the landscaping works

Street Lighting In Nairobi

Adopt-A-Light

Private Business Lighting Poor Neighbourhoods

The Africa Pro-Aid Agents Don’t want you to know

Mobile telephone services: once a domain of donors in Africa, now provide access to millions of Africans

1. MTN—the largest mobile operator in Africa—reported 44.3 million subscribers in March 2007, with an increase of 4.25 million subscribers in the last three months alone.

2. Celtel, with its subscriber base of 21.4 million, recently launched a single-tariff promotion for the entire region comprising Kenya, Uganda, Tanzania , Democratic Republic of Congo, Congo Brazzaville, and Gabon.

Multinationals are taking note: the airline sector has attracted big players like Virgin Atlantic; the beverage alcohol sector has wooed global giant Diageo; and agribusinesses like Syngenta have all carved out a place in the African market.

The 950 Million person market that rich country corporations are jostling to penetrate!

Connectivity means informed choices

Surfacing the African entrepreneur through Connectivity

Corruption?

Somali says no to food aid! Somali elders have asked the United Nations World Food Program (WFP) to halt its food aid supply to Somalia for it contributes to the unrest and distortion of market prices of food in the region (A.E. article June 27 2007)

Kenya Telkom Example

Clip: The Africa You Never Hear about

http://www.youtube.com/watch?v=jVm_2AmnK-s

Stop AID and Build Africa

Build Africa the self confidence of Africans to do business and respond to their needs

Stop Suffocating African entrepreneurs through Subsidizing African government's poor policies and rich country entrepreneurs

Respect the individual liberty in Africa too! Restore Dignity in the poor by giving them freedom

to solve and respond their needs creatively/Do not reduce them to “animals in a zoo”

SPIEGEL INTERVIEW WITH AFRICAN ECONOMICS EXPERT

"For God's Sake, Please Stop the Aid!"

http://www.spiegel.de/international/spiegel/0,1518,363663,00.html

Thank You

www.irenkenya.com www.africanexecutive.com

james@irenkenya.org