Aid and Africa's
Development
James Shikwati
Director Inter Region Economic
Network
james@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…

1.
2.
3.
4.
African governments prevent access to health
care and medicine development by:
Taxes and tariffs of up to 55% on imported
medicine
Low pay and poor conditions in government run
hospitals
Government regulating growth of insurance
industry
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 fishprocessing 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
business thinking
Confidence to boost
Create Passion to do Business among
the Youth
Clip on Doing Business in
Africa

http://www.youtube.com/watch?v=jVm_2Amn
K-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

1.
2.


Mobile telephone services: once a domain of donors in Africa,
now provide access to millions of Africans
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.
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_2Amn
K-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

