Obama and the Business of Aid

Monday, 20 July 2009

Don’t hold your breath, thinks Andrea Bohnstedt – Obama’s speech made all the right noises, but how much will the US Africa policy really change? Obama’s speech in Ghana struck a sensible balance between Africa’s undisputed problems and the continent’s resilience, capacity and need to lead in solving its problems. Africa - if there is such a thing, since the diversity of a continent with more than 50 countries is difficult to shrink into one word - is ‘more than tragedy and or the need for charity’, and both needs and deserves meaningful democracy, strong institutions, governance, and the rule of law. Obama argued that the US must be more responsible in its aid, reduce the amount of money that goes to Western consultants, and become more open for goods and services from Africa. To support Africa on this trajectory, the US administration had committed USD63bn. More Money, More Sense? Leaving aside the usual debate whether funding promises are old or new money, this does little to take into account a widely held recent debate, kicked off by Dambisa Moyo’s ‘Dead Aid’: Is aid not, in fact, part of the problem rather than the solution? Doesn’t easy aid money encourage corruption rather than reduce it? Few would doubt the importance of strong institutions and good governance – but if we are honest, we do not really know how to create such an environment. In Kenya, the World Bank announced a new multi-million dollar loan for ‘good governance’ merely days after the AngloLeasing scandal broke in what was wildly unfortunate timing. There is little to show for the billions of US dollars that the continent has received over the decades, but reliance on aid has created a dependency culture that has not really helped along entrepreneurial thinking. For many graduates, their career ambition is to work for an NGO or a charity, or for the UN. Obama argues rightly that the aid industry should not be permanent: ‘The purpose of foreign assistance must be creating the conditions where it's no longer needed.’ But in reality, aid is an industry where employees depend on jobs and incomes, and where organisations depend on growth. This is surely an odd incentive, whether for a bilateral donor or an NGO – few people will be keen to put an end to their job. It is unlikely that Obama could even announce a plan to reduce aid – perhaps not in the five-year time frame that Moyo asks for, but over a clearly defined period. This is, in the discourse of international assistance, still unthinkable, not the least because rockstars, having diversified from their usual portfolio of rock-star related activities, have created enormous public pressure to ‘do something’ and do so by throwing more money at the problem. And in the current economic environment, industrialised countries lean towards protectionism in a populist knee-jerk reaction: Will the Obama administration be able to just open the US market to African agricultural products, or prise the fingers of the powerful agribusiness lobby of the food aid system? Gradual Changes So will there be a turnaround in US foreign policy on Africa? Most likely not – changes will be nuanced rather than sweeping. Partly because policy is institutionalised, and any changes in direction will take a while to filter through. There may be more substantial changes on a handful of issues, e.g. relating to family planning where the Bush administration was notoriously strict in cutting off funding from organizations that were pro-choice on abortion and did not promote abstinence only. The new US administration’s emphasis on renewable energies and combating climate change should boost Africa’s position in climate change debates. Realistically, Africa will not even top the US foreign policy agenda, as Asia and Latin America take priority. However, there are two critical issues on the US’ international agenda that Obama has not addressed in his Africa speech, and that are highly relevant to Africa: the fight against Islamic terrorism and the US interests in African oil and other commodities. Obama’s administration has renounced the use of torture, and strives to re-establish a more trustful relationship with the Middle East. How much this will affect operations on the ground e.g. in Kenya, from where a number of extraordinary renditions took place, is, again, a different matter. Similarly, the US dependence on imported oil has often made it complicit in the governance problems in many oil-producing countries. And in East Africa? What does this mean for East Africa, and Kenya in particular? Obama has a first-hand understanding how corruption affects the lives of Kenyan citizens and has in the past been very vocal in speaking out against it, much to the irritation of members of the current administration. But a wholesale change of the aid system is unlikely to happen anytime soon, for the reasons indicated above. Kenya, despite its well-known governances issues and previous delays in its IMF programme, is currently busy trying to collect more soft money: The country received a balance of payment support from the IMF and reportedly also seeks to quadruple borrowing from the World Bank to USD1bn a year – if this is invested sensibly in the areas that Finance Minister Uhuru Kenyatta says he will focus on, i.e. infrastructure and energy, it would be great. But past experiences show that much of the funding will be diverted into private pockets, leaving Kenyan taxpayers with a rising foreign debt burden. Michela Wrong, in her book ‘It’s our turn to eat’, devoted a chapter on analysing how the aid industry has often been complicit in corruption. In addition, Kenya’s strategic location in the region may also soften any pressure that the US – and other foreign governments – would try to exert on Kenya: The US government has been supporting, financially and otherwise, both the southern Sudanese government and the Somali transitional federal government (TFG). Discussions about an intervention in Somalia are ongoing, and there are concerns that Southern Sudan is also considering a return to war. The US may have renounced some of the more unsavoury elements in the fight against Islamic terrorism, but are still very concerned with what is happening in Somalia, and there are expectations of renewed military action. In this scenario, the US government will expect to use Kenya as a base again, which will reduce the leverage that it has over the Kenyan administration to push for improvements in governance. So - will Obama’s Kenya business be business as usual? This article was previously published in a shorter version on www.kenyabuzz.com . Share this article with others: Comments (0) Subscribe to this comment's feed Write comment Show/Hide comment form Name Email Title Comment smaller | bigger Subscribe via email (Registered users only) I have read and agree to the Terms of Usage. Add Comment