Foreign aid has always been seen as the best platform to transform Africa from a third world, developing continent ranking to a global power player that is independent, self-sufficient, and thriving. To boost this untrue assumption foreign governments especially the U.S. government have invested lots of money in foreign aid to Africa with the hope that these investments will help transform the economic capability of these African countries, as well as reap benefits for the governments providing the aid, but unfortunately, corruption, ineffective leadership and bad governance, political insecurity, lack of trained and qualified managers, lack of an administrative structure of development, and legislative oversight on economic policy development and implementation has resulted in mounting debt burdens by Africa that leading to poor investment of time and resources in paying off interests on these debts as opposed to investments in economic development.
Debt relief has seldom been utilized as a valid alternative in helping transform Africa’s economic situation, but, new studies are showing the benefits of debt relief in boosting the economic development outcome of African governments especially after the recent meeting of the G7 countries resulting in an agreement based on the foundation of the Millennium Goal Initiative for Africa to cancel completely the debt burden on some African countries, make recommendations for partial cancellation for others, and cancel the debt burden of some based on some pre-conditions.
Lack of sufficient economic growth and development, as well as social independence in Africa has been a big problem and a point of concern challenging economists and policy planners in developed countries like the U.S. where foreign aid commitments, a significant portion of their GDPs have been used as a tool to assess the effectiveness of their investments in third world countries growth and development, as well as measure the efficiency of their national policy initiatives regarding foreign aid. The question then is, should policy planners in the U.S. decide on foreign aid as a more beneficial tool to economic development in Africa or offer debt relief as a better option in enhancing our economic benefits towards economic development investment in Africa?
The Millennium Development Initiative, a proposal agreement between the developing countries and the developed countries initiated a set of bold goals that is recommended for implementation for Africa to lift it from a third world ranking to a global leader. These goals are to eradicate extreme hunger and poverty; achieve universal primary education; promote gender equality and empower women; reduce child mortality; improve maternal health; combat HIV/AIDS, Malaria, and other diseases; ensure environmental sustainability; and develop a global partnership for development.
To meet these noble goals, the U.S. has a major part to play to ensure they get the optimal return on their aid or relief by requiring and recommending responsible and effective leadership from Africa, efficient and qualified managers, empowerment and active participation of citizens in the decision process, efficient and productive projects and programs for development, as well as the development, implementation, and enforcement of proper rules and regulations to ensure transparent and accountable system of governance as a tool to evaluate the effectiveness and cost benefit advantage of their foreign aid or relief.
Foreign aid after debt relief is necessary to sustain the growth and development of Africa but policy administrators must put conditions that are flexible and fair, not harsh and impossible to ensure that governments’ investments yield positive.
African governments have a huge part to play to be responsible, accountable, effective, efficient, and economical with their resources and talent.
U.S. government must work with African governments hand in hand in knowledge transfer, technology advancement, poverty reduction, health service administration, democratic government development, investment in human potential and capital, independent resources development, and trade.
In order to initiate foreign aid in the future, corruption and good governance, accountability and transparency, promotion of Peace and Security at the highest level through preventive measures, identifying best practices, freezing foreign accounts of corrupt governments, confiscation of fraudulent assets, and repatriation must be enforced by the donors and recipients. Also, some foreign aid should come in the form of grants not loans to boost investment and return in value.
Monday, October 20, 2008
Hope for Africa...Part I
Very little credit has been given to Africa for the immense growth and development it has recorded especially in the use and adaptation of modern technology, development of enhanced and sustainable financial market for capital investment and resources development, increased political independence and accountability with regards upholding the rule of law, and free market enterprise that has transformed and elevated the economic standards of the continent. Nigeria for example has grown by at a steady and consistent rate compared to its colonial years, recovering slowly from its misfortunes and on pace to become one of the 20 most vibrant economies by 2020 if the Vision 20-2020 is anything to look up to.
The immense growth and development has happened within a short period of time as a result of a renewed resilience by Africans to take responsibility and hold themselves accountable for the change they desire and not relegate that responsibility and duty to foreign influence. Given that the bruises and scars from colonialism and subsequently foreign domination of the development, implementation, and regulation of policy actions that relate to economic, social, and political development remain, the lessons have served as the motivation and impetus to reverse and change what used to be our accepted norm to an enhanced realization and understanding of what our hope and expectation for our future is.
This future is one where every citizen has equal right and access to fair representation in the polity to demonstrate their freedom of choice and participation; has equal and fair access to the opportunity of an education to enhance and develop themselves; has equal right and access to invest and create opportunity for human capacity building through developing innovative ideas and solutions to society's problems and challenges without fear or intimidation; has equal access to services, tools and resources, and opportunities to build and develop for themselves a life that ensures their optimal security, positive livelihood, economic sustainability, and personal enhancement; and above all where knowledge ability is recognized and channeled properly, talent potential and ability revered and respected, creativity and ingenuity is harnessed, challenged and developed, and visionary attitude embraced and enhanced.
In any free society people should be able to actively participate, contribute, and add value to the growth and development of economic principles, ideas, concepts, and opinions on enhancing human capacity development, social responsibility, academic knowledge and understanding, professional development, and political empowerment. To ensure this a proper framework and foundation system is necessary. For any free society, the establishment and existence of institutions that encourage investment, free enterprise, and networks that enhance and encourage private sector development, as well as public sector accountability and responsibility is essential with the enabling environment to support.
Growing up in Nigeria and living through the experience of successive dictatorial regimes that have in many ways plunged our country into the moral and corruptible decay it is gradually coming out now, it is a welcome relief and encouragement to see the hope and opportunity that now exists especially in ensuring that the free market works and benefits all.
Changes and reform in the public and private sector has provided immense opportunities for the common man to participate and contribute in the growth and development of society. By free market, I mean a situation where private enterprise is allowed to establish, work, operate, and develop in a society where the public sector provides the support mechanism in terms of policy framework and security to ensure that investments are safe, exchange of knowledge and ideas freely is encouraged, fear and intimidation in the implementation of services is minimal, competition for goods and services are available, private and public capital are easily tapped into and developed, human capacity are readily available, tools and resources for the growth and development of the economy are continually enhanced through sheer innovation and talent acquisition, and Rule of Law is adhered to and respected. While it seems it is a long way from being reality, it actually isn’t, Nigeria is on a more positive path than before.
The immense growth and development has happened within a short period of time as a result of a renewed resilience by Africans to take responsibility and hold themselves accountable for the change they desire and not relegate that responsibility and duty to foreign influence. Given that the bruises and scars from colonialism and subsequently foreign domination of the development, implementation, and regulation of policy actions that relate to economic, social, and political development remain, the lessons have served as the motivation and impetus to reverse and change what used to be our accepted norm to an enhanced realization and understanding of what our hope and expectation for our future is.
This future is one where every citizen has equal right and access to fair representation in the polity to demonstrate their freedom of choice and participation; has equal and fair access to the opportunity of an education to enhance and develop themselves; has equal right and access to invest and create opportunity for human capacity building through developing innovative ideas and solutions to society's problems and challenges without fear or intimidation; has equal access to services, tools and resources, and opportunities to build and develop for themselves a life that ensures their optimal security, positive livelihood, economic sustainability, and personal enhancement; and above all where knowledge ability is recognized and channeled properly, talent potential and ability revered and respected, creativity and ingenuity is harnessed, challenged and developed, and visionary attitude embraced and enhanced.
In any free society people should be able to actively participate, contribute, and add value to the growth and development of economic principles, ideas, concepts, and opinions on enhancing human capacity development, social responsibility, academic knowledge and understanding, professional development, and political empowerment. To ensure this a proper framework and foundation system is necessary. For any free society, the establishment and existence of institutions that encourage investment, free enterprise, and networks that enhance and encourage private sector development, as well as public sector accountability and responsibility is essential with the enabling environment to support.
Growing up in Nigeria and living through the experience of successive dictatorial regimes that have in many ways plunged our country into the moral and corruptible decay it is gradually coming out now, it is a welcome relief and encouragement to see the hope and opportunity that now exists especially in ensuring that the free market works and benefits all.
Changes and reform in the public and private sector has provided immense opportunities for the common man to participate and contribute in the growth and development of society. By free market, I mean a situation where private enterprise is allowed to establish, work, operate, and develop in a society where the public sector provides the support mechanism in terms of policy framework and security to ensure that investments are safe, exchange of knowledge and ideas freely is encouraged, fear and intimidation in the implementation of services is minimal, competition for goods and services are available, private and public capital are easily tapped into and developed, human capacity are readily available, tools and resources for the growth and development of the economy are continually enhanced through sheer innovation and talent acquisition, and Rule of Law is adhered to and respected. While it seems it is a long way from being reality, it actually isn’t, Nigeria is on a more positive path than before.
Bio-fuels Could Help Africa Fight Poverty...
Local renewable fuel production is reducing poverty and strengthening markets across the continent. An emerging international market in biofuels— fuel typically derived from plant biomass— presents a unique opportunity for African growth and development. While bio-fuel production can have serious implications for food security and the sustainable management of land resources, with smart policies and actions these obstacles can be overcome to ensure long-term socio-economic and environmental benefits. For Africa, bio-fuels can be a tool for development that can help create domestic energy supplies, improve rural livelihoods, and put Africa in line to become a global player in the emerging renewable fuel markets.
Members of the European Union agreed earlier this year to a goal of using bio-fuels to meet 5.75 percent of their transportation fuel needs by 2010. China is requiring a 10% ethanol blend in 5 provinces of the country by 2010 and the Energy Bill that just passed the Senate floor, likewise, includes a bio-fuels target for the United States of up to 7.5 billion gallons blend by 2012, and Canada with a 3.5% bio-fuels target blend by 2010. It is policies like these, driven by concerns about energy security and climate change in industrialized countries that are propelling the bio-fuels industry to record levels of growth.
The ethanol industry has seen production worldwide double since 2001; bio-diesel has similarly expanded dramatically, more than tripling production since 2005. Brazil, for one, has dominated the spotlight because of its impressive 30-year transition since the mid-1970s from foreign imported fossil fuels to domestically processed bio-based fuels made from sugar cane.
Now a question that many people are asking is if Brazil’s story can set an example for other countries in the developing world. Does Africa stand to take advantage of this emerging market? Or will it be left on the sidelines of yet another global industry in the modern era?
Bio-fuel production, unlike manufacturing and high-tech industries, is rooted in agriculture development, where the required resources and capability strength is abundant in Africa. With a greater land mass than the United States, Brazil and India put together, tropical climatic zones that have year-round growing seasons, and a large labor force—more than half of the population lives off farming—the continent has many of the right ingredients to become a global supplier of bio-fuels.
With oil prices showing no sign of abating, ethanol and bio-diesel are increasingly cost competitive. For Africa in particular the introduction of a bio-fuel industry could have a broad range of positive economic impacts. The opportunities are endless: creating secondary or supplemental income for farmers, improving rural communities, building domestic foreign refinery capacity, creating jobs, offering diversifying agricultural food production, helping meet domestic fuel demand, and the possibility of energy export, among others.
High energy crops like sugarcane, corn, and cassava, produced in excess and known for their high starch content, a key requirement for ethanol production, have been found suitable for production in Africa. Also, peanuts, jatropha, and palm oil, crops that could produce diesel from their oil using a low-cost technology mechanism, grown under Africa’s favorable climatic condition could add to the opportunity for development.
Some African countries have already begun to respond to this opportunity. Senegal, an oil-importing country in West Africa, is at the forefront of these efforts. Led by President Abdoulaye Wade, Senegal has joined forces to form a ‘Green OPEC’ alliance with 14 other non-oil producing countries in Africa under the title of Pan-African Non-Petroleum Producers Association (PANPP). In partnership with Brazil and India, their goal is to exchange knowledge and technologies for the development of a bio-fuel industry. The collaboration has resulted in several investments on projects in Africa, including one with excess of $1 billion over the next six years to construct eight new ethanol plants by Ethanol Africa, a South African company with established knowledge and experience in bio-fuels.
South Africa has taken important steps to implement a policy-wide initiative promoting bio-fuel production in Africa. It recently introduced a 6-billion-rand (US$828-million) plan seeking to use bio-fuels to meet up to 75 percent of its energy needs by 2013. The program will establish an E8 & B2 bio-fuel industry using mostly soybeans for diesel, and maize and sugarcane for ethanol, (crops already produced in excess), with a proposed blending of up to 5% bio-diesel and 10% bio-ethanol. New policies also propose achieving a liquid bio-fuel average market penetration of 3.4% by 2013 without utilizing surplus agricultural capacity. The program expects to create up to 55, 000 new jobs, contribute up to 11% towards GDP, and add about R1 700 million annually in national domestic product. With limited subsidizing of energy crops for bio-fuel production, proper price regulation standards, government support for domestic production, removal of import tariffs, involvement of government agencies to coordinate and enhance productivity, and promotion of international collaboration, South Africa hopes to become a major player in the bio-fuel market.
Namibia, a country in East Africa, has attempted to develop bio-fuels through planting and harvesting jatropha, but the institutional and economic risks involved have hampered further development. Namibia has also made other attempts at renewable energy production using bio-fuels: a planned project seeks to utilize 6% of its mostly degraded land to grow woody shrubs for production to meet domestic energy needs, reduce poverty, and cut down on environmental degradation. The derivative from the production process could be used for animal feed, as charcoal products, chipboards, and as bush blocks.
Similarly, in Mozambique, a two-year program, sponsored by the Global Environment Facility-Small Grant Program and the GAIA Movement with co-financing by Ajuda de Desenvolvimento de Povo para Povo, plants Jatropha around degraded land in rural areas to address deforestation, enhance economic living standards of rural dwellers, and provide domestic fuel capacity for rural communities in what has been termed “fuel fences.” It has been found that the crop simultaneously guards against erosion and encroaching deserts, as well as produces a fruit that can be converted in bio-diesel with simple systems costing less than USD 2,000. The project recruits and trains select groups of farmers to develop and sustain a viable jatropha market in Mozambique. These projects are seen as opportunities for Africa to become major players in the bio-fuel market.
Even oil exporting countries have embarked on the trail in making investments for bio-fuel production; Nigeria in partnership with Brazil expects revenues of about $150 million from investments in the production of ethanol from cassava and sugarcane. Nigeria currently produces about 30 million tons of cassava a year with expected production of about 50 million liters of ethanol a year.
Despite these early advances, however, there are concerns and obstacles to widespread production of bio-fuels. These concerns relate to food security, building technical capacity, climate change and environmental impacts, and economic implications.
Food Security
The debate over the impact of bio-fuels production on food security raises the concern that bio-fuel production will affect food production by creating food scarcity, encourage high food prices, and compete for use of the soil’s natural resources. Concerns that from FAO data for 2001-2003, of the 853 million malnourished people in the world, 206 million are in sub-Saharan African countries imply that competition of food production with bio-fuel production will further exacerbate the access and availability of food. Bio-fuel advocates argue, though, that these problems can be mitigated through smart and effective policies that provide fair and equitable access to food, ensure availability, maintain stability in prices etc, and utilize the natural resources available and required for food production. A system that make use of land that is unused or unproductive, rotational crop production techniques, and improved agricultural processes for higher crop yields could also address these problems and challenges to food security.
Building technical capacity
As Africa is dominated by small subsistence farmers in rural areas, trained and knowledgeable farmers who utilize modern technology for agriculture production is deficient. Policies and actions that build on subsistence farmer collaborations, government agencies’ involvement, and infrastructure that supports small to large scale production of bio-fuels could be enacted. Also, increasing government funding for research and development, instituting a program body to coordinate, oversee, and regulate bio-fuel production, and promoting international collaboration to further enhance growth in this field is encouraged.
Climate Change and Environmental Impact:
The threat and danger of rapid deforestation to enhance bio-fuel production is an environmental concern. A case in Uganda reported in the dailies, detail how the government made a decision to lease land to developers to harvest sugar for bio-fuel purposes at the risk of destroying wildlife without regard of the effects on the indigenous communities. Local protests and public outcry did little to curtail these activities. But, with proper management and planning, under the certain policies certain crops can be grown and certain land used for bio-fuel production that will not result in huge deforestation, while also promoting healthy GHG emission levels and economic benefit.
Economic Implications
Underinvestment or overinvestment in bio-fuel production could be a problem for developing nation economies in Africa as it might significantly drain their budgets without returning benefits from investment. Studies show that in most oil-importing countries in Africa, like Guinea, the government spends up to 8% of GDP on oil subsidies due to the high oil prices, channeling these investments to bio-fuel production can bring economic benefits for rural development. Also, the challenge of unstable governments in developing countries further exacerbates insecure investment infrastructures and capital investment development. Policies and actions that encourage FDI with incentives, opening of the markets for competition, and guaranteeing secure investments could create new jobs, encourage investment, boost national revenues, and empower rural communities.
The problems and challenges that face bio-fuel development in Africa can be resolved or mitigated through proper management and strong policies. Africa stands at the threshold of success in this field as it is endowed with a wealth of natural resources, knowledge and technology ability, investment capability, and development opportunity to become a major player in the bio-fuel market. The further development of bio-fuels in Africa lies on the responsible and motivated leadership of African governments.
Members of the European Union agreed earlier this year to a goal of using bio-fuels to meet 5.75 percent of their transportation fuel needs by 2010. China is requiring a 10% ethanol blend in 5 provinces of the country by 2010 and the Energy Bill that just passed the Senate floor, likewise, includes a bio-fuels target for the United States of up to 7.5 billion gallons blend by 2012, and Canada with a 3.5% bio-fuels target blend by 2010. It is policies like these, driven by concerns about energy security and climate change in industrialized countries that are propelling the bio-fuels industry to record levels of growth.
The ethanol industry has seen production worldwide double since 2001; bio-diesel has similarly expanded dramatically, more than tripling production since 2005. Brazil, for one, has dominated the spotlight because of its impressive 30-year transition since the mid-1970s from foreign imported fossil fuels to domestically processed bio-based fuels made from sugar cane.
Now a question that many people are asking is if Brazil’s story can set an example for other countries in the developing world. Does Africa stand to take advantage of this emerging market? Or will it be left on the sidelines of yet another global industry in the modern era?
Bio-fuel production, unlike manufacturing and high-tech industries, is rooted in agriculture development, where the required resources and capability strength is abundant in Africa. With a greater land mass than the United States, Brazil and India put together, tropical climatic zones that have year-round growing seasons, and a large labor force—more than half of the population lives off farming—the continent has many of the right ingredients to become a global supplier of bio-fuels.
With oil prices showing no sign of abating, ethanol and bio-diesel are increasingly cost competitive. For Africa in particular the introduction of a bio-fuel industry could have a broad range of positive economic impacts. The opportunities are endless: creating secondary or supplemental income for farmers, improving rural communities, building domestic foreign refinery capacity, creating jobs, offering diversifying agricultural food production, helping meet domestic fuel demand, and the possibility of energy export, among others.
High energy crops like sugarcane, corn, and cassava, produced in excess and known for their high starch content, a key requirement for ethanol production, have been found suitable for production in Africa. Also, peanuts, jatropha, and palm oil, crops that could produce diesel from their oil using a low-cost technology mechanism, grown under Africa’s favorable climatic condition could add to the opportunity for development.
Some African countries have already begun to respond to this opportunity. Senegal, an oil-importing country in West Africa, is at the forefront of these efforts. Led by President Abdoulaye Wade, Senegal has joined forces to form a ‘Green OPEC’ alliance with 14 other non-oil producing countries in Africa under the title of Pan-African Non-Petroleum Producers Association (PANPP). In partnership with Brazil and India, their goal is to exchange knowledge and technologies for the development of a bio-fuel industry. The collaboration has resulted in several investments on projects in Africa, including one with excess of $1 billion over the next six years to construct eight new ethanol plants by Ethanol Africa, a South African company with established knowledge and experience in bio-fuels.
South Africa has taken important steps to implement a policy-wide initiative promoting bio-fuel production in Africa. It recently introduced a 6-billion-rand (US$828-million) plan seeking to use bio-fuels to meet up to 75 percent of its energy needs by 2013. The program will establish an E8 & B2 bio-fuel industry using mostly soybeans for diesel, and maize and sugarcane for ethanol, (crops already produced in excess), with a proposed blending of up to 5% bio-diesel and 10% bio-ethanol. New policies also propose achieving a liquid bio-fuel average market penetration of 3.4% by 2013 without utilizing surplus agricultural capacity. The program expects to create up to 55, 000 new jobs, contribute up to 11% towards GDP, and add about R1 700 million annually in national domestic product. With limited subsidizing of energy crops for bio-fuel production, proper price regulation standards, government support for domestic production, removal of import tariffs, involvement of government agencies to coordinate and enhance productivity, and promotion of international collaboration, South Africa hopes to become a major player in the bio-fuel market.
Namibia, a country in East Africa, has attempted to develop bio-fuels through planting and harvesting jatropha, but the institutional and economic risks involved have hampered further development. Namibia has also made other attempts at renewable energy production using bio-fuels: a planned project seeks to utilize 6% of its mostly degraded land to grow woody shrubs for production to meet domestic energy needs, reduce poverty, and cut down on environmental degradation. The derivative from the production process could be used for animal feed, as charcoal products, chipboards, and as bush blocks.
Similarly, in Mozambique, a two-year program, sponsored by the Global Environment Facility-Small Grant Program and the GAIA Movement with co-financing by Ajuda de Desenvolvimento de Povo para Povo, plants Jatropha around degraded land in rural areas to address deforestation, enhance economic living standards of rural dwellers, and provide domestic fuel capacity for rural communities in what has been termed “fuel fences.” It has been found that the crop simultaneously guards against erosion and encroaching deserts, as well as produces a fruit that can be converted in bio-diesel with simple systems costing less than USD 2,000. The project recruits and trains select groups of farmers to develop and sustain a viable jatropha market in Mozambique. These projects are seen as opportunities for Africa to become major players in the bio-fuel market.
Even oil exporting countries have embarked on the trail in making investments for bio-fuel production; Nigeria in partnership with Brazil expects revenues of about $150 million from investments in the production of ethanol from cassava and sugarcane. Nigeria currently produces about 30 million tons of cassava a year with expected production of about 50 million liters of ethanol a year.
Despite these early advances, however, there are concerns and obstacles to widespread production of bio-fuels. These concerns relate to food security, building technical capacity, climate change and environmental impacts, and economic implications.
Food Security
The debate over the impact of bio-fuels production on food security raises the concern that bio-fuel production will affect food production by creating food scarcity, encourage high food prices, and compete for use of the soil’s natural resources. Concerns that from FAO data for 2001-2003, of the 853 million malnourished people in the world, 206 million are in sub-Saharan African countries imply that competition of food production with bio-fuel production will further exacerbate the access and availability of food. Bio-fuel advocates argue, though, that these problems can be mitigated through smart and effective policies that provide fair and equitable access to food, ensure availability, maintain stability in prices etc, and utilize the natural resources available and required for food production. A system that make use of land that is unused or unproductive, rotational crop production techniques, and improved agricultural processes for higher crop yields could also address these problems and challenges to food security.
Building technical capacity
As Africa is dominated by small subsistence farmers in rural areas, trained and knowledgeable farmers who utilize modern technology for agriculture production is deficient. Policies and actions that build on subsistence farmer collaborations, government agencies’ involvement, and infrastructure that supports small to large scale production of bio-fuels could be enacted. Also, increasing government funding for research and development, instituting a program body to coordinate, oversee, and regulate bio-fuel production, and promoting international collaboration to further enhance growth in this field is encouraged.
Climate Change and Environmental Impact:
The threat and danger of rapid deforestation to enhance bio-fuel production is an environmental concern. A case in Uganda reported in the dailies, detail how the government made a decision to lease land to developers to harvest sugar for bio-fuel purposes at the risk of destroying wildlife without regard of the effects on the indigenous communities. Local protests and public outcry did little to curtail these activities. But, with proper management and planning, under the certain policies certain crops can be grown and certain land used for bio-fuel production that will not result in huge deforestation, while also promoting healthy GHG emission levels and economic benefit.
Economic Implications
Underinvestment or overinvestment in bio-fuel production could be a problem for developing nation economies in Africa as it might significantly drain their budgets without returning benefits from investment. Studies show that in most oil-importing countries in Africa, like Guinea, the government spends up to 8% of GDP on oil subsidies due to the high oil prices, channeling these investments to bio-fuel production can bring economic benefits for rural development. Also, the challenge of unstable governments in developing countries further exacerbates insecure investment infrastructures and capital investment development. Policies and actions that encourage FDI with incentives, opening of the markets for competition, and guaranteeing secure investments could create new jobs, encourage investment, boost national revenues, and empower rural communities.
The problems and challenges that face bio-fuel development in Africa can be resolved or mitigated through proper management and strong policies. Africa stands at the threshold of success in this field as it is endowed with a wealth of natural resources, knowledge and technology ability, investment capability, and development opportunity to become a major player in the bio-fuel market. The further development of bio-fuels in Africa lies on the responsible and motivated leadership of African governments.
Analysis on U.S. Foreign Assistance
Abstract
Foreign assistance to developing countries has been a norm for the western world especially after the Second World War, as an attempt to assist in building and enhancing non-developing and developing countries around the world to encourage social economic growth and sustainable development. Unfortunately U.S. Foreign assistance has over the years failed to meet its expected goals and objectives of promoting democracy, economic development, social growth, youth empowerment, education and health-care reform, amongst others in developing and non-developing economies, it has instead in most cases contributed to exacerbate it. In the implementation of foreign aid assistance, certain guidelines and procedures must be adhered to ensure successful fulfillment of the goals and expectations of the aid where the giver and recipients are mutually beneficial. These processes can be realized by a change in policy in the current framework of aid distribution that puts emphasis on country ownership, transparency, accountability, equity and fairness, and independent evaluation of progress for development.
Introduction
The Foreign Assistance Act of 1961 formalized the extent and process for implementing foreign assistance to countries. The act promulgated that, Congress’ intent in foreign assistance is “…to promote the foreign policy, security, and general welfare of the United States by assisting peoples of the world in their efforts toward economic development and internal and external security, and for other purposes.” The act foresaw the need for the United States as a World Power and a developed nation to assist other countries that are not at the same level of political, economic, and technological development in singularity or in collaboration with other countries or organizations to provide the best assistance to help them reform and develop, and according to the act, “eliminate hunger, poverty, illness, and ignorance.”
The Foreign Assistance Act of 1961 further asserts that, the principal objective of the foreign policy of the United States is, “…the encouragement and sustained support of the people of developing countries in their efforts to acquire the knowledge and resources essential to development and to build the economic, political, and social institutions which will improve the quality of their lives.”
Prior to the Foreign Assistance Act of 1961, the United States has been involved in foreign assistance to other countries especially those that they have mutually economic, political, and nationally security interests in protecting. These mutual interests have led them to provide assistance or aid to these countries with the hope of protecting their own interests and to advance society. Foreign assistance after World War II often called the Marshall Plan is an example, which led largely to the formation of the World Bank, of which the U.S. is a major contributor, to provide loans and assistance to rebuild Europe after the devastating effects of the war.
The Marshall Plan, initiated by former U.S. Secretary of State George Marshall after World War II was done with the hope of rebuilding Europe after the devastation of the war, providing approximately $13 billion over four years, up from a proposed $5 billion, and amounting to between 5 and 10 percent of the federal budget over the recovery program period, or about 2 percent of the gross national product over the same period. This staggering amount represented a huge portion of U.S. budget; a huge variation from current allocations for foreign assistance which was approved overwhelmingly by Congress under the Economic Cooperation Act of 1948 due mostly to lobbying efforts convincing the public and private sector that the financial commitment would not pose a risk to the economic sustainability of the United States.
The successful implementation of the Marshall Plan required and led to the formation of the Economic Cooperation Administration (ECA), which consisted of an administrative office headed by an administrator in Washington, D.C., a special representative in Paris, and local missions in each of the participating countries of Europe. The Economic Cooperation Administration (ECA) was constituted to have complete control over operational matters in providing rebuilding assistance, requiring active interaction with the U.S. Department of State in shaping policy relating to effectively implementing rebuilding and foreign assistance aid. The goal and objective of the ECA amongst its bodies was to revitalize production in the economy, help resolve complicated trade and financial problems, and manage other tasks involved in Europe’s successful recovery. Hence, this required the sourcing of a pool of experts and practitioners with professional working experience in the areas of business, labor, agriculture, and the professions to help lead in the rebuilding and development effort.
The Marshall plan also required that participating countries in the program take initiative and play a major role in their own recovery; this was met with the establishment of the Organization for European Economic Cooperation (OEEC), with the mission in joint partnership and agreement with ECA to “devise annual economic recovery plans, optimal methods to allocate and use American aid, make currencies convertible for the benefit of the economy, and loosen restraints in terms of barriers and policies on production and trade.” With the influx of American imports of consumer goods and manufactured products, other forms of American Aid Assistance, and the development and implementation of strong economic policies in the participating countries led to the revitalization and resurgence of the European economy which can be verified in the dramatic increase in gross national product, agricultural production increase from prewar levels, and industrial output increase by 40 percent from pre-war levels.
Analysis of Foreign Aid Assistance Implementation Now
The implementation of U.S. foreign assistance is initiated principally by the United States Agency for International Development, an independent agency created by an executive order of the United States Government as a result of the Foreign Assistance Act of 1961 and operating on a budget allocation of less than one-half of 1 percent of the federal budget, armed with the objective “to extend assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms,” through supporting “…economic growth, agriculture and trade; global health; and, democracy, conflict prevention and humanitarian assistance in Sub-Saharan Africa; Asia and the Near East; Latin America and the Caribbean, and; Europe and Eurasia.”
USAID as the principal government agency that coordinates U.S. bilateral development and humanitarian assistance to foreign countries in operating and implementing its mission works with other agencies through collaboration with the National Security Council’s Policy Coordination Committee (PCC), including representatives from key departments, offices and agencies represented in the NSC to provide policy analysis and ensure the timely response to policy decisions initiated by the President dependent on legislation and appropriations authorized by Congress. USAID along with 50 separate government units implement the aid-related activities it seeks to promote overseas.
USAID promotes its development activities focusing on key areas including promoting democratic governance, driving economic growth, improving environment and health, mitigating and managing conflict, providing humanitarian assistance, and accounting for private foreign aid through programs and projects in partnership and collaboration with public and private enterprise through contracts, grants, cooperative agreements and purchase orders. These agencies include the Bureau of Population, Refugees, and Migration; Immigration and Naturalization Service (INS); United States Trade Representative (USTR); Bureau of Oceans and International Environmental and Scientific Affairs; Department of Treasury International Programs; Bureau for International Narcotics and Law Enforcement Affairs; etc.
U.S. official assistance aid which currently stands at about $10 billion a year, has risen by 50% to about $15 billion in 2006 and will likely increase some more, mostly due to the recently announced Millennium Challenge Account, a major new policy initiative announced by President Bush in March 2002 to reform aid assistance to select qualifying countries pending them meeting some provisions. This initiative and others have funded projects including Afghanistan Road Initiative, a plan that has already been implemented since 2003 to construct a highway from Kabul to Kandahar; the Africa Education Initiative, a project to provide access and opportunity for primary school education for 925, 000 African children; the Global Fund to Fight AIDS, Tuberculosis, and Malaria, a program in Morocco to provide 3, 400 HIV victims voluntary counselling and testing, and providing antiretroviral therapy for about 583 people; and under the Initiative to End Hunger in Africa formed a partnership between about 157 public and private agencies to empower citizens, strengthen markets, improve technologies, and better manage strategic planning goals for the future. These programs among others continue to contribute in sustaining the goals and objectives of U.S. foreign policy intention to encourage democracy, strengthen markets, broaden educational and healthcare opportunities and access for people, and empower citizens of these countries to be worthy assets and major contributors to their countries’ success and development.
Challenges in Foreign Aid Implementation
The United States works to implement the vision of its foreign assistance aid goals and objectives not only through bi-lateral relationships like USAID but also through multi-lateral partnerships and collaborations. These collaborations or partnerships take the form of contributions of knowledge, tools, and resources to such organizations as the World Bank, International Monetary Fund, United Nations, African Development Bank (AfDB), United Nations International Children Education Fund (UNICEF), World Health Organization (WHO), the World Trade Organization, etc to promote development in certain regions.
Foreign aid assistance to developing regions whether bilateral or multilateral have been found to be an ineffective and inefficient way of promoting development in developing and non-developing regions due to the problems of mismanagement, lack of ownership, misappropriation, lack of accountability and transparency, poor training and understanding on how to implement, investment in the wrong initiatives, encroachment by the West in forcing their plan on the assisted, and over emphasis on rules and stipulations that limit the implementation of the aid program. According to the 6th Edition of the Cato Handbook of Policy, it reiterates what most economists have echoed, that most foreign aid assistance as expressed by Paul Coulier, a renowned Oxford Economist that, “…No one who has seen the evidence on aid effectiveness,’’ even a bipartisan Meltzer Commission of the U.S. Congress found that 55 to 60 percent of the World Bank projects failed based on the their own evaluations. The same report found that most government to government aid showed as reproduced and modified here that, “there is no correlation between aid and growth (in development), that aid that goes into an area with poor policy framework doesn’t work and exacerbates debt, that aid provided on the condition on market reforms have failed.”
A Congressional Budget Office report on foreign aid and development showed the inefficacies of current foreign aid to developing or non-developing nations to encourage development and economic growth. The report showed that in the presence of political instability, lack of honest and competent government officials, weak government institutions, and the presence and influence of strong domestic policies affect economic development. A case study on foreign assistance to Pakistan showed both positive and negative effects of foreign assistance on developing economies. The United States has provided substantive foreign aid to Pakistan through both bilateral and multi-lateral aid sources especially after the aftermath of events of September 11 when Pakistan became an important ally of the U.S. in their way on terror. Foreign aid assistance in Pakistan according to the case study has provided both positive and negative results; positive in the sense that, “…it helped boost GDP through structural transformation of the economy, provided foundation for industrial and agricultural sectors, provided technical assistance through exchange and investment of expert talent and resources, policy advice for reform and development of modern technology, assistance in reducing budget deficits and ensuring the funding of projects for social sector development.” The conclusion is that the overall impact of the aid on the economic development was positive. On the negative analysis it showed that aid replaced domestic savings thereby increasing the debt burden. A detailed analysis of this case here shows that aid failed in large part due to lack of strong institutions and incentive to sustain the development due to lack of sufficient monetary, fiscal, and other policies to regulate sustainable growth and development. Pakistan, a non-democratic, political unstable region, though having experienced some growth due mainly to the positive effects of globalization has not advanced beyond the expectations of the huge aid provided to it over the years, instead it is stuck with a huge debt burden that is disrupting economic productivity.
Another case study is presented in the much acclaimed book, “The White Man’s Burden,” by renowned economist William Easterly on Liberia. Liberia, a country ranked at the top 5 most corrupt countries in the world and has experienced political instability throughout its history, even more so when it collapsed into anarchy in 1985 and taken further into oblivion with the rise of dictator Charles Taylor received mass influx of aid. The result of the aid is that Liberia has experienced one of the worst per capita growths amongst countries, after being the recipient of most of the aid during the period of 1980-2002. Most of the aid that came to Liberia went to brutal and corrupt dictators who used the funds to suppress their people, pursue wars and instigate violence, fatten their pockets and those of their buddies, destroyed the economy and every institution that supported growth and development, and generally wasted tools and resources to fund non-working or obsolete goals and objectives. The failure attributed here and is evident in these cases and others show the danger of foreign assistance when unfair and unrealistic standards and expectations are placed on the aid, no level of accountability or evaluation of progress, no monitoring to ensure positive impact of the aid, unstable governments, and weak political and economic institutions.
Recommendations- The Way Forward
In order to transform and learn from these failures in foreign assistance to developing countries, certain recommendations are encouraged that will form a part of a new U.S. foreign assistance framework. Some recommendations for example by the Cato Institute, calls on congress to eliminate USAID as well as government to government aid assistance; withdraw and stop contributing to the World Bank and the five regional multilateral development banks; prevent foreign aid for use as reward for market reforms in the developing world; forgive the debts of heavily indebted countries on certain conditions, etc. Alternatively, a viable option that has shown promise of working and has been heralded by most experts and institutions calls for promoting market reforms in the developing countries by encouraging assumption of government ownership for needed fiscal and monetary reforms for development, assistance with knowledge and resource capital to facilitate the development, calling for democratic institutions, challenging human rights violations and corrupt and incompetent officials, and encouraging accountability, transparency, and evaluation of country progress in development. Further, assisting in the development of the private sector; providing debt relief to qualifying countries especially HIPCs; provide micro financing through the private sector to facilitate development; support humanitarian assistance when needed and required; redefine and reform methods and process bilateral and multilateral aid is administered; and promoting foreign direct investment, among others.
Implementation of Policy
To implement this policy, a reform of the institutions and agencies that are involved in administering foreign assistance aid is required. USAID the foremost agency in implementing the country’s foreign assistance aid will have to take a stronger and more responsible leadership role in this issue. USAID as a government agency would have to change and reform its tactics to adjust and address the problems that have been presented above. In this regard, it is suggested that while USAID is an independent government agency, it should not be housed under the State Department. USAID can and should serve as an independent agency with knowledge and expertise to support all of the United States foreign assistance aid. USAID will continue to provide bilateral aid and work with organizations and institutions like the World Bank, UN, etc to provide multilateral aid assistance. The President will continue the tradition of appointing the General Administrator with approval of Congress. The administrator must be an expert in foreign policy administration, proven and tested leader that can liaise between the administration and Congress on the proper procedure and process to administer aid optimally, must possess knowledge and understanding of regional politics, an expert in human relations and capacity building, and able to work appropriately with the different cabinet departments as required to provide the best knowledge and expertise required to implement the aid.
The reformed UNAID will be a searcher not a planner, that is, the new agency will actively seek out opportunities to invest whether individually or in partnership with other public and private enterprise, to build, develop, and contribute to the implementation of the administration’s foreign assistance aid goals and objectives. Working with Congress and the administration, USAID will present annual and periodic reports to Congress on its activities and the progress it has made. USAID in seeking to implement or provide foreign aid assistance must be invited and requested to help by the recipient government. USAID must assess the situation before commitment to ensure that the recipient country is a democratic country, will take ownership of their own reforms, promote good governance and advance an atmosphere for strong and effective monetary and fiscal policies to exist, promote the sustainability of good institutions that will support economic growth and development, promote the social well being of society (health, education, professional development, etc), and will seek to invest in human capital. USAID must not force their planned reforms on the countries either as a pre-condition or as a condition for aid but must work closely with the country as needed and required to access best practices and solutions that meet the desires and expectations of the recipient country based on their culture and tradition. USAID must also work with private enterprise especially in unstable and undemocratic governments to build morale, develop the private sector, empower the citizenry, and provide the best help and assistance to those who need the help and should receive the help. USAID must have staff that will work as partners with aid recipients to access how aid is being utilized, how much positive impact it is making, what changes may be needed to implement, and how best to continually provide aid to people in the most optimal and cost-benefit method, as well as to obtain a lessons learned approach to improve in the future. USAID will work in bilateral and multilateral fashion with other agencies, institutions, and organizations to provide knowledge, expertise, tools, and resources to countries and people that need it most, especially during times of disaster to help them recover, advance, and be better prepared for future situations.
Conclusion
Foreign assistance aid is an important tool to promote and advance the goals and objectives of the United States of ensuring a safe, and as the act states, to help “…developing countries in their efforts to acquire the knowledge and resources essential to development and to build the economic, political, and social institutions which will improve the quality of their lives.” A strong foreign assistance aid policy can be achieved and sustained, when the U.S. in its implementation of its foreign policy activity reforms to reflect the dynamics of the development community and access the political stability climate of recipient aid countries; the motivation and justification for aid; the nature of the social structure and government institutions in the recipient nations; the receptiveness of the recipient nations to take ownership for reform and be accountable and transparent in their implementation; the level of knowledge and technical expertise of the recipient nations to implement the reforms expected of the aid; and the ability of the private sector to absorb the reform, empower citizens, and advance the social well being of its people.
The Marshall plan heralded a new moment in U.S. foreign policy direction. Lessons learned from the past must be used to make the future better. It is the responsibility of the United States to contribute as the act promulgates to, “eliminate hunger, poverty, illness, and ignorance.” It can be achieved when the U.S. reforms its foreign assistance aid, if and when provided, to reflect the times we live in and give more power to the recipients to implement the reform that works best for their economic, social, and political well being.
Foreign assistance to developing countries has been a norm for the western world especially after the Second World War, as an attempt to assist in building and enhancing non-developing and developing countries around the world to encourage social economic growth and sustainable development. Unfortunately U.S. Foreign assistance has over the years failed to meet its expected goals and objectives of promoting democracy, economic development, social growth, youth empowerment, education and health-care reform, amongst others in developing and non-developing economies, it has instead in most cases contributed to exacerbate it. In the implementation of foreign aid assistance, certain guidelines and procedures must be adhered to ensure successful fulfillment of the goals and expectations of the aid where the giver and recipients are mutually beneficial. These processes can be realized by a change in policy in the current framework of aid distribution that puts emphasis on country ownership, transparency, accountability, equity and fairness, and independent evaluation of progress for development.
Introduction
The Foreign Assistance Act of 1961 formalized the extent and process for implementing foreign assistance to countries. The act promulgated that, Congress’ intent in foreign assistance is “…to promote the foreign policy, security, and general welfare of the United States by assisting peoples of the world in their efforts toward economic development and internal and external security, and for other purposes.” The act foresaw the need for the United States as a World Power and a developed nation to assist other countries that are not at the same level of political, economic, and technological development in singularity or in collaboration with other countries or organizations to provide the best assistance to help them reform and develop, and according to the act, “eliminate hunger, poverty, illness, and ignorance.”
The Foreign Assistance Act of 1961 further asserts that, the principal objective of the foreign policy of the United States is, “…the encouragement and sustained support of the people of developing countries in their efforts to acquire the knowledge and resources essential to development and to build the economic, political, and social institutions which will improve the quality of their lives.”
Prior to the Foreign Assistance Act of 1961, the United States has been involved in foreign assistance to other countries especially those that they have mutually economic, political, and nationally security interests in protecting. These mutual interests have led them to provide assistance or aid to these countries with the hope of protecting their own interests and to advance society. Foreign assistance after World War II often called the Marshall Plan is an example, which led largely to the formation of the World Bank, of which the U.S. is a major contributor, to provide loans and assistance to rebuild Europe after the devastating effects of the war.
The Marshall Plan, initiated by former U.S. Secretary of State George Marshall after World War II was done with the hope of rebuilding Europe after the devastation of the war, providing approximately $13 billion over four years, up from a proposed $5 billion, and amounting to between 5 and 10 percent of the federal budget over the recovery program period, or about 2 percent of the gross national product over the same period. This staggering amount represented a huge portion of U.S. budget; a huge variation from current allocations for foreign assistance which was approved overwhelmingly by Congress under the Economic Cooperation Act of 1948 due mostly to lobbying efforts convincing the public and private sector that the financial commitment would not pose a risk to the economic sustainability of the United States.
The successful implementation of the Marshall Plan required and led to the formation of the Economic Cooperation Administration (ECA), which consisted of an administrative office headed by an administrator in Washington, D.C., a special representative in Paris, and local missions in each of the participating countries of Europe. The Economic Cooperation Administration (ECA) was constituted to have complete control over operational matters in providing rebuilding assistance, requiring active interaction with the U.S. Department of State in shaping policy relating to effectively implementing rebuilding and foreign assistance aid. The goal and objective of the ECA amongst its bodies was to revitalize production in the economy, help resolve complicated trade and financial problems, and manage other tasks involved in Europe’s successful recovery. Hence, this required the sourcing of a pool of experts and practitioners with professional working experience in the areas of business, labor, agriculture, and the professions to help lead in the rebuilding and development effort.
The Marshall plan also required that participating countries in the program take initiative and play a major role in their own recovery; this was met with the establishment of the Organization for European Economic Cooperation (OEEC), with the mission in joint partnership and agreement with ECA to “devise annual economic recovery plans, optimal methods to allocate and use American aid, make currencies convertible for the benefit of the economy, and loosen restraints in terms of barriers and policies on production and trade.” With the influx of American imports of consumer goods and manufactured products, other forms of American Aid Assistance, and the development and implementation of strong economic policies in the participating countries led to the revitalization and resurgence of the European economy which can be verified in the dramatic increase in gross national product, agricultural production increase from prewar levels, and industrial output increase by 40 percent from pre-war levels.
Analysis of Foreign Aid Assistance Implementation Now
The implementation of U.S. foreign assistance is initiated principally by the United States Agency for International Development, an independent agency created by an executive order of the United States Government as a result of the Foreign Assistance Act of 1961 and operating on a budget allocation of less than one-half of 1 percent of the federal budget, armed with the objective “to extend assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms,” through supporting “…economic growth, agriculture and trade; global health; and, democracy, conflict prevention and humanitarian assistance in Sub-Saharan Africa; Asia and the Near East; Latin America and the Caribbean, and; Europe and Eurasia.”
USAID as the principal government agency that coordinates U.S. bilateral development and humanitarian assistance to foreign countries in operating and implementing its mission works with other agencies through collaboration with the National Security Council’s Policy Coordination Committee (PCC), including representatives from key departments, offices and agencies represented in the NSC to provide policy analysis and ensure the timely response to policy decisions initiated by the President dependent on legislation and appropriations authorized by Congress. USAID along with 50 separate government units implement the aid-related activities it seeks to promote overseas.
USAID promotes its development activities focusing on key areas including promoting democratic governance, driving economic growth, improving environment and health, mitigating and managing conflict, providing humanitarian assistance, and accounting for private foreign aid through programs and projects in partnership and collaboration with public and private enterprise through contracts, grants, cooperative agreements and purchase orders. These agencies include the Bureau of Population, Refugees, and Migration; Immigration and Naturalization Service (INS); United States Trade Representative (USTR); Bureau of Oceans and International Environmental and Scientific Affairs; Department of Treasury International Programs; Bureau for International Narcotics and Law Enforcement Affairs; etc.
U.S. official assistance aid which currently stands at about $10 billion a year, has risen by 50% to about $15 billion in 2006 and will likely increase some more, mostly due to the recently announced Millennium Challenge Account, a major new policy initiative announced by President Bush in March 2002 to reform aid assistance to select qualifying countries pending them meeting some provisions. This initiative and others have funded projects including Afghanistan Road Initiative, a plan that has already been implemented since 2003 to construct a highway from Kabul to Kandahar; the Africa Education Initiative, a project to provide access and opportunity for primary school education for 925, 000 African children; the Global Fund to Fight AIDS, Tuberculosis, and Malaria, a program in Morocco to provide 3, 400 HIV victims voluntary counselling and testing, and providing antiretroviral therapy for about 583 people; and under the Initiative to End Hunger in Africa formed a partnership between about 157 public and private agencies to empower citizens, strengthen markets, improve technologies, and better manage strategic planning goals for the future. These programs among others continue to contribute in sustaining the goals and objectives of U.S. foreign policy intention to encourage democracy, strengthen markets, broaden educational and healthcare opportunities and access for people, and empower citizens of these countries to be worthy assets and major contributors to their countries’ success and development.
Challenges in Foreign Aid Implementation
The United States works to implement the vision of its foreign assistance aid goals and objectives not only through bi-lateral relationships like USAID but also through multi-lateral partnerships and collaborations. These collaborations or partnerships take the form of contributions of knowledge, tools, and resources to such organizations as the World Bank, International Monetary Fund, United Nations, African Development Bank (AfDB), United Nations International Children Education Fund (UNICEF), World Health Organization (WHO), the World Trade Organization, etc to promote development in certain regions.
Foreign aid assistance to developing regions whether bilateral or multilateral have been found to be an ineffective and inefficient way of promoting development in developing and non-developing regions due to the problems of mismanagement, lack of ownership, misappropriation, lack of accountability and transparency, poor training and understanding on how to implement, investment in the wrong initiatives, encroachment by the West in forcing their plan on the assisted, and over emphasis on rules and stipulations that limit the implementation of the aid program. According to the 6th Edition of the Cato Handbook of Policy, it reiterates what most economists have echoed, that most foreign aid assistance as expressed by Paul Coulier, a renowned Oxford Economist that, “…No one who has seen the evidence on aid effectiveness,’’ even a bipartisan Meltzer Commission of the U.S. Congress found that 55 to 60 percent of the World Bank projects failed based on the their own evaluations. The same report found that most government to government aid showed as reproduced and modified here that, “there is no correlation between aid and growth (in development), that aid that goes into an area with poor policy framework doesn’t work and exacerbates debt, that aid provided on the condition on market reforms have failed.”
A Congressional Budget Office report on foreign aid and development showed the inefficacies of current foreign aid to developing or non-developing nations to encourage development and economic growth. The report showed that in the presence of political instability, lack of honest and competent government officials, weak government institutions, and the presence and influence of strong domestic policies affect economic development. A case study on foreign assistance to Pakistan showed both positive and negative effects of foreign assistance on developing economies. The United States has provided substantive foreign aid to Pakistan through both bilateral and multi-lateral aid sources especially after the aftermath of events of September 11 when Pakistan became an important ally of the U.S. in their way on terror. Foreign aid assistance in Pakistan according to the case study has provided both positive and negative results; positive in the sense that, “…it helped boost GDP through structural transformation of the economy, provided foundation for industrial and agricultural sectors, provided technical assistance through exchange and investment of expert talent and resources, policy advice for reform and development of modern technology, assistance in reducing budget deficits and ensuring the funding of projects for social sector development.” The conclusion is that the overall impact of the aid on the economic development was positive. On the negative analysis it showed that aid replaced domestic savings thereby increasing the debt burden. A detailed analysis of this case here shows that aid failed in large part due to lack of strong institutions and incentive to sustain the development due to lack of sufficient monetary, fiscal, and other policies to regulate sustainable growth and development. Pakistan, a non-democratic, political unstable region, though having experienced some growth due mainly to the positive effects of globalization has not advanced beyond the expectations of the huge aid provided to it over the years, instead it is stuck with a huge debt burden that is disrupting economic productivity.
Another case study is presented in the much acclaimed book, “The White Man’s Burden,” by renowned economist William Easterly on Liberia. Liberia, a country ranked at the top 5 most corrupt countries in the world and has experienced political instability throughout its history, even more so when it collapsed into anarchy in 1985 and taken further into oblivion with the rise of dictator Charles Taylor received mass influx of aid. The result of the aid is that Liberia has experienced one of the worst per capita growths amongst countries, after being the recipient of most of the aid during the period of 1980-2002. Most of the aid that came to Liberia went to brutal and corrupt dictators who used the funds to suppress their people, pursue wars and instigate violence, fatten their pockets and those of their buddies, destroyed the economy and every institution that supported growth and development, and generally wasted tools and resources to fund non-working or obsolete goals and objectives. The failure attributed here and is evident in these cases and others show the danger of foreign assistance when unfair and unrealistic standards and expectations are placed on the aid, no level of accountability or evaluation of progress, no monitoring to ensure positive impact of the aid, unstable governments, and weak political and economic institutions.
Recommendations- The Way Forward
In order to transform and learn from these failures in foreign assistance to developing countries, certain recommendations are encouraged that will form a part of a new U.S. foreign assistance framework. Some recommendations for example by the Cato Institute, calls on congress to eliminate USAID as well as government to government aid assistance; withdraw and stop contributing to the World Bank and the five regional multilateral development banks; prevent foreign aid for use as reward for market reforms in the developing world; forgive the debts of heavily indebted countries on certain conditions, etc. Alternatively, a viable option that has shown promise of working and has been heralded by most experts and institutions calls for promoting market reforms in the developing countries by encouraging assumption of government ownership for needed fiscal and monetary reforms for development, assistance with knowledge and resource capital to facilitate the development, calling for democratic institutions, challenging human rights violations and corrupt and incompetent officials, and encouraging accountability, transparency, and evaluation of country progress in development. Further, assisting in the development of the private sector; providing debt relief to qualifying countries especially HIPCs; provide micro financing through the private sector to facilitate development; support humanitarian assistance when needed and required; redefine and reform methods and process bilateral and multilateral aid is administered; and promoting foreign direct investment, among others.
Implementation of Policy
To implement this policy, a reform of the institutions and agencies that are involved in administering foreign assistance aid is required. USAID the foremost agency in implementing the country’s foreign assistance aid will have to take a stronger and more responsible leadership role in this issue. USAID as a government agency would have to change and reform its tactics to adjust and address the problems that have been presented above. In this regard, it is suggested that while USAID is an independent government agency, it should not be housed under the State Department. USAID can and should serve as an independent agency with knowledge and expertise to support all of the United States foreign assistance aid. USAID will continue to provide bilateral aid and work with organizations and institutions like the World Bank, UN, etc to provide multilateral aid assistance. The President will continue the tradition of appointing the General Administrator with approval of Congress. The administrator must be an expert in foreign policy administration, proven and tested leader that can liaise between the administration and Congress on the proper procedure and process to administer aid optimally, must possess knowledge and understanding of regional politics, an expert in human relations and capacity building, and able to work appropriately with the different cabinet departments as required to provide the best knowledge and expertise required to implement the aid.
The reformed UNAID will be a searcher not a planner, that is, the new agency will actively seek out opportunities to invest whether individually or in partnership with other public and private enterprise, to build, develop, and contribute to the implementation of the administration’s foreign assistance aid goals and objectives. Working with Congress and the administration, USAID will present annual and periodic reports to Congress on its activities and the progress it has made. USAID in seeking to implement or provide foreign aid assistance must be invited and requested to help by the recipient government. USAID must assess the situation before commitment to ensure that the recipient country is a democratic country, will take ownership of their own reforms, promote good governance and advance an atmosphere for strong and effective monetary and fiscal policies to exist, promote the sustainability of good institutions that will support economic growth and development, promote the social well being of society (health, education, professional development, etc), and will seek to invest in human capital. USAID must not force their planned reforms on the countries either as a pre-condition or as a condition for aid but must work closely with the country as needed and required to access best practices and solutions that meet the desires and expectations of the recipient country based on their culture and tradition. USAID must also work with private enterprise especially in unstable and undemocratic governments to build morale, develop the private sector, empower the citizenry, and provide the best help and assistance to those who need the help and should receive the help. USAID must have staff that will work as partners with aid recipients to access how aid is being utilized, how much positive impact it is making, what changes may be needed to implement, and how best to continually provide aid to people in the most optimal and cost-benefit method, as well as to obtain a lessons learned approach to improve in the future. USAID will work in bilateral and multilateral fashion with other agencies, institutions, and organizations to provide knowledge, expertise, tools, and resources to countries and people that need it most, especially during times of disaster to help them recover, advance, and be better prepared for future situations.
Conclusion
Foreign assistance aid is an important tool to promote and advance the goals and objectives of the United States of ensuring a safe, and as the act states, to help “…developing countries in their efforts to acquire the knowledge and resources essential to development and to build the economic, political, and social institutions which will improve the quality of their lives.” A strong foreign assistance aid policy can be achieved and sustained, when the U.S. in its implementation of its foreign policy activity reforms to reflect the dynamics of the development community and access the political stability climate of recipient aid countries; the motivation and justification for aid; the nature of the social structure and government institutions in the recipient nations; the receptiveness of the recipient nations to take ownership for reform and be accountable and transparent in their implementation; the level of knowledge and technical expertise of the recipient nations to implement the reforms expected of the aid; and the ability of the private sector to absorb the reform, empower citizens, and advance the social well being of its people.
The Marshall plan heralded a new moment in U.S. foreign policy direction. Lessons learned from the past must be used to make the future better. It is the responsibility of the United States to contribute as the act promulgates to, “eliminate hunger, poverty, illness, and ignorance.” It can be achieved when the U.S. reforms its foreign assistance aid, if and when provided, to reflect the times we live in and give more power to the recipients to implement the reform that works best for their economic, social, and political well being.
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