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Will Money Solve Africa's Development Problems?

November 04, 2007

Templeton_logo_sm About a month ago, I wrote about an expensive two-page spread in the New York Time's Week in Review section taken out by the John Templeton Foundation. The foundation had used the space to launch a series of conversations involving leading scholars and scientists about the "big questions" -- for example, whether the universe has a purpose or not.

The foundation has purchased another two-page spread in today's Times and used it to ask the far more interesting (and important, in my view) question, Will money solve Africa's development problems? Here are some excerpts from that conversation:

"Yes. If it is invested in enhancing African capabilities to integrate the continent into global networks of knowledge and creating prosperity and stability. This will mean confronting and overcoming a triple failure: corruption and abuse of power by African governments, predatory practices by extractive industries, and the waste of resources by an uncoordinated and ineffective aid system...." (cont. online)

-- Ashraf Ghani, chair, Institute for State Effectiveness and former finance minister of Afghanistan (2002-04)

"No. In fact, after fifty years of trying and $600 billion worth of aid-giving, with close to zero rise in living standards in Africa, I can make the case for 'No' pretty decisively. Aid advocates talk about cheap solutions like the 10-cent oral rehydration salts that would save a baby from diarrheal diseases, the 12-cent malaria medicine that saves someone dying from malaria, or the $5 bed nets that keep them from getting malaria in the first place. Yet despite the aid money flowing, two million babies still died from diarrheal diseases last year, more than a million still died from malaria, and most potential malaria victims are still not sleeping under bed nets...." (cont. online)

-- William Easterly, professor of economics and co-director of the Development Research Institute, New York University

"I thought so. But now I don't. There is that thread-bare maxim: If you hold a hammer in your hand, every problem looks like a nail. What happens, then, when all we hold in our hand is a checkbook...?" (cont. online)

-- Michael Fairbanks, co-founder of the OTF Group and the Seven Fund

"No. Not as long as there are issues such as prolonged violent conflict, bad governance, excessive external interference, and lack of an autonomous policy space. Alone, money cannot solve Africa's development problems. Proof, if any was needed, is the fact that many of Africa's natural resource-rich countries score very low on human development indicators...." (cont. online)

-- Dr. Donald Kaberuka, president, African Development Bank

"Yes. But only if the money comes as investment. Africa doesn't need aid from governments and international agencies. Over the last 40 years, aid to developing countries has reached $2.6 trillion, 25 percent of which has gone to sub-Saharan Africa. It has notably failed to eliminate poverty. Philanthropy should have only a limited role -- for disaster relief -- and helping policy makers promote good governance, the rule of law, and property rights...." (cont. online)

-- Professor James Tooley, president, Education Fund, Orient Global

"No. By now we should have learned. Donor nations have spent billions of dollars for development schemes in post-colonial Africa, yet there is little to show for this beyond dependency and corruption...." (cont. online)

-- Edward "Ted" Green, director, AIDS Prevention Research Project at Harvard's Center for Population and Development Studies

"Only if it empowers citizens. African entrepreneurs are the key to solving Africa's development problems. It is they who can drive their continent's economic growth and it is they who can make their governments better. If money is invested engaging the organic and transformative potential of local entrepreneurs, Africa will flourish...." (cont. online)

-- Iqbal Z. Quadir, founder, GrameenPhone and the Legatum Center for Development and Entrepreneurship at MIT

"No way. The problem in Africa has never been lack of money, but rather the inability to exploit the African mind. Picture a banana farmer in a rural African village with a leaking roof that would cost $100 to fix. If one purchased $100 worth of his bananas, the farmer would have the power and choice to determine whether the leaking roof is his top spending priority. On the other hand, if he is given $100 as a grant or a loan to fix the roof, his choice would be limited to what the owner of the big money views as a priority...." (cont. online)

-- James Shikwati, founder and director, InterRegion Economic Network

What do you think? Will money solve Africa's development problems? Or will more aid and philanthropy impose a donor-country agenda on poor countries already traumatized by colonialism and deepen what some see as a fatal dependency on foreign flows of capital? Does Africa need a hand up? More investment and entrepreneurship? Or a little tough love?

I encourage you to read the above essays in their entirety and then to come back and share your thoughts.

-- Mitch Nauffts

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