On Monday, I was invited to speak at an Africa-China conference under the theme “China’s partnership with Africa: improving aid architecture for policy effectiveness.” By sustaining rapid economic growth over the last two decades, China has emerged as a major global economic power. The major driver of this growth is export of manufactured products. This has made China hungry for raw materials.

African countries are largely producers and exporters of raw materials. The demand from China is already increasing the price of these materials in international markets. This creates big opportunities for both China and Africa to make joint gains from trade and investment in the production and export of these materials. Why then should Africa’s partnership with China be based on charity (assistance) rather than on these mutual gains?

There is a lot of excitement in Africa about China. Many Africans and outside observers think that the entry of China into the global aid market will improve the architecture of aid. But this argument is misleading because at root, aid is an ineffective instrument of development policy that distorts the incentives of recipients to use it profitably. Aid tends to increase corruption, subsidize incompetence and disarticulate the interest of ruling elites from those of citizen.

Secondly, aid is just one input into the development process. Yet development depends on the interaction of many other variables within a society. therefore, what you get from aid is not specific to the money and technical assistance it brings. Rather, it is on how it interacts with other variables within a given country – most especially its politics. That is why we need appreciate how political power is organized, how it is exercised and how it is reproduced.

In most of the nations of Africa, political power is organized around individuals rather than institutions. Thus decision making tends to be arbitrary. It is exercised through neo-patrimonial relations by a selective allocation of economic benefits to targeted groups and individuals. And it is through these practices that our governments build coalitions that govern us.

From this perspective, it does not matter whether foreign aid comes from China or the West; or whether the architecture of aid is changed or remains the same. When aid is poured into the kind of neo-patrimonial politics we see in Africa, it tends to accentuate the forms of institutional dysfunctions common to our countries. Therefore, Africa is unlikely to benefit from aid, however, delivered when politics is still organized in this medieval fashion.

China’s recent interest in increasing its aid to Africa is not worth getting particularly excited about. Chinese aid is not very different from all other aid Africa has received from the West before. Western countries pledged to double aid to Africa over the next decade. They also agreed to cancel most African nations’ debts. With increased aid and canceled debt, Western aid to Africa has significantly increased. China isn’t doing anything new or different; it is only following in the West’s footsteps, down a path that’s not particularly productive.

Aid is attracted to our poverty, rather than our wealth. We have both poverty and wealth living side by side in Africa – with poverty as the most dominant condition. Yet in trying to address the most dominant problem, aid is seeks to fix our weaknesses (poverty) instead of leveraging our strength (wealth). This way, it tends to subsidize failure rather than to reward success, innovation and entrepreneurship.

The history of humanity shows that nations are never transformed by the masses from below but by elites from above. The most successful individuals and classes play the role of change agents of the society and pull the rest along. The industrialization of the West was promoted by capitalists; the communist revolution in China was orchestrated by intellectuals who rallied the masses of peasants. We should be looking for Africa’s change agents and discussing ways in which we can empower them further to play this historic role.

One way to change Africa is to alter the way aid is given. In countries with extremely weak states, corrupt bureaucracies and factionalized politics but endowed with excellent private sector potential, aid should seek to reward innovators in the market rather than crooks in politics. Under this model, we should think of aid as venture capital – extended to businesses that have shown an incredible knack for innovation. Uganda, Ghana, Kenya, Tanzania etc fall into this category.

In Rwanda and Ethiopia, where we have seen the emergence of developmental states – states with the political discipline, the bureaucratic ability and the moral purpose to pursue a collective vision, we can give aid using the traditional tools. There are a number of factors that create the kind of state we see in Ethiopia and post genocide Rwanda. One of them is the dominance of power by an ethnic minority – the Tigray in Ethiopia and the Tutsi in Rwanda. Lacking the ethnic legitimacy to rule, they seek to build it through the provision of public goods and services – roads, bridges, education, health etc.

The other is the presence of a strong group threat which imposes on them an equally strong revenue imperative to build a military and security apparatus to starve off any violent power-grab. This inadvertently leads to the building of a strong and effective state which can be an effective agent of social transformation.

The supply of effective leadership and organization to implement the collective vision is vital. The mere existence of a minority in power coupled with a strong existential threat does not – in and of itself – automatically produce a Paul Kagame or a Meles Zenawi. Both these leaders and their organizations were produced by the nature of the political-military struggle they went through. By confronting strong opponents, they needed to build superior leadership ability and superior organizational forms to survive leave alone to succeed.

The lesson from the above is that the conditions that create developmental states and therefore make aid to governments effective are rare to find and difficult to re-create. We should treat Rwanda, Ethiopia and Botswana as exceptions. In dealing with most of Africa, we need to avoid the state whenever possible and rely more on the private sector. 

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Comments (29)

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Aid is Bad for Africa but now good for Rwanda??
written by Politi Fact, February 03, 2010

You have pesistently argued that all aid is bad and counter productive. Are you now amending your thesis in suggesting that all aid is bad, except when it applies to Rwanda?. Aid fails because it finances expenditure rather than investment. Its main harm is that it finances expenditure on importation of the aid giver's goods, Land rovers from UK, tractors from China etc and it creates dependency. It also comes with restrictions on sector spending such as Military and health! - the kind of things Rwanda prioritises. Therefore Aid is as bad for Kagame as it is for the rest of the third world.

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written by Andrew Mwenda, February 03, 2010

It would be wrong to argue that come rain of shine - all forms of aid cannot work. Aid can work, but under exceptional circustances. My argument has been that it can work at a micro level of an aid project in a particular village (check my TED speech). Here my advice is that do not generalisesuch an experience as spread it across the world as "what works." It can work at a macro level like western europe through the marshal plan. or in a given country as a particular period (uganda between 1987 and 1997 or rwanda today). The lesson from this is that aid should not be given to countries because they are poor. It should be given aftrer a good understanding of its political economy which teaches us specifically what works in that country and what doesnt.

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How to get business characteristics in aid?
written by Joe P, February 03, 2010

Interesting article Andrew - the question is how you go about transforming aid to have the venture capatist characteristics you talks about? If Western nations have decided they want to have aid budgets - be it out of charity, self-interest, guilt or whatever - there will always be a huge pot of money to be spent in Africa. However, it is far easier for an institution like DFID to give budget support than it is to seek out potenital winners in the private sector and invest there. The latter approach would also require a change in mindset from giving grants to expecting returns - something most aid agencies are not set up to do.

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written by Major Adam Kifaliso, February 03, 2010

Andrew , you got it right , its politics of un-patrotic black african leaders which are wasting aid , eg The USA had the heart and courage to award Uganda AGOA , but the dictator had the heart to give it to the Asian Tamil Terrorists whole-sale with 30m USD on top, Now here we got a dictator who has failed to set up a ''T-shirt Factory'' and now wants nuclear power plants , oil refineries and Geo-thermo Power plants . These self made african god not only waste funds and time but lives too , Now is Uganda it is estimated around 25 Ugandans die on the road from accidents caused by motorcade convoy of the m7 or Mama Janet alone .

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written by Major Adam Kifaliso, February 03, 2010

Now is Uganda it is estimated around 25 Ugandans die on the road from accidents caused by motorcade convoys of the m7 or Mama Janet alone every month ,leave alone money spent on these useless country tours

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The string theory of aid money: donors will always be donors
written by Ocheto, February 03, 2010

Politi seems to have the right track on the chicanery behind aid money, even though Andrew, too, seems to agree that aid is one key to solving africa economic woes. Until the aid recipients have THE say on how aid money in spent it is really serving the interests of the donor nations more than those of the recipient countries. Ethiopian and Rwandan military rulers are simply serving the global interests of the military industrial complex; food donated to starving Ethiopians is serving the financial interests of the farmers who grow that food, and PEPFAR billions benefit the pharmaceuticals just as they may benefit the sick in Africa. The linkages are complex but the ultimate beneficiaries are known: donors and corrupt african politicians, hardly the poor in whose name it is touted.

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written by Omeros, February 03, 2010

A fine point, Joe P. A fine point. Of course, that's not to say that, should donor governments decide to provide assistance on the private equity model - putting up cash for credible entrepreneurs - those aid agencies couldn't acquire (or hire) the requisite commercial skills. Western governments have had to learn how to run their nationalised banks on a commercial footing, after all: indeed the 80% UK government-owned RBS recently funded the successful bid of Kraft for Cadbury. So it is not beyond the realm of possibility that aid agencies turned ethical private equity funds could learn to take commercial considerations into account when funding whatever project took its fancy.

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Economic versus political governance
written by EA, February 03, 2010

Mwenda, what are the implications of your argument for political governance in states like Rwanda and Ethiopia, both of which have governed well economically, but contain genuine strains of authoritarianism and illiberalism? I worry that when you assess the effects of aid--especially as it pertains to countries like Rwanda--you do so almost entirely through an assessment of economic institutions. If aid yields positive economic dividends in R and E, what happens on the political front? Does it support the political entrenchment of a minority? Can it exacerbate political grievances?

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wider lens
written by Justus, February 04, 2010

Guys, truth be told Aid isn't that good for the dev’t of Africa. However, if Aid is channelled to private sector which is sounds a good idea, as Andrew has proposed -I have assumed no complexities involved in identifying successful businesses, who to identify them in a corrupt Africa; the big question that remains, are not those so called "successful private business” the ones owned by corrupt elites-the kutesa's, Janet Museveni & her daughters, associates of the corrupt elites-the kabonero's, Basaja balaba etc. Here you see Aid would still fail even though it’s given "to private sector''. A successful business like independent would never qualify. And not giving Aid to poor &b fragile African states would weaken their capacities further.

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Aid a tool to deter technological advancement in Africa
written by Russo, February 04, 2010

Good posts and Andrew thank you. Aid would have added advantages to the wealth we have in Africa but because of political/leadership poverty aid is abraised and abused. Maybe is donors should give 60% of the aid as technical personnel to boost scientific advancement and the other 40% for the stealing elites/patrons. I think establishing direct lending banks by donor countries to non-political and private firms with records in civil structural development like roads, hospitals, schools, credible auditing firms etc
But above all Africa needs to tread carefully with China. Africa needs to strongly demand reduced technological protectionism mechanism from countries that come to exploit it ,and this where a new generation need to fight hard to save and shape our country.

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Ugandans have been shut out of their country's Oil Deal
written by Hustler Hollywood, February 04, 2010

Uganda remains a nation subject to insult and humiliation. The Ugandan government has stood down against : Ugandans have been shut out of the country's oil deal! LOL No respect!

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dev't states
written by Aboagye, February 04, 2010

Mr. Mwenda, if I were you I'd do some very deep research on those two developmental states you are talking about, for they seem to be, at least for now a very good hand for the (neo) colonialists (colonialism has never gone away, it just mutated). That's why you see a francophone 'easily' joining the common wealth/ poverty group and the other is a helping hand in Somalia; ever thought these two are mutually exclusive events!? Do your research quite well, the way you always seem to do. I can offer free dialogue on anything to do with a country that has a system which goes by some marxism, stalinism or maoism!!!!!!!!!!!

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aid
written by Aboagye, February 04, 2010

Back to the aid thing, please try find out why the chinese give aid, dev't assistance ( dev't disorganization for the west) with no strings attached. Your point on governance in Africa being around one man/ figure is spot on, albeit it may not be by default, but by design! And the aid they are given is coz they are in good books, one reason why your Kagame, Zenawi, M7 et al are still hanging on, otherwise you end up like a Mugabe. I remember in late 90's when a UK high com. (most likely Sir Edward Clay) was posted to Nairobi, after he left K'la and brought a lot of hype about corruption in Kenya, yet he'd left finished and unfinished commisions of inquiry in UG! That's the world for you.

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Crony/partronage capitalism can create real capitalists
written by Des.M, February 05, 2010

Lets say Museveni or gov't identifies some guys with enterprising streak, gives them money and good incentives to invest, and also continues to help and guide them. Am sure after a reasonable period of time these guys will emerge as real capitalists, employing many people thus lifting them out of poverty and this will be aid money well used. But on the other hand let gov't give money and other incentives to lads like Basajjabalaba, then you end up with white elephant investments, as the current case in Uganda. Cronyism or partronage can create progressive capitalists, for so long as the areas of investment are right and managed by a competent team. This system really worked development wonders in alot of now developed countries, at the infant stages of their economies.

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AID IS GOOD AND BAD
written by OJA, February 06, 2010

I agree with Mwenda that China shouldn't give aid to Africa but participate in empirical developmental programmes such as constructing roads, building dams etc. In fact that would make a big difference between China and the West and thus endear it to Africans. So what is the goodness of Aid? It will continue to support development programmes if executed prudently without any drop of saliva from the mouth of the implementors just like the East Asian countries have done. It is bad when it is given to sustain the Musevenis (individual turned institution) in power for buying military wares although failing to improve living conditions of military men and women; and over all, destroying a promising country.

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China, don't give US aid: Imperialism doesn't come cheap
written by Ocheto, February 06, 2010

Andrew is saying China should stop underwriting the United States debt. The capitalism which socialises loses and privatises profit is no capitalism. At least China is openly socialist, the US/West neo-capitalism is a fraud. It is no wonder Museveni is liked in Washington. The NRM Inc sets up phony "private" firms to vacuum all the public funds, be they locally generated through tax, or internationally acquired through aid, grants, or bank loans. NRM treats it as their money, funneling it through pseudo-private "enterprises." Who are they fooling ? It is time to learn Chinese. Americans are learning how costly imperialism is.

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Observer
written by Kaikai, February 06, 2010

Aid of any form without strings attached is desirable. However, as long as African countries continue specialising on exporting raw materials to the donor countries and imporating processed products, dependecy will never end. Add value to what we produce and compete like others in the international market and stop acusing industrialised countrie of unfair trade. Technologies are available and wonder what stops a country like Uganda to export high quality cotton fabrics to China, India etc. The income from such exports would contribute to the development of the infrastructure China or any other donor is supporting with strings attached. Let Aficans and Ugandans in particular think out of the box.

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Explains the confusionist in Mwenda.
written by Imhotep, February 06, 2010

Just like some authors who start writing novels and instead of them being in charge, the novels take them on a wild-goose chase. Mwenda is one such author. If he is given a ticket to attend a conference in Copenhaggen, he says what they want to hear there. If Museveni writes him a cheque, he will write good things about him. The reason why Aid is given to us by the West, is to enslave us and keep us this way while they keep taking from us. Africa can never realise its full potential on Aid in a billion years. The Mwendas are incognito mouth-pieces for Western governments meant to condition us to think in a certain way. What we need are technical skills and nothing more. Hotep.

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Recycled retrograde nonsense
written by Ocheto, February 06, 2010

Kaikai, saying "any form of strings is desirable" is idiotic. Or asking africans to "innovate and compete" in a corrupt system is hardly what anyone would call "thinking out side the box." They are a recycling of old retrograde nonsense, passed as mantra by sloganeers. Try reading if you have the capacity the tomes of the terms of world trade for example. What the world needs is a new 21-st century archictecture of global trade that is open and fair, and is devoid of corruption and intrigue.

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Adopt Home grown measures not Aid at all
written by Emma, February 07, 2010

Conclusion, all countries are corrupt, eg look at what happened on the WALL STREET, or politics of China in Darfur or Angola or DRC, or USA politics in Iraq or the list is endless!! If yu are luck and you are in peaceful Uganda or Rwanda with some freedom to invest and reinvest without hussles, just work cos where you may think might be better, its worse, yu can know it when the leadership changes and in Africa, its always chaning to the worst istean of better!

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written by Emma, February 07, 2010

Mwenda should go for further studies on political economy and international relations! because, his analysis go to political extremism and fails to strike a balance between politics and economy. China has poor politics full of corruption and the worst human rights, fereedom of speech, etc violation levels, but it has built a strong transitional economy threatening world ecnomic imbalances. Hence in order to develop the economy and reduce poverty, a country does not necessarily need the west democracy of making noice through demonstrating and talking all the days like in Kenya and uganda is just wasting time guys!!!

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written by Emma, February 07, 2010

All that democratic hypocracies can work well when the country has built strong economy and improved welfare of its citizens-USA had no democracy when they were using African slaves, likewise China is doing the same in different form today! PEOPLE SHOULD NOT THAT, DEMOCRACY CANNOT WORK IF THE GENERAL POPULATION IS IN EXTREME POVERTY. Yu need to fight literacy, have health people and improve economic growth and development , then the westen democracy can work well..

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written by Emma, February 07, 2010

So, for countries like Rwanda, Uganda, China, etc are lucky because their leaders though considered dictators have continued to shape liberalism in building the economy and empoweing economic freedom to their people. I better have a Ugandan Museveni or Kagame than having leaders of Kenya, Tanzania, Ghana, Zambia which have been stable for many years without economic development and hence were left behind by their counterparts such as South Korea and Japan which were at the same level of development in 1960/70s.

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written by Emma, February 07, 2010

So, guys, if a country is peaceful and have remarkable macro-micro economic progress like Uganda and Rwanda, stop making noise in politics, just utilise conducive environment to generate wealth after all not all of us can be politicians otherwise no one will be an enterpreneur or economist!!! Look at Kenya, Odinga made noise and when he got power using bloodshed of kenyans he has refused to bring his leaders who cause violance to justice, Kibaki used to accuse Moi and did the same when he got into power......

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written by Emma, February 07, 2010

Besigye who has no political economy back ground and used to steall public money when he was in power with NRM is wasting time everyday playing cheap politics that he can manage this time when actually he is a failure.....its only selfish power strugle not having mercy to people the mercy he never had when he was in government eating.

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There is no school for politicians: politics is everybody's business
written by Ocheto, February 08, 2010

Anybody from any background can make a good politician. This nonsensical notion that one has to have degrees or formal training in political science to be a politician is stupid. Politics is too important to everybody's life for it to be left to career politicians alone, who most of the time can't do anything else in their lives, are total failures in other fields. Politics is about your freedoms, liberties, and asperations. Now why would any sane person want to surrender the entire responsibility of lives to any one person. I wouldn't surrender my own life to a doctor entirely. I would rather be closely involved in what is going with my life as much as appreciate the job my doctor or doctors are doing.

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NOTHING FOR NOTHING: AID HAS HIDDEN COSTS
written by Lakwena, February 09, 2010

Mwendaconomics always make good reading. The adage which says that "instead of giving a man fish everyday, teach him how to fish", is Chinese. How comes the Chinese want to give us fish instead of teaching us how to fish? Simple: a hoodwink. It is something for something; nothing for nothing philosophy. It all boils down to self-interest. China has become the 21st century mythical Medusa, which is thirsty for raw materials.

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written by Lakwena, February 09, 2010

A few tokens of aid dropped into tinpot, held by blind African despots, the Chinese will get whatever they want. Hasn't Tallow already sold off its Bunyoro oil interest to the Chinese (The Daily Monitor, 7 Feb 2010)? Given their terrible human rights record, add Museveni and NRM Mafia gang; Like Sudan, Ugandans must be ready for hell on earth!

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Independent thinking free of economic, political, and social manipulation
written by Ocheto, February 09, 2010

Andrews appeal comes from the fact that he is an independent thinker, who thinks outside the box. We all have control over our thoughts and minds regardless of political, economic, and social conditions. There is no excuse for anyone to sheepishly and sycophantly follow anybody like they have no independent thought. Even Providence gave us ordinary mortals that latitude. We aren't using it effectively when we should. First, Africa should wrest the control of their destiny from those Africans who are selling out the african resources then worry about imperialist interests. Africa should focus on what they can and must eliminate: corrupt authoritarianism. Imperialism is not new, neither is it ever going to go away.

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