Accessibility links

Aid to Africa Must be More Than Cash to Solve Issues

There are currently more than a billion people in Africa who live on less than $1 a day. Twenty countries are living on less than they did a decade ago.

Western leaders, and British Prime Minister Tony Blair in particular, have vowed to lift Africa out of poverty. "There can be no excuse, no defense, no justification for the plight of millions of our fellow beings in Africa today. There should be nothing that stands in our way of changing it," he said.

Stephen Smith, a professor of economics at George Washington University in Washington D.C. says what is standing in the way is an overly simplified idea about poverty. "The key is to understand that poverty is not just about income. It's not just about whether or not you have more than a dollar a day or how much less than a dollar a day you have."

Smith says poverty has many dimensions, including the lack of access to power, or credit, or insurance, or healthcare, or education, or markets, or technology, or human rights.

Smith says just giving money won't automatically solve these community-based problems.

Recently the nature of the aid has begun to change, to address these problems. U.S. President George W. Bush created the Millennium Challenge Corporation, to tie aid to standards for good governance and democracy.

Providing some insight, Paul Applegarth, the CEO of the Corporation said, "Just throwing money at a problem is not a solution. Americans know that. We've learned that. But you gotta think about it ahead of time. Treat, even for aid, as an investment. What are we going to get from this in terms of promoting poverty reduction & promoting growth."

The Republic of Cape Verde is one example of an African country that is benefiting from this new form of aid.

After demonstrating a small economic growth rate and evidence of democratic governance, it received a $110 million grant.

Cape Verde Prime Minister Jose Maria Neves says the aid is helping. "We are aware of the fact that, with the implementation of the Millennium Challenge Account in Cape Verde, we have more human resources, we will have stronger institutions and we will have developed also the competitive factors that are important for the development of Cape Verde."

But critics say one of the problems inherent in the Millennium Challenge has to do with the "all or nothing" selection process for the recipients. The countries that qualify receive a very generous package while those countries that are judged just below the cut-off get nothing. Only nine African countries have qualified for Millennium's aid.

Professor Smith says the idea of thinking about Africa as an investment is a solid one, but it needs some real capital. He says it could pay some large returns. "In 2050 there will be 1.7 billion people in sub-Saharan Africa, more than in China. That's a great market, and if investors can come to recognize Africa's future as a good source of economic growth and begin to invest in Africa and take it seriously, the way that investors started taking China seriously in the early to mid-80s, I think that will be a very exciting and very positive outcome for Africa."

Ultimately, analysts say, there are no quick fixes to Africa's poverty problem.

The goals of altruistic Westerners may be out of sync with African reality. There is agreement that Africans will have to end poverty on their continent. The question remains: what should the rest of the world do to help.