africa

Africa at a Fork in the Road: Taking Off or Disappointment Once Again?
on international bond markets, and taking the risk of spending for short-run, politically
expedient gain, rather than investing in long-term growth as a future source
of (tax) revenue. Of course, the potentially massive financial resources associated
with natural resource finds could be invested to create the infrastructure and human
capital that drives future growth and poverty reduction. But without clear political
interest and commitment to this kind of future, such wealth will not be handled well,
and the signs are not encouraging. 4
19.5 Making aid work
In this environment, aid does not self-evidently provide development. Moreover, larger
flows from international capital markets, emerging powers, and natural-resourcebacked
loans and revenues mean that aid is becoming a relatively less important
source of financing. This does not mean that governments in Sub-Saharan Africa
are not interested in receiving aid or concessional loans; rather that the usual policy
conditions (whether ex-post or ex-ante) that donors attach to aid are becoming even
less effective. More and more, as alternative ways of financing investment plans
become available, a sense of partnership and shared commitment by the different
parties involved is vital for aid to be effective.
If donors want to see their aid used for promoting growth and poverty reduction,
and if we are right that the political economy in many Sub-Saharan African countries
does not favor this, what then should be the role of development aid? We offer five
general ideas and principles.
First, it is important to be willing to work more selectively. The return to aid in terms
of growth and poverty reduction will be higher if recipient countries are actively trying
to create a climate that favors growth and poverty reduction. While it is broadly
accepted that there could be various ways to be aligned with growth and poverty
reduction (and that we might not necessarily be able to judge this alignment easily),
the opposite case, of predatory states in which elites focus on extracting rents
from society, is familiar and recognizable. In such states, merely behaving as if aid
can be apolitical—as is done at times by some multilateral agencies, or indeed by
China—is effectively itself a political choice that favors the current political settlement
irrespective of its role in broader development.
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