africa

Africa at a Fork in the Road: Taking Off or Disappointment Once Again?
Third, what should aid resources be used for? Above, we touched on the need to
be aware of the political economy and of the institutional consequences of giving
aid, and to choose well for long-term gain. But more can be said. Where financial
resources are increasing, aid becomes less needed as a substitute source of public
finance, but offers greater opportunities to be used as a multiplier that unlocks
other resources. For example, aid can be used to unlock tax collection, partly to
make development self-financing but also to strengthen mutual accountability and
legitimacy between the state, citizens, and business (Besley and Persson, 2011).
Aid can also be used to directly promote systems of accountability, and—albeit
carefully—to unlock international investment or to improve access to international
finance at competitive rates for both the private and public sectors. Aid can be
used to encourage risk taking and experimentation by the public sector and other
stakeholders, and to promote learning, showing what can and cannot be done with
public resources. Aid becomes then a complementary good to other sources of
finance, leveraging these resources and unlocking greater return.
Fourth, donors should use aid to create the external conditions to enable those
African countries that promote growth and poverty reduction to be more successful.
This is a vast non-aid agenda, but one that often receives less attention than
the aid agenda itself. It encompasses the global and regional actions that change
rules, norms, and behaviors and that are particularly beneficial for growth and
poverty reduction. Aid can be used to fund these changes, but success often has
more to do with effective diplomacy to the advantage of poorer countries than with
the amount that is spent. The most obvious areas for action are trade, access to
financial markets, and the global financial infrastructure. Global health initiatives or
initiatives to set clear international learning standards similarly can have high returns.
Of particular importance to Sub-Saharan Africa in the near future will be finding
ever-better mechanisms to ensure that natural resource extraction, contracting, and
revenue flows are as clean and transparent as possible. Deepening the Extractive
Industries Transparency Initiative and related actions, and giving them more “teeth,”
will be crucial. The current private scramble for control of natural resources in many
African countries by unscrupulous businesspeople from both OECD and emerging
powers, and political elites all too clearly with souls and hearts of darkness, will
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