Is aid a good thing or a bad thing?
Two hundred years ago the debate concerning Africa was dominated by Christian missionaries. Today it is more likely to be dominated by economists – and they fall into two schools – those who support free trade and are opposed to the provision of aid and those who are opposed to free trade and support the provision of aid.
The free trade – anti aid group believe that African countries should not subsidize or protect any producers, should trade freely on the global market and allow non African industries to trade freely on theirs. They also believe that aid handicaps countries by creating aid-dependency and by killing incentive, motivation and entrepreneurship.
Those opposed to free trade and supportive of aid believe that free trade disadvantages African countries because they have to abide by free trade rules or be penalized with loan and aid reductions, while wealthy countries can ignore these rules at will – with no threat of penalty. They believe that aid is essential to build the infrastructure and strengthen the institutions which African countries need if they are to have any chance of reducing poverty.
And as with most things – the best solution lies somewhere between these two positions. Fairly open trade most of the time is justified – absolutely free trade one hundred percent of the time is an extremist position and is not. Aid that is properly planned and managed will usually work well – whereas aid that is not planned and is poorly managed will usually be wasted.
The Africa Water Bank provides assistance to people in Africa who do not have access to clean water – but is conditional on recipients complying with a number of key conditions – one of which is they provide twenty percent of the total cost of the project. Remarkably – we have a waiting list in excess of one thousand communities – all of which have raised their twenty percent contribution and complied with all of the other conditions. Does this aid work? You bet it does.