The new development partnership: Smart aid for Africa

Jong-Dae Park, Ambassador of the Republic of Korea in South Africa, discusses smart aid and sustainable development for Africa post COVID-19

The world is plagued by COVID-19 and it is wreaking havoc on our daily lives. However, while we fight this pandemic that is like nothing that has ever come before in our lifetime, we might take this opportunity to genuinely reflect on what needs to be done as we try to work towards a post-pandemic era. One of the things that comes to my mind as a fundamental problem to tackle is Africa’s development.

The need to move from ‘ideals’ towards ‘impact’

On July 18th, UN Secretary-General Guterres reiterated a call for debt relief for poor countries and asked the rich countries to do much more to help. Lamenting division and inequality among nations; he said that the pandemic had revealed, like an x-ray, “fractures in the fragile skeleton of the societies we have built.”

However, sustainable development of poor countries cannot be driven by the acts of charity and goodwill on the part of rich countries alone. Just appealing to moral obligation and urging nations to cooperate will not get the work done. Fundamental problems such as development, call for measures that developing countries, not the international community, must initiate and take primary responsibility for. ‘Sustainable development’ has a profound meaning much broader than environmental viability. In fact, UN Sustainable Development Goals (SDGs) are made up of five ‘P’s: the three main fields of the economy (prosperity), social (people), and environment (planet) as well as peace and partnership. It would be ideal if all these can be achieved simultaneously but we need to be realistic. The focus and priorities should be set. While rich nations may have the luxury to consider different options, for poor countries, attaining high economic growth is of utmost importance to get out of poverty.

Phrases such as ‘better quality of life’ and ‘wellbeing economy’ etc., are in fashion, however, these also require resources that must be obtained through creation of wealth. In this digital era of the fourth industrial revolution, people’s expectations and standards of living will only rise. Yes, we should reduce waste and pollution, and use natural resources and energy in the most efficient manner but this does not mean that we should not care about production or economic values. Sustainability comes from balancing the wants and availability, ensuring that there is enough dynamism to support and manage the flow of these. It is a question of being smarter and more impactful.

Just as our crusade for environmental protection gathers strength when it is based on facts and science, we should equally apply objective facts and science when it comes to economic development for the sake of its sustainability. Keeping a warm heart but a cool head is the way to go since economics and the economy does not follow ethical, humanitarian laws. However, many still seem to think so. We strive for ideas and values but what actually takes place, in reality, is the workings of ‘economic law’: market economy mechanisms heavily influenced by human behaviour and human nature. Trade-offs between political goals and economic effects are real and must be taken into consideration. Hence, post-COVID-19, development needs new thinking from the perspective of true sustainability.

Smart development partnership and smart aids for Africa

How is this relevant to Africa? Many sub-Saharan African countries have not been proactively taking advantage of (or adapting to) the international economic environment and development architecture; rather, they have been largely passive ‘takers’ of external factors. Between 2000 and 2018, African economies grew at 4.6% annually while Asia recorded 7.4% during the same period (OECD). Africa has the highest population growth rate (2.6% above the average) which considerably offsets growth in per capital GDP. Despite this growth, not enough quality jobs have been created as the economy is heavily commodity dependent with a huge informal sector, and most of the countries have actually seen decline in manufacturing with Ethiopia being a rare exception.

From 1960 to 2018, Africa has received more than $2.3 trillion aid from the international community; today, Africa gets 32% ($59.4 billion in 2017) of global aid, slightly more than Asia which has the population of about four times its size (ISS, 2020). Foreign aid has played an important role of providing the basic support needed by African countries’ institutions and economies in a supplementary manner. However, it has not been effective in triggering their economic transformation. While foreign aid will not go away any time soon and is likely to continue for a foreseeable future, the trend is that the amount of FDI, which is deemed to already have surpassed aid inflow, will continue increasing in relation to aid in Africa.

It would be natural that the portion of foreign aid decreases over time as African economies continue to grow but this does not mean the role of donors will become less important. If there is a need to drastically increase aid, it only means that aid has all but failed. What is most urgent is to raise the level of labour productivity in Africa which has remained unchanged since 2000 at a low level of 12% of that of the U.S. Under the current situation of low capacity and productivity, poor management, weak public governance and service, among others, mere capital inflows and material transfers will not produce the desired outcome.

African countries hold the key to their development. But donors must also rethink their methods and not repeat the same things that deliver the same results. Aid recipients must understand that the usefulness of aid and FDI for that matter, is only as good as how well they receive and make use of it. It is largely an attitudinal issue that applies to all other things. No one should expect something special to happen when everything is done the same. It is now time for donors and recipients to shift the gear towards smarter partnership and aids by really focusing on the development of ‘software’ aspects of human capital: capacity, productivity, ownership, and accountability.

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