Aid “for Trade” is pointless amid corruption
While funds continue to be pumped into Africa through Aid for Trade programmes (to the tune of $9.5 billion in 2007), African governments continue to stifle their own businesses by imposing restrictions upon the movement of goods through the region.
A recent article in the Vanguard News (Lagos) details how debilitating delays to traffic are caused by Nigerian government officials extorting money, in the form of taxes and fines, from traders. It’s a common story, has even become a stereotype of much of the continent, yet sadly remains true. This heavy handed government action renders Nigerian businesses uncompetitive–delaying their goods and increasing their costs compared to foreign competitors.
Historically, the response of the government in Nigeria has been to increase import duties to “protect” their domestic industries. This results in higher prices for the average Nigerian as they have to pay more for their goods and services. The sad irony is that the reason many Nigerian businesses aren’t competitive in the first place is because of these detrimental government interventions in their business activities. Thus the vicious cycle continues–businesses crippled by their own governments plead for further protection against competition from abroad.
African governments need to stop looking to aid agencies for hand-outs and start allowing domestic companies to do their good honest business.
January 8th, 2010 at 10:09 pm
You’ve made the mistake of jumping from “Africa” in the first paragraph to “Nigeria” in the second. Nigeria is probably the worst country in Africa for corruption, and I’d agree with you in respect of Nigeria apart from the fact that the cycle is savage (vicious) not sticky (viscous).
But there are countries that are a lot better than Nigeria, and a bit of support with forensic accountants to catch the corruption – for countries that actually want to do that – would be effective and meaningful aid.
January 11th, 2010 at 11:55 am
Thank you for your response Richard, and good spot on the vicious typo- although you could probably argue that the cycle is as sticky as it is nasty!!
I wish I could agree with you that Nigeria is one of the most corrupt countries in Africa, but this isn’t the case. Transparency International reports that Nigeria ranks 130th out of 180 worldwide and that, perceived levels of corruption are higher in 18 African countries, than they are in Nigeria. The sad reality is that the European economies considered to be the most corrupt, Bulgaria, Romania and Greece, rank in the mid 70s- most African economies rank over 100. Corruption on the continent is widespread and rife.
The countries that are deemed least corrupt- like Mauritius and Botswana- actually receive very little Aid for Trade- they have undertaken unilateral reforms that have allowed their industries and entrepreneurs to flourish and do not need of aid handouts.
Countries that are serious about allowing their economies to grow are perfectly capable of doing so on their own – those that aren’t find ever niftier ways of siphoning off well-intended funds to line the pockets of their political elite.