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Rockers deaf to aid realities

By Helen Hughes - posted Friday, 1 July 2005

It is 20 years since Bob Geldof organised the Live Aid concerts to feed the hungry of Africa. It is five years since the Jubilee campaign for debt relief for poor developing countries in Africa. Almost all poor countries' official debt owed to Western governments had been forgiven in the years to 2000 and that remaining was then cancelled through the Paris Club of aid donors.

Australia and New Zealand have not been serious participants in these arcane negotiations (conducted in great style in Paris under the chairmanship of governors of the Bank of France) because we give the bulk of our aid in grant form.

Nevertheless, the number of displaced Africans has grown to 40 million, deserts have spread and African agricultural production is down so that even where people have not been driven from their homes, millions are starving.


Western generosity - government-to-government aid, concessional loans by multilaterals and relief contributions by non-government organisations - has played a role in these outcomes. Cynical, inept and corrupt African leaders have not only been able to borrow to fund their extravaganzas but have continued to victimise their people knowing that the West will come to rescue those who escape alive.

Non-performing commercial debt has long been written off by Western and Middle Eastern banks foolish enough to lend to dictators such as Idi Amin, Mobuto Sese Seko and Robert Mugabe.

With official and private debt largely written off, the international NGOs and the rock economics that lead the aid industry focused on debt owed to the World Bank, the International Monetary Fund and other multilaterals. The IMF and the World Bank staff began to be concerned about their non-performing loans, particularly to sub-Saharan Africa, in the 1980s. As Michela Wrong wrote in In the Footsteps of Mr Kurtz, these staff did not feel embarrassed because they had made vast loans to Zaire president Mobutu that he spent on palaces and hid abroad. They were concerned that if those loans were not serviced, they could not continue their lending.

The IMF and the World Bank therefore put together a Highly Indebted Poor Countries scheme to service the debt owed to them by bankrupt countries from additional funds from donor countries (including Australia and New Zealand) and by using their own profits from loans to Asian and Latin American countries. The HIPC loan service was thus funded by deflecting aid from countries more likely to use it productively and by the poor people of Bangladesh, India and China.

All but five of the 40 countries initially selected for the scheme were in sub-Saharan Africa. They did not include Botswana and Mauritius, the two African countries with honest and prudent governments and a 30-year record of growth and rising living standards. Among the HIPCs, Ghana and Uganda are regarded as having successfully fulfilled their conditionality obligations. Ghana does have democratic elections and some growth, but it has 88 ministers and deputy ministers - all with a car, secretary, other staff and other perquisites - heading a vast bureaucracy. Not much government expenditure percolates to health and education in the villages.

Uganda has 70 ministers but generates the best socioeconomic data.


Its army has made repeated incursions into the Congo, but its autocratic president seems unable to stop the Lord's Resistance Army from stealing children that it turns into murderers.

Bob Geldof's Live 8 concerts this Saturday and the march on the Group of Eight meeting at Gleneagles in Scotland will back Tony Blair's Make Poverty History debt forgiveness and increased aid to Africa initiative, which already has the support of George W. Bush and European leaders. World Bank president Paul Wolfowitz has been saved the task of cleaning out the non-performing loans made from Robert McNamara's presidency to James Wolfensohn's. But will he be able to change the bank's culture to lend for development?

The evidence that aid flows are inversely related to growth and development is incontrovertible.

The countries with the highest aid per capita (including Pacific countries) have had the slowest growth. But, in political terms, forgiving debt that they are not servicing from African countries is much easier than reducing the subsidies that western Europe, the US and Japan give their farmers at a cost of $300 billion annually to developing countries. So is increasing the volume of aid to $100 billion a year by Western taxpayers.

The international NGOs, led by Geldof and his singers, are facilitating yet another betrayal of Africa.

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First published in The Australian on June 28, 2005.

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About the Author

Professor Helen Hughes AO is a senior fellow of the Centre for Independent Studies.

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