How taxes will liberate Africa from their economic slavery to industrial nations….
I stumbled upon a seriously interesting thinker about what could easily be one of the most explosive taboos in European politics: the financial aid to underdeveloped countries.
The person I am referring to is Dambisa Moyo, an Oxford doctor in economics and holder of a plethora of other university degrees, which makes most of the people I know – including myself – look like a bunch of uneducated retards. She is the author of the book “Dead Aid: Why Aid Is Not Working and How There is Another Way for Africa.”
Not so long ago, I watched Ms. Moyo on TV, and she held the most enlightened speech I have heard in years. She spoke about the aid flowing from the developed countries to Africa and the negative effects this has had on the continent, its development and its people.
It goes without saying: the book is on its way to me by snail-mail “as we speak”; to be devoured in my evening reading sessions. I expect to encounter many interesting – and maybe even shocking – eye openers. I am bracing for impact, as it were.
But first, some priming: It was a spoofed Dutch government communiqué about the decision to stop the aid to Africa in 2011, which made me turn my focus on the subject of aid. It was precious. The bogus message – which was “released” during the TV show I mentioned above – stated that we – the Dutch – were going to put an end to the money-wasting fund-flood that is making its way from the west to the south, which has until now not achieved anything near the desired result. This lack of effectiveness seems to be supported by evidence which is turning up after thorough research is done.
What was it again, that we were trying to accomplish with aid? The rationale behind aid is that we want to support the development of the African countries. We want to reduce poverty and improve the general quality of life for the common people. And we want the infrastructures to become of such quality that they are able to cope with the social and economical activities which are necessary to boost the countries sustainability. In the long run, we want the Africans to get off their behinds and start working for their country and for themselves.
If we start measuring the effectiveness of what we are doing in terms of: “How well are the Africans now able to support themselves after all these years and all these billions of aid-dollars?” The answer, unfortunately, as Moyo stipulates, is clearly a negative one. Africans are hardly any closer to taking care of their own than they were 20 years ago. And ironically, this impotence is caused by the aid itself. Let me explain why:
The argument is fairly easy to understand and therefore it is difficult to accept that is has been overlooked for so long. (I am speaking for myself here…) It goes as follows: An African country that is receiving aid from a donor will make this donor its primary target to please. The receiver-country will try to comply to the donors requirements. At the same time, it will neglect the interests of its own people, because that is not where the money is coming from. If this was the other way round, and the African states sought to focus on its own people instead of on their benefactors, then you have a completely different scenario: Look at Europe: When a government is financed by its own people, like we do in any European country, in the form of revenue- and other taxes, then the people will want to see something in return for that obligatory investment. If people are taxed, then the government is obliged to deliver public services, like adequate governance, a proper civil- and physical infrastructure, fair laws and their enforcement, and access to proper education and healthcare. Vice versa: as long as the people have no obligation to pay taxes to finance their own country, they can’t ask for anything in return either.
The omission of proper taxation by the government has a paralysing effect; there is no incentive to DO anything. Businesses are not started, for instance. These businesses are necessary in order to make the money with which taxes will be paid. Eventually, this results in the absence of an active and taxable middle class. Or better said: it prevents the emergence of such a middle class and thus the formation of a private economy, too. And subsequently, if there is no private economy, then anyone who wants to have something resembling a career, or who just wants to earn a buck, has to get into public service. Ultimately, the public sector, by lack of a private one, is the place where all the money ends up.
This mechanism, Moyo says, has to be reversed by putting a stop to the African Aid programs. Because if aid to a country stops, then the country will have to hold up its own pants. And in doing so, it will have to rethink its methods as to how to come by its revenues and how to survive. It will have to start asking its people for money, who will then demand services back. The focus of the government will shift from the aid donor to the people. And these people will only keep those governments in office who deliver on those demands. It is simple as pie.
As a side-note I must admit to something: for me it is so obvious that a non-functional government does not survive office in my country, that the idea of a government staying on for decades , despite being obviously dysfunctional never occurred to me. In Africa, this seems to be the norm.
The story above is quite a straight forward one, and Moyo is not the only one advocating it. I was surprised to see several African leaders – in the same TV program that acquainted me with Moyo – who fully agreed with her. They even literally went so far as to say that AID was killing Africa; not AIDS. The examples of the opposite seem to speak a clear language. Currently, South-Africa as well as Mozambique are refusing aid from other countries. And they are currently the most successful countries in their region. According to most commentators this is no coincidence, but the result of a genuine incentive to take care of ones own business, instead of looking abroad for someone to be kept by.
But as straightforward as the story may be, for me it was a real eye opener.
I was instantaneously charmed by Moyo (which, by the way, amongst other things means “heart”, “feeling” and “compassion” in Swahili), who lays bare a very sensitive, and possibly explosive, issue in European geo-politics. This is partly because I had encountered the same mechanism of lethargy in another context, namely, the Arab world, and her well established inclination to suppress personal freedom and individuality. The argument is almost identical: the government could not care less about its subjects, because they don’t matter anyway. They are not taxed and are therefore not motivated to develop themselves. Arab regimes have the disadvantage to be able to pump money – oil – out of the ground, so why bother with good governance or proper public service? This “drawback”, of having all the money in the world, has held back the Arab region, and places them in the Middle-Ages ever since we became dependent on their oil, and maybe even before that. Not that their religion is helping them much either, for that matter….
I expect the book Dambisa Moyo wrote to land into my post-box any day now. With my purchase I hope to support this remarkable thinker, even if it is only for a tiny little bit. Not that she needs the few cents royalties she will get from me though. She came across as an established person well capable of taking care of herself. Besides that, I must very “Italianly” admit, she is also quite a looker. So there you have it: A very smart, capable, well educated, very good looking and respected person who has managed to open up a whole new world for me, what else could I wish for?
I am coaxed into rethinking my position on the African Aid issue and its effects in a global context. It feels as if there is a breath of fresh air coming my way.