If all aid was to lead to developments, then Africa would be the most developed place in the world. No doubt it ain’t and that is why, even with Africa being the recipient of the largest amount of aid in the world, it is still the least developed. Isn’t it sad that even after the continued over-reliance on aid, and proving time and again that it ain’t working, we are still on it? Isn’t it more like expecting different results from doing the same thing? We all know how that goes and the faster Africa changes its development structure the better. We need a change from public debts to organic development in Africa.
Research has shown that public debts are not good for a country. The major reason is that most governments are wasteful. The more funds are at disposal, the more wastage. In fact, most of the money borrowed from the outside world goes to personal accounts of leaders other than the projects they are intended for. It gets to a point of inflation of some project’s prices.
Corruption and Public Debts
An example of a grand corruption case from the borrowed money has been the Kenyan case of Eurobond. Kenya borrowed 250 billion to fund various development projects in the country, mainly in infrastructure. The IMF confirmed Kenya received the money. Then accusations of misappropriation surfaced and the Treasury kept making conflicting and contradicting statements on the matter, at one point claiming that no clear records of projects funded by the money exist. Just as per usual, the matter has since died down. The burden of repaying the money will rely solely on the citizens who have never benefitted as they should have from the money lent to the country.
Public debts, being national debts, affect every citizen of a country in the long run, even those who are used efficiently. Every child born in Kenya at the moment already has a debt of Kshs. 75000 ($750) to repay. Therefore the governments should publish all available information concerning public debts, but in most cases, they don’t. Without the knowledge of what is happening in the money world, most of them won’t be vigilant to see to it that the money works for their benefit. This means the citizens are the worst affected as they will repay a loan they are not even aware of.
Public Debts: A Smart Robbery
Public debts are the major cause of a stagnant economic growth. A country that has a higher margin of public debt will automatically have a less saving ability. This creates a cycle where the country will always depend on other countries with surplus money to save. The interest rates of borrowing money to pay off deficits in are too high in most cases. This means that a country operating within the cycle of borrowing and borrowing again to repay is a slave with no significant economic development and independence.
Is Africa able to fund its own growth?
There are several ways through which Africa can realize development without relying on aid. Africa needs to speed up the realization of formation of trade blocks. The success of trading blocs like COMESA, EAC, and IGAD has shown that Africa can have a market for its own goods. The main concern is always that some countries would benefit more than others. Countries would have to join the blocks in the spirit of utmost good faith. Africa has a vast wealth of natural resources. Countries with these resources must invest in extractive industries.
The main reason for continued borrowings has been as a source of funds for developments. But there are several fund sources African countries can use. Domestic financial instruments like remittances, international reserves, pension funds and private equity funds.
All this would be a waste of time unless the governance system doesn’t change the way they operate. The leadership of African countries must ensure to invest in the diverse, competitive, sustainable and efficient use of resources.
Everything indicates that Africa is able to sustain itself. It just has to develop the infrastructure for industrialization and make good use of the available resources. Shunning international borrowing is a healthy idea.
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