Global Policy Forum

By Gebreselassie Y. Tesfamichael*

By many measures, it's been a great year for Africa, with debt relief, awareness-raising concerts and G-8 leaders pledging more aid. As an African, I'm gratified that the world has turned so much attention to my continent. But at the same time, a voice inside me wants to shout: "Wait. This is not the way real development happens!"

Since the 1950s, when most of Africa achieved independence, billions of dollars have been spent on aid and development. So why is the gap between the continent and the rest of the world widening instead of narrowing? The problem is that the aid community has been determining how Africa should go about development. At present, 30 African governments have produced national development programs from the same externally designed template -- the World Bank/International Monetary Fund's so-called poverty-reduction strategy papers. All are aimed at obtaining the most aid possible. Most of the other African countries are sure to follow. We continue to ignore the stark lesson that externally imposed development models have not gotten us very far. It's what Africans do themselves that will determine how far and how fast we move forward.

The only way forward is for Africa to drive its own bus and for the driver and passengers to be in full agreement about where they're going. That said, we do need help filling up the tank.

I was once one of the drivers of such a bus. In Eritrea, where I served as the head of development for the first years after liberation from Ethiopia in 1991 and later as finance minister, we decided to take control of our future, and for a number of years we worked hard at designing and implementing our own development. Eventually, another conflict brought much of this to a standstill, but I believe the lessons we learned point the way for the rest of Africa.

Our war of independence pitted our tiny country of 3.5 million against our much more powerful neighbor, Ethiopia. With no allies, we had no one to count on but ourselves. After a 30-year struggle we marched victoriously into our liberated capital. While I wouldn't wish the horrors of war on anyone, I would wish the self-reliance we felt at the time on all of Africa. If donor nations and African governments are truly concerned about development, they should foster that sense of self-reliance. Sadly, despite lip service to the contrary, they do not.

In the first few years after the war, the Eritrean people were able to welcome and integrate hundreds of thousands of refugees and internally displaced people, care for more than 10,000 war disabled, and demobilize and reintegrate 50,000 combatants, all without any external aid. We dreaded catching the "dependency disease" that aid so often instills. Our government, and particularly those of us managing the development effort, did not want to stand before our people and complain that we had to introduce school fees because the donors told us to, or to worry more about rain in the wheat fields of the United States and Canada than about the weather affecting our own bread basket. We wanted our youth to dream of achieving greatness rather than hope for steady jobs as chauffeurs to foreign aid workers. We wanted our professionals to venture into the private sector and build the nation, not write endless project proposals playing the NGO game. Right or wrong, we wanted to be fully responsible for our newly sovereign nation.

Even while we were still a rebel force, we were formulating policies for developing a modern market economy. We were committed to liberalizing the market and privatizing all public enterprises, but we also realized that nearly all of those businesses -- from large textile plants to small shoe and leather-processing factories and telecoms and other utilities -- were in total disrepair and needed to be rehabilitated before being sold. After independence in the early '90s, while we developed a privatization strategy, we kept these businesses running and used them to kick-start the war-devastated economy.

Early on, a representative of one of the major aid-giving governments offered us $15 million in assistance on the condition that we privatize 50 percent of the state enterprises within six months. We knew there was no way we could manage that so quickly. And we believed that selling the businesses off too early would lead to exactly what happened in Russia after the breakup of the Soviet Union: fire sales of important public assets and disrupted production, sending the economy into a tailspin. It would have been easy money, but not good policy. We told the donor that Eritrea would not go along with such demands.

Still, we needed aid, and we welcomed it, as long as it met our own priorities. About three years after independence, there was a noticeable presence of nongovernmental organizations and other members of the aid community in our country, providing project-based assistance. But we soon learned that many NGOs see aid as an employment and procurement opportunity for their own people. For us, the bottom line was that at least 90 cents on every dollar should reach its intended beneficiary. Though almost all NGOs claim that this amount indeed goes to the programs, what is actually delivered to the people on the ground is a shockingly paltry amount. We were determined that aid resources should be used to get the biggest bang for the buck in the recipient country.

Here's a small example of how we made that happen. We noticed that as the NGOs moved in, brand-new SUVs, most often driven by aid personnel or government officials, became a common sight in the streets of our capital, Asmara. We had no allocation in our national budget for such vehicles, so where were they coming from? Upon scrutiny, it became clear that they were being provided by the NGOs and other donors and given to our various government agencies. When we inquired, the NGO officials told us the vehicles had been purchased for travel to rural projects. But in fact they were being used almost exclusively in Asmara, a city with very well-paved roads. Each SUV cost roughly the equivalent of what it cost to build a rural primary school and used enough gas to pay a government official's monthly stipend. Though the NGOs protested fiercely, we pulled the SUVs off the streets and put them into a rural transportation pool to make them available to all who needed them.

We wanted the NGOs to complement the efforts made by our own people, to work in areas we considered priorities, to concentrate on doing what we could not do for ourselves, and to be accountable to us. So we instituted guidelines to make all this happen. The ensuing outrage made the SUV drama pale in comparison. NGOs are not used to letting the recipient nation take control.

One of the major issues for us, in fact, was the donor-recipient relationship. For decades, we had watched governments throughout the continent compromise their sovereignty as they adopted economic models imposed on them by both the West and the East in order to get aid. We could not help noticing how aid distorted the development process. For instance, donor organizations emphasize the social sectors -- health and education -- while almost entirely ignoring the commercial and business sector. Africa's cities are full of educated, enterprising people who are peddling goods made in Asia. Why should that be? Agriculture and manufacturing are starved for funding. We need health care and education, yes, but we also need a productive sector for the healthy and the educated to work in.

We wanted something different. We wanted a partnership rather than a donor-client relationship. We made this clear when, seeking budgetary support, we agreed to our first major donor conference in Paris in 1994. There, representatives of international donor governments paid lip service to "country ownership," the idea that recipient countries should decide their own development goals. But then they said they couldn't give us any support unless Eritrea entered into the multilateral fad at the time: the IMF's structural adjustment program. This meant undertaking certain measures, such as cutting public expenditures, debt and deficits; freeing up trade; and opening and deregulating the economy in exchange for substantial periodic payments of aid money. The program would be monitored by the IMF and the continued flow of aid would be contingent on our performance. We felt reforms should be internally driven and dictated by the realities on the ground, not by institutions thousands of miles away. We said thanks but no thanks.

Then we implemented a vigorous program of market liberalization, reduced and simplified the tax and customs rates, liberalized investment laws and regulations, restructured public finance and reduced the civil service by a third. Without the guiding hand of structural adjustment and its associated aid, the Eritrean economy grew at an average of 7 percent a year between 1992 and 1997. We did it all with minimal external advice and funds. And at our own pace. Obviously, Eritrea, which has suffered recent setbacks, still has a long way to go. But our success over those years shows what's possible. If a small country coming out of 30 years of war and drought could achieve this reform on its own, why can't the rest of Africa?

One of the terms you hear bandied about in the aid community is "capacity creation" -- that is, building up the administrative, technical and human skill necessary to drive development. It's assumed that Africa has a huge capacity deficit; indeed, it's often depicted as a blank slate. Nothing could be further from the truth. Even in the worst circumstances, the people of Africa retain precious social, cultural, economic and human assets. Factor in the huge diaspora's financial support to the continent -- which at $30 billion a year is more than the $25 billion the world's donors give -- as well as its tremendous intellectual and entrepreneurial support, and the absurdity of the capacity issue becomes clear.

The fundamental problem in Africa is not lack of resources, but the failure of political leadership. The modern African state is a colonial creation, extractive in its design. Its mission was not to serve the people, but to dominate and exploit them. Despite independence, and despite improvements brought by numerous recent democratic elections, the nature of that state remains intact. The primary solution is to change it.

I am pleased by all the focus on my continent this year. But aid and one "Year of Africa" is not enough. Developing Africa is indeed the challenge of our times, but that challenge is primarily Africa's.

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About the Author: Gebreselassie Yosief Tesfamichael, a development economist and former finance minister of Eritrea, is now a Washington-based international consultant writing a book on development and postwar reconstruction.

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