Thursday, March 12, 2009

When is Development Development?

The issue of foreign aid crops up frequently in the development literature. People ask why aid doesn’t seem to be working even after large amounts of money have been donated over long periods of time. These are difficult questions to answer, there’s no denying that.

But there are other questions that may be less difficult. For example, in Tanzania, there doesn’t seem to be much evidence that aid money has been spent on setting up manufacturing outlets. Almost all manufactured goods seem to come from other, very expensive, countries.

Things around the house are either manufactured elsewhere or manufactured by companies that are foreign owned. In Kenya, tea and sugar are among the top products. But even when they are processed in Kenya, they are often processed by foreign companies. The cut flower industru has become one of the countries main exporters. But the outlets producing flowers pay little or no tax, either in Kenya or in their own (developed) country.

Those ‘investing’ in Tanzanian gold mines get years of tax breaks, they can import what they want without restriction and all under the understanding that they are bringing much needed investment to the country. But they don’t leave much behind. Employment conditions are terrible, pay is low, huge social problems develop around the mining industry and when the incentives cease, the mining companies go home. That is, unless they can find other ways of extracting the commodity without having to pay very much in return.

Actually, it’s not fair to say mining companies leave little behind when they have got as much as they can out of a country. They leave behind unhealthy former employees, ghost towns and environmental degradation. The mercury, cyanide and other poisons that they leave behind will slowly kill people, animals and other forms of life, it will poison the water and the soil for the foreseeable future.

When such foreign companies arrive they are given the rights to do whatever they deem necessary to fulfil their objectives. Tanzanians, who struggle to get enough water for their daily needs, find their supply further curtailed. The companies who have come to ‘invest’ in their future have brought their inaccessibly expensive technology to gather water and people already living in the area have to compete for the dwindling supply.

There have been articles in the papers recently about nasty Tanzanians tapping into water pipes belonging to various manufacturers and other commercial interests. Such activities are referred to as acts of vandalism and are entirely unanalysed by commentators. The commercial interests have been assured by the government that they will have unrestricted access to whatever they want. The fact that there are Tanzanians who need water to survive and that the commercial interests are preventing them from getting this water is rarely mentioned.

A large amount of aid money seems to be spent on the continuation of what is already a serious development problem in countries like Kenya and Tanzania: the production of raw materials for rich countries. As long as earnings from the main exports from these countries are dwarfed by what they have to spend on basic (but manufactured) goods that come from rich countries, it’s hard to see aid money having much effect.

For a start, anyhow, much of what is called ‘aid’ comes in the form of loans, loans that must be paid back with interest. The fact that the loans very often can’t be paid back doesn’t mean that the interest doesn’t continue to mount up. But generally, the money that creates unrepayable debts in developing countries never leaves the ‘donor’ country. The money is spent on goods produced in the donor country, transported using the donor country’s transportation networks, handled by the donor country’s employees or it pays for the donor country’s technical expertise.

As a result, the ‘recipient’ country is merely building up a debt in order to buy up the donor country’s surpluses, give business to their service industries and employ their people, often people working in big, foreign NGOs. Vast amounts of money go to NGOs that are based in and administrated by the donor countries. It is in the interest of donor countries that they continue to ‘donate’ aid money, they themselves benefit, they are stimulating the growth and prosperity of their own country.

I’m sure there are lots of reasons why billions of dollars of aid money seem to go to developing countries without having much effect. Worse, many developing countries are regressing. But it could be asked if donors really spend money on developing countries or if donations, to a large extent, fit in with their own commercial interests. To what extent are donations even intended to benefit the recipient?

Countries like Zambia and Botswana depend heavily on their mining industries. When times are good they do relatively well, but doing relatively well is not development. They are always dependent on conditions being favourable in the developed countries who buy the raw materials they produce. Now, conditions are not favourable, and Zambia and Botswana are beginning to suffer. Now that things are difficult, it is apparent that during the ‘good times’ aid money was not used to increase sustainability or self-reliance.

So neither country has developed much in the last couple of decades, despite their great mineral wealth. How much aid money has gone towards developing their ability to produce something other than raw materials? And I’m not talking about money and technology to achieve greater yields from marginal mining outlets. I mean, to what extent has ‘development’ ever meant reducing the extent to which developing countries are completely dependent on developed countries to reach a position that really only constitutes just getting by?


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