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Getting aid priorities right
2005-07-13 08:29:52
By Editor
The hype about the decision by the G8 group of industrialized countries to increase aid to USD 50 billion, as well as scrapping all debts owed to 14 African countries, is not over.
And just before leaving Gleneagles, President Benjamin Mkapa, aware that Tanzania is one of the beneficiary countries, sought for clarifications on the actual benefits that would accrue to Tanzania when all its debts owed to multilateral financial institutions are cancelled.
There is an assurance that the boards of the World Bank and the IMF would soon meet and decide on the details and figures. Reasonably, the President would wish debt relief resources to start flowing to Tanzania as soon as possible, in fact before the next G8 summit.
The fact of the day is that more development cash is in the pipeline and it will mean substantive relief to the national budget whose development component is largely donor-funded.
However, a concern for strategic and institutional ability abounds, when one thinks about our priorities, whether they are currently well framed or might need some sort of re-alignment.
In principle, aid flows should not lead to a need for more aid at a later date, but should create more home-based capacities to make additional foreign loans and aid unnecessary.
The assertion that resources released from debt relief awards would be channelled to education and health sectors of the economy doesn’t guarantee, on its own, an assurance that poverty would be eradicated today or tomorrow.
A few strategic questions remain unclearly answered: Are we investing in the best education that is able to produce the appropriate skills needed by the global market ?
Do we have to import even basic entrepreneurial skills for establishing small and medium industries, packaging and marketing firms, mining experts and cobblers?
Are we largely investing in health ‘physical’ facilities leaving aside the necessary incentives for health practitioners?
Investment in human capital, pre-supposedly the overriding criteria for qualifying for debt relief and the US managed Millennium Challenge Account, must enhance peoples’ ability to produce what the market expects.
The talk about fair trade makes little sense, if not outright nonsense, if a nation has nothing to offer for trading at the outset.
Tanzania for instance, has insignificantly exploited the AGOA opportunity simply because of supply constraints.
A number of American merchants are said to have placed lucrative orders for Tanzania’s apparels and works of art, but a majority of the deals never materialized, one of the reasons being that domestic producers default on quantities and deliver their goods late.
For this reason, the Blair Commission is strongly urging for heavy investment in enhancing Africa’s ability to produce and trade.
President Mkapa was more than correct in telling the G8 summit that the war on poverty has to be a genuine partnership between rich and poor countries, each country living up to its commitments and obligations.
Genuine partnership is hard to come by if appropriate local skills are not readily available.
About USD 40 billion of debts owed to multilateral institutions constitute expenditures on consultancies mostly carried out by experts from the G8.
These monies were siphoned out of Africa, never enhanced the ability of these economies to repay borrowed funds, and the debts became unsustainable.
Somehow, somewhere, we must re-define and own our priorities so that we finally become masters of our own destiny. We can no longer tolerate blaming others for our own deficiencies.
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