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$130 billion did not end up helping the poor
4 September, 2017

$130 billion did not end up helping the poor


Sierra Leone is a West African country faced with many challenges. Just last week the country was hit with severe flooding and a mudslide. This comes on the tails of the Ebola crisis which the country is still recovering from. This made me consider, will Sierra Leone become the next Haiti? What I am referring to is the proliferation of NGOs and an influx of development assistance which hardly reach the poor and needy. Development aid remains a highly controversial topic in Development Studies and Development Economics. There are two main schools of thought on this topic – the first believes that official assistance is ineffective and inefficient (it harms the local economy and promotes dependency and corruption) another school believes that increasing aid is the way to go in the fight against poverty eradication. Professor Agnus Deaton, Nobel Peace Prize laureate for Economics in 2015, argues that foreign aid harms underdeveloped countries rather than helping them. I am not suggesting the complete and total cessation of development assistance or downplaying the role of development assistance plays in developing countries. I argue briefly in this write up that business partnerships and investments can foster greater development.

As I read about countries that have moved from poverty to prosperity, hardly have there been countries that became developed through the reception of aid to become developed Instead, I have come across countries that have developed through industrialization and through business investments. Some people often cite the Marshall Plan in Europe as a success model of how aid should work and that has been the model for lifting countries out of poverty and underdevelopment. But what these critics fail to understand is the historical context of the Marshall plan and the uniqueness of many African countries. This piece does not delve into this history (for more information on this I recommend Prof. Ha-Joon Chang’s Kicking away the ladder)

Moving on, Prof. Deaton noted that much of the over $130 billion that the advanced economies gave in official aid in 2014, did not end up helping the poor. Some research found that bulk of this monies went into the complex and complicated administrative and bureaucratic hurdles – that needed to be crossed before the support arrived at the poor. Some reports claim that a chunk of the monies went into consultancy by third parties, the enormous salaries of development workers, their expensive airline tickets, and luxurious accommodation; these workers most often than not were from these advanced economies. Thereby creating a cycle whereby, the monies given out as development assistance, comes back to the developed countries.

Back to the point raised above, studies have shown that business investments to a large extent make more of an impact in fostering development than development aid. The success stories of Singapore, Malaysia, Indonesia among others lay credence to this point. Investment creates employment which promotes productivity. Furthermore, business investments, are a win-win case for governments and private businesses. Private businesses expand into larger markets especially in Africa and at the same time it aids in the creation of employment as previously stated. One challenge especially that confronts investors (foreign) interested in expanding into the African markets has been the lack of knowledge and adequate information about these markets. There is so much potential in Africa and reports suggests that many of the fastest growing economies can be located on the continent. To tap the potential of the markets in Africa, one needs an experienced hand which will help guide you. To conclude this short write up, I give a brief description of AfriScanLink, a business consultancy firm which serves as a such a guide for Scandinavian investors interested in expanding into African markets.

AfriScanLink.com as a business consultancy firm based in Copenhagen, Denmark and has satellite offices in many African countries. They provide this support and services right from market penetration to staying competitive in the African market. With experienced and local staff who speak more than 30 languages spread across the continent, we specialise in Market Entry Strategies, Logistics and Supply Chain, Marketing, Proxy, Brand Promotion, Public Tenders Assistance, Customizable Business Services, Manpower, Partnership Sourcing, and Pre-start-up Advisory Services.



Nana Yamoah,

Development Researcher


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