Sunday, April 14, 2024

Why a Marshall Plan for Africa might be Dead Aid too

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By Caesar Cheelo, Senior Researcher-Macroeconomics at ZIPAR

Recently, world-renowned author and Zambian economist Dambisa Felicia Moyo wrote an article in the Economist on a “Marshall Plan” for Africa, where, in view of the COVID-19 pandemic, she U-turned from her acclaimed book on Dead Aid.

Dambisa’s change of heart was somewhat unexpected given her strong critique of foreign aid over a decade ago. Nonetheless, her new arguments are quite intriguing, enlightening and provocative. She now propositions the proverbial West – mainly America and Europe – to provide greater aid to Africa, including direct cash transfers to African households to alleviate the COVID-19 crisis. She covers several key issues that Africa and indeed the world should take time to reflect on and debate.

When I read Dambisa’s well-articulated article, my first reaction was: wait a moment, other than the COVID-19 outbreak, what has changed in Africa? Has the corruption and political elite State capture of yesteryear in many African countries now been sufficiently resolved to assure prudent use of aid resources? Operationally, how would the West pull off direct cash transfers to households while sidestepping Governments? How should the West handle the real economic diplomacy risks of being seen to undermine the sovereignty of State and polity? These questions remain…

Dambisa motivates the Marshall Plan for Africa on three counts, morality, migration and influence.

Regarding the morality argument, I quite agree that to save African lives, particularly given the persistently high levels of poverty, inequality and vulnerability, much more health support from the international community will be needed. However, Dambisa estimates that US$135 billion would be too little and US$1 trillion would be more in line with the scale of the problem, albeit on the ambitious side. She further reports estimates that 1.2 billion people in Africa (virtually everyone) will get inflected with COVID-19 by end-2020 and 3.3 million possibly dying from the pandemic. In contrast, as of 6th May 2020, Zambia had recorded a cumulative total of 146 COVID-19 cases, with 4 deaths (3% of total compared to a world average of 7% deaths), 101 recoveries (69% compared to 33% globally) and only 41 active cases (28% compared to 60% globally). The remarkable recovery rate over a relatively short 48-day period since the first COVID-19 case was confirmed on 18th March highlights strong possibility of considerably lower health burdens in some African countries than the world average. The point here is that we must be careful to estimate the scale of the COVID-19 problem in Africa as accurately as possible based on data.

The second motivation is that migration is potentially a big Africa-wide risk for the West in the event of inaction. This idea seems to perceive Africa in a rather monolithic – one size fits all – manner. For instance, given the barrier of geography, it is hard to imagine that much of Southern Africa can embark on a great migration that poses a major migration problem for the West…

The third reason for the Marshall Plan, influence, is a big and controversial issue. The influence argument encourages Western aid actions towards counteracting the growing geopolitical influence and footprint of China in Africa. Essentially the argument is that: “America needs to lead” and “The economic harm of doing nothing may be costlier than intervening”. This is worth some reflection.

To start, Dambisa rightly pointed out the trade, investment and aid relations that China is using to woo Africa. She gives some striking statistics of Chinese exports to Africa reaching US$90 billion in 2018 and foreign investment inflows from China into Africa averaging about US$5.4 billion. One curiously missing statistical insight relates to Africa’s indebtedness to China. The recent China-Africa Research Initiative (CARI) dataset (http://www.sais-cari.org/data) suggests that over 2010-2017 Africa borrowed US$14.9 billion per year on average from China. Surely, with this dispensation, large chunks of Western aid assistance to Africa would be lost as African debt service payments to China. Granted, the IMF and World Bank have orchestrated a debt service moratorium (standstill) by the G20 countries, China included, for the rest of 2020. However with this debt relief being a fleeting interim measure by nature, the West would be ill-advised to marshal a Marshall Plan for Africa.

Moreover, before COVID-19, China may already have been too far ahead in the game for America and friends to make any meaningful geopolitical counter-plays during COVID-19. As Forbes magazine (https://www.forbes.com/sites/wadeshepard/2020/02/28/how-beijing-is-losing-support-for-its-belt-and-road-initiative/#7f8b61112199) puts it: “The [Chinese] Belt and Road is a $900 million/$1 trillion/$5 trillion dollar initiative spanning 65 countries, 60% of the world’s population, 75% of energy resources, and 30% of GDP”. Arguably, the West can surmise that it already lost the current round of the geopolitical battle for the world, Africa included, before the COVID-19 outbreak.

Interestingly, the advocacy for the Marshall Plan for Africa is premised on quite a few phrases like “the West may prevent Africa from pivoting further towards China”, “A Western aid project would be a counterweight to China’s influence and may pay itself back in… the West’s interests” and “the risks of inaction are great, too: … [including] pushing the continent closer to China”. Simply put, the West is Africa’s savior and China the villain. Treading carefully given that the West is by no means a homogenous group, Dr. Arikana Chihombori Quao’s strong views on France’s relations with its former colonies in Africa come to mind. In one of her most poignant statements, on YouTube

She argues that, economically, France still controls 14 of its former African colonies through a document signed at independence, so-called the Pact for the Continuation of Colonization. This pact, according to Dr. Quao, mandates the former French African colonies to remit 50-60% of their bank reserves to the Central Bank of France. The francophone African countries can apparently apply to borrow 20% of their own reserves at commercial interest rates. Meanwhile, France invests the bulk of the proceeds – reportedly approximately US$500 million per year – in the French stock market. And for every US$14 billion that France extracts and invests in this way, it realizes returns upwards of US$300 billion. Assuming this is true or at least partially true, subject to confirmation of the reported formal arrangements and the numbers, is it China or France that is the greater evil for Africa?

While it is desirable that the international community rallies together to save lives in African, the COVID-19 crisis must not be the blackmail letter attempting to coerce the West into increasing aid to rebuild the African economy. Rebuilding Africa should be Africa’s job. Thus, perhaps COVID-19 is an opportunity, not for more economic aid, but for leaving Africa alone for a moment so that, if necessary, she can go into incentive care on the economic front. Maybe it is only after experiencing the full devastation of economic mismanagement, corruption and other vices perpetrated by our political leaders that Africa’s citizens will finally hear the wakeup call that pushes us into making radically different political and economic choices, which break the continent from the past. This, and not more aid or more debt accumulation will save Africa.

Ultimately, a Marshall Plan for Africa is quite possibly dead aid, just like other forms of aid.

14 COMMENTS

  1. Umwaiche Ceaser Cheelo is kust stoking Dambisa Moyo. He is in love.
    Imwe Ba Ceaser just print Dambisa’s picture and put in front of bed.

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  2. If your leaders can spend $42 million of tax payers money on 42 fire trucks that should cost under $15 million and you can’t even hold them accountable , lungu has never been asked about this , you have no hope…..zero hope. Even less than zero hope with the current leadership.

    Too many illiterate people in Africa. And the leaders are prone to corruption and greed….

  3. Well-thought-out piece from someone whose day job is looking at and analysing various economic data and making recommendations. Well done Caesar.

  4. Economics as a discipline has been accused of not being gender-sensitive from the USA up to Zambia. There are just too few ladies in economics, the argument goes. Here’s a lady economist writing on an economic issue on a currently-raging problem, and all lady economists I know hv refrained from commenting on it. They hv ignored their own. This is regrettable.

  5. What do you expect from dambisa that diasporan. Like many other diasporans she is a sellout and can now be controlled like a little black puppet by her masters to carry out their evil schemes. Back in the days of kunta kinta these types of people would have been what they termed house negro. I end here because I feel to strongly about unpatriotic I.diots

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  6. Ceaser, I agree with you to a greater extent. Rightly so, the Marshal plan was meant to prosper Europe so that it buys American products and services. As for Africa, I also doubt so much. The West would rather perpetuate pover in Africa in order to loot resources as a hungry partner has no burgaining advantage

  7. KZ

    being patriotic Zambians goes not mean supporting lungus stealing ……..

    We abore lungus corruption ??

    BTW what happened to the lawsuit by tasila ,kapata and lubinda against the expos’e of their stealing mukula with lungu ???

    And remind lungu the people have not forgotten about the gassing of our brethren …..

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  8. Thanks for this insightful piece Cheelo. Dambisa was way out of line with her ivory tower armchair marshall plan for Africa piece. That a public intellectual of her stature would contradict herself is very disheartening. Also as a wise daughter of the land, she would have aired her views in a closed door meeting with both parties west and African leaders. Giving back really does not mean geographical relocation from your high tower Dambisa, you can use your priviledge to guide your people by the click of a mouse in form of sending an email or launching a not for profit think tank. As the late harvard professor Clayton M. Christensen put it in one of his titles, “How will you measure your life” When all is said and done? I was disappointed to see Dambisa playing the role of lobbyist for…

  9. ….for Africa’s recolonisation, kind of sent my memory jogging down memory lane albeit in my own imagination, to that fateful day when King leopold shared out Africa like a birthday cake based on the premise that we were a “dark continent” in need of a savior. Let it be on record that the same debt that Zambia has accumulated today from China, once upon a time China also has its own share of insurmountable debt. The secret we should be searching for is how this equally heavily once indebted Country in the name of China, managed to go from poorer than most African nations to being the second largest economy in the world which today is debt free. Western diplomacy cannot stop the rise of China ask those of us who see it from the inside, the Chinese are a relentless breed and a very…

  10. …a very disciplined lot at that. To borrow from our own ECL, China’s dominance is the new normal that the west has to contend with. Great power politics is no longer the order of the day in this fourth industrial revolution we are living in. Like a cancer, you either live with it and get your regular chemo or deny to the grave. Zambia’s hope is in its human capital but we need a very capable CEO to channel this energy in the right direction. We can beat COVID-19 on our own terms and we will because surviving is part of human nature.

  11. I still can’t fathom what came over Dambisa – from Dead Aid to Marshall Plan. When will Africa grow up? 70 years and still wearing “amatebela”. We need a hand up not a hand out!

    Dambisa can pick a leaf from Wangari Maathai, the first African woman to receive a Nobel Peace Prize. Not just for literaure but mainly for her pragmatic achievements and contribution to the Kenyan environment like planting trees etc. Give women land ownership, agricultural inputs/services, finances and they will make Africa a great continent which will satisfy it’s own quest for food security and feed the entire globe.

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  12. Quite interesting and enlightening to read both Dambisa Moyo and Caesar Cheelo’s take on the proposed marshall plan for Africa.
    Impressive from Cheelo is his caution on the scale of the Covid-19 problem in Africa and Zambia in particular and his timely advice that this be based on data to avoid taking the problem out of proportion. I wish HH and Nervous Mumba the proponents of complete lockdowns can take Cheelo’s caution seriously. However, I would advise Cheelo to research a bit more on Moyo’s prescription for donor countries to channel direct payments to African households. This cannot certainly be a case for dead aid as Cheelo avers. Cheelo needs to look at the evolution of social cash transfers in Kenya that was spearheaded by American companies from the Silicon Valley that does…

  13. …not raise the sovereignty issues he refers to. Moyo proposes the use of the already existing infrastructure of mobile money networks to avoid the very problems of the corruption of African leaders she discusses in Dead Aid. This does not certainly amount to a change of heart on the part of Moyo from my sympathetic reading of her piece in The Economist.

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