July 6, 2005

A Kenyan Economist Says “Stop Aid to Africa”

Filed under: Economy,Taxes & Government — Tom @ 9:39 pm

A provocative piece in Der Spiegel, which interviewed Kenyan economist James Shikwati, who believes that Africa will never get on its feet until the aid flow stops.

He even disputes the notion that abruptly stopping aid would be a humanitarian catastrophe:

SPIEGEL: If the World Food Program didn’t do anything, the people would starve.

Shikwati: I don’t think so. In such a case, the Kenyans, for a change, would be forced to initiate trade relations with Uganda or Tanzania, and buy their food there. This type of trade is vital for Africa. It would force us to improve our own infrastructure, while making national borders — drawn by the Europeans by the way — more permeable. It would also force us to establish laws favoring market economy.

SPIEGEL: Would Africa actually be able to solve these problems on its own?

Shikwati: Of course. Hunger should not be a problem in most of the countries south of the Sahara. In addition, there are vast natural resources: oil, gold, diamonds. Africa is always only portrayed as a continent of suffering, but most figures are vastly exaggerated. In the industrial nations, there’s a sense that Africa would go under without development aid. But believe me, Africa existed before you Europeans came along. And we didn’t do all that poorly either.

SPIEGEL: But AIDS didn’t exist at that time.

Shikwati: If one were to believe all the horrorifying reports, then all Kenyans should actually be dead by now. But now, tests are being carried out everywhere, and it turns out that the figures were vastly exaggerated. It’s not three million Kenyans that are infected. All of the sudden, it’s only about one million. Malaria is just as much of a problem, but people rarely talk about that.

SPIEGEL: And why’s that?

Shikwati: AIDS is big business, maybe Africa’s biggest business. There’s nothing else that can generate as much aid money as shocking figures on AIDS. AIDS is a political disease here, and we should be very skeptical.

Skikwati is just getting warmed up. He notes that Western aid has perverse consequences that serve to prevent normal economic development:

SPIEGEL: In the West, there are many compassionate citizens wanting to help Africa. Each year, they donate money and pack their old clothes into collection bags …

Shikwati: … and they flood our markets with that stuff. We can buy these donated clothes cheaply at our so-called Mitumba markets. There are Germans who spend a few dollars to get used Bayern Munich or Werder Bremen jerseys, in other words, clothes that that some German kids sent to Africa for a good cause. After buying these jerseys, they auction them off at Ebay and send them back to Germany — for three times the price. That’s insanity ..

SPIEGEL: … and hopefully an exception.

Shikwati: Why do we get these mountains of clothes? No one is freezing here. Instead, our tailors lose their livlihoods. They’re in the same position as our farmers. No one in the low-wage world of Africa can be cost-efficient enough to keep pace with donated products. In 1997, 137,000 workers were employed in Nigeria’s textile industry. By 2003, the figure had dropped to 57,000. The results are the same in all other areas where overwhelming helpfulness and fragile African markets collide.

And he’s tough on his fellow Africans:

SPIEGEL: What are the Germans supposed to do?

Shikwati: If they really want to fight poverty, they should completely halt development aid and give Africa the opportunity to ensure its own survival. Currently, Africa is like a child that immediately cries for its babysitter when something goes wrong. Africa should stand on its own two feet.

Very compelling points. Read the whole thing.

Bizzy’s Biz Links of the Day (070605)

Filed under: Business Moves,Taxes & Government — Tom @ 10:26 am

Things that caught my attention today:

  • RadioEqualizer reports on a shocking judicial ruling in Washington State that could ultimately lead to a back-door reinstatement of the ludicrously misnamed “Fairness Doctrine” in talk radio and other broadcasting. Read it, and be afraid. Radio industry initial reaction is justifiably one of major alarm.

    UPDATE, July 9: Michelle Malkin notices.

  • The Federal Trade Commission is apparently getting better at pursuing and prosecuting scam artists, but I’m still wondering if anyone in federal law enforcement will even make a definitive move against Amway-Quixtar.
  • A hysterical defense (link requires free registration) of Chinese government proxy CNOOC’s bid for Unocal today at opinionjournal.com by CNOOC’s chairman and CEO head apparatchik. This quote near the end is really special:

    “I am conscious that, in some ways, CNOOC is helping show the American people the face not just of our business, but of the changing nature of corporate China. The best way we can do that is by being open and responsive to people’s concerns, and by ensuring that they see the careful, transparent standards of shareholder discipline that we apply to a situation like this.”

    I’ll be impressed when the Chinese government sells its 70% stake in CNOOC to the public. Before that, there is no shareholder discipline, only minority-shareholder gambling on the Chinese government’s plans.

    UPDATE: Though BizzyBlog is no fan of Warren Buffett’s politics, this e-mailer’s rant about Buffett as an investor is worth noting: You know, Warren Buffett said about a year and a half ago that with our hige trade deficit with China, at some point the Chinese would start taking over our assets. They would no longer accept our currency, but rather would be taking our property and be the landlord. That is when he really started taking his money out of the US economy and started putting it into other currencies. He was right …… Now they are getting Unocal. It seems they also got all the land around the Potomac River.