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African Aid

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Author: William Cate

African AidByWilliam Cate

Africa, like everywhere else in the world, has its fair share of honest, intelligent; hardworking people who want to see their families have a better standard of living. Unfortunately, most of these people are living below the poverty line. The reasons that Africa, with all of its natural resources, is an economic basket case are complex. They start with the 16th Century Africans' failure to adopt an effective immigration policy. The result was the European immigrants divided up the continent without regard to historic tribal boundaries. The modern result has been tribal wars waged with modern weapons from the Sudan to Rwanda.

After WWII, the West's development schemes have been a long litany in stupid projects. A few of my favorite examples include: 1. The British Groundnut Project: After WWII, the British found themselves with lots of heavy equipment that needed a use. The British shipped it to Africa and cleared thousands of hectares of tropical jungle. The idea was to grow peanuts and export them back to Britain. Nobody considered the fact that the soils in a jungle are lateritic and, once the jungle was cleared, the exposed areas quickly evolved into concrete parking lots. Not one peanut ever reached England. 2. The Americans Built Highways to Nowhere: After WWII, the Americans built four lane roads in countries with less than one hundred cars. The local Government owned most of the cars. Years later, I sat at a roadside food stand and counted three cars passing in the five hours it took the only bus to travel that road to pick me up. 3. If you think stupidity is limited to English speakers, consider that the Norwegian Government granted US$25 million to build a fish-freezing plant in rural Africa. After the plant was built, someone noticed that the local people don't catch or eat fish. They herd goats. 4. The Soviets built a milk bottling plant in North Africa. The local people don't drink bottled milk and there is no way to ship the milk elsewhere. The plant has yet to ship its first bottle of milk. 5. In East Africa, the Yugoslavian Government built a factory to can mangos. The factory has a capacity that exceeds the entire world's trade in canned mangos. 6. The Italians built a banana processing plant, but the quantity of bananas needed for the plant to breakeven exceed the entire country's banana production. 7. The Americans designed and the Soviet's build the Aswan Dam. Before it was built, studies showed that by 2006, the amount of new irrigation agriculture developed above the dam would be offset by the salinization of the Nile River Delta below the dam. Meanwhile, the Egyptian population would grow and the result would be a constant threat of national starvation. The studies were right.

Everywhere, politicians and bureaucrats produce nothing. In Africaand elsewhere, the political system runs on the axiom: What's mine is mine. What's yours we'll share. In all but four countries, upon independence a one party political system evolved with a single ruler. The result was instant corruption. When Mobutu Sese Seko left office, he had accumulated a $10 billion dollar fortune. He could have written a check and paid off Zaire's $7 Billion foreign debt and still had enough to get by amply in the West. It isn't simply the fact that almost all African leaders are corrupt and dictatorial, it's the fact that most opposition party leaders are seeking office to rape the country. The result is a political vacuum that makes it nearly impossible to help the honest, hardworking Africans create a middle class and stabilize their country.

Today, Prime Minister Blair wants to make another attempt at saving African Swiss-Bank Socialism. His plan is to forgive the debt of the poorest African countries. I'd agree, since this debt will never be repaid. Tying it to countries "on the road to economic reform" is nonsense. Mr. Blair's plan is to double aid from rich nations' taxpayers to US$25 billion each year and US$50 billion annually starting in 2015. The Gnomes in Switzerland must be licking their chops. . Mr. Blair's proposal confirms that the Swiss banks can keep their African clients' accounts and expect to see those accounts grow annually by billions of dollars.

Thanks to the Prime Minister, President Bush has added US$674 million for humanitarian assistance of which US$414 million will go to food aid in the Horn of Africa. Certainly everyone realizes that starvation is a terrible way to slowly die. Unfortunately, due to Global Warming, the 21st Century epitaph for the Horn of Africa will be pending starvation.

Sending money to NGOs (Non-Government Agencies) does see some of that money converted into help for the local people. However, the taxpayer rarely gets fair value for the money sent to any third party. I think funding the eradication of assorted African diseases is in everyone's best interests. >From ridding the continent of River Blindness to finding a way to remove schistosomiasis from Africa's waterways, without damaging the environment, is everyone's social obligation. The West has started to address the issue of African AIDs. We are finding ways to ensure that everyone who is HIV positive has access to modern drugs. Better health for everyone in Africa is a key to allowing a large middle class to evolve.

Mr. Blair and the G8 leaders should realize that trickle down aid is the source of African Swiss-Bank Socialism. If the Prime Minister wants to help the honest, intelligent and hardworking people of Africa, he should take his lead from the women of West Africa. A group of women each put some money into a pot. Then one of the women uses the collected funds to buy something to start a business. As her business prospers, she repays her debt and the next woman, using the same risk capital, starts her business. Eventually, all the women are in business. Usually, about this time along comes a local bureaucrat seeking bribes to allow the women to remain in business. What if the West supplied the local pots of loan capital? What if the local tribal elders had the power to expose corrupt officials seeking bribes? What if the G8 required laws to protect the small businesspersons so that they could prosper? Sadly, none of these options needs to be considered as long as the West thinks African Swiss-Bank Socialism is the way to African Economic Growth. It isn't.

Given African reality, if I were an African businessperson, I'd follow the lead of African politicians and move my money offshore. My family would soon follow.

About the Author

He has been the Managing Director of Beowulf Investments [] since 1981 and is the Executive Director of the Global Village Investment Club []

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