Wednesday, 26 March 2014

Clean up graft, promote transparency: Africa’s Development Road map

I recently came across an interview from 2005, with a Kenyan African Economics Expert James Shikwati titled “For God's Sake, Please Stop the Aid!". According to him, aid to Africa does more harm than good. He spoke about the disastrous effects of Western development policy in Africa, corrupt rulers, and the tendency to overstate the AIDS problem. This got me thinking about the age-long argument of the impact of foreign aid on African countries.

Another article on Why Foreign Aid is Hurting Africa stated that ‘Money from rich countries has trapped many African nations in a cycle of corruption, slower economic growth and poverty’ His panacea: ‘Cutting off the flow would be far more beneficial’.

Despite its good intentions, the developed world and its foreign aid have not made dramatic improvements in curbing corruption especially in Africa. Billions of dollars have been and is still being invested and given to these countries but unemployment, starvation, poor healthcare, under-development and corruption remain major problems in Africa.

While the region remains the poorest in the world, it also remains the most corrupt; corruption has been known to prevent foreign aid from achieving its intended goals in this region.

In the BBC article “Why Aid Doesn't Work”, Fredrik Erixon argues that “if nothing else, aid to Africa seems to have lowered rather than increased economic growth… the tragedy of aid, as been shown in numerous evaluations and by World Bank research is that donors are part of the problem of corruption; aid often underpins corruption and higher aid levels tend to erode the governance structure of poor countries.” (Wilkie, 2008)

In 1999, a paper from the US. House of Representative’s Joint Economic Committee Study Vice Chairman, Jim Saxton suggested that “minimizing IMF lending is one obvious way to prevent IMF assistance from promoting corruption”. (Wilkie, 2008)

Studies have shown that the negative impact of political corruption on investment predominantly affects economic growth. (Mauro 2004:16) notes, ‘there is a close association between corruption and slow growth, as well as between corruption and political instability’.

This view was supported by the World Bank according to (UNODC, 2005:81) which agrees that by distorting the rule of law and weakening the institutional foundation of economic growth, corruption is the single greatest obstacle to economic and social development; noting that the harmful effects of corruption are especially severe on the poor, who are hardest hit by economic decline, and are the most reliant on the provision of basic needs and public services.

A study on the Relationship between Poverty, Conflict and Development (2009) notes that there are certainly ‘corruption-related indicators of poverty’ in Africa that need to be adjusted (these include embezzlement, political patronage, money laundering, bribery, invoicing and over estimation of project and contract); this things impacts on governance negatively in Africa. Also, a Transparency International report has established a link between social conflict and corruption.

As noted by UN Secretary General Kofi Annan in (UNODC, 2005: 92), ‘Corruption is found in all countries – big and small, rich and poor – but it is in the developing world that its effects are most destructive. Corruption hurts the poor disproportionately by diverting funds intended for development, undermining a Government’s ability to provide basic services, feeding inequality…. Corruption is a key element in economic under-performance and a major obstacle to poverty alleviation and development.

Research on aid effectiveness has shown that foreign aid given to countries with poor governance and poor economic policy environments does not aid growth and development, and may actually do the reverse.

According to empirical consensus, foreign aid perpetuates poor governance and bad policies (with corruption being a symptom of both) in countries with these problems. As such it is presumed that foreign aid given to countries with high levels of corruption will fuel that corruption and over a period of time we will see an increase in the levels of corruption (Wilkie, 2008).

Therefore, if aid recipiency increases corruption in highly corrupt countries, it is only logical to expect that donors reconsider the continuous flow of aid to such countries but even now, is this really the case?

The Need for Domestic Reform

Many calls have been made for the need for domestic reform, foreign funds can help only those African countries that undertake political, economic, and institutional reform, but the commitment to reform has been and is still seriously lacking. (Ayodele and Cudjoe, et al., 2005). Without domestic reforms, African politicians will line their pockets, but Africa will remain desperately poor.

In conclusion therefore, my argument is that aid to African countries should be more about providing the support and framework to fight corruption and graft and fast track progressive development and not really the continuous flow of financial foreign aid. As evidence has shown this has led to increased corruption across many African countries, thus tackling the cycle of corruption especially political corruption should be the major focus if there is any hope for Africa to begin to enjoy sustainable development

By Patience Bamidele, Masters Student of IDS


Tuesday, 11 March 2014

Conditional Cash Transfers and child protection outcomes: sticks or carrots?

Conditional cash transfers (CCTs) have gained unprecedented popularity as a social protection intervention and are no longer exclusively found in Latin America but being implemented across the globe. Its appeal lies in the combination of poverty reduction through the provision of cash with behavioural change by tying the receipt of cash to specific conditions that aim to improve outcomes in other dimensions of wellbeing, most notably for children. Such conditions frequently include school attendance and health check-ups. Ideological and political considerations also come into play: many hold strong reservations about whether cash is spent on the ‘right’ things or are opposed to the idea of giving ‘something for nothing’. Making cash transfers conditional upon certain behaviour is a means of counteracting such concerns.

There is no doubt that CCTs can help reduce poverty and improve wellbeing outcomes that range from nutrition to education and health. The evidence base about those positive effects is substantial and steadily expanding. However, the current debate around CCTs is in danger of being romanticised. Apart from strong moral and ideological considerations denouncing the conditional element of CCTs, perverse incentives and unintended side-effects of CCTs can negatively influence children’s outcomes. A recently published paper in Child Abuse & Neglect assesses the potential impact of three elements of CCTs – conditions, cash and services – on child protection outcomes in particular.

Conditionality is the defining feature of CCTs, requiring participants to meet certain requirements in order to receive the transfers. It is considered part and parcel of CCTs’ great success: the aspect of conditionality induces behavioural change that leads to positive outcomes in the areas of education, health, amongst others. The extent to which positive impacts of CCTs can be attributed to the aspect of conditionality, however, is far from evident. At the same time, perverse incentives and negative side effects are often overlooked. Experiences in Brazil, Kenya and Nicaragua indicate that children were either kept underweight or being overfed in a bid to meet requirements and guarantee receipt of transfers. Programmes that are conditional upon work – public works programmes – have been found to lead to substitutability with children taking on more domestic work or increasing the numbers of hours spent on rearing livestock at the expense of going to school or enjoying leisure time.

The provision of cash has many positive effects: it reduces poverty, improves wellbeing outcomes and helps lifting barriers to access to services. In terms of child protection, it can improve care relationships due to ameliorated stress levels and support carers in providing better care for their children. The role of cash in supporting care for children is however not without its pitfalls. There is a danger of ‘commodification’ of children when carers are primarily motivated by financial incentives to provide foster care, for example.

Finally, CCTs are predicated on the assumption that services required for participants to meet conditions related to education, health and nutrition are available and that services are of high quality. The importance of this supply-side requirement, and the reality that indeed services may not be available to everyone or may not be of high quality, is often overlooked in ‘theories of change’ of CCTs. This particularly puts the most marginalised and vulnerable groups at a double disadvantage: not only do they experience lack of access to (high quality) services, they are also punished for such lack of access as the consequent inability to comply with conditions means they are no longer eligible for the programme.

This blog post does not aim to discredit the many positive effects of CCTs. That said, the current debate on CCTs and their appropriate role does need a more nuanced perspective and be more recognisant of the potential negative effects, particularly when it comes to children. The substantial evidence base on positive impacts makes it tempting to base future decisions on if, where and how to implement CCTs on assumptions rather than in-depth assessments of what works and doesn’t work for children. Stronger linkages between the social protection and child protection rhetoric could help bridging the divide. Without a more nuanced perspective, programmes risk doing as much harm as they do good.  

Written by Keetie Roelen, IDS Research Fellow