In this post I will dig a little deeper in the implications of current development aid and how it is related to the lack of power African citizens have over their government. Most people know this discussion through the writings of Dambisa Moyo in her recent book ‘Dead Aid’. Although I do not agree with the solutions suggested by Moyo (See my first post), I do acknowledge some of the problems she puts forward.

Foreign Aid and Democracy
Democracy as we know it evolves from mutual dependency of the elite and the general public. They depend on each other in order to create a stable economy which will benefit all. In their symbiosis, the general public produces commodities which the elite collect and distribute. When either of the two does not perform their task well, one is able to hold the other accountable for not sticking to the deal. Elites can punish civilians who do not pay tax or disobey the law, civilians can demonstrate and vote for another government if tax money is not spent according to their needs.

This extremely simplified description of modern democracy will hopefully help to explain why problems can arise from foreign aid flooding in to a state. Foreign aid can complicate and eventually erode the dependency relations between government and civilians. This disruption of dependency relations eventually leads to governments who are over sensitive when it comes to foreign investors. Citizens will not generate as much wealth as foreign parties, so accountability of government processes shift toward these investors (Aid, Chinese investments, sale of natural resources to international corporations etc.). Citizens are less valuable to the elite and in the historically weak democracies of Africa, civil society will be hesitant to demand rights they have never known.  In other words; Foreign aid can ‘short circuit’ the link between government and civil society and obfuscate the democratic process.

The case of Uganda
In a concrete example we can look at Uganda, where foreign aid takes care of 43% of the revenues collected by the Ugandan treasury. On top of this figure are various NGOs, which take care of a lot of public responsibilities from the government and thus give the state the ability to invest in other sectors. Instead of providing healthcare, education and infrastructure, public money is invested in the military, public administration (also known as patronage) or presidential jets. Of the 2006/2007 national budget, six hundred and ninety billion Uganda shillings was spent on public administration (Ministers, Presidential advisors etc.), compared to only eighteen billion which was spent on agriculture. On the military, three hundred and eighty billion was spent, whereas only forty three billion went to trade and industry (source: Andrew Mwenda).

It becomes clear that the government is spending public money to strengthen its position instead of taking care of the interests of the whole nation. Public administration and the military receive disproportionate amounts of money compared to agriculture and trade. Filling the gap left behind by the mismanagement of African governments with foreign aid is promoting corruption. More importantly, it obstructs the democratic process by alienating civilians from their role in society. Instead of justifying their actions to civilians, African governments turn to foreign donors who bring more money into the state treasury than taxpayers do. In a healthy democracy, civilians give the mandate to govern to their leaders. In Africa, this mutual dependency is often obstructed by foreign aid. The disenfranchisement of civilians from political participation leaves governments with fewer incentives to provide feedback to their citizens; lack of feedback creates a politically ignorant civil society.

Lowering Taxes in Uganda
The Ugandan tax base is currently at 14% of GDP compared to 58% of GDP in for instance Sweden. In order to boost its popularity and to attract votes for the elections of 2007, the ruling party of Uganda abolished the national ‘graduated tax’. This was a small tax which had to be paid by all men above the age of eighteen, who did not attend school. The decision was welcomed by the population and awarded the ruling party enough votes from the peasant population to win the elections. The regime is able to take such irresponsible measures as abolishing tax because the deficits in the treasury will be filled up by aid in the long run. This example illustrates the way in which the Ugandan government, with the help of foreign aid, is taking away incentives for its people to perform their political role in society.

In recent years, some development agencies like DFID have taken notice of this destructive side effect of development aid and have adjusted their policy accordingly. Some development agencies are now turning away from giving aid to support schools and healthcare as this is a responsibility of governments in receiving states. More emphasis lies on transformative development in which civil society is strengthened and mechanisms of accountability are restored. Important in this process is to sensitize citizens on their democratic obligation and promote a transparency of state spending amongst the people. My research on the way ICTs can be used in this process will be discussed in the following blog post.