‘Lost’ Swedish aid millions are the tip of the iceberg

How many people are publicly employed in the Democratic Republic of Congo? Swedish Radio reported recently that foreign aid agency SIDA has spent 22 million kronor on finding an answer to this question. SIDA has not clarified what this large sum of money has been spent on in one of the most corrupt countries in Africa.

A total of 15 million kronor has been spent on consulting fees in the project, but no information has been given regarding how many consultants were hired and how this sum was calculated.

This is, alas, not the only example of large sums being wasted on foreign aid. As foreign aid has been an integral part of the economy of many African countries, many nations in the region have been accused of developing so-called “vampire states”. This term is used to describe regimes that literally live of the misery of their inhabitants.

African head of states such as Jean-Bédel Bokassa in Central Africa, Mobutu Sese Seko in Democratic Republic of Congo (then known as Zaire), Idi Amin in Uganda and Robert Mugabe in Zimbabwe have all become infamous for amassing large private fortunes through exploiting their countries. But these individuals only represent the top of an iceberg of corruption that underlies many African states.

The generous foreign aid policies of the western world worsen this problem, since much of the money that the corrupt bureaucracy feeds on comes directly from aid. In a similar way a large aid industry has been created in the western world, where tens of thousands of government officials and even more people in aid organizations are making a living out of the aid industry.

Those working in the western aid industry are of course not as corrupt as African aid officials, but they still represent how the self interest of those working with aid has become an integral part of the foreign aid industry.

Today when both the UN and the center-right government of Sweden are calling for more foreign aid, it is time to question the very practice of foreign aid. After the Second World War both South Eastern Asia and Africa were among the poorest regions in the world. Since then, African countries have relied heavily on foreign aid, socialism and state control of the economy. Since 1970 Africa has received over $400 million in aid. But the foreign aid has done little to reduce poverty. Rather, Africa has simply stagnated.

The countries of South Eastern Asia have had a different kind of political development, where they have made free market reforms and not relied as much on foreign aid. By implementing property rights, allowing people to start businesses and maintaining the rule of law countries such as South Korea, Taiwan and Singapore have achieved great prosperity.

An illustrative example is that South Korea was about twice as rich as Zambia in 1960. Since then Zambia has received 13 times more in foreign aid per capita compared to South Korea. Today however, South Korea is fully 38 times richer than Zambia.

Many people simply see foreign aid as a way of being kind to the poor, but as history has shown us this policy often stands in the way of economic development rather than promoting it.

Here in Sweden, we must not only put more pressure on SIDA to ensure that the aid does not simply feed corruption, but also ask ourselves if the foreign aid policies are helping at all. After decades spent hoping that foreign aid would lift Africa out of poverty perhaps it is time to end aid-dependence and attempt to persuade African nations to implement free market reforms similar to those in South Eastern Asia.

Nima Sanandaji

President of the Swedish free market think tank Captus