After about fifteen years of good growth, economic development in Africa has changed abruptly. The need for assistance is increasing at the same time as donor countries are making cuts and reprioritisations. Now we must make sure to safeguard long-term poverty reduction efforts run by the African countries themselves, writes Lennart Wohlgemuth.
From the end of the 1990s up to and including 2014, the GDP of many African countries increased rapidly, mainly as a result of a sustained commodity boom and investments in infrastructure and construction. Although the distribution of the new resources was far from equal, many observers spoke of "Africa turning".
Through the rapid growth, tax revenues increased and the countries gained more and more local resources to use for investment and social activities. In addition, the supply of investment funds from the private sector abroad increased, and from the so-called "new players" led by China. Remittances, that is, money that African guest workers in other countries send home to their families, accounted for as much of Africa's economy as all official aid.
Aid dependence thus decreased rapidly. In Tanzania, the share of the country's budget consisting of development assistance decreased from close to 50% in 2010 to 30% in 2015, and in Zambia the share decreased to less than 5%. As the need for traditional assistance decreased, self-confidence increased. African countries increasingly needed to meet the conditions of donors. There was widespread talk that the time for traditional aid was coming to an end.
Abrupt change
In just one year, the picture of economic development in Africa has completely changed. After about fifteen years of comparatively good economic development, most countries in Africa have been hit by an economic downturn. Commodity prices (especially the price of oil), on which the African economies are strongly dependent, have fallen to a third of what they were in 2014. Economic growth has fallen sharply and in some countries has even shown negative figures.
As a result, tax revenues have declined in most countries, as have private investment. Many of the "new players" such as Russia and Brazil themselves have sharply declining production figures. Others have continued growth but sufficient problems to deal with internally, such as China and India. On top of this, East Africa (especially the Horn of Africa and Southeast Africa) has now been hit by the most severe drought in thirty years. This rapid turnaround in development has led to an increase in the need for traditional assistance again.
Increasing needs and decreasing assistance
The OECD countries, which account for the majority of traditional aid, have had their own problems. Europe and the United States have found it very difficult to recover from the economic downturn that began with the financial crisis of 2008. In addition, crises in Europe's neighboring areas such as Syria, Iraq and Libya, with subsequent refugee flows, have contributed to both political and economic conflicts. Because of all this, traditional aid has changed fundamentally, both in size and character.
Firstly Several previously important donor countries, such as the Netherlands, Denmark and Finland, have sharply reduced their development aid budgets, and others are following suit.
Second An increasing share of the remaining development assistance has been allocated to areas of use that were previously financed by other means. Costs for caring for refugees during their first year are allowed, for example, to be counted as assistance. Other costs are also discussed, such as military spending in connection with a conflict.
Recent statistics from the OECD-DAC show that the largest donor countries' total settlements for refugee costs almost doubled between 2014 and 2015 - from 6,6 to 12 billion USD - and the figure for 2016 is expected to be even higher. Ceilings for the settlements have been set up in Sweden (30%) and Norway (20%), among others. Despite this, for example, Sweden's aid directly to Africa has decreased by 600 million per year in 2015 and 2016.
For the third Demand for humanitarian aid has risen sharply, largely due to the same problems that have led to increased refugee flows, but also due to more and worse disasters due to climate change.
Profiling at the expense of traditional assistance?
With reduced resources for development assistance, donors' interest in profiling themselves within development assistance will be greater than before. Therefore, we see that countries, including Sweden, emphasize the investment in specific themes such as human rights, democracy or the environment at the expense of country-to-country aid.
What is left after cuts and reprioritisations goes to what used to be the bulk of aid, namely land-to-land aid - which is distributed among states, civil society and private actors - and multilateral aid to UN agencies and the World Bank. Assistance to these areas has thus decreased significantly. Multilateral aid has fallen so sharply that important UN agencies are at risk of not surviving. It is currently being discussed whether the UN research body UNRISD will survive this spring.
Cuts require priorities
For the African states that run long-term development programs and which have come a long way in recent years, the situation now looks bleak. Foreign investment and the basis for own financing have fallen sharply, as has the aid the countries have previously been able to rely on.
It can be argued that it is good to work under the cold star of scarcity. This can lead to you becoming more careful with the money you have. What I am worried about is that many efforts that are well on their way to achieving long-term good results and that are driven by the African countries themselves will be terminated as a result of this development. Particularly vulnerable are efforts aimed at combating poverty.
Maybe we can get better at focusing on the most important things, but I fear that with less aid, Africa may be forced to close many development programs. The global goals for sustainable development as well as the rights of women, men, girls and boys may be challenged.
It will be important with priorities for both donors and recipients in the future. Otherwise, many children will be thrown out with the bathwater.
Lennart Wohlgemuth
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