Posts Tagged ‘poor countries and EU’

DW: Mr Piebalgs , you say that poverty in the world could be abolished during our lifetime. Why are you so optimistic?

original_Andris-Piebalgs-13Andris Piebalgs (EU’s commissioner for development): Around the world, we have six billion people who live in prosperity, and one billion people who are poor. Just by redistributing income, we could reach those at the lowest end. The affected countries themselves must make a political contribution, but we must deliver on our promises; namely, to provide 0.7 percent of Gross Domestic Product as development aid.”

Oh boy me! What is the solution to end poverty?

Piebalgs would say: Aid, aid and more aid… and yadi yadi yah.

I disagree, 125 percent in fact. No offense to folks in the development world, but I think bilateral aid has rendered state systems in the world extremely weak, lazy, and massively corrupt. Even if this was an unintended consequence of aid, donor countries are absolutely making use of it to their benefits.

African authors as well as North American economists have written about it and have proved that donating money to governments in developing countries does not help anyone but the donors themselves. Dambisa Moyo in her book “Dead Aid” shows how aid kills small business initiatives.

Dambisa’s analogy is a small-time entrepreneur whose mosquito net business collapsed because he couldn’t compete with the free flow of nets from aid agencies – so did Daron Acemoglu and James A. Robinson in their book “Why Nations Fail”.

Why Nations Fail” analyzes how extractive governments have been able to form absolute control of the flow of resources thereby eliminating all forms of competition for power. Zimbabwe’s president Robert Mugabe is a good example for creating an extremely extractive political system. And there are many of them out there in the African continent.

Now, when you keep pumping money into an extractive institution, what happens? We all know the answer, it’s quite visible in almost all states in Africa.

Back to Piebalgs statement, I agree that the EU can do more to eradicate poverty but just not through development aid. In fact, it will fail again and again.

G8 LeadersMy solution would be to cut out the corrupt middle men; i.e. The extractive political institutions. The EU can set up direct incentive programs for people with excellent ideas. These ideas could mean a whole lot for communities in developing countries. It can encourage individuals to be more creative and think deeply for solutions to problems in their societies. This is extremely healthy for growth and without it a nation is doomed to fail.

The EU needs to open up and make its offices around the world accessible to the man on the street. That is for people like Yeabu that has to wake up everyday at 6:00am and runs to the wharf to buy fish and brings them to sell at the fish market. When she fails to do so for the day, her family will starve for that day. Yeabu has to know that she can go to the office of the EU on the nicer side of town and to speak to someone who will encourage her to come up with ideas for a business or service and that the EU will support her to make that happen.

Secondly, I think the EU has to cut down direct spending on governments significantly if it plans to help meaningfully. Governments need to fend for themselves. I am not saying it because it is easier to say, but because it hard to do and I Believe if a government struggles very hard to get its money, it will fight very hard to put it into better use. As people say in Sierra Leone, “spend no check, I got it FOC” (Free of Charge). With less FOC money, Government institutions will be more robust in collecting revenues for their states.

Thirdly, the EU has to create a level playing ground for European and African farmers.

Here is an analogy: Seku, the Ivorian cocoa former, does not even know the end product of his produce. He sells a 50 kilogram bag of cocoa to Fritz, his German retailer, for extremely cheap. Fritz imports the cocoa on behalf of his multi-million dollar firm that is making 20 times the profit that Seku could dream of. Profits to Germany.

The heavily subsidized German farmer Heinrich sells his produce to a German firm for a standard price fixed up by a government committee. Heinrich is protected by Germany and the EU, whereas Seku isn’t.

The price of cocoa beans is fixed by Fritz and his rich firm and if Seku refuses to sell to him for cheap, he threatens he will go to John in Cameroon who is dying to sell his produce. By the way, I have not even mentioned the other middlemen, the Lebanese and Syrian cocoa buyers that as well sell to the likes of Fritz through ripping-off of poor farmers and the corrupt institutions that makes the whole export business cumbersome for Seku. What the EU does is that it sets the standard for the quality of cocoa beans rather than the living standard of Seku.

Because Seku is extremely poor and rely heavily on Fritz to live, he will sell his produce as cheaply as Fritz wants. More profits to Germany.

Hence the EU has to make the same regulations equal for both European and African farmers: i.e Fritz should only be allowed to import cocoa beans from Seku if his standard of living equals to that of Heinrich. Easy to say and easy to do.

Fourthly, if the EU genuinely wants to eradicate poverty, it should then lower the barrier for students coming from developing nations to study in Europe. It’s true that the number of Africans studying in Europe has increased in the last few years. This is because African economies have made huge strides in the last decade and more Africans can now afford to live and study in Europe. But this number is not enough yet to spark a trickle-down effect. If this trend continues it will take decades for changes to be made. To provide a quick fix to poverty, more Africans need to travel and see how things get done successfully in other places.

Everyday I see my fellow Sierra Leoneans out in the global north representing the nation at conferences and forums. While I celebrate that my country is slowly getting re-exposed to the world, the other side of my brain ponders on how this makes it even more complicated for these folks that have been able to leave the country for these important but very short trips. It’s evident that these folks learn from their exposure but what they take home is often not what Sierra Leone needs.

They see the glamour of the north and tend to copy it but what they fail to understand is how the north was able to get there. Europe went through a lot of periods from the black death to the neolithic revolution, the medieval period and finally industrialization and globalization. African colonies didn’t but this isn’t about history. It is about the fact that Europe has learned from these and this what shapes the lifestyle of the average European.

For example, if the bus pulls up at the station in London or Berlin on a busy Monday morning everyone will instinctively form a queue, whereas in Freetown or Accra people will scramble and fight to get in first. When a new design of t-shirts is trending in the German market, the average German earner would first consider how much damage buying that t-shirt would cost to his income, considering also rent, electricity and heating bills, taxes, medical insurance and savings. In Sierra Leone, the average earner would buy that t-shirt irrespective of his debts and dues. Yes, how you look and dress is highly prioritized in most developing countries as opposed to rich nations.

My point is that these folks see European lifestyle and tend to copy it, but fail to consider European thought-process. In other to fully understand how things get successfully done in Europe, it takes more than a three-day climate change conference in Warsaw. If there is one thing I have learned in my three years of studying and working in Germany it is how to be efficient in what I do. By efficiency I mean how to do things better through eliminating all forms of failure.

The EU needs to promote more educational programs for students from developing countries, eliminate language barriers and set a lower bar. It also needs to promote more long-term exchange programs especially for experts from developing nations to learn from their European counterparts.

IMG_1739Finally, the EU needs to go beyond figures and statistic trajectories. Setting the barrier that every nations Gross Domestic Product, which politicians always call the GDP and sometimes do not even understand what it means, should not be below whatever percentage does not solve the problem. Sierra Leone’s GDP projected from 3.2 percent in 2009 to 6 percent in 2012 but the reality on the ground is quite the opposite of the stats. A bag of rice in 2009 cost SLL 90,000 ($30) and in 2012 it cost SLL 120,000 ($40).

So Mr. Piebalgs, the UK has reached its threshold of providing 0.7 percent of GDP in aid but that does not make the lives of poor people in Sierra Leone better. The EU simply needs to rethink its development programs that can somehow meet the intended purposes. It owes the world that much considering the damage Europe inflicted on the rest of the world.

My Two cents: