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Executive Summary
The use of aid as a development tool is a contentious issue. After nearly 50 years of independence and development efforts backed by more than half a trillion dollars of Western aid, most of Africa’s citizens are poorer than ever. A radical review of donor aid policy is surely long overdue.
The discussion falls between the moralists, who argue that the world is obliged to provide aid to Africa and other developing nations, and the sceptics, who dispute the feasibility of aid as a development tool. Yet there is a middle path between the two
extremes that suggests we should employ aid specifically for humanitarian purposes; and also with a clear and targeted strategy and for a limited period for Africa’s development.
This middle path would lead to Africa and its donors committing themselves to phasing out Western aid over the next five years, with the aim of replacing foreign lending by African resources, drawing on a combination of:
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higher domestic savings;
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greater use of land ownership and houses as collateral;
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implementing incentives to secure a higher share of foreign direct investment (FDI);
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taking advantage of international trade reforms;
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implementing measures to encourage the private sector and reverse capital flight, including an amnesty for those who have broken the law by illegally sending money abroad; and
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tougher action by banks to stem illegal transfers.
Footnote:
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Michael Holman is a London-based columnist and novelist and was the Financial Times Africa editor from 1984 to 2002; Dr Greg Mills heads the Johannesburg-based Brenthurst Foundation dedicated to strengthening African economic performance, and which, together with the Konrad Adenauer Stiftung and Danida, is devising the terms and conditions of an ‘Africa beyond Aid’; see <http://www.thebrenthurstfoundation.org>.
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