Editor’s Note: February 21, 2019

What’s so bad about aid?

Ghana’s parliament is due to consider the adoption of a roadmap to help end the country’s reliance on development assistance – or aid. The plan is part of the wider debate about whether aid has a role to play in driving development in Africa.

For many the answer is no. At best it’s seen as ineffective, if it isn’t actively contributing to underdevelopment.

There is room for nuance here. 

When we speak of aid it’s usually in reference to the patronizing, Western-led charity epitomized by initiatives like Band Aid. This approach has largely been discredited, helping to drive a shift towards an emphasis on using development assistance to drive private investment.

Development finance institutions for example – often partially or fully funded by aid budgets – have played an important role in catalyzing investment. Private equity in Africa would not be where it is today without them.

Another example is Kenya’s M-Pesa mobile money platform, which has helped transform the finance space on the continent. It started with funding from the UK’s Department for International Development.

The rise of new donors like China – with its emphasis on infrastructure – has also been important in catalyzing private investment.

The point is that Africa doesn’t face an ‘either or’ choice between aid and investment. The former can actually be quite useful.

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