As stated by the Global Policy Forum (2018), International aid offers a key element of development financing. Official Development Assistance plays a fundamental role in supporting the public infrastructure, health, education, and agricultural sectors in developing countries. The dissertation seeks to prove that despite the benefits, foreign aid to East Africa does not help to improve the region's development. The research will focus on Kenya and Tanzania as case studies to prove this claim.
Kenya
Argument
The proponents of financial aid claim that the assistances has had a lot of benefits for developing countries. Mwega (2009), an Associate Professor at the University of Nairobi states that, since the 1980s, Kenya has had a relatively unpredictable flow of funds from international donors. In this case, the country’s nominal aid flows improved from $ 393. 4 million in 1980 to $1120.5 million in 1989-90 (Mwega, 2009). However, International aid flows declined to a low $308.5 million in 1999. Since 1992, there has been a substantial increase in aid flows due to the government’s increased borrowing to finance various development plans (Mwega, 2009). Therefore, international aid has benefited Kenya by facilitating the following projects.
The Nyeri Water Supply System
A research study conducted by Mwega (2009) established that the Nyeri water supply system is one of the projects where the objectives of the Kenyan government and those of the donors have satisfactorily been attained. In 1996, the Nyeri Municipal Council presented a proposal to the Germany Agency for Technical cooperation to fund the project Mwega (2009). In 2003, KFW, a German government-owned development bank agreed to inject $10.5 million to rehabilitate Nyeri town water system (Mwega, 2009). The project has been vital in providing water and sewerage services to Nyeri residents. Besides, a water treatment plant of a capacity of 21,000 m³/d has already been designed and it is under construction at the Kamakwa trading center which is located in the western part of the Nyeri municipality (Mwega, 2009).
Enhancing the Country’s Healthcare System
With a population of about 47 million people, Kenya’s Gross Domestic Product per capita is $3200 per year (Wawira, 2014). Only 5.7% of the country’s expenditure are devoted to healthcare, a sector where probably the funds are needed most (Wawira, 2014). A 2006 United Nations Development Program (UNDP) report indicated that health and HIV/ AIDS are some of the areas that receive the highest share of foreign aid funding in Kenya (Wawira, 2014). Through aid-supported programs, the nation has experienced significant reforms its health care system.
In February 2013, the Kenyatta National Hospital Cancer Treatment Centre took part in a six-month Leadership Development Program offered by the U.S Agency for International Development (Mwega, 2009). The primary purpose of the program was to sensitize the participants on the importance of creating a conducive working environment that will improve the quality of services offered to clients (Kosgei 2015, p. 34). Moreover, the practitioners at Kenyatta National Hospital, the country’s biggest healthcare facility has been able to enhance their problem-solving skills, build on resource and teamwork, and facilitate resource and stakeholder mobilization. Wawira (2014) states that the skills acquired during the training were vital in enhancing how doctor-patient scheduling system is managed subsequently improving service delivery to cancer patients. Also, a research done by Gabriel Demombynes and Sofia Trommlerova found out that Kenya’s infant mortality rates have significantly reduced in recent years (Sachs, 2018).
Infrastructure
International aid has also been critical in improving Kenya’s infrastructure. In 2014, the country received a total of a total of $2.7 billion from donors to help build its infrastructure and facilitate development (The Borgen Proect, 2016). Additionally, in 2010, Kenya’s Ministry of Finance wrote to the Chinese Government requesting for a concessional loan to help facilitate the construction of the Standard Gauge Railway costing $ 2.5 Billion (Standard gauge freight launch, 2018).On May 31, 2017, President Uhuru Kenyatta launched the much awaited Mombasa-Nairobi Standard Gauge Railway Line (SGR). Launching the first phase of SGR has provided fast, efficient and reliable transportation. It has also reduced the cost of transporting cargo, increased industrialization and helped protect the environment through reduced carbon emissions (Mwega, 2009).
Rebuttal
In spite of the benefits obtained from international aid, these funds do not help improve Kenya's development. Mallik (2008, p. 251) states that even after more than three decades of foreign aid assistance for development purposes, the real per capita income among African countries has either declined or remained static since 1965. In this regard, large inflows of foreign aid have long-term devastating effects on Kenya because of the following reasons.
Increased Corruption
In line with Hope (2017, p. 61), Kenya is one of the countries in Africa where corruption pervades all levels of the society. International aid fails to reach the right people who are really in need of assistance due to corruption. The country loses a third of its budget to misappropriation of funds every year. The 2017 Corruptions Perceptions Index reported by Transparency International ranked Kenya position 143 of the least corrupt nations out of 175 countries (Agutu, 2017). That said, the past two decades have witnessed an increased criticism based on the widespread perception that international aid has not attained the expected outcomes. A research study conducted by Ndida (2014) revealed that international aid towards in the Kenyan healthcare sector has been on the decline to high rates of corruption. As such, many donors have resorted to channeling their funds through NGOs rather than funding the government directly (Mwega, 2009).
In late 2016, Kenya’s ministry of health attracted heavy criticism due to a massive corruption scandal that allegedly saw $5 billion reserved for the provision of free maternity healthcare stolen or spent inappropriately (Gaffey, 2017). As a result, the United States Embassy in Nairobi announced that it was suspending foreign aid amounting to $21 million directed to Kenya’s ministry of public health (Ndida, 2014). The decision taken by the U.S government was a wakeup call to President Kenyatta’s administration to take appropriate measures and address corruption which has considerably hampered the development of the country’s health infrastructure (Ndida, 2014). In 2017, Kenyan doctors went on strike arguing that corruption prevented them from being paid. A 2016 leaked audit report further revealed the weakness of the country’s accounting procedures. In this case, $48.4 million was stolen or squandered as a result of the diversion of funds or due to double payment of goods (Gaffey, 2017; Mwega, 2009).
Despite the rampant cases of corruption, no action was taken against the leaders at the helm of the country’s health system when all these scandals took place (Ndida, 2014). Dr Cleopa Mailu, the cabinet secretary of the health ministry by then did not resign or hold those involved in the scandal accountable. Surprisingly, Nicholas Muraguri, the ministry Principle Secretary was transferred to another government ministry instead of taking responsibility for the corruption allegations (Gaffey, 2017).
Moreover, an article published on The Guardian indicated that the European Union suspended £83m aid meant to boost Kenya’s economy because of concerns about corruption (Vasagar, 2004). Edward Clay, British’s high commissioner accused Mwai Kibaki, the country’s former president of greed and arrogance. The decision taken by the European Union prompted other donors to intensify their pressure on Kenya over the resurgence of corruption (Gaffey, 2017). Evidently the scale of corruption in Kenya seems to be holding back development. The foreign aid contributed by donors is stolen or not used for the purpose it is meant for due to rampant corruption thus making some donors suspend their support (Vasagar, 2004). Therefore, foreign aid has been one of the factors that have been fuelling rampant corruption in Kenya. The aid does more harm than good to the country and keeps its development in stagnation.
High-Interest Rates and Increased Debts
According to a new research, Kenya is losing more to its helpers than the amount it is getting from them. Also, the donors are gaining more than their intended beneficiaries. The rapid increase in Kenya’s borrowing is associated with a significant rise in its public debt. For instance, it is argued that the Eurobond will cost the Kenyan taxpayers a total cost of $3.2 billion in interest payments during its lifetime of up to 30 years (Mwaniki, 2018).The amount of interest to be paid is equivalent to the cost of successfully completing a segment of the Mombasa-Nairobi standard gauge railway line (Gaffey, 2017). International aid to Kenya proves the high cost of borrowing which the Jubilee administration has preferred over concessional loans which are characterised by low-interest rates. These loans can also be paid in reducing balance terms as opposed to the international aid payments (Vasagar, 2004). The high cost of interest payments caught the attention of the International Monetary Fund which recommended that there is a need for Kenya to come up with effective plans that will adequately tackle the country’s fiscal deficit which is the main driver of borrowing. Besides, Kenya is expected to pay interest of $2 billion to the lenders at the dates of maturity in February 2028 and 2048 (Vasagar, 2004). Apart from that, these interest payments are exposed to foreign exchange risks implying that the cost of debt will rapidly increase if the exchange rate of the Kenyan shilling weakens (Mwaniki, 2018).
In his recent visit to China, President Uhuru Kenyatta signed a contract with Beijing that will see Kenya labor for China in several years to come. The deal will tighten China’s grip on Kenya’s economy. During the trip, the president secured sh362 billion to be used in expanding the standard gauge railway from Naivasha to Nakuru (Standard Media Group, 2018). Additionally, it is stated that the president requested for another sh16 billion to facilitate the construction of the Western Bypass. An Increase in borrowing will further escalate the burden placed on Kenyan taxpayers. Every Kenyan citizen will be expected to pay at least sh 100 000 to clear the county’s mushrooming debt which was estimated to be sh4.58 trillion in November 2017 (Standard Media Group, 2018). The escalating cost debt is worrying because the country is not producing as fast as it is borrowing. Foreign aid leads to significant debt burdens. Hence, the high costs of borrowing will have an adverse effect on the country’s development plans. As such, international aid to Kenya will be detrimental to Kenya’s economic growth (Vasagar, 2004).
Maintenance of Aided Projects
International aid creates a culture of dependency among recipient countries resulting in a situation where the governments of the aid-receiving countries are unable to maintain the projects. For example, the Japanese Government spent approximately $149.710 million to the Tana Delta Irrigation Project (TDIP). After its completion in the year 1997, the site where the project was built was damaged due to the El Nino phenomenon. So far, only 30% of the project has been renovated. Inadequate finances and the lack of donors have derailed the process of rehabilitation. Further, there were concerns about Kenya’s ability to settle its external debt discouraging some donors from offering their support (Mwega, 2009).
The Third Nairobi Water Supply Project (NWSP) is also another initiative that has never been completed after the donors withdrew their aid. The main player in this particular project was the World Bank. Other financiers include the Japan Bank for International Corporation, European Investment Bank as well as the African Development Bank. The total cost of the project was estimated to be $11 billion with phase 1 costing $5billion. Mwega (2009) states that phase 1 was completed in 1994. However, the other phases have never been implemented. The donors cited poor governance in the country to be the key reason for their withdrawal (Vasagar, 2004).
Lastly, the Bura Irrigation and Settlement Scheme is a project which was financed and supported by the World Bank together with the European Development Bank (Mwega 2009). Other soft loans and grants were provided by countries such as the United Kingdom and Japan. Nevertheless, various factors such as unforeseen expenditures, underestimations, inflation and devaluation resulted in financial constraints discouraging the donors from completing the project. The Kenyan government was unable to meet its financial obligations causing major delays and any progress in completing the irrigation and settlement scheme (Mwega, 2009). Thus, International aids lead to over-reliance such that the governments of aid-receiving countries’ cannot finance the projects to their completion in case of any economic factors or withdrawal of donors affecting the country’s economic growth (Vasagar, 2004).
Tanzania
The United Republic of Tanzania has been successful in attaining various political reforms. Between the year 1990 and 2010, the country received $26.85 billion in foreign aid. In the 2010-11 financial year, it is estimated that 33% of the government’s spending was financed through international aid (Albiman, 2016). Nyoni (1998, p. 1237) claims that there has been an increasing amount of foreign aid to Tanzania in the past decades. The World Development Indicator states that the amount of foreign aid received by Tanzania from 1987 to 2013 increased from $894 410 000 to $3430 280 000 in 2013 (Albiman, 2016). Through the support of foreign donors and multilateral aid agencies, Tanzania has been able to initiate several economic programs (Albiman 2016). Some of the programs that have benefited from international aid include
Development of Infrastructure
Tanzania has been one of the countries that has embraced various reforms inspired by the Road Management initiative. As stated by Olingo (2017), the country is a big beneficiary of donor-funded development projects on the continent. The World Bank and the African Development Bank have been funding various major projects in areas such as aviation, railways, energy, and water sectors in the East African region. Tanzania received $1.58 billion and used it to pave 2, 230 kilometers of roads (Olingo, 2017). Infrastructural development has helped the country open up remote areas boosting its economic and agricultural potential. During his visit to Tanzania, Jim Yong Kim, the president of World Bank Group said that the country will be able to access up to $2.4 billion to finance its infrastructure projects (Albiman, 2016). The World Bank also provided $200 million to be used in rehabilitating its central railway which will boost its agricultural trade, create more jobs, and improve the livelihoods of its people and that of its neighboring countries such as Kenya (Olingo, 2017).
Improving the Country’s Healthcare System
International aid has played a fundamental role in enhancing the health and quality of life among various communities in Tanzania (Pincock 2005, p. 2171). The African Medical and Research Foundation (AMREF) has been essential in providing medical assistance to remote communities in East Africa. The organization provides medical and health-related services. AMREF Health Africa’s activities are facilitated by the funds obtained from Europe and North America. The donors include Global Affairs Canada (GAC), Danish International Development Agency, Irish, and Madrid Regional Government- Spain among others. In 2015, AMREF received a grant of $30 472 094 from the Global Fund, one of its donors to facilitate the provision of medical care to Malaria and tuberculosis patients (Albiman, 2016).
The organization has been active in Tanzania since 1957 and has supported the enactment of various national health policies, strategies and guidelines meant to ensure that there is equitable health service delivery in Tanzania (AMREF Health Africa n.d). Currently, the organization has over 25 active projects in various regions in Tanzania, and it focuses on various programs to enhance healthcare delivery (Albiman, 2016).
Disease Control and Prevention Program
To begin with, the Disease control and prevention program focuses on ensuring successful implementation of both community and individual-based interventions to help minimize the burden of illnesses and its risk factors. AMREF targets communities to sensitize them on behavioral and medical health risks. Also, the program ensures healthcare facilities are well equipped and have adequate skilled personnel who can provide accurate, timely and reliable services to patients (AMREF Health Africa n.d).
Water, Hygiene and Sanitation Program
Under this program, AMREF focuses on ensuring that all communities within the country are empowered so that they can develop, operate and maintain their water sources. The organization also seeks to make sure that sanitation and hygiene practices are improved. The program has enabled various communities in Tanzania gain access to safe and adequate water, and appropriate sanitation facilities (AMREF Health Africa n.d).
Reproductive, Maternal, Newborn, Child and Adolescent Health (RMNCAH) Program
The above-mentioned program focuses on improving the health of women in Tanzania. AMREF also encourages men to take part in the program to contribute towards reducing preventable maternal, newborn, child and adolescent morbidity and mortality rates. The project has considerably improved access to reproductive health services, enhanced the construction and rehabilitation of facilities as well as equipping them with medical supplies and equipment (AMREF Health Africa n. d).
Rebuttal
High Levels of Poverty
Tanzania is one of the fastest growing economies with nearly 7% annual Growth since the year 2000 (Albiman, 2016). Usually, financial aid is meant to ensure countries effectively address their problems. Despite the high levels of foreign aid received by the country, poverty is still rampant. The 2011 statistics indicated that over 46% of Tanzania’s population lives on under $1.90 a day and the government is still struggling to address the issue of poverty among its citizens. In the year 2012, it was estimated that close to 12 million Tanzanians, equivalent to 70% of the country’s population lived in poverty (USAID, 2018). Poverty is a multifaceted concept that looks at various elements such as infrastructure, unemployment hunger, life expectancy, poor health services and social services.
The country’s poor healthcare system has been caused by the unequal distribution of resources. In this case, close to 85% of Tanzania’s healthcare spending goes to central urban hospitals (Lind, 2017). However, only 10% of the country’s population has access to these healthcare facilities whereas the remaining 90% has to rely on the 15% of the country’s healthcare spending resulting in poor quality of services due to inadequate resources. In spite of the efforts, initiatives and various programs introduced by AMREF, thousands of people in Tanzania, more especially the poor and young children lose their lives every day because the small amount of resources cannot be used to handle common diseases such as cholera, HIV, tuberculosis and malaria (Lind, 2017).
Besides, poor or lack of education has been cited to be one of the reasons behind Tanzania’s high levels of poverty. Despite the significant efforts made by the government to improve the education sector within the country, millions of children have limited access to secondary and post-secondary schooling. The cost of obtaining an education is too expensive for many families. Additionally, poor transportation and infrastructure are underlying factors for many of the students who are unable to attend school (Lind, 2017).
In Tanzania, the citizens have been compelled to deal with issues of malnutrition and food security. In 1991, the government introduced the Food and Security Act to help address food shortages in the country. Nonetheless, the law has not been effective in alleviating the problems of food security and malnutrition (Lind, 2017). A 2009 report released by the Ministry of Agriculture indicated that more than 17000 people in Chamwino district were not able to afford food daily.
Therefore, the high amounts of international aid received by Tanzania have not helped the country address the challenges faced by a majority of its citizens refuting the claims put forth by proponents of international aid. Tanzania is still lagging behind in terms of development. A substantial percentage of its population are languishing in poverty and are unable to access basic services such as proper healthcare and education.
Increased Dependency on Foreign Aid
As it has been noted, international aid is vital in funding various projects and facilitating economic growth. However, over-reliance on foreign aid has had adverse consequences to Tanzania. In the year 2003, Tanzania’s minister for finance announced the abolition of development levy in the country (Fjeldstad and Semboja 2001, p. 2059). The abolition significantly reduced the amount of revenue received by district councils. As a result, a total of 114 councils operating in 99 districts relied on the central government for revenue. Today, over 95% of revenue given to the country’s local government comes from the central government which is sourced from donors. (Fjeldstad and Semboja 2001, p. 2065). Relying on donors has negatively affected various development projects. It has also impeded the ability of citizens to actively take part in various initiatives, consequently stagnating the country development projects and the economy as a whole.
Similarly, in 2015, a cholera epidemic occurred in Tanzania. More than 126, 000 refugees had sought refuge in the country as a result of the political unrest that broke out in Burundi (Albiman, 2016). Heavy rains, flooding and a spike of new arrivals contributed to the cholera outbreak. A total of 24 108 cases and 378 deaths were reported countrywide (World Health Organization, 2016).The overall trend of incident kept on fluctuating. In 2016, the United Nations started an initiative to help respond to the severe cholera outbreak which affected 19 regions in the country. The U.N allocated $11 million to address the urgent needs of the refugees from Burundi by providing them with clean water, adequate sanitation, healthcare, food and shelter (World Health Organization, 2016). Since then, other medical issues have surfaced due to insufficient resources. There has been a considerable increase in sexual and reproductive health concerns. Also, there have been increased cases of malaria which are attributed to the refugees who reside in highly populated areas with unsanitary conditions. The situation has been worsened by a decline in international donors. As a result, the Tanzanian government has been compelled to overstretch its resources and cater for the needs of the refugees consequently affecting the country’s budgetary obligations. Therefore, funding from donors leads to over-reliance which poses a significant threat to Tanzania when issues such as cholera outbreak come up or when the donors withdraw their support (Albiman, 2016).
Corruption
The Transparency International’s corruption index placed Tanzania at position 116 with 32 points implying that it is performing better in terms of addressing corruption compared to Kenya (Agutu, 2017). However, corruption is a serious problem in Tanzania even though various comprehensive laws have been put in place to address the issue. According to Anderson (2014), the United Kingdom and other international donors suspended close to $500 meant to support Tanzania meet its budgetary obligations. The suspension was caused by allegations of corruption against some senior government officials who were involved in syphoning funds from the country’s central bank.
In a statement released by Zitto Kabwe, the chairman of the country’s public accounts committee, these officials conspired with various corrupt businessmen to transfer the funds from the central bank of Tanzania to private accounts abroad. UK’s Department for International Development together with other 12 donors has already given Tanzania $69 million to support its budget and they were committed to providing an additional $559m to finance the country’s current budget. Due to the issue of corruption, then donors suspended any further general budget support until more information about the scandal is released. Due to the international aid withdrawal, the country plunged into power shortages (Anderson, 2014). The scandal also tainted the country’s political and business climate. Usually, general budget support is meant to fund programs that have been set by the government. Most of them are designed to alleviate poverty. International aid has been one of the factors fuelling corruption in Tanzania. As a result, the funds do not perform the purposes or activities that they are meant to do subsequently affecting the country’s economic growth. Hence, it can be argued that international aid to Tanzania has not helped the country develop (Albiman, 2016).
High Levels of Public Debt
The latest figures indicate that Tanzania’s public debt reached $24.514 billion during the financial year that ended 30th June 2017. The high debt is caused by various mega projects which President John Magufuli has prioritised (Mbani, 2017). For instance, Tanzania is currently constructing a standard gauge railway that will link the country to other nations such as Burundi, Rwanda, Uganda, Zambia, as well as the Democratic Republic of Congo. Part of the funding used in constructing the project was obtained from Export Credit Bank of Turkey (Mbani, 2017). Tanzania’s current debt is equivalent to almost half of the country’s GDP. The huge amounts of public debt are associated with increased interest rates, a burden which will be settled by the taxpayers. For that reason, High levels of public debt caused by increased flows of international aid adversely affect the country’s economy. A substantial amount of Tanzania’s resources will be directed towards settling its debts subsequently disrupting the initiation and completion of any development projects stagnating its progress.
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