USA/Africa Dialogue, No. 262: THE FAILURE OF EXTERNAL SOLUTIONS, I

1. By Africa, I mean "Sub-Saharan Africa" or "Black Africa."

2. I have NEVER claimed Africa is culturally "homogenous." Nor have I
proposed a "unified" African Heritage theory. Neither have I tried to
paint traditional Africa as "idyllic." My critics falsely distort my
position in order to attack it. All I have said is that, in spite of the
immense cultural diversity, certain commonalities can be discerned. We
all know that there are EXCEPTIONS to the traditional system of
government - for example, Ethiopia, the Emirate of Sokoto, etc. But that
does not make the exceptions the rule. Certain general statements can be
about the traditional system of government. Statements such as
decentralization of power, devolution of authority, chiefs, council of
elders, village meetings, and consensus building, inclusiveness can
still be made.

3. Traditional Africa has not vanished into antiquity. It is still
there. The vast majority of the African people live in the traditional
and informal sectors.

Despite all that has been rewritten about traditional Africa, I believe
it has a history, viable indigenous institutions and a heritage. This
heritage has its warts and blemishes as well and I have never tried to
paint it as "idyllic." Nor have I said this heritage is "unified." I
won't argue over this any longer. Rather, I will move on to a new topic:
Why external solutions haven't worked in Africa (below). It is in two

Foreign aid has done more harm to Africa than we care to admit. It has
led to a situation where Africa has failed to set its own pace and
direction of development free of external interference. Today, Africa's
development plans are drawn thousands of miles away in the corridors of
the IMF and World Bank. What is sad is that the IMF and World Bank
"experts" who draw these development plans are people completely out of
touch with the local African reality.

-- Dr. Joshat Karanja, a former Kenya member of parliament, in New
African, June 1992, 20.

_______________________

I drew a few conclusions of what's wrong with the way aid has been given
in the past. First is that generally it serves the interests of the
donors rather than the recipients.
A lot of the official aid has to go through government channels. The
World Bank is bound by its charter that it needs the guarantee of the
receiving government. That means the receiving government decides what
project to apply for. Very often, the World Bank has served the
interests of repressive or corrupt governments, and that is
counterproductive. Most foreign aid is intergovernmental, allowing
recipient governments to divert funds for their own purposes. Lack of
coordination between donors makes it easier for recipient governments to
divert aid.
Thirdly, most of the aid is bilateral. The World Bank and the European
have great difficulty sponsoring regional or global projects and,
generally, civil society channels are not used. Aid is administered by
bureaucrats with little incentive to take the risks required for
successful projects. Programs are often imported rather than home-grown.
Recipients rarely have "ownership" of development projects.
The main cause of misery and poverty in the world is bad government.
Given the sovereignty of states, it is very difficult to impose, from
the outside, conditions. But offering incentives, encouragement,
empowerment for country that are moving in the right direction, that
have governments that are seeking to improve conditions, is one way of

_______________________

AAll these people [African leaders and elites] do is talk, talk, talk.
Then if they do get any money from the wazungu [white men], they just
steal it for themselves. And what about us? We have no food. We have no
schools. We have no future. We are just left to die.@

-- Mercy Muigai, an unemployed Kenyan woman, after the presidents of
Algeria, Nigeria, Senegal and South Africa traveled to Kananaski,
Alberta (Canada) on June 26, 2002, to present NEPAD to the G-8 Summit
for funding by the rich nations (The Washington Times, June 28, 2002;
p.A17).
_______________________

Preamble

On July 13, 2004, I was invited to the White House to attend a
bill-signing ceremony. President Bush was to sign into law an extension
of the Africa Growth and Opportunity Act (AGOA). I took along a cheap
disposable Kodak camera, thinking that a cheap camera was more likely to
pass security scrutiny than a more expensive and sophisticated gizmo.

I joined a line of African ambassadors, some clad in colorful African
garb while others were pompously dressed in 9-piece "zoots", which could
barely contain their super-sized egos and puffed-up self-importance. I
could easily determine on whose hit list I was just by looking at them.
Those who quickly looked away when our eyes met so identified
themselves. I knew what was going through their minds. You see, these
were people who would gleefully toss me into jail for writing something
they didn't like and throw away the key - or worse. I am sure they were
asking themselves, how on earth could this lowly rabble-rouser (a.k.a.
The Cutlass) got invited to the White House. Well, let them go figure.
They didn't know I was watching them too. They were on my "Hit List."
Too bad I couldn't take the Cutlass along; wouldn't have passed
security.

At about 10:00 a.m. the announcement came: "Ladies and Gentlemen, here
is the President of the United States." We all rose from our chairs.
President Bush strode confidently into the room, followed by National
Security Advisor Condelessa Rice and then by Secretary of State Colin
Powell. They were followed by some key Congressmen who had worked on the
Bill - such as Reps. Charles Rangel and Donald Payne. President Bush
walked up to a lectern, greeted us and asked us to be please seated. I
was sitting less than 10 feet away from him. As he was making his
remarks, I took out my camera and started taking pictures. I could take
pictures of the president of the United States but I wanted one of me
with him in it -- somewhere! Hey, this happens only once in a lifetime,
you know!

After a brief speech, President Bush walked over to a small table, sat
down and proceeded to sign into law the bill extending AGOA well into
the future. I gave my camera to an African who was sitting next to me
and asked him to take pictures of me, making absolutely sure the
President of the United States was somewhere in it!! But he started
snapping away at the ceiling, at other people -- like there would be no
tomorrow. "Hey, take it easy, my friend. We don't want to run out of a
film," I whispered into his ear.

After signing the Bill, President Bush rose from the chair and mingled
with the crowd, shaking hands. I stepped forward and shook his hand,
thanking him for trying to help Africa. I also shook Colin Powell's
hand. A Nigerian officer, attached to the Nigerian Embassy and standing
nearby quipped: "The United States has done its part, let's hope African
leaders would do their part". "Would they?" I queried. He scanned the
faces of the African ambassadors at the ceremony, cast his eyes down,
and gently shook his head.

Then I felt a gentle nudge. The African who was sitting next to me
handed me back my camera.

     "Did you get a picture of me shaking the president's hands?" I
frantically asked him.
    "No, the camera ran out of film," he said.
      "You Stupid *(%#@*&!!. Damn!"

   I almost killed him.

Will AGOA Save Africa?

First, some conceptual issues need to be cleared up. External assistance
to Africa or "foreign involvement" in the resolution of Africa's

1.      Humanitarian relief aid, given to victims of natural disasters such
as earthquakes, cyclones and floods;
2.       Peacekeeping Operations,
3.      Military aid
4. Economic development assistance.

Humanitarian Aid

Humanitarian relief assistance cannot be impugned. Natural disasters can
strike a poor African country and there is nothing wrong with seeking
foreign assistance. In the past, Africa has also received generous
humanitarian relief assistance: 1985 famine relief for Ethiopia ("Live
Aid"), 2000 floods in Mozambique, etc. But donors do not always follow
through with their pledges. Another major obstacle to international
giving is "donor fatigue." That is the diplomatic way of saying that the
international community is fed up with incessant African appeals and
begging. Today, there is famine in Ethiopia, tomorrow, there is a
refugee crisis created by war in Somalia. Then there is genocide in
Rwanda, starvation among refugees in eastern Congo, Sierra Leone,
Liberia, and on and on. Haba. Africa is now synonymous with war,
destruction, famine, refugees, starvation, instability and chaos. Year
after year since 1985, one African country after another has imploded,
scattering refugees in all directions: Ethiopia (1985), Angola (1986),
Mozambique (1987), Sudan (1991), Liberia (1992), Somalia (1993), Rwanda
(1994), Zaire (1996), Sierra Leone (1997), Congo DRC (1998),
Ethiopia/Eritrea (1998), Angola (1999), Ivory Coast (2000). And year
after year, grisly images of emaciated bodies of African famine victims
are paraded on Western television in urgent appeals for humanitarian
assistance. The most idiotic of all these war was that between Ethiopia
and Eritrea, two of the world's most poorest nation, in 1998-2000. The
war resulted from a border dispute over a tiny piece of territory at
Badame, where the colonial boundary was not clearly delineated. These
two poor African nations spent $1 million each per month to purchase
weapons, pounded each other, apologized for innocent civilian
casualties, took a break to bury the dead, re-armed and went at it again
while appealing to the international community for famine relief
assistance.

The international community has now come to regard Africa's never-ending
humanitarian crises are MAN-MADE and is not so generous in providing
relief assistance. Kofi Annan has often complained bitterly of the
difficulty he faces in getting the rich countries to fulfill their
pledges or contribute peacekeeping troops to resolve an African crisis
situation.

By contrast, the international community responded enthusiastically to
the Asian tsunami disaster. But even then there are problems. First,
pledges aren't often fulfilled. When an earthquake struck Iran in 2003,
leveling an entire city, the international community pledged $1 billion
but only $17 million was delivered. Indonesia says it needs $2.2 billion
to rebuild the areas devastated by the tsunami but we now know that of
the $5-$6 billion pledged so far, only $1 billion is a FREE GRANT,
meaning the rest are LOANS which the highly-indebted Asian countries
must repay. There is a PR chicanery involved here. Country X pledges
$600 million to aid the Asian tsunami victims, reaping a huge public
relations bonanza. But the pledge is not a grant but a loan which has to
be paid back.

Even if pledges are fulfilled, foreign interventionism hasn't worked
very well in Africa's crises. In Somalia, when the going got tough, the
U.N. and the U.S. fled in 1993. In the case of the genocide in Rwanda,
they were nowhere to be seen. Elsewhere, the U.N. has blundered through
and exacerbated one African crisis after the other. It claims Mozambique
as a "success" but only because it avoided its own embarrassing missteps
in Angola. It has pulled out of Western Sahara after failing to organize
a referendum there. The 1993 Somalia mission was a monumental disaster,
costing the international community a staggering $3.5 billion and the
lives of 18 American marines. The Liberian mission has been a miserable
fiasco. Most humiliating was its mission into Sierra Leone (UNASIL). It

accord, godfathered by Rev. Jesse Jackson in Lome, Togo. There, Rev.
Jackson and regional leaders, applying their own strange Adouble
standards,@ argued that warlord, Mr. Foday Sankoh, and his
blood-drenched butchers were not to be prosecuted for war crimes as in
Kosovo but instead granted amnesty, a share of Sierra Leone=s diamond
wealth and positions in government. Imagine. Accordingly, eight
ministerial positions were handed to rebels (Mr. Sankoh became the
vice-president and minister of mines) in exchange for a promise to
behave nicely: To disarm and participate in elections in 2001. U.N.
Special representative, Oluyemi Odeniji, even called Sankoh Amy
brother.@ Well, the "brother" taught the U.N. a lesson: "The agreement
collapsed when the rebels refused to disarm and took 500 U.N.
peacekeepers hostage, plunging the country back into war" (The
Washington Post, Feb 19, 2001; p.A29). Let's not ask about the role of
U.N. peacekeepers in the Congo crisis.

In Bunia, U.N. peacekeepers, made up of 600 Uruguans soldiers, were
supposed to provide security and keep peace among rival militias. But
when the U.N. peacekeepers came under unrelenting attack from the
marauding militia of the Lendu tribesmen, several of the Uruguan
soldiers had a "mental breakdown." And why not? "The Kinshasa policemen,
ostensibly helping keep the peace, were either marching with the Lendu
fighters or selling their weapons to them" (The Washington Times, May
13, 2003; p.A13). Lord save us. Eventually, a small Congolese rebel
group, Union of Congolese Patriots, "came to the rescue of U.N. forces
besieged in the northeast by rival rebels. The U.N. troops were not able
to quell persistent ethnic violence that caused dozens of deaths and led
aid workers to abandon their posts" (The Washington Times, May 13, 2003;
p.A13).

Put aside the current allegations of sexual abuse and rape of refugees
by U.N. peacekeepers in the Congo, the peacekeepers do not have the
mandate to do battle with unrepentant warlords. And peace can be
achieved if both sides to the conflict are interested in peace. More
often than not, war is profitable to both sides. It provides the rebels
with an opportunity to pillage, plunder and rape. It also provides the
government side with the opportunity to suspend development, political
reform, civil liberties, divert funds into the "war effort" and enter
into secret arrangements to purchase weapons, etc. etc. In an April 1998
Report to the United Nations Security Council, Secretary-General, Kofi
Annan, observed that:

"Since 1970, more than 30 wars have been fought in Africa, the vast
majority of them intra State in origin. The consequences of those
conflicts have seriously undermined Africa's efforts to ensure long term
stability, prosperity and peace for its peoples.
By not averting these colossal human tragedies, African leaders have
failed the peoples of Africa; the international community has failed
them; the United Nations has failed them. We have failed them by not
adequately addressing the causes of conflict; by not doing enough to
ensure peace; and by our repeated inability to create the conditions for
sustainable development.

It would be criminally irresponsible to call for more "foreign
intervention"-in the teeth of failed U.N. missions in Africa. South
Africa could probably be presented as a successful model of "foreign
intervention" but remember how LONG it took to mobilize international
pressure to bring to bear on the apartheid regime: 9 years from the time
calls for sanctions gathered momentum (1985) to the 1994 elections.
Thus, the call for more foreign intervention is really a no solution.
There is no international appetite for intervention in an African crisis
situation unless a former colonial power is willing to take over the
running of the country temporarily - as Britain did in the case of
Sierra Leone and France in Ivory Coast. But as the Ivorian situation
illustrates, foreign involvement can exacerbate the situation. And has
it occurred to us that if these humanitarian crises are man-made, they

Military Aid

This is simply out of the question for Africa. During the Cold War, the
super-powers poured tons of military hardware into Africa to support
their ideological allies - on credit. The former Soviet Union poured
over $11 billion worth of arms into Ethiopia. Much of the Soviet
military hardware was used to carry out indiscriminate bombings,
shelling, and slaughter of civilians. Even famine relief centers in the
north and along the Sudan border were bombed and burned. In February
1988, when drought victims refused to participate in the government
resettlement program in the northern town of Korem, Ethiopian troops
opened fire on thousands, killing at least 20 (Wall Street Journal, Feb
12, 1988, p. 1). In 1984, while thousands of Ethiopians were starving to
death, Mengistu spent $200 million to celebrate the tenth anniversary of
Soviet imperialism. As children died, Mengistu and his army were
consuming Scotch whisky, crates of caviar, salmon, lobster, and French
champagne. Ten million dollars were spent to redecorate the statues of
Marx, Engels, and Lenin in Addis Ababa, the capital. The Soviets also
shipped weapons worth $5 billion to Angola on credit. The U.S. also
spent enormously, giving billions in military aid to Liberia (Samuel
Doe), Zaire (Mobutu), Nigeria, Kenya and others. However, much of that
military aid went to prop up repressive regimes and crush any challenge
to their legitimacy.

Today, the Cold War has been replaced by the war on terrorism and the
West needs allies in this new war. As you guessed, all sorts of unsavory
despots in Africa also claim they too are fighting against terrorists
when they themselves are the real state terrorists! Obasanjo of Nigeria,
Bashir of Sudan, Mugabe of Zimbabwe, Afwerki of Eritrea, Zenawi of
Ethiopia, among others. You see, anybody who opposes them is a
"terrorist." Even Charles Taylor had an "Anti-Terrorist Unit" ran by his
brother! Lord save us in Africa.

Economic Development Assistance

Much confusion surrounds economic development assistance, also known as
official development assistance or ODA. Contrary to popular
misconceptions, ODA is not "free." It is essentially a "soft loan," or
loan granted on extremely generous or "concessionary" terms.

For example, suppose an African government needs $50 million to build a
dam. It may borrow the said amount from a foreign private bank, say
Chase Manhattan, at 10 percent rate of interest for 10 years - a
proto-type of a typical foreign commercial loan. However, a western
government aid agency, say US AID, may provide the funds at 2 percent
interest for 20 years, with a 5-year grace period. This ODA differs from
a normal foreign commercial loan in three respects: It has a lower rate
of interest, a longer term to maturity and provides a "grace period."
Still, it is a "soft loan" that must be paid back; it is not free.

Foreign Aid After Independence

After independence, African nationalists settled down to the task of
developing Africa - in its own image. No more would Africa be relegated
to the inferior status of "hewers of wood and drawers of water,"
producing raw materials to feed the industries of Europe. Colonialism
was exploitative, and, since the colonialists declared themselves to be
"capitalists," African nationalist leaders believed, in one monumental
syllogistic error, that capitalism, too, was exploitative. Thus, Africa
was to be developed, not by capitalist or imperialist principles, but by
a socialist ideology under which the state not only participated but
captured the "commanding heights of the economy." Furthermore, only the
state under the banner of socialism, they argued, possessed the
necessary powers to mobilize the requisite resources to accelerate the
pace of development. A large role was envisaged for an activist and
centralized state, gathering resources from traditional economic
activities and investing them in modernization. Much of these resources
were to be secured domestically through increased savings, sacrifice,
and belt-tightening. The remainder was to be sought through foreign aid

Initially, foreign aid was expected to fill the gap between domestic
savings and investment. The rationale was the banal "vicious circle of
poverty." Savings or investible resources were low because of poverty
and incomes were low because of low investment, which in turn was due to
low savings. Foreign aid therefore could supplement domestic savings,
enable a higher rate of investment to be attained, and propel the
economy out of its "low-level equilibrium trap." Foreign aid was thus
seen as an essential prerequisite to economic advancement.

The development frenzy received further impetus when the United Nations
declared the 1960s as the "development decade." Advocates of foreign aid
determined that an African country's capacity to earn more foreign
exchange through exports was limited by the following constraints: an
inelastic foreign demand for African exports, an unjust international
economy system, protectionist policies of industrialized nations, and
monopolistic as well as oligopolistic practices of multinational
corporations. Therefore, even if imported consumer goods were reduced to
be barest minimum - assuming African elites would consent to an
abstemious diet - the foreign exchange earnings saved would still be
insufficient to finance huge capital imports. Given those assumptions,
foreign aid was expected to play a vital role in accelerating
development by financing critical imports (Chenery and Strout, 1966;
pp.679-733).

The West responded to African appeals with generous contributions of
aid. As Whittaker (1988) noted:

"Even in 1965, almost 20 percent of Western countries' development
assistance went to Africa. In the 1980s, Africans, who are about 12
percent of the developing world's population, were receiving about 22
percent of the total, and the share per person was higher than anywhere
else in the Third World - amounting to about $20, versus $7 for Latin
America and $5 for Asia" (p.60).

Earlier, the World Bank (1984) had reached similar conclusions:

"External capital flows to sub-Saharan Africa have been quite high.
Between 1970 and 1982, official development assistance (ODA) per capita
increased in real terms by 5 percent a year, much faster than for other
developing countries. In 1982, ODA per capita was $19 for all
sub-Saharan African countries and $46 per capital for low-income
semiarid countries - compared, for example, with $4.80 per capita for
South Asia. Aid finances 10 percent of gross domestic investment in
Africa as a whole, but up to 80 percent for low-income semiarid
countries and over 15 percent for other low-income semiarid countries.
For some countries, ODA finances not only all investment, but also some
consumption. During the 1980-82 period, however, ODA levels stagnated,
even though sub-Saharan Africa's share in the total increased from 21
percent in 1980 to 24 percent in 1982" (p.13)

Changing Foreign Aid Patterns

Official development assistance (ODA) to Africa may be delineated into
four phases. Phase I covers the period from independence in the 1960s to
the beginning of the 1970s, during which bilateral aid was the main
source of development finance in Africa. Private foreign investment was
not significant, largely as a result of the socialist rhetoric and
policies of African nationalist leaders. There was some recourse to
private credit markets in the West but this was insignificant, and,
where utilized, tended to be of very high cost, as was the case with
supplier's credit. "Foreign direct investment was limited mainly to
minerals and oil extraction, and in some cases to the production of wage
goods such as beverages and textiles" (UNCTAD, 1998; p.116). Although
the former colonial powers (Britain, France, and Belgium) provided the
bulk of bilateral assistance, other countries such as Canada, Norway,
Sweden, the Soviet Union (mostly military aid) and the United States
assumed an increasingly prominent role in aid disbursements to Africa.

However, as early as the 1960's, a growing concern over the
effectiveness of foreign aid had begun to surface. US AID officials had

governments improved the incentive framework for economic activity. As a
result, the Peterson Commission was established by the Nixon
Administration to evaluate and reform U.S. foreign aid programs. It
recommended that the primary function of US AID be shifted back to
project lending and technical assistance, while the IMF and World Bank
would provide overall policy frameworks for developing countries.

Thus, phase II began in the early 1970s when multilateral institutions,
such as the IMF, the World Bank, the European Development Bank, the OPEC
Special Fund, the International Fund for Agricultural Development, the
UNDP, the Arab Bank for Economic Development in Africa, the African
Development Bank, and the Commonwealth Development Corporation, became
increasingly important sources of development assistance. For example,
in 1970, aid from multilateral sources accounted for only 13 percent of
the total; by 1987, that had grown to 34 percent.

By contrast, private commercial lending, including net foreign
investment in Africa, has declined sharply, although it picked up in
1994. Between 1990 and 1995 the net yearly flow of foreign direct
investment into developing countries quadrupled to over $90 billion but
Africa's share of this fell to only 2.4 percent. According to the World
Bank, in 1995 a record $231 billion in foreign investment flowed into
the Third World. Singapore by itself attracted $5.8 billion, while
Africa's share was a paltry 1 percent or $2 billion -- less than the sum
invested in Chile alone (The Economist, 9 November 1996, 95). "Even that
meager proportion has been disputed by some analysts who believe the
true figure to be less than $1 billion," said The African Observer
(11-24 April 1996, 20). Although it increased dramatically to $4.7
billion in both 1996 and 1997, it dropped to $3 billion, leading United
Nation's Conference on Trade and Development (UNCTAD) to conclude that
"Africa has lost attractiveness as market for Foreign Direct Investment
as compared to other developing regions during the last two decades,"
(The African Observer, 30 November - 13 December 1998, 21).

This view is corroborated by the Organization for Economic Cooperation
and Development (OECD), which noted that though private capital flows to
developing countries over the period 1990-97 exceeded $600 billion, the
flow to all of sub-Saharan Africa barely amounted to $10 billion. Even
then, of that total, fully $9 billion accrued to one country, South
Africa - meaning that the other 49 countries and 560 million people of
sub-Sahara attracted essentially no net new private capital during the
greatest international investment boom ever witnessed (Eberstadt 2000;
p.B4). Thus, Sub-Saharan Africa has steadily grown ever more dependent
on foreign aid or ODA, with the MDBs and bilateral donors simply filling
the void vacated by private commercial lenders.

Much of the loans extended by the MDBs during the second phase were
project-specific: To fund infrastructural development (roads, dams,
telecommunications, and schools) - public goods that were vital for an
African country's development. A hydro-electric dam, such as the
Akosombo Dam in Ghana financed by the World Bank for example, generated
not only electricity but also provided large "externalities": a low-cost
power grid for an industrial base, a man-made lake that could provide
income-earning opportunities from tourism and fishing. Road
construction, telecommunications also fall in this category, since they
facilitate movement of goods and commerce. Similarly, a steady supply of
well-educated labor force aids industrial expansion. MDB loans were also
used to finance agricultural and industrial projects in Africa, which
were largely owned by the state.

Phase III began in the early 1980s when it became apparent that most
African economies were in crises. Although the crises were triggered by
the oil price shocks of 1979 and the Third World debt crisis of 1982,
there was a general recognition that decades of misguided government

in May 1986, African leaders themselves collectively admitted on their
own accord, in a rare moment of courage and forthrightness, before the
United Nations Special Session on Africa that their own capricious and
predatory management had contributed greatly to the continent's
deepening economic crisis. In particular, they pointed to their own
"past policy mistakes", especially the neglect of agriculture. The 1985
OAU Report, which served as the core of the African sermon at the United
Nations, urged African nations "to take measures to strengthen incentive
schemes, review public investment policies, improve economic management,
including greater discipline and efficiency in the use of resources"
(West Africa, 21 April 1986, 816). Most notably, the report pledged that
"the positive role of the private sector is to be encouraged." Even a
year before that, the African Development Bank and the Economic
Commission for Africa had produced reports that had been adopted at the
OAU meeting in July 1985. These reports stressed a change of direction
of economic policy "toward more market freedom, more emphasis on
producer incentives, as well as reform of the public sector to ensure
greater profitability" (West Africa, 21 April 1986, 817).

Subsequently, African leaders agreed to the World Bank's structural
adjustment programs (SAPs) in return for loans to ease balance of
payment, debt-servicing and budgetary difficulties. In June 1987,
African leaders reaffirmed their determination to pursue the SAPs at a
conference organized by the Economic Commission on Africa at Abuja,
Nigeria. Under a structural adjustment program, an African country
undertook to devalue its currency to bring its overvalued exchange rate
in line with its true value. Supposedly a more realistic exchange rate
would reduce imports and encourage exports, thereby alleviating the
balance-of-trade deficit. The second major thrust of SAP was to trim
down the statist interventionist behemoth by reining in soaring
government expenditures, removing the plethora of state controls on
prices, rents, interest and the exchange rate, while eliminating
subsidies, selling off unprofitable state-owned enterprises, and
generally "rationalizing" the public sector to make it more efficient.
By 1989, 37 African nations had formally signed up with over $25 billion
in Western donor support. Note that SAPs were CONDITIONAL loans; that
is, granted on condition of implementing economic reform.

Phase IV began after the collapse of communism in the eastern-bloc
countries in 1989 when Western donor governments and the MDBs finally
recognized the importance of a democratic order and added various
"conditionalities" to the receipt of their aid: Respect for human
rights, establishment of multi-party democracy, etc. For example, on May
13, 1992, "the World Bank and Western donor nations suspended most aid
to Malawi citing its poor human rights record, a history of repression
under its nonagenarian "life-president" Hastings Banda . . . The
decision came after protest by workers turned into a violent melee in
Blantyre. Shops linked to Banda and the ruling party were looted and
government troops fired point-blank at the protesters, killing at least
38 (The Washington Post, May 14, 1992; p. A16). Thus, more conditions
were attached to Western loans and by 2003, the total number of
conditionalities exceeded 40.

The total amount of funds transferred to African governments during the
four phases has been quite substantial. According to OECD, "the net
disbursement of official development assistance (ODA), adjusted for
inflation between 1960 and 1997 amounted to roughly $400 billion. In
absolute magnitude, this would be equivalent to almost six Marshall Aid
Plans" (Eberstadt 2000; p.B4). Since ODA is merely a "soft loan," this
accumulated foreign aid forms the bulk of Africa's $350 billion foreign
debt. Of this, 40 percent is owed to or guaranteed by Western
governments and 36 percent is owed to multilateral financial
institutions, such as the World Bank and the IMF (Nafziger, 1993: 29).