Where has all the money gone?

Brady Yauch

June 2, 2009

A recent article by Lord Aikins Adusei in the Zimbabwe Observer asks some pointed questions of the international aid agencies and development banks. After nearly 50 years and billions of dollars in loans and grants, he says, Africa remains a poverty-stricken continent, rife with corruption and political instability. Why?

What good has all this money from the international community done for Africa, he asks? And, more importantly, have these loans done any good at all?

“What has happened to all the aid money or the IMF and World Bank loans or aid and grants from US, Japan, European Union and the revenue from the natural resources,” he writes. “In short why are the people so poor when Aid Agencies are helping them every day?”

He points out that after years of receiving money from organizations such as the World Bank and the IMF, the standard of living for millions of Africans is no higher now than it was decades ago. Recent statistics from the World Bank show that the poverty rate in Sub-Saharan Africa increased from 54 percent in 1981 to 59 percent in 1999. Although the poverty rate dropped to 51 percent by 2005, the absolute number of people living below the poverty line in the region has nearly doubled over that time.

“Why are we still poor,” Adusei asks. “This is a troubling question. I cannot understand why, after so many years of aid and big loans, Africa still sits at the bottom of the world’s progressive continents.”

It is, he says, because organizations, such as the World Bank and the IMF, “claim to provide vital financial support to poor countries to help them alleviate poverty.” But maybe many of these loans have come in the form of odious debts for the people, and bonuses for corrupt leaders. “Could it be,” he says, “that the Bank and IMF give the loans to corrupt regimes that then deposit the money in their private banks in Europe and then ask the poor people who never benefited from the loans to use the little resources they have to service the odious debts?”

His remarks concerning the World Bank and corrupt African regimes are supported by a recent report from the World Bank itself. According to Bea Edwards[PDF] , a program director at the Government Accountability Project, says the International Development Association—an arm of the World Bank— says it “ doesn’t protect its funds adequately from theft and diversion.”

Who receives those monies and what do they use the money for, Lord Adusei asks. “How have the ordinary people benefited from the grants and aid? If so much has been received then so much should have been done to reduce poverty. Then why are we still poor despite years of development assistance?”

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