January 29, 2010
Brian Griffiths, an international adviser for Goldman Sachs, is another voice in what is quickly becoming a chorus of foreign aid critics that are heralding the use of private markets and funds as way to promote economic growth on the African continent. In a recent lecture at Oxford University, Griffiths said [PDF] churches already working in Africa should help promote businesses and markets in countries across the continent.
“You have the church there, tying up with the potential for wealth creation,” Griffiths said. “The creation of wealth, the potential of markets in developing countries is really enormous.”
“Africa is potentially teeming with millions of entrepreneurs,” he said.
Griffiths’ remarks come after other prominent economists, such as Dambisa Moyo in her book “Dead Aid”, have called on governments across Africa to use private markets, rather than aid handouts, to achieve economic growth. She calls for a mixture of trade, foreign direct investment, capital markets, international bond markets, remittances and microfinance to help Africa achieve economic growth.
“The good news is that the bond markets offer a real opportunity for Africa’s governments to be serious about financial discipline and transparency—and to escape from the yoke of aid,” she recently wrote in an article for the Economist.
The arguments being made by people like Moyo and Griffiths seem to be gaining traction in many African countries. A recent article [PDF] from Reuters says that a number of African governments are beginning to implement the necessary economic and political reforms that will allow them to tap private markets for financing.
“As well as increasing domestic borrowing and widening their tax bases, African governments are looking to tap outside appetites for the high-yielding debt that rapid economic growth is able to offer,” the article says. “Following in the footsteps of Gabon and Ghana, which launched frontier Africa’s first Eurobond in 2007, are planned bond issues from Angola, Kenya, Uganda and Zambia—all switching to private sector finance rather than relying on aid.”
In fact, recent economic figures from the IMF show that African countries are experiencing vibrant economic growth. The IMF believes growth in sub-Saharan Africa will be one percentage point about the global average. It is also putting eight African countries in its top 20 fastest-expanding economies in 2010. It expects both Angola and the Congo Republic to experience growth rates of more than 9 and 12 percent respectively—beating even the red-hot Chinese economy.
Who is saying there is a better way? Reading List:
Why aid to Africa must stop: Interview with Dambisa Moyo
Thinking outside the foreign aid box
Foreign aid on the ropes
To help Haiti, end foreign aid
Africa: Foreign Aid Not Good for Region
Pakistan needs taxation with representation, not U.S. aid, says Finance Minister
Foreign Aid and Bad Government
Dutch politician asks if aid really aids
Africa’s ‘dead aid’
Categories: Foreign Aid