Business — the best way to help Africa?

I’ve had a heart for Africa for some time.  One of our World Vision sponsor children is from Kenya.  We’ve been writing Dennis for 10 years and I’ve been able to visit with him three times on mission trips there.  My wife and I are planning to go to Kenya on another mission trip in 2010 (this will be her first trip, so we’re excited about that).  We’ve found very effective ministries there and seen firsthand how far money goes in helping the poorest of the poor and how the hospital we support provides excellent care to people who would otherwise have none.

But even though I have no intention of backing off our personal commitments there, I agreed with the findings of The Business of Africa (Forbes.com).  If you aren’t careful with charitable endeavors you can do more harm than good.  Of course you want to help people today, but without good foresight and wisdom you may be hurting countless people tomorrow.  The Law of Unintended Consequences can be brutal.  In many areas these good intentions have just institutionalized poverty. 

I encourage you to read the whole thing, but here are some snippets:

$2 trillion (in today’s dollars) has been transferred from rich countries to poor ones over 50 years, with most of that going to Africa. The U.S. has spent $300 billion on Africa since 1970. The result: GDP per capita in Moyo’s home country of Zambia is under $500, less than it was in 1960. The most heavily aid-dependent countries, she writes, have negative or flat annual growth over the last 30 years. Moyo proposes that Africa be weaned off all aid in five years so that its economies can fend for themselves.

They propose that the U.S. government make direct loans to businesses and then direct the repayments of principal to host governments for use in building roads, electric grids, schools and the like. This was how the Marshall Plan rebuilt Europe after the war.

There are 1.4 billion people living on less than $500 a year–what the World Bank classifies as extreme poverty. It would cost $700 billion to double their incomes, assuming that all of that money would even get to the recipients. At $1,000 a year, the recipients would still be poor, and we’d have spent seven times the world’s current aid budget (and given the state of the global economy, richer nations are more likely to cut back at the moment).

In the original Marshall Plan, which cost just $115 billion in today’s dollars, the U.S. gathered all of the willing European nations and set up country-specific Economic Cooperation Administrations. These councils were granted money by the U.S. and operated as development banks. They loaned money to businesses that met with the board’s approval. Each ECA was made up of appointed business leaders from the U.S. and Europe. As the loans were paid back, the money was turned over to the government, which then used the money to build highways, phone lines and a regulatory apparatus for the business community.

Of course, a lot of African leaders will oppose the plan or refuse to go along. The original Marshall Plan offered assistance to the Soviet Union and Eastern bloc countries, but they declined. In the case of Africa, regimes have been propped up by the abundance of aid flows.

“To some leaders the system isn’t broken,” Duggan says. “They get their cut of the aid dollars, the big house, the Mercedes and the trips to Europe, so what’s the problem?”

Moyo writes about an African manufacturer of mosquito nets being put out of business by a charitable antimalaria campaign that gave away nets for free. Hubbard says that there will always be a need for charity and a human drive to give food and money to those who lack them. He’d like to see charity look more in Africa the way it does in America, where charities give to the poor but aren’t the first or only solution.

I encourage people to give generously and with discernment while at the same time promoting government policies that will have real and lasting differences to countless people.

0 thoughts on “Business — the best way to help Africa?”

  1. To me it is just pure common sense for America to do a “Marshall Plan” with Africa. All that aid usually ends up in corrupt hands anyway. Aid is just a hindrance towards African economic independence. It just saddens me that Africa is the world’s most prosperous mineral/ material continent yet it is the poorest.

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  2. wow! Our church just recently did a big drive for the free mosq nets. I never even thought about any African Mftrs being effected. Thanks for this info, a real eye opener.

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    1. I’ve donated to net campaigns as well. I wouldn’t assume that they are all putting African manufacturers out of work. It is just one of those “law of unintended consequence” things where we always need to use discernment when giving. I’d hate for people to stop giving, though!

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  3. I have a friend that spent several years in Africa, managing a Micro-Finance program there. From what I have read, those programs are very very successful.

    Pure charity has made many parts of Africa dependent, which I view as a modern form of colonialism.

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  4. Things like this only make sense. I can remember the first time I heard that you shouldn’t feed animals in the wild. The reason? You get them dependent on humans and they can’t fend for themselves any longer.

    Now, I am not suggesting that we shouldn’t help those in need, but we have to be careful that we are aiding those people in a way that they can become self-sufficient some day. The whole “give a man a fish vs. teach a man to fish” thing.

    Very interesting article though. Makes you stop and think.

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  5. It’s sad the amount of wealth – diamonds, gold, slave labor, etc -that has been plundered from Africa. We give to Africa through ministries and natives who return in order to ensure what we give makes it to those in need without traveling through a bureaucrat’s hands.

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  6. Neil,

    What do you make of Jesus’: You’ll always have the poor statement?

    Is it futile to try to eradicate poverty?

    I know it is good Christian values — but I’m not sure if our goal “or marketing slogan” is attainable…

    thoughts?

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    1. Even if poverty is eradicated, we will always have the spiritually poor, who are worse off by far.

      Our goal should not be eradicating poverty anyways. That’s a purely secular end divorced from Christ. Our goal should be serving Christ be helping our Brothers and Sisters in need.

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      1. Agreed about the spiritually poor. Matthew 5:3 is one of those verses often taken out of context, where people only quote the first 4 words: “Blessed are the poor in spirit, for theirs is the kingdom of heaven.”

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      2. Our goal should not be eradicating poverty anyways. That’s a purely secular end divorced from Christ.

        Can we have more than one goal? I understand that one can be more important to you than another, but if you don’t think we should be eradicating poverty, why should we help anyone with their “earthly” problems? Cancer is pretty secular too, as is the McGriddle, and both must be eradicated to the best of our ability.

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    2. Good question, Edgar. We can know from the rest of Scripture that He wasn’t saying not to help them. It was a simple statement of fact: There will be lots of opportunities to help the poor but very limited ones to serve him physically while He was on earth.

      I do think it is naïve to think that if we find the perfect man-made system that we’ll eradicate poverty. We need to use reason to come up with a plan in line with God’s word that helps the most long term.

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    3. There was more to the statement but yes, the poor will always be there. Why? Poverty is one of the sufferings the world sees today. When you see suffering as one big whole package, you’ll see there are so many forms of sufferings the mankind endures. And biblically speaking, suffering is a direct consequence of sin. The greed of some sections of society is the result of poverty in other sections of the society. So as long as there is sin, it’s effect will remain. That’s why you’ll see throughout His ministry on earth, Jesus concentrated on saving us from the cause rather than saving us individually from each of it’s effects. Remember though He fed the hungry, when they wanted more of it He moved away from them? Not because He wanted them to be hungry (And He knew what hunger is. Matthew 4: 2)but because He had a greater purpose to fulfill.

      And though I wouldn’t say helping the poor is futile, that’s one reason why I think Socialism fails. It focuses primarily on the effect when the cause remains, which I personally think is a very stupid way to deal with any situation. So in answer to your original question, though poor will always be there is nothing to stop us from helping the poor, just like the temptations of sin always being there yet there is nothing to stop us from fighting against sin in the name of Jesus. There is no futility in Christ.

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