Aiding poverty: the G-8’s role in Africa’s progress

Improving the world’s least productive agricultural sector is a moral imperative and a great way to kick-start economic development. Relying on food handouts — when available — is a particularly ineffective way to help Africans when you look at the alternatives.

A better and immediate solution would be to remove the world’s most crippling trade barriers, 70 percent of which are imposed by governments in less-developed countries, including on food. The average tariff on agricultural goods in sub-Saharan Africa is 33.6 percent, the highest of any region. Additionally, taxes and tariffs restrict access to essential inputs such as fertilizer, making it six times more expensive in Sub-Saharan Africa than the basic price.

Removing these trading restrictions would bring in more money than all aid, World Bank figures show.

As Ethiopia faces another famine, the World Bank ranks it 112th in a rising list of 125 countries’ tariff restrictions.

The World Food Program estimates at least 10 million people will be hurt by rising food prices and Ethiopia’s failed harvest this year: Ethiopia, unfortunately, has kept many of the self-defeating policies that have blighted Africa with the support of aid agencies, Western government and NGOs.

Despite moves to free the economy, all imports still require licenses, cereal exports have been banned, state companies manipulate prices and, above all, the government prohibits land ownership, so the poor are chained to the land but cannot use it as collateral for loans. This pushes fertilizer or hybrid seeds further out of reach and makes farmers vulnerable to droughts, heavy rains and pests.

Bono, Bob Geldof and Kofi Annan tug at the heart-strings of people who rightly want to help, but they don’t mention that totalitarian Ethiopia is already one of Africa’s biggest aid recipients, that it runs a Stalinist compulsory relocation scheme for millions and that things are worse since Band Aid first hit the world’s conscience in 1984. Annual per capita food production dropped from 450 kgs to 140 kgs between 1984 and 2002 and has scarcely improved since.

Reform won’t happen because the government is more accountable to donors than its own people — and donors hardly hold recipients accountable.

To really help the world’s poor, the G-8 countries meeting in Hokkaido this month must insist they get the same economic freedoms as people in countries that are actually developing: the right to own and sell land and the right to trade with each other. Without those freedoms, more aid is yet more good money after bad.

Alec van Gelder is Network Director at International Policy Network, a development think-tank in London, where he specializes in trade, technology and intellectual property. Caroline Boin runs IPN’s Environment Program.

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