Great speech from Andrew Mwenda. He has assiduously criticised aid agencies and charities for what he says is their ineffectiveness and collusion with corruption. He believes that western aid has been largely unhelpful for African development, since it encourages dependency, sustains wars and fuels corrupt states
I am very, very happy to be amidst some of the most -- the lights are really disturbing my eyes and they're reflecting on my glasses. I am very happy and honored to be amidst very, very innovative and intelligent people. I have listened to the three previous speakers, and guess what happened?Every single thing I planned to say, they have said it here, and it looks and sounds like I have nothing else to say.
But there is a saying in my culture that if a bud leaves a tree without saying something, that bud is a young one. So I will -- since I am not young and am very old -- I still will say something.
We are hosting this conference at a very opportune moment because another conference is taking place in Berlin. It is the G8 Summit. The G8 Summit proposes that the solution to Africa's problems should be a massive increase in aid,something akin to the Marshall Plan. Unfortunately, I personally do not believe in the Marshall Plan.One, because the benefits of the Marshall Plan have been overstated. Its largest recipients were Germany and France, and it was only 2.5 percent of their GDP. An average African country receives foreign aid to the tune of 13, 15 percent of its GDP,and that is an unprecedented transfer of financial resources from rich countries to poor countries.
But I want to say that there are two things we need to connect. How the media covers Africa in the West, and the consequences of that. By displaying despair, helplessness and hopelessness, the media is telling the truth about Africa, and nothing but the truth. However, the media is not telling us the whole truth. Because despair, civil war, hunger and famine, although they're part and parcel of our African reality, they are not the only reality. And secondly, they are the smallest reality.
Africa has 53 nations. We have civil wars only in six countries, which means that the media are covering only six countries. Africa has immense opportunities that never navigate through the web of despair and helplessness that the Western media largely presents to its audience. But the effect of that presentation is it appeals to sympathy.It appeals to pity; it appeals to something called charity. And, as a consequence, the Western viewof Africa's economic dilemma is framed wrongly.The wrong framing is a product of thinking that Africa is a place of despair. What should we do with it? We should give food to the hungry. We should deliver medicines to those who are ill. We should send peacekeeping troops to serve those who are facing a civil war. And in the process Africa has been stripped of self-initiative.
I want to say that it is important to recognize that Africa has fundamental weaknesses. But equally, it has opportunities and a lot of potential. We need to reframe the challenge that is facing Africa from a challenge of despair, despair which is called poverty reduction, to a challenge of hope. We frame it as a challenge of hope, and that is worth creation. The challenge facing all those who are interested in Africa is not the challenge of reducing poverty. It should be a challenge of creating wealth.
Once we change those two things -- if you say the Africans are poor and they need poverty reduction,you have the international cartel of good intentionsmoving onto the continent, with what? Medicines for the poor, food relief for those who are hungry,and peacekeepers for those who are facing civil war. And in the process none of these things really are productive because you are treating the symptoms, not the causes of Africa's fundamental problems. Sending somebody to school and giving them medicines, ladies and gentlemen, does not create wealth for them. Wealth is a function of income, and income comes from you finding a profitable trading opportunity or a well-paying job.
Now, once we begin to talk about wealth creation in Africa, our second challenge will be, who are the wealth-creating agents in any society? They are entrepreneurs. [Unclear] told us they are alwaysabout four percent of the population, but 16 percent are imitators. But they also succeed at the job of entrepreneurship. So where should we be putting the money? We need to put money where it can productively grow. Support private investment in Africa, both domestic and foreign. Support research institutions, because knowledge is an important part of wealth creation.
But what is the international aid community doing with Africa today? They are throwing large sums of money for primary health, for primary education, for food relief. The entire continent has been turned into a place of despair, in need of charity. Ladies and gentlemen, can any one of you tell me a neighbor, a friend, a relative that you know, who became rich by receiving charity? By holding the begging bowl and receiving alms? Does any one of you in the audience have that person? Does any one of you know a country that developed because of the generosity and kindness of another? Well, since I'm not seeing the hand, it appears that what I'm stating is true.
Thank you very much. But let me tell you this.External actors can only present to you an opportunity. The ability to utilize that opportunity and turn it into an advantage depends on your internal capacity. Africa has received many opportunities,many of them we haven't benefited much. Why? Because we lack the internal institutional framework and policy framework that can make it possible for us to benefit from our external relations. I'll give you an example.
Under the Cotonou Agreement, formerly known as the Lome Convention, African countries have been given an opportunity by Europe to export goods, duty-free, to the European Union market. My own country, Uganda, has a quota to export 50,000 metric tons of sugar to the European Union market.We haven't exported one kilogram yet. We import 50,000 metric tons of sugar from Brazil and Cuba.Secondly, under the beef protocol of that agreement, African countries that produce beefhave quotas to export beef, duty-free, to the European Union market. None of those countries, including Africa's most successful nation, Botswana, has ever met its quota.
So I want to argue today that the fundamental source of Africa's inability to engage the rest of the world in a more productive relationship is because it has a poor institutional and policy framework.And all forms of intervention need support, the evolution of the kinds of institutions that create wealth, the kinds of institutions that increase productivity. How do we begin to do that and why is aid the bad instrument? Aid is the bad instrument, and do you know why? Because all governments across the world need money to survive. Money is needed for a simple thing like keeping law and order. You have to pay the army and the police to show law and order. And because many of our governments are quite dictatorial, they need really to have the army clobber the opposition. The second thing you need to do is pay your political hangers-on. Why should people support their government? Well, because it gives them good paying jobs. Or, in many African countries, unofficial opportunities to profit from corruption.
The fact is, no government in the world, with the exception of a few like that of Idi Amin, can seek to depend entirely on force as an instrument of rule.Many countries in the [unclear], they need legitimacy. To get legitimacy, governments often need to deliver things like primary education,primary health, roads, build hospitals and clinics. If the government's fiscal survival depends on it having to raise money from its own people, such a government is driven by self-interest to govern in a more enlightened fashion. It will sit with those who create wealth. Talk to them about the kind of policies and institutions that are necessary for them to expand a scale and scope of business so that it can collect more tax revenues from them.The problem with the African continent and the problem with the aid industry is that it has distorted the structure of incentives facing the governments in Africa. The productive margin in our government's search for revenue does not lie in the domestic economy, it lies with international donors.
Rather than sit with Ugandan entrepreneurs,Ghanaian businessmen, South African enterprising leaders, our governments find it more productive to talk to the IMF and the World Bank. I can tell you, even if you have ten Ph.D.s, you can never beat Bill Gates in understanding computer industry. Why? Because the knowledge that is required for you to understand the incentives necessary to expand a business, it requires that you listen to the people, the private sector actors in that industry.
Governments in Africa have therefore been given an opportunity by the international community to avoid building productive arrangements with your own citizens, and therefore allowed to begin endless negotiations with the IMF and the World Bank, and then it is the IMF and the World Bank that tell them what its citizens need. In the process we, the African people, have been sidelined from the policy-making, policy-orientation, and policyimplementation process in our countries. We have limited input, because he who pays the piper calls the tune. The IMF, the World Bank, and the cartel of good intentions in the world has taken over our rights as citizens, and therefore what our governments are doing, because they depend on aid, is to listen to international creditors rather than their own citizens.
But I want to put a caveat on my argument, and that caveat is that it is not true that aid is always destructive. Some aid may have built a hospital, fed a hungry village. It may have built a road, and that road may have served a very good role. The mistake of the international aid industry is to pick these isolated incidents of success, generalize them, pour billions and trillions of dollars into them, and then spread them across the whole world, ignoring the specific and unique circumstances in a given village, the skills, the practices, the norms and habits that allowed that small aid project to succeed -- like in Sauri village in Kenya where Jeffrey Sachs is working -- and therefore generalize this experience as the experience of everybody.
Aid increases the resources available to governments, and that makes working in a government the most profitable thing you can have as a person in Africa seeking a career. By increasing the political attractiveness of the state,especially in our ethnically fragmented societies in Africa, aid tends to accentuate ethnic tensions as every single ethnic group now begins struggling to enter the state in order to get access to the foreign aid pie. Ladies and gentlemen, the most enterprising people in Africa cannot find opportunities to trade and work in the private sectorbecause the institutional and policy environment is hostile to business. Governments are not changing it. Why? Because they don't need to talk to their own citizens. They talk to international donors. So the most enterprising Africans end up going to work for government, and that has increased the political tensions in our countriesprecisely because we depend on aid.
I also want to say that it is important for us to note that over the last 50 years Africa has been receiving increasing aid from the international community in the form of technical assistance, and financial aid,and all other forms of aid. Between 1960 and 2003 our continent received 600 billion dollars of aid,and we are still told that there is a lot of poverty in Africa. Where has all the aid gone?
I want to use the example of my own country called Uganda and the kind of structure of incentives that aid has brought there. In the 2006-2007 budget, expected revenue 2.5 trillion shillings. The expected foreign aid: 1.9 trillion. Uganda's recurrent expenditure -- by recurrent what do I mean? Hand-to-mouth -- is 2.6 trillion. Why does the government of Uganda budget spend 110 percent of its own revenue? It's because there's somebody there called foreign aid who contributes for it. But this shows you that the government of Uganda is not committed to spending its own revenue to invest in productive investments, but rather it devotes this revenue to paying structure of public expenditure. Public administration, which is largely patronage, takes 690 billion. The military, 380 billion. Agriculture, which employs 18 percent of our poverty-stricken citizens, takes only 18 billion. Trade and industry takes 43 billion. And let me show you what does public expenditure --rather, public administration expenditure -- in Uganda constitute? There you go. 70 cabinet ministers, 114 presidential advisers -- by the way, who never see the president, except on television.
And when they see him physically, it is at public functions like this, and even there, it is him who advises them.
We have 81 units of local government; each local government is organized like the central government -- a bureaucracy, a cabinet, a parliament, and so many jobs for the political hangers-on. There were 56, and when our president wanted to amend the constitution and remove term limits, he had to create 25 new districts, and now there are 81. 333 members of parliament. You need Wembley Stadium to host our parliament. 134 commissions and semi-autonomous government bodies, all of which have directors and the cars and -- and the final thing,this is addressed to Mr. Bono. In his work he may help us on this.
A recent government of Uganda study found that there are 3,000 four-wheel drive motor vehicles at the Minister of Health headquarters. Uganda has 961 subcounties, each of them with a dispensary,none of which has an ambulance. So the four-wheel drive vehicles at the headquarters drive the ministers, the permanent secretaries, the bureaucrats and the international aid bureaucrats who work in aid projects while the poor die without ambulances and medicine.
