News Post: The Rise of State-Owned National Oil Companies

“How Wall Street Is Killing Big Oil”

http://yaleglobal.yale.edu/m/content/how-wall-street-killing-big-oil/9559

In its discussion of how western international oil companies are ramping down exploratory efforts and selling assets, this article touches on the corresponding rise of national oil companies (NOCs) in emerging markets (including Africa). The article refers specifically to NOCs in Nigeria that have recently been gaining control of new resources as western companies sell assets in order to focus on short term cash flows. The rise of NOCs raises questions about the role of these state-owned oil companies in national development (see: literature on the “resource curse”).

Additionally, the article suggests that as Western influence in the oil industry fades, corporate “leadership” on climate change will soon be the province of the major NOCs.

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News Post: Senegal is now Ebola Free

Hey guys,

The title pretty much says it all; I just wish the article was a bit more specific on what set Senegal apart in the way Ebola was dealt with, although they do briefly mention its success in “isolating the infection”. It also mentions a degree of success in Nigeria, and how the needs of pregnant women are threatened by the overstretched health clinics that resulted from Ebola.

http://www.nytimes.com/2014/10/18/world/africa/in-conspicuous-success-senegal-is-declared-ebola-free.html?partner=rss&emc=rss&smid=fb-nytimes&bicmst=1409232722000&bicmet=1419773522000&smtyp=aut&bicmp=AD&bicmlukp=WT.mc_id&_r=0

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Aid in Namibia

Dambis Moyo was a strong critic of aid, especially in Africa because she believed that there is a vicious cycle of aid. She says: “In response to poverty, donors give more aid, which continues the downward spiral of poverty.”  I agree with her, However, Namibia is one of the better off countries in Africa (considered a middle income country with GDP per capita of $6610 as of 2009, with a rather stable political framework comparatively to most other African countries, and higher incomes, thus I believe it is a better qualifier for aid. Furthermore, lots of its aid is involved directly with the population rather than through the government, thus having less room for corruption.

 

China is a big donor of aid to Namibia, although still offering less efficient aid that has room to go into officials’ pockets through soft, interest-free loans, and grants, China mainly focused on giving aid through infrastructure, a form of aid that Dambis Moyo herself approved of in Dead Aid. Aid through infrastructure helps provide economic growth and less room for corruption.

 

 

USAID is a large donor of aid too to Namibia. A large focus of USAID is combating the high number of people in Namibia with HIV/AIDS (13.1%). HIV/AIDS affects people especially of the working population, the ones who drive the economy, since a lot of them have HIV/AIDS, it prevents economic growth in the country because a large proportion of the working population is unable to work, also increasing the already extremely large income disparity that Namibia has. In just 2011, PEPFAR spent $102.6 million in Namibia and has managed to get antiretroviral treatment to 98,200 individuals while around quarter of a million patients received care and support. There is no doubt that without this help, economic growth in Namibia would have been slower than the 4.2% that it is growing at now.

 

The devastating impact of AIDS on the economy was shown through Tanzania where a loss in labor supply prevented enough people from harvesting food, raising the issue of food security to a higher level, and the general population had to focus on feeding itself, rather than working.

 

Another interesting foreign aid project in Namibia is represented in the village Otjivero. People in the village would receive $100 (9 pounds) Namibian dollar grants monthly, the money coming from protestant churches in Germany. The town had a history of alcoholism, one aspect that could have hindered the project, but the village committee found ways of combating this by making bar owners close their shops on payday. This experiment lifted the people of the village of poverty, and once people had enough to eat, progress came for Otjivero, as the money was then used to create micro-businesses, and now people were able to support themselves.

Sources:

http://dspace.africaportal.org/jspui/bitstream/123456789/32046/1/Namibia-China.pdf?1

http://www.usaid.gov/namibia/global-health

http://www.spiegel.de/international/world/a-new-approach-to-aid-how-a-basic-income-program-saved-a-namibian-village-a-642310-2.html

http://www.pepfar.gov/countries/namibia/

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Bostwana – U.S. Relations

Botswana and the United States have a very stable relationship. Both parties are benefitting from their mutual involvement within each other’s economic plan. In terms of world politics; Botswana is the U.S.’s prime example of the achievements foreign aid can bring to Africa, and the potential Africa has as a world partner.

The United States has been very involved in Botswana affairs since their break from the U.K. in 1966. The U.S.’s involvement in Botswana’s battle against HIV/AIDS could have very well been the turning point in Botswana’s recent history that helped  Botswana obtain a promising future.

The U.S. Peace Corps came to Botswana in 2002 with AIDs as there main focus and currently Botswana one of the best AIDs rate in sub-sahara Africa. However, before the resurgence in U.S. effort  to free Botswana from the AIDs epidemic, the U.S. was there before creating programs emphasizing education, entrepreneurship, environmental management, and reproductive health.  These programs can have just as much as an impact as monetary funds being pumped into the economy.

Much of U.S. relationship with Botswana has been in the Ministry of Health. Through time and through great results, the focus has certainly shifted to more of an economic goal orientated aid. Botswana has developed several agreements with South Africa and the United states in terms of trade, and consulting.

Botswana’s focus economically in order to get to the next pinnacle the plan to be, is diversifying their economy. Diamonds make up 1/3 of Botswana’s revenue. However, many African political scientist state that the U.S. is at fault for Botswana having such a small economy portfolio. Their argument is that the aid provided by the U.S. has stunted Botswana’s ability to venture into different realms of revenue besides mining. Some also say that the U.S.’s emphasis on the mining economy in Botswana has also aided in the lack of diversity present in their economy. The future will tell if the relations between Botswana and the United States will sustain. In order for this be true the United States must adhere to the new demands of Botswana economically.

Sources:

http://en.wikipedia.org/wiki/Foreign_relations_of_Botswana

http://www.cfr.org/botswana/botswana-african-success-story-shows-strains/p15108

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Botswana and U.S. Aid Response

Botswana has been receiving U.S. aid since it’s independence from the United Kingdom in 1966. The aid at first primarily went to Botswana’s AIDs relief. Botswana was one of the main countries for PEPFAR (President’s Emergency Plan for Aids Relief). PEPFAR helped Botswana support sustainable, high quality treatment for the citizens of Botswana. The CDC (Centers for Disease Control and Prevention) has also started numerous projects. Botswana and the United States are a perfect paradigm for states in Africa trying to resolve the AID’s epidemic. The monetary value of the U.S. and Botswana in terms of aid to promote health in Botswana is a four year sixty four million dollar partnership This effort by the U.S. drastically changed Botswana’s infrastructure. Their staggering AIDs numbers dropped dramatically. Once this shift in Botswana health occurred; Botswana was able to start concentrating on their economy, along with other matters in the state that needed dire attention.
Another matter Botswana found important to obtain foreign aid in was law enforcement. The ILEA (International Law Enforcement Academy) was created and financed by both Botswana and the United States. This academy serves most of the sub-Saharan region. There are more than 6,906 law professionals from 34 member states and they have received elite training by the ILEA since 2001. However, Botswana’s efforts to improve their state did not stop there; Botswana improved it’s military as well.
Botswana’s aid received in the military is was not just monetary support. The U.S. recognized Botswana’s democratic interest in improving domestic and regional military efforts. The U.S. provided these non-monetary aid services in a unique way. The United States sponsored Botswana Defense Force officers and noncommissioned officers in enrolling in U.S. professional military education services. Note that these educational services also promoted the teachings of military in a democracy, and everlasting theme of human rights. All these improvements by the state of Botswana should serve as a poster-child for other African states. They demonstrate the proper way to go about aid services and the proper way to maintain a co-beneficial relationship with your foreign aid partner. All these efforts by the Botswana government did not only improve the infrastructure of their state – it did wonders for the economy.
The improvement of Botswana’s government was not only due to all the infrastructure improvements. Botswana is eligible for preferential trade benefits under the African Growth and Opportunity Act.  Botswana is also a member of the South African Customs Union. This union has negotiated TIDCA (Trade, Investment, and Development Cooperative Agreement) with the United States.  The terms of this agreement help Botswana economically exponentially.  They are now able to reap the benefits of being involved in the World Marker on a grander scale. The United States serves as a consultant to Botswana on an array of topics involving trade such as: facilitation, technical barriers, investment promotion, and sanitary and phytosanitary measures.
The Aid-Growth Debate serves as an important reference when discussing Botswana’s trade system, and economic status. There has been several case studies of whether aid helps a state achieve it’s goals. Some results say yes, others no. A number of cases found that there is a saturation point also known as  a point of no return – where any increase in aid will not yield any effect – a zero effect. However, recent studies seem to be directly describing Botswana’s aid history, and activity with the United States. Recent studies have found that aid used for short-term investments, such as infrastructure have even a stronger impact on growth. Botswana’s government (with credit to the United States) has been able to focus on Botswana before adhering to other international concerns. This has led Botswana to have one of the most  stable governments in Africa.

Sources:

http://www.state.gov/r/pa/ei/bgn/1830.htm

https://wesfiles.wesleyan.edu/home/mbnelson/Courses/AFWP/Readings/Moss-Ch8-2011.pdf p.13

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Aid to Rwanda-A Shimmering gleam of Hope for All of Africa

 

Since the 1994 genocide, Rwanda has become a major recipient of U.S. Aid focused on agriculture, economic development, health, democracy and humanitarian assistance. Foreign aid currently comprises 40% of Rwanda’s budget, leaving Rwanda vulnerable to fluctuations in aid flows[1]. While despite Damisa Moyo’s argument that aid has inhibited success in Africa in her book, Dead Aid, Rwanda has been extremely successful at using Aid efficiently and affectively[2]. As British development expert Paul Collier argues, Rwanda has the “Hat-trick of rapid growth, sharp poverty reduction and reduced inequality”[3] .

Rwanda’s main contributors of foreign aid remain to be the West with the United States and Britain as their largest bilateral contributors. Recently making big headlines in 2012, Britain’s Department for International Development (DFID) had foreign aid funds frozen, unfrozen then refrozen due to the ethical accusations made against Rwanda regarding its involvement of its Western neighbor, Democratic Republic of the Congo. Many other Western countries followed in suit, questioning the ethics of Paul Kagame. Since then, foreign aid to Rwanda has been steadily decreasing

Despite this recent hiccup in foreign aid flow, Rwanda has done incredibly well comparatively to other African nations with its usage of foreign aid. While I do think Paul Kagame’s autocratic rule is undemocratic and oppressive, it definitely has been successful in an array of subjects especially cracking down on corruption. Rwanda prides its self with its anti-corruption laws and whistler-blower protection laws that few other African countries enforce as well.

China has taken particular fondness in Rwanda and its infrastructure. It has given $219 million RMB loan for the rehabilitation of Kigali road network in 2009. In 2013, over one in every four roads that I traveled on in Rwanda was under construction, especially on my way to Lake Kivu.  Clearly, China has a large interest in the Lake Kivu region as the lake neighbors the resource wealthy Democratic Republic of the Congo. But the infrastructure provided by the Chinese has benefited the local population and its economy immensely.

While Rwanda boasts of  remarkable progress in part to aid, dependency is still a large issue among other things. Let’s also not be so quick to judge as while poverty has dropped remarkably, it still remains at 45% further reflecting the need for continued development.  Rwandan’s dependency on foreign aid has been a substantial drawback of Rwanda’s recovery of the 1994 genocide. RPF leaders and Paul Kagame remained impervious to international criticism throughout the 2000’s they were continuously praised for stopping the genocide. Furthermore, dependency persists as an issue as Rwanda remains a largely agricultural based economy; little investment has gone into its further development increasing Rwanda’s dependency of foreign aid. And as Rwanda continues to expand social benefits to its people, what will happen when aid gets cut-off?

Overall, I thought the foreign aid readings were really interesting especially Damisa Moyo’s writing in Dead Aid. It has me thinking critically of celebrities and government promoting aid My question is that if aid does have a specific cause in Africa, AIDS for example, would it be more beneficial for a country to support that single cause through a non-for profit? Personally it seems plausible but nationally it is not possible.

 

[1] http://www.worldbank.org/en/country/rwanda/overview

 

[2] Dead Aid, Dambisa Moyo

[3] http://www.economist.com/news/middle-east-and-africa/21569438-will-rwandas-widely-praised-development-plans-now-be-stymied-pain

http://www.huffingtonpost.com/hugh-evans/rwanda-foreign-aid_b_1269599.html

http://unu.edu/publications/articles/to-aid-or-not-to-aid-the-case-of-rwanda.html

http://anticorrp.eu/news/control-of-corruption-in-rwanda/

http://www.usaid.gov/history-usaidrwanda

 

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Foreign Aid to Zimbabwe

Although more often thought of as a recipient of sanctions, Zimbabwe also receives large amounts of international aid each year. Since 2006, Zimbabwe has received an increasingly amount international humanitarian assistance each year, especially since the Cholera outbreak of 2008-2009. In 2012, Zimbabwe received over $1 billion of foreign aid. Since the last 7 years the US has been its top bilateral donor. In 2011, the US gave Zimbabwe $69.7 million in bilateral aid while the EU gave $19.3 million. In 2012, Zimbabwe received the equivalent of 11.2% of its gross national income as aid (ODA) (Global Humanitarian Assistance).
In 2011, the bulk of bilateral humanitarian assistance given to Zimbabwe was emergency food aid and emergency/distress relief (Global Humanitarian Assistance). The food crisis in Zimbabwe arose out of Mugabe’s fast-track land reform policy that distributed hundreds of thousands of acres of farmland owned by white farmers to low and middle-class Black Zimbabweans. Their inexperience and lack of expertise in farming has caused a major agricultural crisis wherein the country once known as the “breadbasket of Africa” is now dependent on Western food imports and World Food Programme aid. According to the WPF, 25% of Zimbabweans (2 million people) will need food assistance or face risk of starvation in 2014-15. The emergency/distress relief aid is mainly to combat poverty and AIDS in the nation with the highest inflation rate in the world and 15% HIV rate.
Another consequence of Mugabe’s land reforms is that donors have sought to channel all their money through organizations like UNICEF or local NGOS so as not to give a penny to the ZANU-PF government. The UK has been especially weary of its funds ending up in the hands of people living on “contested lands.” The problem with this is that some 150,000 people live on such lands, and that translates to nearly 1 million people being ignored my most Western aid organizations (Guardian).
One of the main problems in Zimbabwe, as in all of Africa, is the belief that the major aid agendas serve external commercial interests more than local human needs. How can Zimbabwe re-establish its status as a food exporter when it is being flooded with Western gain? Zimbabwe is one of many African states that have developed their own local substitutes to the French product, Plumpy’nut, a local groundnut-based famine-relief paste. But there is an international patent commotion, which is preventing local producers from making and marketing a comparable product within Africa. Another external agenda item that is being introduced is the recent fad of “conservation agriculture,” or no-till planting. As Zimbabwean agricultural experts have pointed out, there was no grassroots drive to adopt no-tillage systems. The practice was entirely pushed by donor agendas, sending in NGO-funded development workers to teach people this exciting new technique that was supposed to revolutionize their yields, but didn’t end up adding much to harvests (African Arguments).

http://africanarguments.org/2011/08/08/parasites-of-the-poor-international-ngos-and-aid-agencies-in-zimbabwe-by-diana-jeater/

http://allafrica.com/stories/201409210042.html

http://data.worldbank.org/country/zimbabwe#cp_prop

http://data.worldbank.org/indicator/DT.ODA.ALLD.CD

http://www.globalhumanitarianassistance.org/countryprofile/zimbabwe#tab-home

http://www.theguardian.com/global-development/poverty-matters/2012/may/04/aid-zimbabwe-resettled-farmers-contested-land

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Nigeria and Foreign Aid

Nigeria receives approximately $83b per year in foreign aid from donors including the US, Europe, the World Bank, Europe, Japan, and the UN, and certain Gulf countries (AidData). The US aims to contribute approximately $720m in aid in 2015, while European Union aid to Nigeria between 2009 and 2013 totaled approximately $225m per year (Business Day, 2014) (EU External Action). The United States contributed a relatively small amount aid to Nigeria beginning at Nigerian independence in 1960s. Flows during this time were much lower than they have been since democratization. A major US-sponsored aid project in the country during this time was the development of several agricultural schools at Nigeria institutes of higher education (USAID). The US restricted aid the in the early 90s in response to drug trafficking inside Nigeria, donating about $7 million per year during this time (approximately $.06/person) (USAID). In 1999, Nigeria’s first president was elected, and twenty years later, the US president is requesting $720 million in foreign aid to Nigeria (approximately $4/person, adjusted for population growth) (Business Day). US aid to Nigeria thus increased dramatically during the same period that the country became a democracy.

There are various possible explanations for the significant increase in aid from the US to Nigeria over the past twenty years, or since independence. There has been growing recognition by governments and aid agencies of the importance of good governance in effective aid (Moss), and it is possible that agencies and governments have recognized the greater potential effectiveness of donations to a country under democratic rule. On the part of the United States, Other strategic interests that may foster larger aid flows include security concerns associated with the War on Terror and economic concerns at the US begins to import more oil from West Africa. A great deal of aid, approximately 60% of the US contribution, is designated to address the problem of AIDS/HIV. Internal security is also a concern, with aid dollars and advisory support directed especially towards the Niger Delta (EU External Action).

It is interesting to note that although ober $80b in aid makes its way to Nigeria annually, this statistic is much smaller than both foreign direct investment ($117.4b) and remittances ($182.9b). Although such sources of financing cannot be directed by a central planner to address any particular social problem, this type of inflow is viewed by scholars such as Dambisa Moyo to be less damaging to civil society than aid, as well as less vulnerable to corruption. The World Bank notes that Nigeria’s size and decentralized public authority may offer opportunities for corruption, as Nigeria’s 36 states and 774 local governments control half of the government’s total revenues, and have a great deal of discretion in this area (World Bank). A 2013 opinion piece in a UK news outlet argued that aid money is wasted in Nigeria due to the corruption levels, noting Nigeria’s poor 174/215 ranking by Transparency International (Daily Mail, 2013). There are certainly some aspects of development that aid can support, but in such a large country it is challenging to find conclusive evidence about the effectiveness of foreign aid.

Moss, Todd. “Chapter 8: The International Aid System.”

Moyo, Dambisa. Dead Aid.

USAID: Nigeria

http://www.usaid.gov/nigeria

World Bank: Nigeria Overview

http://www.worldbank.org/en/country/nigeria

Trading Economics: Nigeria

http://www.tradingeconomics.com/nigeria/population

EU External Action: Nigeria

http://eeas.europa.eu/nigeria/index_en.htm

“Nigeria, a country so corrupt it would be better to burn our aid money” (The Daily Mail, August 2013)

http://www.dailymail.co.uk/debate/article-2387359/Nigeria-country-corrupt-better-burn-aid-money.html

“America wants to send $720m foreign aid to Nigeria in 2015” (Business Day, August 2014)

http://businessdayonline.com/2014/08/60156/#.VD8xCYt4qto

AidData

 

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Foreign Aid for Cameroon

Cameroon receives a significant amount of foreign aid and unsurprisingly most of this aid comes from France. In 2011-2012 the French were the top donor with a gross ODA (Official Development Assistance) of 178 million U.S. dollars. The next highest donor was the EU Institutions with a gross ODA of 95 million U.S. dollars. This French dominance of aid makes sense given their role as colonizer and primary economic trade partner. Many Western countries believe there is some universal duty of “the rich should help the poor, and the form of this help should be aid,” (Moyo). Part of the French commitment to aid in Cameroon definitely reflects this maxim but there is also a more selfish, ulterior reason for this aid and involvement. As one of Cameroon’s largest trade partners France has a large stake in the economic conditions of the country. Especially with the emergence of oil markets, both in the regions near Nigeria and in offshore drilling areas, Cameroon’s economic stability is even more important to the French. Another shocking conclusion from the seemingly heavy French aid involvement in Cameroon is the true vast inequity between the West and the rest. Despite that France is Cameroon’s largest donor by nearly one hundred million dollars; Cameroon doesn’t even register in the top ten recipients of French aid. Additionally, at least six other countries on the continent receive more aid from the French than does Cameroon. Based on Moyo’s belief about the effects of foreign aid on African development, this omission from the top recipients may be an unintentional benefit to Cameroon. Moyo believes that African, especially Sub-Saharan countries, struggle so mightily strictly because of the aid they receive from the Western powers.

Especially in a country as ripe for corruption as Cameroon, less aid may be the biggest favor the West could ever do them as, “aid is one of [corruption’s] greatest aides,” (Moyo 48). Despite recent actions taken to attempt to improve the setting, Cameroon is still listed as one of the most corrupt countries in the government. In Moyo’s view aid would do nothing but hurt this because “with aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments – providing them with freely usable cash,” (Moyo 49). This raises the inevitable question of how of this substantial aid (596 million U.S. dollars for 2012) actually goes to use and how much is used just to support this seemingly corrupt government.

Conspicuously, the U.S. barely even registers on the list of the top ten donors to Cameroon. It ranks as the 8th largest donor, with a gross ODA of 23 million dollars, just barely more than Japan. Much of this could be in connection to the strife over human rights between the U.S. and Cameroon. Also, the U.S. still gives a great amount of aid to the USAID regional office in Accra, Ghana. From there funds are allocated to regional countries including Cameroon. However, once again it must be asked how much, if any, of these funds are put to their desired use or do they just create a “culture of dependency” that leads to a downward spiral of poverty and aid in developing countries.

 

Dambisa Moyo, “The World of Aid”.

http://www.oecd.org/dac/stats/documentupload/CMR.JPG

http://map.usaid.gov/?l=regional&w=SUB%20SAHARAN%20AFRICA

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Foreign Aid in Benin

Foreign Aid and Benin

 

The role of Foreign Aid in Benin has varied largely since the country became a democracy in the early 1990s. In the post soviet world, analysts believed that Benin was one of the best candidates for aid because of its recent transformation to democracy (Gazibo). Benin was seen as the laboratory for democracy within Africa and the United States in particular had an interest in seeing this small country succeed. The amount of aid given to Benin significantly changed in the 2000s because of an overall re-assessment of where aid should go spurred by the Millennium Development goals. Yet a large amount of aid is still given to Benin both bilaterally and multilaterally. The largest multilateral donors come from the EU, giving in aggregate $146.6 million in 2009. While the United States still gives the most aid to Benin out of any country ($59 million), other countries play a large role in giving aid to Benin as well, such as Denmark ($51.4 million), France ($50.4 million), Germany ($43.1 million), and the Netherlands ($42 million) (Gazibo). Benin also receives foreign aid from non-traditional aid countries such as India, Saudi Arabia, Abu Dhabi, Kuwait and Brazil, though these countries give a much smaller amount of aid in comparison to western nations. An interesting side-not, Brazil gives aid to Benin because a large portion of the population of Benin believe that their ancestors were brought to South America from Benin.

While non-western countries do not really care about the use of their aid in Benin the United States and Europe attempt to ensure their aid is being used to strengthen democracy within Benin. While aid has not helped in the areas of good governance, rule of law, and accountability, there have been statistical studies that link foreign aid in Benin to an improvement in elections and civil society (though these are two extremely broad topics that have potential to be influence by many lurking variables). The US aid, the most important and largest amount of aid given to Benin, is focused on improving education and health, staples of a stable society. European aid is mostly focused on improving infrastructure (ex. Roads) and regional communications, enhancing trade and the economy. The way the US gives aid to Benin and the way the European countries give aid to Benin display the interests of the donor country: keeping democracy for the former and improving trade in the latter. Over the years, donors have increasingly wanted more say in where foreign aid is being used with Beninese society.

Interestingly the history of aid in Benin supports the Moyo’s argument that aid tends to hurt the recipient country more than it helps. During the 90s, when Benin received a larger allocation of aid, the country experienced large economic stagnation. Since the reduction of aid beginning in the 2000s, Benin has experienced a thriving economy that is currently growing around 6% (GDP growth) and has experienced rapid expansion in the past decade. More research needs to be done on the topic, but at a first glance it would seem that the reduction of aid to Benin has allowed the country to develop more sustainable economic growth.

 

Sources: Wikipedia

Foreign Aid and the Challenge of Deepening Democracy in Benin- Mamoudou Gazibo March 2012

 

Dead Aid- Dambisa Moyo

 

 

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