Overcoming Africa’s Addiction To Foreign Aid: A Look At Some Financial Engineering To Mobilize Other Resources

The paper points out that African countries have become addicted to foreign aid. This has not, however, entirely helped their development because not only has aid been inadequate but it has also increased Africa’s indebtedness with considerable servicing costs. Moreover, aid volatility, bureaucracy, and “tying” have curtailed and frustrated African budgets. The paper calls on African countries to explore alternative means of mobilizing resources to avoid the pitfalls of aid and foster the continent’s development. Among the vehicles to this end proposed by the paper are: the budget; domestic capital markets; remittances; other Diasporean capital; future foreign exchange flows; and “reverse capital flight.”