Professionalism/James Shikwati and Aid to Africa

James Shikwati is a Kenyan economist and libertarian. He is known for promoting the idea that the current system of sending aid to Africa causes more harm than good, due to the fact that the influx of cheap food often hurts African farmers, and many corrupt governments misuse the aid rather than sending it directly to those who need it.

Background

James Shikwati at TEDGlobal 2007

James Shikwati was born in rural Western Kenya on a banana farm in 1970 . He attended Musingu High School in 1989, and later graduated from the University of Nairobi in 1994 with a B.ED in Arts. The same year he went on to teach geography, sociology, and ethics at Kiptewit High School in the Kenyan province of Kericho Rift Valley until 2001. During his time as a teacher, he filled out dozens of applications to American graduate schools. He was rejected from all of them, but one of these rejection letters actually marked the start of a radical change in Shikwati’s life, because included with it was a copy of a book called The Law .

The Law and Libertarianism

Many libertarians consider The Law to be highly relevant to the ideas of libertarianism even though it was written more than a century ago by Frederic Bastiat . In his book, Bastiat asserts that every person has a natural right to defend their person, liberty, and property; a government should not go beyond protecting these rights. Under this presumption, philanthropic acts like aid cannot be justified because they plunder citizens of their property through taxation. Similarly, it makes the recipient dependent on these philanthropic acts which interferes with the benefits of a free market.

Libertarianism is a political philosophy that emphasizes freedom, individual liberty, and voluntary association. When Shikwati learned about the principles of libertarianism by reading The Law, he quickly realized that foreign aid was doing more harm than good to the African economy. If Africa wants to develop its economy it needs to stop being dependent on foreign aid and look to its own resources for real value. Shikwati notes that Africa has enormous capital in the form of natural resources . Many libertarians agree that money is the result, and not a precondition, of economic achievement. Shikwati thinks that investments in the people will promote freedom and bring economic success to Africa.

Farm Subsidies

The history of farm subsidies in America helps explain the origins of sending aid abroad. In 1929, the Hoover administration first bought up and stored 257 million bushels of wheat to please the farm bloc. Subsidies like this brought three main benefits to the American economy: they stabilized food prices, ensured food production, and guaranteed income for farmers. However, the storage costs incurred by the Hoover administration became an issue during the Great Depression so the Roosevelt administration set a precedent by paying farmers to simply plant fewer crops. Farm subsidies continued to grow as the supply of crops increased with the improvement of farming methods. By 1983, farmers had become highly dependent on these subsidies and in 2005 corn subsidies alone totaled over $7 billion .

Farm subsidies work by establishing an artificial price floor which has the unwanted effect of generating a significant surplus of crops. This surplus can be controlled in a variety of ways and the Food for Peace program was established in the 1950s to send it abroad. In addition to keeping the surpluses away from the domestic economy, the program built new markets for American products and rewarded favored third world regimes. Since the origin of the Food for Peace program, many other aid programs have developed that bring similar benefits. .

Problems with Corruption

In the late nineteenth century, imperialism in Africa was rampant. European nations were rushing to carve out spheres of influence and make divisions along their own political lines, rather than tribal or cultural lines. This not only divided many tribes, but tried to group others together who may have had generations of conflict between them. Even though the European countries eventually pulled out after many long struggles and quests for independence, Africa was left divided and without any strong system of government. In many countries, this has led to violent coups, genocide, militaristic dictators, and government corruption.

This instability and general prevalence of corruption in many African countries is one of the major inhibitors to the success of foreign aid. When other countries and organizations send aid in the form of money, food, or other resources, it is often given to the government of the country receiving the aid to distribute to its people. However, in many cases these governments will take the aid and use it for their own profit before it reaches the people, if in fact it ever reaches them. In some cases, if the aid given is not financial, the government will sell the resources it receives instead of freely distributing it to its citizens in need . Another common form of misuse is the use of aid to buy votes. When corrupt government leaders are presented with aid for their country, some will use it as an incentive to persuade citizens to vote for them in order to receive a portion of the aid, as a means to retain their positions of power .

James Shikwati

James Shikwati believes that the lack of money being donated to Africa is not the reason why the continent is struggling. He argues that when the money is given to people it limits what it can be used for. For example, if a farmer has a leak in his roof, money may be given to him to repair the roof but he may feel that the money is better spent elsewhere. However, since the money was given to him, the power of what to do lies with the donor and therefore the only option is to repair the roof. This, Shikwati argues, is why donating money will do little to help improve the continent. Instead Shikwati wants young people to realize that they can turn African problems into opportunities. Entrepreneurial opportunities exist in feeding an estimated 200 million people, killing billions of malaria causing mosquitoes, and developing infrastructure. He also wants Africans to utilize the continents abundance of natural resources that could allow them to become competitive in many different industries including the cell phone industry. Shikwati wants the people of Africa to basically invest in Africa.

Criticism

The John Templeton Foundation created a think tank of eight experts of varying fields including James Shikwati and posed the question: Will money solve Africa’s development problems? The experts all had different responses to the question. Some believed that money will help while others were vehemently against it.

Experts who say yes:

• Ashraf Ghandi is Chairman of the Institute for State Effectiveness as well as the former Finance Minister of Afghanistan. He believes that money needs to be invested into the prosperity and stability of Africa to create infrastructure to allow for the globalization of the continent. Barriers preventing entrepreneurs from creating businesses must also be removed. In order to create development in Africa, the continent must be able to overcome the corruption and abuse of power, the predatory practices by extractive industries such as the diamond industry, and improve resource management. He stresses that the development of Africa is a long term engagement of at least 10 to upwards of 20 years and countries must plan accordingly.
• Iqbal Quadir is the founder of Grameen Phone in Bangladesh and is the founder and executive director of the Legatum Center for Development and Entrepreneurship at MIT. He believes that money needs to be used to promote growths. He believes that when the people have the money, as opposed to the government which acts like a monopoly with the money, change is possible. Quadir advocates investing in the people who will in turn create businesses and jobs leading to development.
• James Tooley is the President of the Education Fund, Orient Global. He believes that the money given to Africa is beneficial but that it needs to be used as an investment especially in improving education because of the rampant illiteracy in Africa. He wants to invest in private schools because they are better than the public schools and are still cheap enough for children living in slums to attend. Because they are privatized, the schools provide attractive business opportunities to entrepreneurs as well and will in turn help create more jobs and stimulate the economy.

Experts who say no:

• Dr. Donald Kaberuka is the President of the African Development Bank and former Minister of Finance for Rwanda. He states that my cannot solve Africa's problems by itself because the people don't trust the governments. He does believe that money is still needed in order to improve infrastructure, educate children, and fight AIDs.
• Edward Green is the director of the AIDs Prevention Research Project at Harvard's Center for Population and Development Studies. Mr Green argues that billions of dollars have already been donated and there is little to show for it. Colonialism brainwashed the poor into thinking that all their problems will be solved by wealthy nations.
• Michael Fairbanks is a co-founder of OTF Group and the Seven Fund, which provides grants for enterprise solutions to poverty. According to him, the power of what to do with the money belongs with the donor. As a result, the donors, big western governments, have to much control over what happens to that money and may not benefit the people enough. The people must also be willing to take less money for the benefit of the whole country.
• William Easterly is a Professor of economics at NYU. He believes entrepreneurs are needed and cites China and India as places where free enterprise has shown to be successful in developing regions.

All experts, including James Shikwati, agree that just sending money to Africa is not the solution to its development problems. They all agree that the money must be given to the people instead of governments and that the money should be used to promote entrepreneurship and create businesses. Most importantly, all agree that there is no short term solution to solving Africa's development problem. They all recommend that for the aid program to be successful, long-term plans must be implemented and continued to completion.

Generalizable Lesson

The issue of a short-term fix versus a long-term solution is a conflict that repeatedly rears its head in professional ethics. This is evident in Africa where western governments give African governments billions of dollars without any clear long-term plan for what to do with the money. The United States government has similar programs back on the home-front as well. Both farm subsidies and Social Security are programs where the government gives money to solve a problem without developing a clear long-term solution. Companies do the same thing. Corporations like Enron, Arthur Andersen, and Worldcom both sacrificed their long-term stability and viability for large short-term gains. Big banks have done the same thing with the housing market offering high-risk mortgages instead of ensuring their long-term gains. It is important for people and companies to remember what effects their actions today can have in the future.

References

http://www.nytimes.com/2006/11/18/us/politics/18thinktank.html?_r=1