Aid : The Pitfalls of Africa's Addiction

I would first like to link you to a rare piece of editorial genius from the BBC. Rarely do the BBC publish articles which provide true insight into problems, rather than superficial sob-stories.

The article on aid to Africa

To me, the story resoundingly shows that free market capitalism is the way forward for Africa. Too long have Africans relied upon other continents for aid, which results only in dependence and debt.

The way forward is by microfinance venture capitalism and development funds. By loaning money at minimal cost to the capitalists in Africa (ie the vegetable merchants, the scrap metal collectors etc), development will occur.

Continuing aid to Africa will only result in further dependence, loss of money to corruption and dejection.

The way forward for Africa in my eyes should be one where the leaders are not handed any money. The money should go directly via the private sector into these micro-development funds. In this way, KKR and Blackrock could achieve more than Unicef ever has.

Thank you! I've been thinking this for quite awhile. Seems the world enjoys funneling aid to the wrong people ('leaders').

Originally posted by 44soulslayer
The way forward is by microfinance venture capitalism and development funds. By loaning money at minimal cost to the capitalists in Africa (ie the vegetable merchants, the scrap metal collectors etc), development will occur.

You are right. Corrupt politicians should be completely out of the development fund loop.

Think about it. If all of the aid given to Africa was given as microloans in the first place the continent would be a lot more developed today. There are a lot of small enterpreneurs there who just don't have the money to get ahead.

Basically you should put the money into microfinancing, small local NGOs, maybe education and health care... But never put any of the money into the hands of the politicians.

Development funds directed directly to the grassroots level, that would work.

The reason that Asia is developing compared to Africa is that Asia has adopted a model of advancement as opposed to reliance.

Grameen Bank in Bangladesh pioneered Microcredit (thus winning Younus, the CEO a Nobel Prize). This single bank has done more good in terms of uplifting the impoverished than any huge NGO such as Unicef. The brilliant thing about microcredit is that the risk is so negligible that people dont mind lending. The odd thing is that the money is almost always returned, and can then be recycled for other people to use! Its a positive spiral!

Compare that to Unicef, who blow massive amounts of money on advertising and logistics; then spend vast sums treating temporary illness. Its highly short sighted. While they save lives in the short term, they fail to tackle the endemic problems.

If 1/10th of the money going to charity were diverted into microcredit and microVC, the third world would see tangible results as opposed to the sinkhole it is today.