Development finance: The role for aid in Africa.

Author:Addison, Tony
Position::UNU-WIDER Logo

29 June 2015

Aid's future, its history, and its impact were the topics of a policy workshop held by UNU-WIDER in co-operation with the Embassy of Denmark in Dar es Salaam on 8 June. The Dar symposium brought together a range of international and local participants, including donors and policy makers, and was opened by Johnny Flento, Denmark's ambassador to Tanzania.

Africa has now seen over a decade of economic progress. For many countries strong growth has combined with macroeconomic improvement and higher tax revenues to deliver rising living standards. The region is receiving more foreign direct investment than ever, and other sources of private development finance are on the rise. This has led many to question the role and future for foreign aid.

Myles Wickstead, formerly Head of Secretariat to the Commission for Africa, and previously the UK's ambassador to Ethiopia, spoke about how aid has evolved over the years, both politically and within the context of changing ideas about development. UNU-WIDER's director, Finn Tarp, presented on what we now know about the impact of aid, growth, and development. Finn has a series of papers with Channing Arndt, Sam Jones and other colleagues which provide very solid evidence on aid's generally positive growth impact (check out the new UNU-WIDER special issue of World Development on this: it's edited by Finn and myself, and is open access).

I then talked about some of the difficult choices that have to be made as aid donors look to their future strategies (with some of them cutting their budgets, too). A Tanzanian perspective was provided by the Vice Chancellor of the University of Dar es Salaam, Rwekaza Mukandala, who spoke about his country's sometimes rocky relationship with the donors over the years. Aidan Eyakuze of Twaweza moderated the meeting with panache and humour.

What are the key challenges ahead for the development community in Africa?

Africa faces a number of challenges that countries and their donor partners need to meet. Some--like Ebola and other diseases, as well as conflict--are very urgent. Others are longer term and developmental. Amongst the longer-term goals are:

* the need to accelerate the creation of livelihoods and jobs for Africa's youth

* to diversify economies (a need amplified by the weakening of global commodity prices)

* and to make better use of the natural wealth of the region.

Despite success, poverty remains deep and potentially destabilizing to democracy. These...

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