The Economist: Somaliland does not need aid.

Liban Obsiye and Yusuf Salah
Saturday, July 16, 2011

The Economist, a global social affairs magazine, reported in its latest issue on the research carried out by a Stanford University academic, Nicholas Eubank which suggested that Somaliland’s success is down to the fact that it receives no direct international aid as a non recognised State. Instead, Eubank argues, Somaliland authorities have to rely on locally collected tax revenues in order to survive and this has made Somaliland a more democratic place in that it has made the government more inclusive, representative and accountable as the public have some real leverage.

 

Supporters of aid in Africa as a means of development would surely be angry with this latest research as it flies in the face of all their past arguments. Aid to Africa is usually distributed by national governments as well as International Financial Institutions (IFI’s) like the IMF and World Bank in the form of loans. The idea is that upon receiving these loans good hearted, public centred government than use it to build their nations infrastructure, human capital and health care systems and so forth. However, what is rarely discussed openly by advocates of Aid are the crippling Neo-Liberal, free market economic conditions that are usually attached to it. The IMF and World Bank are notorious for forcing privatisation and whole sale public sector reforms on developing countries at times when they least need it and are prepared for it. In addition, with the requirement to open up developing nations economies to speculators and private investors, the developing countries are not given a fair platform to trade globally in order to repay the debt in the future which consequently traps them in a vicious cycle of poverty and aid dependency.

Aid instead of assisting the development of poorer nations, helps to bring about their demise more quickly and swiftly as it makes them more dependent on aid. Dambisa Moyo rightfully referred to aid in her best selling book “Dead Aid” as the killer of growth and one of the key reasons behind the many conflicts in Africa as corrupt groups fight their way to power in order to control the vast sums of aid money. Aid she rightly argues kills the entrepreneurial l skills and desire brought about by a need to create, build and to sell and export in order for developing nations to truly tackle poverty and build their capacity to compete in the global economy. It is not just Dambisa Moyo who recognises the damaging effects of aid as she is joined by the Nobel Peace prize winning economist Jospeh Stiglitz, Oxford University professor and author of the “Bottom Billion” Paul Collier and the late London School of Economics economist, Peter Bauer who was one of the earliest critics of aid at a time when it was unfashionable to do so.

Many citizens of the break away and not yet internationally recognised republic of Somaliland speak fondly of aid and its potential to build their country. Some are even desperate for recognition solely because they feel that they will be able to access aid quickly and as a result accelerate their development. However, these people, which include some senior politicians, are naive as they firstly ignore the conditionality’s that will be attached to any support they receive and secondly of the wider repercussions for their long term future. Many Somalis believe that aid has made war profitable in Mogadishu as the African Union troops, corrupt warlords now turned respectable politicians and the neighbouring countries, especially those that have contributed soldiers to the peacekeeping mission task force and those that receive a large number of Somali refugees fleeing the violence, are benefiting enormously from the chaos and desperation.

“Ethiopia, Kenya, Uganda and many others countries are getting aid money for their involvement in Somalia,” said one businessman who did not want to be identified. “Would they be there for free and to just bring peace to the Somali people? What are they risking their soldier’s lives for? What pays for the warlords in parliament’s salaries and expenses and all the pointless conference all over East Africa? Aid.” Another jumps in and adds, “If aid to Somali was stopped I believe we will get peace because all the gangsters might just go and our neighbours will withdraw their troops.”

“Aid has benefitted those who are able to use a rifle properly and it has taught them that the longer they use it and the more violently they use it, the more it will pay,” smirked a gentleman who had lived in Nairobi and claimed to have seen the waste of aid money by government departments and aid agencies. “Aid is the real reason why peace may never return to Somalia.”

Somaliland has a booming economy fuelled by hungry entrepreneurs in all sectors hoping to escape poverty and to develop their capacity in order that they are able to one day trade and compete globally. It is also a place where dialogue between differing tribes, government and businesses exists and is strong and valued as all relevant parties realise its importance to their interests. However, if Somaliland starts to receive aid all this is very likely to disappear quickly and a situation like Mogadishu will quickly develop as tribal families will inevitably fight for a share of the aid money. This would lead at best to a stifling of the developing private sector lead growth Somaliland currently enjoys and at worst, a tribal based civil war.

The break away republic of Somaliland has proven that, although it has been extremely difficult, it can live within its means and its people have shown that they are willing to sacrifice. Somaliland has as a result of internal negotiations achieved peace and as a consequence of peace managed to facilitate private sector growth without the need for direct foreign aid. In order to reach the next step of the developmental journey, the Somaliland government desperately needs a policy of managed capitalism which is underpinned by legally binding regulations. Also urgently required is the capacity building and strengthening of public sector institutions and the enhancement of a governance system built on a combination of consent and trust. Aid will not allow for this.

Somaliland at present has no national debt and is quietly developing while war torn Somalia continuously begs the world for more aid and assistance. This allows Somaliland to own its own policies and its policy process and act in its citizens best interests.  Aid conditions by their very nature are undemocratic as they require the borrowing nations to regularly act in opposition to their own people’s interests (Anybody following Greece?) and Somaliland, if it were to receive aid will be forced to do the same and eventually lose the democracy it has fought so hard to nurture and to strengthen.

Aid if well used and coupled with free trade like after the Second World War in Europe in the form of the Marshal plan where the USA for fear of the spread of communism provided Europe with monetary support in order to rebuild Europe’s economy, will work. Just like In Europe recipient nations will industrialise and pay back their debt as they trade freely with the rest of the world.  In this case, aid will be a short term measure. However, in Africa it has become a long term prescription which is slowly killing all the nations it’s suppose to bring to better health.

Somaliland rebuilt without aid and through intertribal dialogue and as it has proven successful it is the way it should continue to be. Aid will make Somaliland into another Somalia and it will also stifle the economic progress been driven through by a new and an up and coming middle class entrepreneurs in the absence of aid. The taxes from these entrepreneurs’ successes and the port of Bebera can sustain Somaliland as they do at present.  If the world really cares, instead of offering the developing countries, especially those in Africa crippling future debts that impoverish their future generations, offer them advice and expertise to rebuild, strengthen and genuinely develop from the bottom up. Furthermore, donor nations should make more effort to commit to a free trade policy rather than aid because this is the only real path to genuine long term development for most of the worlds poorest nations.


Liban Obsiye
libanbakaa@hotmail.com

Yusuf Salah
ylucknow@hotmail.com

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