Donors who cut aid to Kigali inadvertently made it discover a new aspect of its potential – citizen solidarity
When the
governments of United States, United Kingdom, Netherlands and Germany
cut aid to Rwanda three months ago, I was among those who did not shed a
tear. I have always argued that aid is a dysfunctional tool of
development policy. In many instances, it forces recipient governments
to adopt institutions, policies, and practices that donors fancy rather
than what citizens need. All too often, they are good for the donor
country (because they evolved organically out of its experience) but are
often inappropriate for the recipient nation given its unique history
and social structure.
Compare
aid to Foreign Direct Investment (FDI). Because FDI is private money
whose shareholders are looking for a good return, those who manage it
tend to be realistic and take a long-term view. For example, a company
like MTN is unlikely to pull out of a country because a human rights
group has made noise about something. If it does, the costs to its
shareholders would be enormous; it would lose the capital it had
invested. Thus, self-interest makes FDI much more cautious and
realistic. Aid is OPM (other people’s money i.e. taxpayer money). Those
who manage it lose nothing if they suspend it. So they work largely out
of altruism. This self-righteousness makes aid a puritanical, hubristic
and, therefore, arbitrary form of capital.
However,
the worst effect of aid is to undermine the evolution of an effective
state. One of the proxies economists use for effective states is tax
administration. The more elaborate and robust the tax administration of
any country is, the more effective will be the state. This is because
for a government to be able to mobilise revenues from domestic sources
in a comprehensive manner, it has to develop a social map of the society
over which it presides. It must register every business activity, name
every road and street, mark every plot and house, count every employee
etc. To build capacity to acquire and utilise such information is a
daunting task.
Aid
dependent governments have little incentive to invest in building a
robust tax administrative apparatus i.e. in penetrating their societies.
This is because for every fiscal shortage, they look to international
donors to fill the gap. This tends to disarticulate the state from its
people. Governments develop limited interest in the productivity of the
domestic economy. They also avoid the difficult task of negotiating with
their citizens for revenues. Such negotiation is essential to building a
culture of democracy and accountability. Unable to appreciate the costs
of the incentive structure their aid has created, donors begin to treat
their incompetent recipient as they would a child.
In spite
of these obvious pathologies, Rwanda under President Paul Kagame has
always disproved my argument on each and every one of these
dysfunctions. It depends on aid for almost 50 percent of its budget. Yet
it has developed one of the most effective tax administrative systems
in contemporary Africa. It has little corruption, has kept its
government engaged with its citizens, cut down on wastage and adopted
policies, practices and institutions that respond of the needs of
citizens rather than donors. Ironically this has made donors love Rwanda
and hence shower it with more money. The country has been a living
disproof of my criticism of aid.
Hence,
when donors cut aid to it because of Congo, a country that is the exact
opposite of what Rwanda is, they defeated even the little legitimacy
they have in giving it. Congo is corrupt. Congo is incompetent. Congo is
dysfunctional. Congo has an absent state in most of its territory.
Congo misuses aid given to it. Congo has little interest in the welfare
of its citizens. Congo does not build roads or schools and hospitals. It
does not provide any services to its citizens that are worth talking
about. Whether it is healthcare or education, agricultural extension of
security, Congo fails on each and every thing. Instead, Congo exports
its dysfunctions to its neighbors. It endangers their security, exports
refugees to them and more.
It is the
Rwandan people who again affirmed my criticism of aid. When donors cut
aid, the government called upon its citizens to fill the gap by setting
up the Agaciro Development Fund. Agaciro means dignity. Rwandans felt
insulted with this callous use of checkbooks as a form of blackmail.
Rwandans responded with characteristic solidarity. Peasants, workers,
vendors, businessmen and women, civil servants, soldiers, policemen,
cleaners, students, professors, taxi drivers, waiters, bartenders –
everyone contributed. In just under 30 days (one month), they raised RwF
18 billion (US$ 30 million) in donations to their government – more
than the total donors had cut and an unprecedented show of national
pride.
Rwandans
responded this way because they believe in their government and
leadership. Those who accuse Kagame of reigning over a dictatorship may
need to go back unto the drawing board. Trust cannot be enforced; it is
earned. The people of Rwanda have said again and again in opinion
surveys by state research institutions and by international polling
firms that they trust their government. In all of them, Rwanda ranks
among the world’s leading ten democracies – New Zealand, Sweden,
Austria, Australia, Norway, Finland, Denmark etc. Critics say the polls
are rigged.
Perhaps
donors and their Congolese baby may need to learn that rather than
disparage Rwanda and its president, they may need to use them to
stabilise that troubled country. Rwanda has the experience,
self-interest and proximity to DRC that is vital for a solution to that
country.
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