Prsentation PowerPoint

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What  aid  to Africa ? Doubling aid to
Africa conference The Center, Brussels June
14, 2005 Vincent Okele
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Agenda

• The Investment-Export growth-Savings virtuos
  circle
• Africas growth prospects
• Ineffectiveness of aid on africas growth
  prospects
• What next?

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Factors affecting Africas growth prospects
Investments
Provides resources for investment
Creates employment opportunities
productivity growth and in creased
competitiveness Shift of production to high
income elasticity products
Fex for foreign goods imports and advanced
technology
Export Growth
Domestic Savings
Contributes to
Creates employment opportunities
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Africas growth prospects
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Ineffectiveness of aid on Africas growth
prospects

• Donors aid allocation policies have more to do
  with geo-politics and domestic policy agendas
• Very little aid goes to the three largest
  countries (India, China and Nigeria) where almost
  2/3 of the worlds 1/day live
• US massive aid to Afghanistan and Iraq vs
  blocking of projects that promote birth-control
• Inconsistent with poverty reduction goals

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Ineffectiveness of aid on Africas growth
prospects

• Strong coordination of policy conditionalities vs
  diversity in terms of aid delivery
• Volatility of aid has contributed to increased
  macroeconomic stability
• Double squeeze has led to distortion of
  government finances for many countries
• Rise in the ratio of capital expenditure as of
  government expenditure (from 24 in 70s to 36
  in 90s) due to aid projects
• Domestic brain drain from government sector to
  aid funded projects and programmes
• Erosion of state capacities

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Ineffectiveness of aid on Africas growth
prospects

• Aid is taking up an increasing share in
  government spending
• doubling of aid will increase Africas aid-to-GDP
  ratio from 10 to 15. In 4 countries, share of
  aid in govt spending already exceeds 40
  (Burundi, Ethiopia, Sierra Leone and Uganda)
• In such countries, aid will not taper out when
  growth process succeeds. It will be difficult to
  get aid dependent countries off aid post 2015
• Creation of aid dependent economy

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Africas growth prospects