The Millennium Project 2005 report then recommends that most others become eligible for the “Big Push” of foreign aid out of the alleged poverty trap, that “well-governed low-income countries be granted ‘fast-track MDG status’ by the international community and receive the massive increase in development assistance needed for them to implement MDG-based poverty reduction strategies.82
The search for the elusive “well-governed low-income countries” casts a broad net. The report lists sixty-three poor countries that are “potentially well governed,” and thus potentially eligible for a massive increase in foreign aid. The list includes five out of the seven countries singled out by Transparency International in October 2004 as the most corrupt in the world: Azerbaijan, Bangladesh, Chad, Nigeria, and Paraguay. The list of “potentially well-governed” countries also includes fifteen governments that Freedom House classifies as “not free.” Such dictators as Paul Biya of Cameroon, Hun Sen of Cambodia, and Ilham Aliyev of Azerbaijan are on the list. President Aliyev of Azerbaijan has scored a double as most autocratic and most corrupt since he was “elected” to succeed his autocratic father in 2003.83
In his book The End of Poverty, Jeffrey Sachs emphasizes that many African countries do not have unusually bad governments compared with other countries at their level of income. Unfortunately, what counts for the population’s well-being is not how good the government is for its level of income; it is just how good the government is, period. Aid agencies have to face reality: Is money given to a bad government going to reach the poor? Perhaps the reason the country is poor has something to do with bad government?
It could be that donors are just making a pragmatic choice—appeasing the bad government so they can operate in the country on their own and reach the poor. It is true that donors do a lot on their own by bypassing the government. Unfortunately, they also spend massive amounts of their time trying to fix the bad government and work through it—much more than the token amount that the appeasement thesis would predict.
Screening Out Bad Governments
The Millennium Challenge Account of the Bush administration is one interesting experiment in trying to keep money out of the hands of gangsters. The U.S. Millennium Challenge Corporation gives aid only to governments that meet certain standards, such as democracy, investing in their people, freedom from corruption, and freedom from government interference in markets. It is a welcome step compared with giving money to gangsters, and it will be interesting to see how it plays out.
However, there are some potential pitfalls. Can outsiders really tell when government is good and when it is bad? Should outsiders be supporting a government that they decide is good, without a mechanism for feedback from the citizens of that country? There are certainly plenty of extreme cases of bad governments, such as in the examples given in this chapter, and crossing them off the list is a great step that other aid agencies should emulate. Yet there is a middle ground that is treacherous to negotiate. For example, as of June 2005, the Millennium Challenge Corporation had reached agreements on aid programs with two countries—Honduras and Madagascar. In 2004, Honduras’s government was ranked by the World Bank as among the worst third in the world for corruption. Madagascar is better; it is smack in the middle on corruption. But the other problem is that these corruption ratings are imprecise. The World Bank reports the margin of error of its estimate, and fifty-seven other countries lie within the margin of error of the Madagascar rating on corruption. The high margin of error reflects the difficulty that different outside rating agencies have reaching consensus on which countries are more or less corrupt. It looks like selecting good governments is not so easy.
Try Again
As the awful examples in this chapter illustrate, the official aid agencies simply don’t know how to change bad governments into good governments with the apparatus of foreign aid. Bad government has far deeper roots than anything the West can affect. To make things worse, the aid agencies need the poor-country government, even a bad government, to fill the role of aid recipient to keep money flowing.
The aid system continues to pursue the contradictory combination of reforming government, promoting “government ownership” of reforms, and keeping aid money flowing. The current system drives outside observers, like yours truly, so nuts that we are prone to recommending drastic remedies. Right now foreign aid is caught in a nightmarish in-between world in which donors (1) take up much of the time of the government with attempts to impose “good behavior” (2) insist that the government freely choose to behave; and (3) sometimes bypass the government anyway to do the donors’ projects. Observers of aid are sharply divided as to whether aid should bypass government even more, or whether it should bypass it less and try to strengthen low-income governments.
This chapter’s reading of the evidence suggests dropping the obsession with always working through the government. However, let’s hold fast to opposing shock therapy and universal blueprints, even for the country of foreign aid. Any of these changes should be tried in a gradual, piecemeal, experimental way, and the answers will be different in different countries and different sectors. Large infrastructure projects probably have to be done through governments, although private contracting can be used creatively. Some countries could have sufficiently functional democratic and effective governments so that the aid community could conceivably give the government a blank check. (However, we have seen how difficult it is for outsiders to determine just which governments are in this category.)
For the rest: let political leaders and social activists in the West expose and denounce tyranny in the Rest, but don’t expect Western governments or aid agencies to change bad governments into good ones.
Today’s system of foreign aid coddles (and probably worsens) bad governments. The long-standing dictator in Cameroon, Paul Biya, gets 41 percent of his government revenue from foreign aid. Under current proposals to sharply increase aid to Africa, that figure would increase to 55 percent.84
Let social and economic interactions continue between private citizens of all lands, but Western governments or official aid agencies don’t have to deal with corrupt autocrats. When working with the government doesn’t get results for the poor, aid agencies should try something else. Can’t donors take aid away from bad governments and see if they can get it into the hands of poor people?
And if aid is apolitical on the receiving end, so it should be on the giving end. Can’t Western voters demand that their aid agencies direct their dollars to where they will reach the most poor, and not to ugly autocratic friends of the donors?
Even with well-functioning democracies, not everything is done through the government. I could organize a workshop in New York with foreign participants to discuss American economic policies without asking permission from President Bush. I could solicit foreign donations to alleviate poverty in Harlem without checking with the secretary of housing and urban development. Why should donors insist that analogous exercises be run through the government in poor countries?
Some authors argue that aid has to go through even bad governments to promote their political development. This argument is based on the overambitious goals of political transformation, which have repeatedly failed. The argument is not too persuasive if aid aims not at transforming governments but just at helping very poor individuals with their most desperate needs.
The principle is nonintervention. Don’t reward bad governments by working through them, but don’t try to boss them around or overthrow them either. The status quo of both donors and gangsters badly needs some work.
SNAPSHOT: FELA KUTI
FELA KUTI (1938–1997) was not only an internationally famous Nigerian musician, the king of Afrobeat, he was also a courageous political activist. In his songs, he mocked the military rulers who had been such a plague on Nigeria. He said in one song that VIP meant “Vagabonds in Power.” Another song was called “Authority Stealing.” He also attacked Western racism and meddling in Africa. He was consta
ntly persecuted by the military, beaten with rifle butts, and imprisoned—perhaps because his subversive music was so popular with Nigerians. In his 1977 song “Zombie,” he derided Nigerian soldiers as mindless robots obeying orders to harass the population. The enraged army attacked Fela Kuti’s compound in Lagos, torturing, raping, and murdering members of his entourage. Soldiers threw his aged mother from a second-story window; she subsequently died from her injuries. Kuti never forgave Olusegun Obasanjo, the military dictator at the time, who never apologized publicly for the attack. In 1979, when Obasanjo transferred power to a civilian regime, Kuti led a march of his followers to Obasanjo’s home carrying a mock coffin in protest against his mother’s murder. In 1980, Fela Kuti recorded a song called ITT (International Thief Thief ), which accused Obasanjo of corruption.
Obasanjo went over to the opposition during the 1990s military dictatorship of Sani Abacha. After the death of Abacha, former military dictator Obasanjo was elected president in 1999. He promised to crack down on Nigeria’s notorious corruption, but his Anti-Corruption Commission managed to prosecute only one minor official during Obasanjo’s four-year term.85 He got a second term in 2003, in an election in which European Union observers noted “serious irregularities.” He launched yet another anticorruption campaign in 2005, partly motivated by the desire to get relief on Nigeria’s high foreign debt. Governments since independence have so mismanaged the country’s oil riches that 60 percent of Nigerians remain below the poverty line.86 Chronic violence between ethnic groups and weak economic performance have marred Obasanjo’s presidency. Fela Kuti is no longer with us, but his music remains popular. His courageous struggle for freedom from corruption, and from the heavy hand of the military, lives on.87
SNAPSHOT: NEW YORK UNIVERSITY PROFESSOR LEONARD WANTCHEKON*
IGREW UP IN ZAGNANADO, a small town in Central Benin of about three thousand people, in the 1960s. It is one of the poorest towns in the country. There was no paved road, and no electricity, but it had one of the oldest elementary schools in the country. Our homes were constructed of straw, earth, brick, cement, or sometimes corrugated aluminum.
My parents, though illiterate, valued education immensely, and in that respect had great ambition for their children. In many ways they went against the grain of custom in the village. Many families had ten or twelve children, often two years apart. My mother decided to have only five children, four boys and one girl, and that she would have them at four-year intervals. All attended school until they were at least fourteen, an extraordinary accomplishment in a region where most frequently only one child from a family of twelve would receive any formal schooling whatsoever.
In Zagnanado, the farther one goes from the village, the easier it is to find a fertile field for one’s own use. When my father finally found a good field, it was fifteen kilometers from the village. He fashioned a primitive shelter in a cave in order to store the harvest, and during harvest time he stayed in his field, too far from the village to return. He spent weeks harvesting, far from anyone, and with no means of communication. A man of enormous courage, he slept at night in the cave, alone, surrounded by snakes and monkeys. He only asked that his sons come on weekends to take away as much of the harvest as we could carry, which we then sold to buy books, pencils, and papers for our studies. He also earned extra revenue by taking in laundry from a local government official, but often still had to take on debt to provide his sons with the transportation and school supplies necessary to their studies.
Thirty years later, I realized that Zagnanado has produced ten university professors, thirteen medical doctors, two architects, four diplomats, and at least one hundred more with at least a university degree. At least seven of “our” professors and medical doctors work in the United States, Germany, and France. Zagnanado is also the hometown of Cardinal Gantin, the former dean of the Sacred College of Cardinals in the Vatican, who retired in 2002.
Zagnanado and its immediate surrounding towns have a large number of lakes and rivers, with wild animals, and could have been at least a major tourist destination. The story of Zagnanado could also well be the story of the whole of Benin.
Why did such as an impressive collection of personal success and talent not translate into economic prosperity?
I thought the absence of democracy was the root cause of the problem. One year my father was asked to pay taxes amounting to 90 percent of his annual revenue, a level of taxation that was obviously impossible for anyone, but especially so for him, considering his advanced age. He was already quite old at the time, and too sick to work. Officials came to our home in the middle of the night, woke him up, arrested him, and forced him to parade himself throughout Zagnanado denouncing himself: “I am an irresponsible lout, I didn’t pay my taxes. Look upon a horrible sight, I didn’t pull my weight. I am stupid, and low, I didn’t pay taxes.” And this was done to the kindest, sweetest, most generous man I ever knew. This was the treatment given to that courageous man who lived alone in a cave for weeks on end to provide for his sons. When it happened I thought, No, it’s impossible, it can’t happen. And it was then, when I saw my father humiliated in this way, that I resolved to change things in my country. From that point on I was committed to political change.
In 1979 and again in 1985, as a student at the National University of Benin (UNB), I organized pro-democracy movements. I was arrested in July 1985 and fled in December 1986. The pro-democracy movement grew and led to major democratic reforms in the country in 1990. Meanwhile, I immigrated to Canada in 1988 and then later to the United States, in 1992. I enrolled in graduate programs at Laval University and UBC in Canada, and Northwestern University in the United States. I graduated in 1995 and became an assistant professor at Yale University in 1995 and an associate professor at NYU in 2001.
Today, Leonard Wantchekon, now an NYU professor of politics with a global reputation, runs a research institute in Benin devoted to testing what works in development programs for Benin, training the next generation and devising ways to hold the new democratic government of Benin accountable for delivering services to its citizens.
PART II
ACTING OUT THE BURDEN
CHAPTER FIVE
THE RICH HAVE MARKETS, THE POOR HAVE BUREAUCRATS
To err is human,
To really screw up takes a committee.
ANONYMOUS
FFOREIGN AID DONORS spent two billion dollars in Tanzania during the past twenty years building roads. The road network did not improve. Roads deteriorated faster than donors built new ones, due to lack of maintenance.1 I have been on my share of bad roads in Africa, roads so bad that you can only creep along them at about five miles per hour. You may think roads are not so critical, but maybe you would change your mind if you were a desperate husband traveling at five miles per hour with a wife in labor, trying to get her to a health clinic to address life-threatening complications. The poor need roads; the aid bureaucracy fails to deliver them. We should be tough on a bureaucracy that fails to turn aid money into critical services for the poor.
The international aid bureaucracy includes the World Bank, the U.S. Agency for International Development and other national government agencies, the regional development banks such as the Inter-American Development Bank, and the United Nations agencies. How well have we foreign aid bureaucrats done through the $2.3 trillion we’ve spent on the problems of the poor?
The “growth industry” in Tanzania is actually bureaucracy. Tanzania produced more than 2,400 reports a year for its aid donors, who sent the beleaguered recipient one thousand missions of donor officials per year.2 I myself wasted government officials’ time on five continents during my bureaucratic career. Foreign aid did not supply something the poor wanted (roads), while it did supply a lot of something the poor probably had little use for (me and my fellow bureaucrats).
Contrast this with the efficiency of bottom-up Searchers. We have seen that the conditions for markets are often absent, but when they are present, as in ric
h countries, market Searchers work wonders. It is hard to go ninety miles on a road in Tanzania, but you can book online in about five minutes a nonstop flight from New York to Los Angeles leaving in about an hour and a half from this moment, and be three thousand miles away by this afternoon. No bureaucrats assess your needs for air travel over the next year. You file no reports with strategies or plans for your travel over the next fiscal year. Southwest Airlines is not offering to transform the world; it just searches for a way to get you to Los Angeles right away so you will buy a ticket and contribute to its profits. Despite this lack of bureaucracy, the flight from New York to Los Angeles is available to whoever wants it at a price of $299.
You might think this comparison is unfair. Markets do not supply all goods for the rich. Some goods are public services, such as roads, that have to be supplied by the state. The state does use bureaucracy to meet these needs. Yet the bureaucracy in rich countries works better than the bureaucracy of the aid agencies for the poor. The previous chapter has already shown how better public services go along with democracy, so let me just give an anecdote here. I once had a pothole in front of my house in Takoma Park, Maryland. I got the city bureaucracy to fix the pothole in three easy steps: (1) I called my city councilwoman, Kathy Porter, and asked her to please have the city repair the pothole; (2) the next day, the Takoma Park Public Works bureaucracy was out there filling in the pothole; and (3) actually, there was no third step. This worked because the city bureaucracy is accountable to elected politicians such as Kathy Porter, who is accountable to me and other voters. Kathy Porter is a Searcher. She built her political career in Takoma Park on responding to constituents. Today, she is entering her eighth year as mayor of Takoma Park. Of course, rich-country democracy doesn’t always work this well, but it works well enough to get many public services to its rich citizens.
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