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FOREIGN AID,

SELF-RELIANCE, AND
ECONOMIC DEVELOPMENT
IN WEST AFRICA
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FOREIGN AID,
SELF-RELIANCE,
AND
ECONOMIC DEVELOPMENT
IN WEST AFRICA

R. Omotayo Olaniyan

FMEGER Westport, Connecticut


London
Library of Congress Cataloging-in-Publication Data

Olaniyan, R. Omotayo.
Foreign aid, self-reliance, and economic development in West
Africa / R. Omotayo Olaniyan.
p. cm.
Includes bibliographical references and index.
ISBN 0-275-95501-X (alk. paper)
1. Economic assistance—Africa, West. 2. Sustainable development—
Africa, West. 3. Africa, West—Economic policy. I. Title.
HC1000.O43 1996
338.966—dc20 96-10425
British Library Cataloguing in Publication Data is available.

Copyright © 1996 by R. Omotayo Olaniyan

All rights reserved. No portion of this book may be


reproduced, by any process or technique, without the
express written consent of the publisher.

Library of Congress Catalog Card Number: 96-10425


ISBN: 0-275-95501-X

First published in 1996


Praeger Publishers, 88 Post Road West, Westport, CT 06881
An imprint of Greenwood Publishing Group, Inc.

Printed in the United States of America

The paper used in this book complies with the


Permanent Paper Standard issued by the National
Information Standards Organization (Z39.48-1984).

10 9 8 7 6 5 4 3 2

In order to keep this title in print and available to the academic community, this edition
was produced using digital reprint technology in a relatively short print run. This would
not have been attainable using traditional methods. Although the cover has been changed
from its original appearance, the text remains the same and all materials and methods
used still conform to the highest book-making standards.
To My Wife,
Grace Olufunke Olaniyan

and Children,
Oluwatoyin, Olayemisi, Oluwadamilola,
and Oyebola Olaniyan.
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Contents

Abbreviations ix
Acknowledgments xiii
1. Introduction 1

2. General Theories of Foreign Aid and Economic


Development 13
3. Foreign Aid in West Africa 27

4. Self-Reliance in West Africa 97

5. Critical Issues in Foreign Aid, Self-Reliance, and


Economic Development 127
6. Conclusion 179

Selected Bibliography 187


Index 197
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Abbreviations

ACP African, Caribbean, and Pacific States


ADB African Development Bank
ADF African Development Fund
AID Agency for International Development
BCB Banque Beninoise pour le Development
BIAO Banque Internationale pour PAfrique de
TOuest
BNP Banque Nationale de Paris
CARICOM Caribbean Community
CEAO Communaute Economique de T Afrique
Occidentale (West African Community)
CEDEAO Communaute Economique des Etats de
PAfrique de TOuest
CIDA Canadian International Development Agency
CILSS Commite Permanent Inter-Etats de Lutte contre
la Secheresse dans le Sahel
CMB Cocoa Marketing Board
CMEA Council for Mutual Economic Assistance
COMESA Economic Community of Eastern and South
X Abbreviations

African States
DAC Development Assistance Committee
DANIDA Danish International Development Agency
EC European Community
ECOMOG Economic Community of West African States
Ceasefire Monitoring Group
ECOWAS Economic Community of West African States,
or Communaute Economique des Etats de
P Afrique de POuest (CEDEAO)
EDF European Development Fund
EIB European Investment Bank
ESAF Expanded Structural Adjustment Facility
EU European Union
FUR Federal Institute of Industrial Research
GDP Gross Domestic Product
GEF Global Environmental Facility
GNP Gross National Product
GTZ German Agency for Technical Cooperation
IBRD International Bank for Reconstruction and
Development
ICA International Commodity Agreement
IDA International Development Association
IDC Industrial Development Centre
IFAD International Fund for Agricultural
Development
IFC International Financial Corporation
ILO International Labour Organization
IMF International Monetary Fund
JICA Japan International Cooperation Agency
JAIDO Japan International Development Organization
MRU Mano River Union
NAFTA North American Free Trade Agreement
NGOs Nongovernmental Organizations
NISER Nigerian Institute for Social and Economic
Abbreviations XI

Research
NLC National Liberation Council
NRC National Redemption Council
NTF Nigerian Trust Fund
OAU Organization of African Unity
ODA Official Development Assistance
ODF Overseas Development Fund
OECD Organization for Economic Cooperation and
Development
OFN Operation Feed the Nation
OIC Organization for Islamic Conference
OMUS Organization de Mise en Valeur du Fleuve
Senegal
ONAHA Organisation Nigerien de PAmenagement
Hydro Agricole
OPEC Organization of Petroleum Exporting Countries
OPVN Office des Products Vivriers du Niger
PRODA Project Development Institute
SADC Southern African Development Community
SAP Structural Adjustment Program
SONARA Societe National de Commercialisation de
PArachide
UN United Nations
UNCC Union Nigerienne de Credit et de Cooperation
UNCED United Nations Conference on Environment
and Development
UNCTAD United Nations Conference on Trade and
Development
UNDP United Nations Development Programme
UNECA United Nations Economic Commission for
Africa
UNECLA United Nations Economic Commission for
Latin America and the Caribbean
UNEP United Nations Environment Programme
XII Abbreviations

UNPAAERD United Nations Programme of Action for


African Economic Recovery and Development
UNSO United Nations Sudano-Sahelian Office
USAID United States Agency for International
Development
WFP World Food Programme
Acknowledgments

The idea of this book emerged in the mid-1980s when most African countries
embarked on economic reforms in the attempt to arrest economic recession and
promote economic growth and development. The West African subregion was
of particular interest to me, as it embraces a variety of countries at different
levels of economic development. The subregion is made up of countries with
varying colonial experience—British, French, and Portuguese. The main mo-
tive was to inquire into what went wrong with development policies and
development in the West African subregion, which is endowed with consider-
able natural resources and which in the early 1960s experienced economic
growth.
The book represents a major research study that I initiated as Head of the
Division of International Economic Relations at the prestigious Nigerian Insti-
tute of International Affairs, Lagos, Nigeria. I would like to acknowledge the
constructive criticisms of the research colleagues at the institute, which were
useful in shaping well the conceptual aspect and the scope of the book at the
initial stage. Also, I would like to acknowledge the vital financial support of the
institute, without which the field trips to West African countries, France, and
Britain would not have been possible. The field study enhanced the quality of
the book as it led to greater exposure to the practical development problems of
a number of West African countries, in particular, in the collection of informa-
tion and access to up-to-date data. In this connection, I would like to thank the
Librarians of the British Museum and Library, London and OECD, Paris, for
their invaluable assistance. In the same vein, the author also wishes to express
his profound gratitude to the librarians of the UN Library, New York, for their
XIV Acknowiedgments

cooperation and readiness to assist at all times. Furthermore, I would like to


acknowledge the invaluable secretarial support provided by Olayemisi, Olu-
wadamilola, and Oyebola Olaniyan in the preparation of the tables.
The views expressed in this book are entirely those of the author and not of
those of the Nigerian Institute of International Affairs or the Organization of
African Unity.
1

Introduction

The persistence of the deplorable economic situation in the West African


subregion has been a major reason for the relentless search for realistic and
durable solutions by the various West African political leaders. In recent years,
this search has subsumed the application of disparate economic tools and
concepts of which foreign aid and self-reliance have been very prominent. But
these tools and concepts have not been without their own limitations in a rapidly
changing national and international environment.
Generally, the importance of foreign aid has always been recognized in the
process of economic development by the governments of West African coun-
tries, as in the cases of other developing countries. Foreign aid, in conjunction
with foreign investment, the expansion of foreign trade, and the application of
technology are expected to play leading roles in the process of economic
development. In particular, foreign aid is needed to fill investment-savings gap
in economic development programs.1 Saving is perceived as a critical deficient
factor in the process of economic development; it is scarce as a result of the
chronic prevailing low level of incomes. This phenomenon has been well
articulated in the concept of the "vicious circle" of poverty, an aspect of the
famous modernization theories of the 1960s.2 The need for foreign aid in the
West African subregion has, in the past decade, been reinforced by the fact that
underdevelopment has been unimaginably accentuated by the global economic
recession. The global economic recession has its roots in the world oil price
shock of 1973. Its implications were far-reaching and with very devastating
effects on the foreign exchange earnings and reserves of the feeble economies
of the nonoil-producing countries in West Africa. Officially, seven of the sixteen
2 Foreign Aid and Seif-Reiiance in West Africa

countries in West Africa are classified among the least developed countries in
the world according to the UN categorization. These countries include: Benin,
Burkina Faso, Cape Verde, Gambia, Guinea, Mali, and Niger. Three of the seven
countries are landlocked (Burkina Faso, Mali, and Niger). The problems of
these countries were aggravated by their remoteness from the world and the
attendant transport and transit costs.3
The depressing economic situation in West Africa has been aptly illustrated
by the basic economic indicators. Over the period 1970-1982, the average
annual growth of the Gross Domestic Product (GDP) was 3.5 percent. Within
this, Cote dTvoire and Mali had an average annual growth rate of 5.7 and 4.3
percent, respectively, as against -0.5 and 0.9 percent for Ghana and Liberia.4
The average Gross National Product (GNP) per capita of West Africa, in 1984,
was US$410.5; that is, one-fourth that of Brazil or one-twenty-fifth that of
Japan.5
The annual average rate of inflation for West Africa over the period 1970-
1982 has been a disappointing 15 percent. This suggests that the standard of
living of West Africans, during this period, has been unduly depressed. For some
countries, the impact has been more severe; this is especially well illustrated in
the cases of Ghana and Nigeria, for which annual average rate of inflation was
calculated to be approximately 40 percent.6
West Africa's export performance since 1970 has been generally disappoint-
ing. The volume of exports has fallen by 1 percent per year. In this respect, the
poor performances of Benin, Ghana, and Sierra Leone have been remarkable,
both recorded an annual decline of 4.4, 4.7, and 6.6 percent, respectively. In
Benin and Ghana, the reluctance of the marketing boards to pay prices closer
to the world level discouraged production for export. In Sierra Leone, the
volume of diamond exports decreased as a result of the increases in the number
of illegal diggings. But a few exceptions to this trend were highlighted in
Burkina Faso, Cote dTvoire, Mali, and Niger, whose annual growth rates were
9.1, 2.2, 6.6, and 20.8 percent, respectively.7 Both Burkina Faso and Mali
benefited from the expansion of the cotton industry and a steadily rising trend
in the world prices of cotton. The performance of Cote dTvoire was good
because of its export diversification. The government made substantial progress
in the implementation of import substitution industrialization policies that
enabled the export of industrial products to increase significantly. But Niger's
exports growth was largely due to the expansion of its uranium industry. Thus,
for most West African countries, the period 1970-1982 has been very traumatic;
the process of economic development was severely constrained with the dimi-
nution of exports and foreign exchange earnings. Under this circumstance, it
became imperative that more external financial assistance would be required in
order to arrest further deterioration and avoid the collapse of the economies of
the seriously handicapped West African countries.
Introduction 3

It has however, not been very difficult to understand why export trend
assumed this pattern. In thefirstplace, all West African countries are principally
primary producers, essentially exporting few agricultural and mineral products.
Secondly, the difficulties of some of the countries were due to circumstances
beyond their control. For example, the Sahelian countries suffered from the
bouts of drought. The decreases in the international prices of crops accounted,
in most cases, for reduced'export revenue earnings. Thirdly, the actions of
monopsonist marketing boards through the payment of a small proportion of
the global price to farmers contributed to the attractiveness of subsistence
agriculture rather than export production.8
The development in imports was remarkably different. Between 1970 and
1980, import volumes in West Africa grew at a rate of 7.5 percent per annum.
However, after 1981, following the rise in the global price of oil, there was a
substantial reduction in import volumes. This new level of import was largely
sustained through external borrowings.9
The massive incursion of West African countries into external borrowing for
the import of capital and consumption goods has, however, not been devoid of
its own problems. It resulted in the rapid growth of external debt and rising debt
burden. This was, for example, estimated at 37 percent in 1982. The rising debt
burden has been a major cog in the wheel of economic development in the
subregion, since a smaller and smaller proportion of foreign exchange earnings
became available for development purposes within each West African state.
What is more, the recent global developments have indicated that West
African countries, like other African countries, are geared toward harder times
in the 1990s. Perestroika and glasnost initiated in the former Soviet Union in
1986, have been well embraced in other Eastern European countries that
hitherto have been itching for political and economic reforms. In the view of
the former president of the Soviet Union, Mikhail Gorbachev, perestroika
implies the opening up of the Soviet Union's economy to allow in more foreign
investments. Foreign investments, especially on a joint venture basis, should be
considered the corner stone for the promotion of economic growth in a trans-
formed Soviet Union. Along with this, glasnost, the decentralization of author-
ity and greater freedom of the press, was designed to ensure the effective
implementation of the economic reforms.10 As a result of these developments,
foreign investments were increasingly diverted to the Soviet Union and to the
other more profitable Eastern European countries.] [ This was inevitable because
foreign capital would naturally flow to arears of maximum returns on capital.
Furthermore, the consolidation of the European Community (EC) through
the Single European Act effective from 1992 raises problems about the potential
growth of West African exports to the community, which absorbs over 60
percent of the subregion's exports. The prospects for increases in financial
support to the subregion are not attractive. A possible economic growth in the
EC after 1992 may not lead to corresponding increase in its imports from West
4 Foreign Aid and Self-Reliance in West Africa

Africa because the demand for primary products is not highly responsive to
increases in economic growth. In addition, the EC's financial assistance to West
Africa would be undermined not just because of its diversion to Eastern Europe,
but because available capital would be directed to more productive and profit-
able areas within the EC itself.12
In the effort to solve these problems, the imaginative approach adopted by
most governments has increasingly indicated the crucial role of increased
foreign aid if the economic crisis in West Africa is to be reversed. By 1985, the
various forms of austerity measures and economic stabilization arrangements
that prevailed in the early 1980s have been effectively transformed into struc-
tural adjustment programs (SAP). SAP was largely inspired by the World Bank
and the International Monetary Fund (IMF). Across the board, West Africa's
SAP essentially aims at the restoration of the balance of payments equilibrium
while ensuring sustained balanced economic growth. However, the success of
SAP in the subregion over the years could at best be described as modest. The
program, in a number of countries, has effected negligible growth in both the
industrial and agricultural sectors. This is particularly so while it is observed
that most countries in West Africa continue to be confronted by an increasing
menace of high rates of inflation and rising unemployment. It has become clear
that the success of the monetary-based program would largely depend on greater
increases in concessional inflows from the multilateral international financial
institutions.
This demand, however, raises considerable questions since the record of
foreign aid flows to the developing countries has not been impressive in the
past. Also, there were divergent views on the contribution of foreign aid to
economic development in the developing countries. As early as 1968, the United
Nations, actively interested in the promotion of equitable global development
had resolved on the objective of 1 percent of the GNP for the net transfer of
resources to LDCs including private flows, and with 0.7 percent as a target for
Official Development Assistance (ODA).13 The ratio between these two figures
reflects the relative flows at that time, and the ODA target was largely a political
goal. When this target was discussed, most of the developed countries accepted
it, some with a time frame. For example, this was the case for Belgium, the
Netherlands, and Sweden. The former Federal Republic of Germany accepted
it in principle. Whereas others, including the United States did not commit
themselves.14
While the 1 percent norm for overall net flows (including private investment
and commercial lending) has been reached, the hopes aroused for the ODA
target have been dashed. The average performance, for example, of the Organi-
zation for Economic Cooperation and Development (OECD) countries was
only 0.36 percent of the GNP in 1984. The contribution of the United States
had fallen from 0.5 percent in 1960 to 0.24 percent in 1983. The Federal
Republic of Germany at 0.49 percent in 1983 remains at a low level. In the same
Introduction 5

vein, the performance of the former Soviet Union and other members of the
Council for Mutual Economic Assistance (CMEA) has been disappointing. This
was only in the order of 0.18 percent in the early 1980s.15 The exception to this
pattern of performance has been that of the Organization of Petroleum Export-
ing Countries (OPEC), whose increased oil revenues have resulted in 3 percent
of GNP contributions.
The relative performance of different countries in meeting this target may,
however, not even be absolutely easy to compare. This is particularly the case
because certain donors have argued that while their aid performance has been
low their trade policies have been liberal. Some that have shown better perform-
ance include expenditure on overseas commitments that in proper evaluation
should not qualify as aid. Quite a number of donors allocate their aid on
need-based criteria, while others prefer to aid those countries with which they
have special historical, commercial, or other ties. Foreign aid from the Eastern
European countries was essentially directed at the public sector, the area that
received less aid from other donors. Beyond this, the Eastern European coun-
tries also take goods in repayment for debt.
As to the relevance of foreign aid to economic development, K. B. Griffin
and J. L. Enos have argued that it may not necessarily lead to increases in growth
rate, since it is primarily used to supplant domestic savings.16 Foreign aid they
added, is associated with the decline in domestic savings. This occurs because
foreign aid permits a government to relax efforts in savings and to increase its
consumption expenditure, or because private foreign investment usurps domes-
tic investment opportunities that would reduce savings to the extent that savings
becomes dependent on investment opportunities.17
The disillusionment with the inflow of and role of foreign aid in the 1960s
led to the consideration of "self-reliance" as part of the strategy to overcome
underdevelopment in developing countries in the early 1970s. Generally, most
West African governments have identified with this concept since it was
proclaimed at the nonaligned movement's conference convened in Lusaka,
Zambia, in 1971. The idea was further accorded a central position in the
celebrated 1980 Lagos Plan of Action and Final Act of Lagos for accelerated
economic development in Africa. Both the Organization of African Unity
(OAU) and the United Nations Economic Commission for Africa (UNECA),
the principal architects of the plan felt that the path of self-reliance was the most
realistic toward meaningful economic development in the continent. The expe-
rience of African countries following the world oil price shock of 1973 and the
subsequent global inflation have influenced thinking in the OAU and UNECA
that the prospects of economic development in Africa would be better enhanced
through a greater inward-looking policy and reduced dependence on the indus-
trially developed countries. The importance that most West African govern-
ments attached to the idea is well illustrated in their reference to it in their several
development plans and annual budgets over the past fifteen years.
6 Foreign Aid and Self-Reliance in West Africa

Basically, self-reliance requires developing countries to substantially and


fully utilize their natural resources for the promotion of economic development.
Among other things, it entails the construction of indigenous models of eco-
nomic development. This may involve withdrawing from the international
economic system in order to reduce the vulnerability of the national economy.
A corollary would be diminishing the role of foreign aid.
Naturally, this approach has itself been a subject of increasing debate among
the observers of the development process in the developing countries. The basic
issues are not so much in the ability of these countries to control and manage
their resources for development but in their intricate linkage and high depend-
ence on the developed countries. For example, most West African countries
export primary products and principally rely on the proceeds for the import of
capital and consumption goods for economic development. Besides, there are
questions of the irrevocable commitments of the developing countries to the
international community, in particular, to major international political and
economic institutions. Thus, like foreign aid, self-reliance in the context of the
development process in the developing countries has some basic limitations that
should be properly addressed if it is to serve as the building block for accelerated
and sustained development.
Beyond all these however, it has now been recognized that self-reliance and
economic development should in the contemporary world development process
be appropriately conceptualized in the context of sustainable development. In
a world conference in Rio de Janeiro, Brazil, from June 3 to 14, 1992, the
international community, including West African countries, came to the con-
clusion that development is multidimensional and intricately linked to the
environment. Economic development would in this context have more meaning
when it is considered together with its political and social ramifications. But
then, all these will have to be considered in the framework of the relationship
with the environment. What is implicit in this proposition is that development
should not occur at the expense of the environment and the future of mankind.
All these were wrapped up in the concluding package, Agenda 21. In its social
and economic dimensions, Agenda 21, among other things, calls for: (1)
international cooperation to accelerate sustainable development in developing
countries; (2) the eradication of poverty; (3) a change in consumption patterns;
(4) demographic dynamics and sustainability; (5) the protection and promotion
of human health conditions; and (6) the integration of environment and devel-
opment in decision making. On the conservation and management of resources
for development, there would be international cooperation in the following
areas: (1) the protection of the atmosphere; (2) an integrated approach to the
planning and management of land resources; (3) the combating of deforestation;
(4) the management of fragile ecosystems, especially of combating desertifica-
tion and drought as well as sustainable mountain development; (5) the promo-
tion of sustainable agriculture and rural development; and (6) the conservation
Introduction 7

of biological diversity. The agenda further calls for an international consolida-


tion of the role of major groups in the effort to ensure sustainable development.
In this connection, there should be an international support in the following
areas: (1) global action for women toward sustainable and equitable develop-
ment; (2) children and youth in sustainable development; (3) recognition and
the strengthening of the role of the indigenous people and their communities;
(4) the strengthening of the role of non-governmental organizations, especially
those involving partnership for sustainable development; (5) local authorities'
initiatives in support of Agenda 21; and (6) the strengthening of the role of
workers and their trade unions.18
In order to accelerate sustainable development in developing countries, states
have decided to establish a new partnership. This partnership commits all states
to engage in a continuous and constructive dialogue to achieve a more efficient
and equitable world economy. Economic policies of individual countries and
international economic relations both have great relevance to sustainable devel-
opment. It is assumed that the reactivation and acceleration of development
requires both a dynamic and a supportive international economic environment
and determined policies at the national level. And it is also assumed that
international cooperation in this area should be designed to complement sound
domestic economic policies. Thus, among other things, a supportive interna-
tional climate should be provided to facilitate an increase in financial resources
flow to developing countries and thus lead to the reduction in the external debt
of developing countries.19 Many developing countries have experienced a
decade-long situation of negative transfer of financial resources, during which
their financial receipts were exceeded by payments that they had to make, in
particular for debt-servicing. Consequently, domestically mobilized resources
had to be transferred abroad instead of being invested locally in order to promote
economic development. Also, the burden of debt-service payments in those
countries has imposed severe constraints on their ability to accelerate growth
and eradicate poverty and has led to a contraction in imports, investment, and
consumption. External indebtedness has emerged as a main factor in the
economic stalemate for the developing countries.
Thus, it could be observed that Agenda 21 provides an integrated compre-
hensive approach that could have significant influence on the process of
economic development in West African countries. However, if implemented, its
benefits to the countries in West Africa are likely to come in the areas of poverty
eradication, the protection and promotion of human health conditions, the
promotion of sustainable human settlement development, and the integration
of environment and development in decision making. But the question that still
remains unsatisfactorily answered is how the countries in West Africa would
find the money to meet the additional costs that the program entails. This is
particularly worrying when the prospects for a better and new partnership for
increased financial assistance are not very bright. Most of the donor countries
8 Foreign Aid and Self-Reliance in West Africa

are weary of increasing their financial assistance flows to the developing


countries, especially those in Africa.
Given these premises, therefore, four basic assumptions are fundamental to
this study. First, that structural transformation implicit in the process of eco-
nomic development cannot entirely be a function of capital formation as
generally stipulated in the various theories of economic growth. Economic
development is a multidimensional process, explainable not strictly in the
context of economic variables but, to a large extent, within the framework of
numerous interrelated political, social, and cultural factors.
Secondly, that academic theories generally provide a sound explanatory
arrangement of the pattern of phenomena and are valuable if they sufficiently
incorporate local variables of the areas where they are applied. Hence, the
general theories on foreign aid and economic development are useful only to
the extent that their basic assumptions are relevant to West African economic
development.
Thirdly, it is assumed that foreign aid could be an important ingredient in the
process of economic development if it flows into the subregion under the right
conditions and in the appropriate quantity. It will furthermore be a catalyst to
economic development in West Africa if it is properly directed to priority
subregion or national projects. For most countries in the past, economic growth
and development have been significantly assisted by external financial support.
For example, in the Middle Ages, England—clearly an underdeveloped coun-
try—profited from the technical assistance provided by the Norman masons,
Flemish weavers, and Italian bankers. In the nineteenth century, British invest-
ments and French loans helped the United States and the former Soviet Union
to lay the foundations of their modern economy. Moreover, in the twentieth
century, the rapid recovery and development of Western Europe, after its
devastation from World War II, was facilitated through the massive inflow of
foreign aid from the United States under the Marshall Plan. Thus, foreign aid
is historical in the relationship of states and vital for the procurement of their
accelerated economic growth and development.
Fourthly, self-reliance represents a realistic approach toward sound economic
development in West Africa. The subregion is well endowed with natural
resources. Some of the important minerals found in West Africa include
diamond, gold, iron ore, bauxite, coal, uranium, and petroleum, to mention a
few. A significant part of the land in West Africa, in the areas of savannah and
tropical rain forests, is arable. The population of West Africa is over 150 million.
This could be a vital market for the disparate national economies as integration
proceeds under the arrangement of the Economic Community of West African
States (ECOWAS). The economies of West African countries, like those of other
African countries, are highly vulnerable because of their over-dependence on
the economies of the industrially developed countries of the West. West African
countries depend on the export of their primary products to the markets of the
Introduction 9

industrially developed countries and depend on the import of capital and


consumption goods. The import of food has, in recent years, assumed significant
proportions in the wake of global economic crises and bouts of drought.
Furthermore, the increasing protectionism of the industrially developed coun-
tries on certain agricultural and industrial products is not in the interest of West
African countries. In view of these circumstances, it would be important to
harness internal resources for well-founded development and reduce external
dependence.
However, the approach would be more useful when its limitations are fully
acknowledged and sufficient efforts are made to reduce them. It would be more
useful as an approach if it is first concerned with the sector in which countries
have the natural ability to effect rapid transformation. A typical example would
be the agricultural sector that hitherto has been the most important sector for
the primary commodities countries of West Africa. The sector should be
transformed to increase productivity in cash crops and adequately cater for the
food needs of each country. The development of this sector could have positive
demonstration effects on the other sectors of the economy. Thus, the problems
of foreign aid and self-reliance would need to be more imaginatively addressed
in the subregion.
Given the development experience in the subregion since the mid-1970s, the
main objective of this study is to examine the prospects for increased external
financial assistance and the feasibility of self-reliance as an approach to tackling
the problems of underdevelopment in West Africa. Thus, Chapter 2 is concerned
with the general theories of foreign aid, self-reliance and economic develop-
ment. In this chapter, focus is, among other things, on the political and economic
theories of transaction that articulate the interests of aid users and how such
interests are pursued. Transfer theory examines resources transfer, which leads
on to the identification of other resources such as savings or foreign exchange
earnings with which aid may be supposed to interact. Also, this chapter analyzes
developmentalism with its strong emphasis on industrialization and depend-
ency, which highlights the operation of transnational enterprises as a critical
factor in the underdevelopment of developing countries.
Chapter 3 is concerned with the nature and impact of bilateral and multilateral
aid to West Africa since 1975. The chapter will seek to analyze the essential
nature of the flows from the two sources. It assesses the magnitude of inflows
and the areas to which they are directed in the various West African economies.
The chapter attempts to highlight the principal objectives of donors in West
Africa, and examines the extent to which aid has been effectively utilized in
West Africa. It seeks to bring to the fore the political, economic, social, cultural,
and institutional limitations that are peculiar to the subregion in the administra-
tion of foreign aid.
Chapter 4 essentially focuses on the examination of self-reliance in West
Africa. It identifies the key areas of the economy where economic development
10 Foreign Aid and Self-Reliance in West Africa

has been synonymous with self-reliance. For most countries, this would, among
other things, include agriculture, industry, foreign trade, and regional integra-
tion. What has been the extent of the success of self-reliance in these areas?
Also, what have been the critical limitations and how can these be resolved?
In Chapter 5, the critical issues in foreign aid and self-reliance are put in
sharper perspective. Foreign aid and self-reliance are not necessarily mutually
exclusive factors in the process of economic development. The increases in
foreign aid and the successful implementation of a self-reliance scheme in the
future may hinge on clearer perception and the provision of solutions to certain
fundamental problems. For example, in the context of foreign aid, it would be
desirable to critically examine donors' interests and foreign aid management in
West Africa. Also, under self-reliance, the relevance of the structural adjustment
program should be accorded a more careful analysis. Furthermore, the problems
of commodity prices, drought, and regional integration schemes should be more
rigorously examined in order to arrive at possible solutions that could assist in
the process of West African development.
In Chapter 6, conclusions are drawn and recommendations made on the basic
issues raised in the study. The high priority issues in West African development
are identified and action-oriented policies suggested as initial steps toward the
promotion of economic development in West Africa.

NOTES
1. G. M. Meier, The International Economics of Development, Theory and Policy (London:
Harper and Row, 1968), pp. 97-8.
2. R. Nurkse, Problems of Capital Formation in Underdeveloped Countries (New York:
Oxford University Press, 1953), p. 57.
3. Other important impediments to development include inadequate water management and
the survey of natural resources, the menace of diseases and epidemics. For example, the limited
water in the arid and semi-arid areas undermines efforts in the improvement of agricultural
production. Many of the least developed countries hold considerable deposits of economic and
strategic minerals but lack the technological know-how and financial resources to carry out
adequate surveys to determine the extent and quantity of their reserves or even export what is
known to be available. The solution to the water problem may involve adequate drainage or an
irrigation system. The effective tackling of the exploitation of natural resources may be a
function of the establishment of a proper permanent mineral resources center to carry out
research and exploration. For further readings, see Independent Commission in International
Development Issues, The Prospects of the Least Developed Countries in Africa, August 7,1978,
WG-LDC2.
4. World Bank, World Development Report 1983 (Washington, D.C.: World Bank, 1983),
Statistical Appendix.
5. World Bank, World Development Report 1986 (Washington, D.C.: Word Bank, 1986),
Statistical Appendix.
6. World Bank, World Development Report 1983 (Washington, D.C.: World Bank, 1983),
Statistical Appendix.
7. Ibid.
Introduction 11

8. African Economic Handbook (London: Ecromorator Publications Limited, 1986), p. 92.


9. Ibid.
10. M. Gorbachev, "Perestroika Is the Concern of all Soviet Peoples" (Speech at a meeting
with working people in Kiev, February 23, 1989) (Moscow: Novosti Press Agency Publishing
House, 1989), p. 8.
11. G. G. Blakey, "Investment in Nigeria—A European Perspective." Paper delivered at a
public lecture organized by Equity Securities Limited at the Nigerian Institute of International
Affairs, Lagos, March 8, 1990, p. 4.
12. M. Davenport, "The Developing Countries and 1992." ODI Briefing Paper, November
1989, London, p. 1.
13. Willy Brandt, North-South: A Program for Survival (London: Pan Books, 1980), pp.
221-222.
14. Ibid.
15. J. C. Wheeler, Development Cooperation: Efforts and Policies of the Members of the
Development Assistance Committee (Paris: OECD, 1987).
16. K. B. Griffin and J. L. Enos, "Foreign Assistance: Objectives and Consequences,"
Economic Development and Cultural Change, 18(3), April 1970, p. 31.
17. UNCTAD Secretariat, Domestic Savings in Developing Countries, TD/B/C.3124/Supp.
1, September 12, 1975, p. 16.
18. United Nations, United Nations Conference on Environment and Development, Rio de
Janeiro, June 3-14, 1992, A/COIF.151/4 (Parts I, II, and III).
19. United Nations, United Nations Conference on Environment and Development,
A/COIF.151/4 (Part I), p. 6.
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2

General Theories of Foreign Aid


and Economic Development

INTRODUCTION
For the purpose of this study, "foreign aid" will be defined as cooperation with
a foreign state or autonomous political unit with the objective of assisting that
state or autonomous political unit in furthering economic growth development
and social progress or that part of capital inflow that is not based on normal
market incentives but is instead made on concessionary terms.1 Thus, grants of
freely convertible currency constitute aid in the full sense; loans contain only
an element of aid (the aid component being greater the longer the grace and
maturity periods and the lower the interest rate); and private foreign investment
and short-term capital movements are excluded.2
The term "self-reliance," a national strategy for economic development,
would be defined as a process of selective disengagement from international
transactions, restructuring of the fundamental economic and political relation-
ships, values, and institutions, and of partial reestablishment of hitherto eco-
nomic and political links with the industrially developed countries.3 It assumes
disengagement in the international system in the areas of trade, aid, investment,
technology, information, and manpower exchanges and these are to be supple-
mented by reliance on internal capabilities. Restructuring is not only at the
international level but at the national level. And at the time of reassociation, the
nature of the national and international economic systems will be transformed
to place the country adopting the self-reliance strategy in an advantageous
position.4
14 Foreign Aid and Self-Reliance in West Africa

"Economic development" refers to a process of structural change in the


patterns of production and consumption and of change in institutions or as the
creation of more interdependence between the different industries and activities
within a country.5 The result of that is a gradual movement from an underde-
veloped situation to a more satisfactory situation as typified in the theories of
the stages of economic growth postulated by W. W. Rostow, A. O. Hirschman,
and others.6 In the more satisfactory situation, there should be a reduction in
poverty, unemployment, and inequality since this promotes the fulfillment of
human potentials.7 An important factor in the trend toward the more satisfactory
situation is the reduced need for imports, especially basic foods, petroleum and
its products, capital equipment, and expertise.
The idea of foreign aid originated in the late 1950s to essentially describe the
flow of resources of many different kinds from institutions in North America
and Europe to institutions and people of Africa, Asia, and Latin America.
But as from the early 1960s, when most developing countries began to agitate
for rapid economic development, the nature and aim of foreign aid became more
clearly defined. For example, Africa though rich in human and natural re-
sources, lacks the skilled manpower and technological knowledge necessary to
procure economic development on the continent. Also, Africa suffers from a
high rate of illiteracy and an underdeveloped infrastructure such as transporta-
tion and communications. However, in the context of development planning,
which most African countries—including those in West Africa—embarked
upon, the assumption of the political leaders and bureaucrats was that foreign
capital has a dual role in enabling the recipient country to raise its level of
investment and increase its level of imports. The developed countries also
encourage the practice of development planning as a prerequisite for the receipt
of foreign aid.
Furthermore, it may also be noted that the idea of foreign aid was
compatible with the central theme of economic development in Africa since
the early 1960s. The idea of rapid industrialization nurtured by the United
Nations Economic Commission for Latin America and the Caribbean (UNE-
CLA) in the early 1950s was accepted by the UNECA and African political
leaders. Rapid industrialization was seen as the quick escape root from the
straitjacket of underdevelopment characterized by underdeveloped infra-
structures and dualistic economies. But industrializing, even at the level of
import substitution, required a significant amount of investments and tech-
nology. The required amount of investments could not be made with the low
savings and government revenue, hence foreign capital, especially aid, was
seen as compatible with economic development objectives. Let us now
examine some of the main influential theories, namely: (1) supplemental
theories, (2) donor-oriented theories, (3) developmentalism, (4) dependence
theory, and (5) self-reliance.
Foreign Aid and Economic Development Theories 15

SUPPLEMENTAL THEORIES

One important feature of supplemental theories consists of its tenacious link


to certain factors in economic development. In the 1950s, this was generally
taken to be savings. However, in the 1960s, attention shifted somewhat from
savings to other developmental factors, notably the need for foreign exchange
and skills. In spite of these however, the influence of savings within the
discussion of supplemental theories remains preponderant.
It was argued that foreign aid could supplement savings and thereby enable
the country to maintain the level of investment desirable for economic growth.
As the economy grows, and incomes grow, the country can afford to set aside
an increasing proportion of its income in the form of savings. Eventually, it
reaches the point at which savings are sufficient to finance the volume of
investment needed to maintain the desired state of growth without further aid.
In this context, supplemental theories are essentially directed at the attainment
of "self-sustaining growth." Self-sustaining growth is held out as a device and
promise that foreign aid would be of limited duration: a time would arrive when
the developed countries would not need further disbursement of aids to devel-
oping countries.8
The assumption about the growth of the economy and the capacity to save
enough for the desired level of investment to a large extent ignores some of the
basic impediments to economic growth in West African countries and other
developing countries. The capacity to grow remarkably over the years has
largely been affected by the paucity of appropriate technology, inadequate
economic policies, and adverse weather conditions. Also, while the extent and
level of foreign financial assistance necessary for the attainment of self-sustain-
ing growth are generally known for the countries in the subregion, there are
problems in the attainment of the envisaged appropriate level. Inflows are
generally based on other reasons, which are mainly political and strategic, rather
than in the economic interests of the West African countries. In other words,
there are considerable problems of exclusion of other basic factors and defi-
ciency in the emphasis on the size of relevant inflow.
Furthermore, much of the disaffection with supplemental theories arose from
a suspicion that they could be used to rationalize the erosion of long-term
commitment to assist developing countries. Also, there were doubts about the
relevance of the weak aggregative models of economic growth on which these
theories rested. The dominant influence in the construction of growth models
as a basis for supplemental theories has been the Harrod-Domar model and W.
W. Rostow's theory of the stages of growth. This has been used to reinforce the
notion that a massive dose of aid over a relatively short period will, in developing
countries that have already reached the appropriate stage, rapidly bring them to
the point at which foreign aid would no longer be required. The five stages of
growth of the Rostow theory are as follows: (1) the traditional society; (2) the
16 Foreign Aid and Self-Reliance in West Africa

long period when the preconditions for growth are evolved; (3) the relatively
short period of take-off into self-sustaining growth; (4) the rapid drive to
maturity; and (5) the era of high mass consumption. The role of donors is
expected to be very significant in the third stage, covering a period of about
twenty years.9
However, this assumption has been refuted by R. F. Mikesell, who empha-
sized that it is impossible in the history of both the developed and developing
countries to identify any unique and relatively short historical phase as the
period of take-off.10 The theory of the stages of growth, he added, is highly
aggregative and can be misleading when used to identify a crucial area of
activity within the national economy. Thus, it has led to foreign aid being viewed
as part of a short, sharp effort to overcome just one crucial hurdle.

DONOR-ORIENTED THEORIES
The main thrust of donor-oriented or international relations theory is that
donors have other objectives apart from the promotion of economic develop-
ment in the recipient countries. The long-term interest in the welfare of the
developing countries might be both political and economic.11
In political terms, the developed countries might be interested in the stability
of the developing countries. The basic assumption here is that hunger breads
discontent, and discontent breeds instability. However, this is not totally con-
vincing for most West African countries or other developing countries. The
causes of instability in most countries in the West African subregion since the
late 1960s are to be found more in tribal division within countries, the inordinate
ambition of military leaders, and irredentism among the countries.
In economic terms, the developing countries might be interested in a world
economy organized on principles of comparative advantage and the interna-
tional division of labor, hoping the developed countries will specialize in what
they do best. In principle, the economic case is stronger than the political case.
The developed countries do not perceive their own interests in these terms. In
the 1960s, the process to which foreign aid contributed tended to be one of
import substitution rather than export promotion, especially in Africa and Latin
America. Subsequently, partly influenced by the work done under the auspices
of the OECD Development Center, some aid agencies put more emphasis on
promoting the developing countries' export industries. But in general, they were
unwilling to adopt the logical corollary of opening up their markets for the
industrial products of developing countries.
The nature of the interest of developed countries in the general welfare of the
developing countries is seldom specified; it is difficult to see how such interest
would be sustained, except on a very high plane of moral argument, which is
not what foreign policy is usually about. Moreover, as Mikesell partially further
admits, international relations have derided the notion that the development of
Foreign Aid and Economic Development Theories 17

underdeveloped countries in any general sense serves the interest of the United
States.12
International relation theories, therefore, are likely to fall back on the more
conventional and much more convincing identification of specific foreign
policy objectives that the donors pursue, such as the maintenance of military
alliances or trading and investment relationships.

DEVELOPMENTALISM
In 1950 Raiil Prebisch, leading the UNECLA technocrats, argued that
unfavorable terms of trade resulted in less capacity for capital accumulation in
the "periphery," since saving is primarily dependent on productivity. Progress
in capital accumulation could be possible only if there is an alteration in the
terms of trade permanently loaded in favor or the "center." Industrialization
through import substitution and protectionism in his view represented the best
strategy for the accumulation of capital.13
The assumption that the terms of trade lead inevitably to low capital accu-
mulation has been criticized by Professor G. Haberler, who maintains that a
deterioration in a country's terms of trade in the international market within a
given period does not necessarily mean that the country's accumulation of
capital and economic development will be adversely affected by the end of the
period. There may also be unequal distribution of gains in favor of the center
via foreign trade and, at the same time, as a result of increases in productivity.
Furthermore, there may be capital accumulation and economic development in
the periphery.14
Rapid industrialization may not be promoted in developing countries even
through a policy of import substitution and protectionism because of the
limitations of the market and inefficiency. The UNECLA technocrats them-
selves were not slow to appreciate the limitations of narrow markets in such
countries as Argentina, Brazil, and Mexico, where import substitution and
industrialization progressed rapidly in the 1950s and early 1960s. Thereafter, it
became increasingly difficult to substitute domestic production for imports once
the stage of light manufacturing was passed.15 Markets for capital equipment
and major consumer durables are too small in any Latin American economy for
the production of those goods. A reasonably large market was clearly required
to ensure rapid industrial development.16
The case for most West African countries that have since the early 1960s,
embarked on import substitution industrialization as a strategy for promoting
economic development is not substantially different. Apart from Nigeria and
Ghana, the markets of West African countries are small and the acknowledgment
of this impediment has resulted in the establishment of a number of economic
cooperation arrangements. One of the most important of these is the ECOWAS,
which was established on May 28, 1975 to integrate the disparate subregional
18 Foreign Aid and Self-Reliance in West Africa

economies. The main objectives of the ECOWAS, among other things, include
the promotion of industrial development, trade expansion, agricultural devel-
opment, and cooperation in scientific and cultural issues.17 Also, the progress
in import substitution industrialization has been significantly undermined as a
result of poor management of industries. For example, most industries in
Nigeria produce under full capacity and rely to a great extent on imported raw
materials. The rectification of these lapses has been part of the main objectives
of the federal military government's structural adjustment program.18
Protectionism, as W. Baer further postulated, inevitably leads to the devel-
opment of inefficient and costly industries in developing countries, as illustrated
in his study of the automobile industry in Latin America, where the existence
of numerous firms had ruled out the possibility of economies of large-scale
production.19 Thus, in the late 1960s, the annual output of cars and trucks by
ninety firms in eight Latin American countries was 600,000 or an average of
6,700 per firm. Hence, protectionism per se is not a single important factor in
the process of industrialization; effective entrepreneurship is also required, as
well as capital and skilled labor.
Apart from these, the nature of economic development was, in the late 1950s,
given a new dimension as the Transnational Enterprises made massive incur-
sions into the economies of developing countries. Prebisch himself, however,
argued that foreign investment was beneficial and had to admit to its considera-
tion as a vehicle of dependence on the industrially developed countries.20 This
view was widely held by prominent Latin American economists within the
UNECLA and became crystallized in the celebrated theory of dependence.

DEPENDENCE THEORY
Two principal traditions emerged within the theory of dependence or "de-
pendencia" in Latin America. The first, and more influential, stems from the
UNECLA structuralist perspectives associated with F. Cardoso, E. Faletto, and
C. Furtado. The second stems from the marxist perspectives with which T. dos
Santos and A. G. Frank are associated.21
According to both Professors F. Cardoso and E. Faletto, there was depend-
ence on the industrially developed countries through the mechanism of direct
foreign investment and its institution, the Transnational Enterprises. The plac-
ing of foreign investment in the sector producing consumer durables results in
the accumulation cycle being completed at world level. Keeping up the pace of
economic growth implies increases in the importation of capital goods.22
Subsequently, this formed an important part of the general theory of economic
development in Africa and other developing countries.
Thus, the late Kwame Nkrumah, the President of Ghana, postulated that the
underdeveloped countries, even when fully independent politically, continue to
be a source of capital accumulation for the imperialist states.23 The enterprises
Foreign Aid and Economic Development Theories 19

established by the Transnational Enterprises are vertically integrated with the


parent company and have few forward and backward linkages with the local
economy. Where production of import substitution is undertaken, there is often
a high import content to inputs, reducing the net foreign savings, an effect that
is further reinforced by the practice of transfer pricing between subsidiaries of
the same parent company. Transfer pricing, along with licensing fees and
services controls by the parent company, reduces the declared profits and hence
the contribution to public savings through taxes paid, when these taxes have not
been disallowed as part of the fiscal incentives offered to investors.24
The structural theory of dependence as formulated by F. Cardoso and others
attempts to explain the series of events and situations that occur together and to
make empirical situations understandable in terms of the way internal and
external structural components are linked. The practical usefulness of the theory
in the developing countries including those in Africa is still doubtful. As H. M.
Sandstromn himself pointed out, "Everything is connected to everything else
but how and why remain obscure and this makes policy issues for economic
development ambiguous."25 Thus it is not clear, for instance, if Transnational
Enterprises in Latin American countries are to be nationalized or to be controlled
by an Andean Pact-style foreign investment code, nor which specific policies
are to be followed with regard to transfer and technological development and
income distribution. The main policy advocated is that of changing internal
structure to obtain national development.26
By the early 1970s, however, the problems of economic development in
African countries and other developing regions became more acute. The basic
indicators of economic growth, for example, showed that the GNP in the
developing countries over the years had risen at a negligible rate in comparison
with the rate of the industrially developed countries. Whatever the success of
the development efforts of the 1960s, whatever the trickle-down effect, the gap
between the North and South did not become any narrower: while per capita
real income (at 1973 prices) in the industrially developed countries doubled
from about US$2,000 to US$4,000 in the period 1952 to 1972, in the developing
countries, it rose by a mere US$125, from US$175 to US$300. In other words,
real income per head in the developing countries amounted to approximately 9
percent of that in developed countries in 1952 and to approximately 8 percent
in 1972.27 While the internal problems of underdevelopment were recognized,
considerable attention was paid to the external issues as a result of increasing
global interdependence in the wake of rapid technological advancement in the
two decades after World War II.
To most developing countries, the international and regional development
efforts, and in particular, the mechanism of the international economic system,
had failed to promote equitable global economic development. According to
UNCTAD: "The fact that economic development declined in the developing
countries when the developed countries experienced remarkable rapid expan-
20 Foreign Aid and Self-Reliance in West Africa

sion "indicated the existence of basic weaknesses in the mechanisms which link
the economies of the two groups of countries. The weakness of this structure,
the inadequacy of the mechanisms by which growth in the developed countries
is transmitted to the third world, are manifested in each of the major areas of
economic relations between developed and developing countries—in the trade
in commodities and in manufactures, in the transfer of technology, and in the
provision of financial resources through the international monetary and finan-
cial system."28 Thus, in their search for solutions to these problems, the
developing countries embraced the concept of "self-reliance" enunciated at the
1971 summit of the Heads of State and Government, and subsequently elabo-
rated at the 1972 conference of Foreign Ministers in Georgetown, Guyana.29

SELF-RELIANCE
Generally, self-reliance as an analytical concept has been treated in various
ways. This notwithstanding however, there is a consensus that it should be
perceived both as a strategy and the description of an objective.30 The main
objectives of a strategy of national self-reliance are the elimination of undue
external dependence and the promotion of rapid economic development.
Broadly, the strategy of self-reliance is categorized into three phases. The first
phase involves the partial disengagement of a country from the existing global
political and economic relations.31 Disengagement from the present global
political relations would involve severing relations with global political insti-
tutions. For example, it would involve the rejection of multilateral-aid offers or
International Monetary Fund (IMF) financial transfers that eliminate the possi-
bility of political leverage. Also, disengagement from the global institutions
would involve a refusal to participate in UN peace-keeping forces to avoid
potentially costly international involvements.
But disengagement from the present international economic system would
imply the erection of trade barriers to restrict the magnitude and influence of
foreign goods. Comprehensive limitations on the amount of foreign investment
and expatriate manpower are also an important component of disengagement,
as is deliberate rejection of aid offers from the industrially developed countries.
The development of new technologies, or the adaptation of existing methods,
is also an important aspect of the process of disengagement. In this respect,
foreign expertise is rejected, and emphasis is placed on the local design of
equipment and methods of production. The technological modifications essen-
tially suggested by the workers would lead to more appropriate methods of
production that are better suited to local supplies of raw materials.32
Disengagement is a call for a partial reduction in the magnitude of interna-
tional economic transactions with the industrially developed countries and for
the achievement of self-sufficiency only in particular sectors. For example,
self-sufficiency in basic needs such as food, energy, or national defense.
Foreign Aid and Economic Development Theories 21

The second phase is restructuring both at the international and national levels.
This itself is partly induced by the disengagement process or is brought about
by a deliberate governmental policy. The structuring of basic international
relationships of underdeveloped countries away from their traditional ties to
industrially developed countries is generally described as "collective self-reli-
ance," and this refers to increased cooperation and exchanges of commodities
and skills among developing countries. Cooperation could be within the context
of regional economic integration arrangements.
Some restructuring effects at the global level could also be political and
institutional. A typical case could be joint action in the UN negotiations,
particularly on trade and investment issues. Similarly, another dimension is in
the context of the coordination of negotiating positions vis-a-vis multinational
corporations.
However, at the national level, restructuring would, among other things,
involve the modification of consumption values, the development of new and
"appropriate" technologies and institutions that support the basic principle of
relying on local efforts and initiatives, the decentralization of decision making,
and the increase of political participation. This is generally referred to as
"individual self-reliance." Individual self-reliance therefore reinforces collec-
tive self-reliance.33
The third phase describes the process of reassociation. This implies partial
reestablishment of previous relations with the industrially developed countries
on a new basis. The previous basis of dependency has been altered. Disengage-
ment and restructuring have transformed countries pursuing self-reliance to
such an extent that they can afford to reestablish political and economic relations
with the industrially developed countries without fear of dependence.34
Albeit, there are still considerable questions unanswered about the assump-
tions of self-reliance, especially how this could be relevant to rapid economic
growth and development in West Africa. One of the fundamental assumptions
of the disengagement process, for example is that foreign aid should be rejected
in order to keep in abeyance the political influence of donors of even multilateral
international financial institutions. It is hard to see how this could be signifi-
cantly justified in the context of West African countries, where the paucity of
capital has been a critical limiting factor in the process of capital formation and
economic growth. The general low level of income in the subregion has not
permitted adequate savings for the required level of investment for economic
growth. The case for external financial assistance has further been reinforced
by economic recession and decline in foreign exchange earnings. The OAU and
UNECA were themselves very quick to realize this; thus, it was explicitly
stipulated in the Lagos Plan of Action of 1980, a blueprint for an accelerated
economic growth and development in Africa, that outside contributions are
"supplements to own efforts and cannot be substitutes."35 Also, it stipulates that
external contributions "must be supplements genuinely relevant and substan-
22 Foreign Aid and Self-Reliance in West Africa

tially meaningful in terms of the purpose and programs the member states have
collectively resolved to pursue."36 Thus, external financial assistance will
inevitably play a critical role in the efforts of West African countries at
effectively using external resources for the promotion of sustained economic
growth and development.
In the disengagement phase, it is assumed that the erection of trade barriers
should facilitate the acceleration of industrial development, especially of the
establishment of new industries. While the case for the protection of new
industries is incontrovertible because of the undue competition from similar
products produced in the industrially developed countries, there are, neverthe-
less, increasing doubts as to whether this has assisted import substitution
industrialization in West African countries or other developing countries. Over-
protection of infant industries has generally resulted in inefficient industries
largely characterized by poor quality in output. This has been an important
factor that has dogged the success in industrial take-off, especially in Nigeria.
The restructuring phase, among other things, assumes that regional economic
integration would proceed satisfactorily in order to effect judicious utilization
of resources and the meaningful promotion of sustained economic growth and
development. The role of economic integration arrangements cannot be under-
estimated in the process of economic growth and development of developing
countries as they could procure trade expansion and industrial development.
Nevertheless, one should be cautious of their timely positive contributions to
economic growth and development during the restructuring phase. This is
particularly so because economic integration arrangements among developing
countries are fraught with several difficulties. These, to a large extent, explain
the stagnation of the ECOWAS, Southern African Development Community
(SADC), Economic Community of Eastern and South African States
(COMESA) and the Caribbean Community (CARICOM) to mention a few.
Rapid progress in the ECOWAS for example, has been hindered by the fact that
the Community has to undertake the provision of the basic infrastructures such
as telecommunications systems, and the network of roads and railways—things
normally taken for granted in the integration arrangements among developed
countries, such as the EC or the Council for Mutual Economic Assistance
(CMEA).37 Moreover, integration has stagnated in the ECOWAS because of the
lack of commitment of the member states to the ideals of the community.
Integration inevitably involves the erosion of national sovereignty, where the
basic mechanisms include trade liberalization and the establishment of common
external tariffs. These two issues imply the surrender of the basic instruments
of economic policies by the component states. Most states substantially depend
on customs duties as a source of revenue. Thus, there has been considerable
reluctance in the implementation of the relevant protocols adopted at the
summits of the heads of state and governments.38 Under this circumstance
therefore, the catalyst role of regional economic integration schemes in the
Foreign Aid and Economic Development Theories 23

phase of restructuring in self-reliance strategy should be viewed with some


reservations.
Furthermore, the assumption about a "hitch free" reestablishment of relations
with the industrially developed countries in the reassociation phase remains
doubtful. The global economy is in a perpetual state of transformation, growth,
and development. The bottom line in international economic relations is that
the main objectives of states are to secure maximum benefits especially in the
area of trade, investments, and technology transfer. In fact, the need to attain
these objectives is further reinforced particularly when these countries are in
the throes of economic crisis. National economic growth and development have
to be sustained in order to ensure internal cohesion and political stability and
the sustenance of influence in the international milieu. For example, the
reestablishment of relevant trade relations may be problematic with the indus-
trially developed countries. It is in this context that one could understand the
tariff and nontariff barriers of the industrially developed countries against the
industrial products of the newly industrializing countries of Southeast Asia and
Latin America. Protectionism was deemed necessary, particularly from the early
1980s, in order to protect jobs and raise the standard of living of the people.
The case for protection against the products of a self-reliant country may further
be reinforced by the fact that it is involved in integration schemes in which the
developed countries are excluded and have no direct benefits of trade expansion.
Thus, there are still significant unresolved issues in the concept of self-reliance
as a strategy for the promotion of accelerated and sustained economic growth
and development in the developing countries.

CONCLUSION
The general theories of foreign aid and development clearly has limited
applications in contemporary economic situations in developing countries,
including those in West Africa. A number of critical variables peculiar to some
countries do not wholly justify the conclusions and inferences drawn from these
theories. Besides, the universality of the theories are constantly challenged as
a result of the emerging new patterns of international cooperation in recent years
due to rapid advancements in science and technology. The world has become a
"global village," characterized by high interdependence, increasing division of
labor, high movement of capital, and intense competition among countries.
As far as supplemental theories are concerned, foreign aid may not necessar-
ily be the critical factor for the attainment of the desirable level of investment
for sustainable economic growth. In the modern-day global economy, techno-
logical know-how and the availability of basic skills are some of the fundamen-
tal prerequisites. The donor-oriented theories may fit well into the basic
conceptions in international division of labor, but this is hardly sufficiently
justifiable when the objectives of the donors and recipients do not often
24 Foreign Aid and Self-Reliance in West Africa

converge. For example, foreign aid/investments and development would suffer


abysmally in a situation where the donors are interested in assistance to
alleviate poverty and promote political stability and the recipients are interested
in financial and technical cooperation to promote rapid industrialization.
Also, while the case for developmentalism remains unassailable for rapid
development in the developing countries, one is nevertheless, naturally wary of
a number of other associated difficulties. For example, undue protectionism for
import substitution industrialization may in itself hamper economic growth and
development by making these industries uncompetitive in the global market.
Besides, the limited internal markets of most of the developing countries
constitute major barriers to the effective establishment and growth of import
substitution industries. Even if the answer to this lies in regional economic
integration arrangements, it is yet to be seen how the already created ones could
adequately provide the solutions.
Furthermore, the theory of self-reliance, although sounding realistic and
sometimes irresistible, is loaded with a lot of difficulties even at the stipulated
first stage of its operation which primarily entails reduction in external depend-
ence in the process of economic growth. For many developing countries,
particularly those in Africa, this concept appears almost impractical given the
turn of events in the international economy in the last two decades. Autonomous
external resources could not be maintained or increased in the last two decades
following the catastrophic decline in the world price and demand for primary
commodities. Besides, there has been disturbing deterioration in their terms of
trade while inflow of funds has not increased substantially in real value. And
when this is taken together with the necessity to service the increasing volume
of external debt, it is clear that the capacity to initiate autonomous growth has
been seriously eroded. In the same vein, collective self-reliance has proved very
difficult to implement in many developing regions, especially in Africa. The
sacrifices and political will necessary to put economic integration into full
operation are disappointingly lacking in Africa.

NOTES
1. W. G. Zeylstra, Aid or Development: The Relevance of Development Aid to Problems of
Developing Countries (Leyden, The Netherlands: A. W. Sijthoff, 1977), p. 16.
2. G. M. Meier, The International Economics of Development, Theory and Policy (London:
Harper and Row, 1968), p. 95.
3. T. J. Biersteker, "Self-Reliance in Theory and Practice in Tanzanian Trade Relations,"
International Organization, 34(2), Spring 1980, pp. 235-236.
4. For details, see J. Galtung et al., Self-Reliance: A New Development Strategy (London:
Bogle-L'Ouverture, 1980).
5. J. A. Schumpeter, The Theory of Economic Development: An Inquiry into Profits, Capital,
Credit, Interest and Business Cycle (Cambridge: Harvard University Press, 1934), pp. 15-66.
Foreign Aid and Economic Development Theories 25

6. W. W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto (London:


Cambridge University Press, 1960); A. O. Hirschman, The Strategy of Economic Development
(New Haven, Conn.: Yale University Press, 1958), Chapters 1 and 2.
7. D. Seers, "The Meaning of Development," in D. Lehman (ed.), Development Theory:
Four Critical Studies (London: Franc Cass & Co. Limited, 1979), pp. 9-29.
8. For details, see J. White, The Politics of Foreign Aid (New York: St. Martins Press, 1974).
9. Rostow, The Stages of Economic Growth.
10. R. F. Mikesell, The Economics of Foreign Aid: Treaties in Modern Economics (London:
Weidenfeld and Nicolson, 1968).
11.1.M.D. Little and J. M. Clifford, International Aid: A Discussion of the Flow of Public
Resources from Rich to Poor Countries with Particular Reference to British Policy (London:
Allen &Unwin, 1965).
12. Mikesell, The Economics of Foreign Aid, p. 20.
13. R. Prebisch, Towards a New Trade Policy for Development (New York: UNCTAD, 1964).
14. G. Haberler, "The Terms of Trade and Economic Development," in H. S. Ellis (ed.),
Economic Development for Latin America (New York: St. Martins Press, 1961).
15. UNECLA, Towards a Dynamic Development Policy for Latin America,
E/CN.12/680/Rev.I, 1963.
16. S. Macario, "Protectionism and Industrialization in Latin America," Economic Bulletin
for Latin America, 9, March 1964, pp. 61-101.
17. ECOWAS Secretariat, The Treaty of ECOWAS, Lagos, Article 2, 1 975.
18. Federal Republic of Nigeria, Structural Adjustment Program for Nigeria: July 1986-
June 1988 (Lagos: Federal Ministry of Information, 1986).
19. W. Baer, "Import Substitution and Industrialization in Latin America: Experience and
Interpretations," Latin American Review, 7(1), Spring 1972.
20. R. Prebisch, Towards a New Trade Policy for Development.
21. F. Cardoso and E. Faletto, Dependencia y Desarrollo (Mexico City: Siglo XXI, 1967);
See also, F. Cardoso, Report on Dependence in Relation to Development, (ECLA [ILPES],
1965); C. Furtado, "Dependencia externa y teoria economica," El Trimestre Economico,
April-June 1971; A. G. Frank, Capitalism and Underdevelopment in Latin America (New York:
Monthly Review Press, 1969).
22. Ibid.
23. K. Nkrumah, Neo-Colonialism: The Last State of Imperialism (New York: St. Martins
Press, 1965).
24. A. Mclntyre, "Some Issues in Trade Policy in the West Indies," in N. Girvan and P.
Jefferson (eds.), Readings in the Political Economy of the Caribbean (Mona, Jamaica: New
World Group, 1977).
25. H. M. Sandstromn, Dependency Theory in the Caribbean, Annual Meeting of the
Caribbean Studies Association, St. Lucia, January 1976.
26. Ibid.
27. UNCTAD Secretariat, New Directions and New Structures for Trade and Development,
Report by the Secretary-General of UNCTAD to the Conference (TD/183), April 14, 1976, p.
4.
28. Ibid.
29. Guyana Ministry of Foreign Affairs, Main Documents Relating to Conferences of
Non-Aligned Countries (Georgetown: Author, 1972).
30. Galtung, Self-Reliance.
31. Biersteker, "Self-Reliance in Theory and Practice," p. 230.
32. Ibid., p. 231.
33. Ibid., p. 234.
26 Foreign Aid and Self-Reliance in West Africa

34. Ibid., p. 235


35. UNECA, \Jlan of Action for the Implementation of the Monrovia Strategy for the
Economic Development of Africa, E/CN. 14/781/Add.l, p. 4.
36. Ibid., p. 4.
37. R. Omotayo Olaniyan, "Nigeria and Economic Community of West African States: A
Role and Problem Analysis," in G. O. Olusanya and R. A. Akindele (eds.), Nigeria's External
Relations: The First Twenty-Five Years (Ibadan: University Press Limited, 1986), pp. 129-130.
38. Ibid., pp. 134-136.
3

Foreign Aid in West Africa

INTRODUCTION
Many West African countries entered the second half of the 1970s with
considerable handicap as a result of the oil price shock of 1973. The steep rise
in the price of oil precipitated economic recession in the subregion. This became
aggravated by the early 1980s as a result of the adverse impact of several other
factors, such as the decline in the global price of primary commodities, the
increased burden of foreign debt, inadequate internal economic policies, and
drought, to mention a few. This development implied that West African coun-
tries had to mobilize both their internal and external resources in order to bring
their economies back on course for economic growth and development.
The need for an increase in financial assistance was also recognized by the
developed countries, which felt that the international community should assist
in the arrest and alleviation of the growing poverty in Africa. This naturally led
to some renewed cooperative efforts at both bilateral and multilateral levels:
direct assistance from governments and from international financial institutions.
In addition to this, several nongovernmental international organizations have
also shown tremendous interest in the ways to eradicate poverty in West Africa.
However, while the need for external financial assistance has been recognized
as urgent in the subregion, it remains highly doubtful if these responses have
been commensurate with the demands of West African countries. Also, there is
considerable skepticism over whether the available inflows in recent years have
been efficiently utilized by the recipient West African countries for economic
growth and development. The critical underlying factors on the impact of
28 Foreign Aid and Self-Reliance in West Africa

foreign aid in West African economic growth and development remain the
foreign aid policies of the industrially developed countries and the management
of foreign aid by West African countries. Thus, for example, the general
tendency for the metropolitan powers, especially Great Britain and France, to
maintain their influence in their former colonies continue to prevail, yet this
must be linked to their economic interests. Special considerations are accorded
to the benefits of the private sector in aid flows to developing countries: it is
essentially deemed imperative to be linked to domestic industrial output and
growth. This was necessary while the metropolitan countries were themselves
confronted with unemployment and inflationary problems. Besides, the types
of political and economic policies that West African countries pursue are strong
determinants of the size of financial aid that they receive from the developed
countries. The tendency has generally been to assist those countries with overt
commitment to democratic political arrangements and liberal economic poli-
cies. (See Table 3.1.)
In other words, while the developed countries have shown interest in the
predicament of West African countries, they have at the same time indicated
that foreign aid would make positive impact on their economies in the right
political environment—essentially, in the framework of democratic systems
that permit peaceful changes and provide full guarantees for human rights. In
the same vein, the developed countries have seen a relationship in aid flow and
economic policies. The West African countries would need to put in place
adequate economic policies such as structural adjustment programs that could
correct imbalances in their economic structures and provide the basis for
durable economic growth. The importance of such programs has been linked
with laying the foundations of economic growth and therefore of the effective
utility of foreign aid. Structural adjustment programs would enable the govern-
ments to establish more market-oriented economies, better infrastructures, and
institutions that would enhance the absorptive capacity of these countries.
However, the position of the developed countries on these issues, in the view
of some observers, remains highly contentious as they raise controversial
questions of interference in the internal development processes of the develop-
ing countries.
Furthermore, the issue of foreign aid in West Africa relates to the question
of coordination. How has this been coordinated to ensure maximum utilization?
Foreign aid is, generally, from diverse sources for different purposes. It must
be properly coordinated and directed to national development priority areas in
order to have maximum positive impact on economic development. Let us now
look first into the pattern of bilateral aid flows into some West African countries.
The analysis will treat the volume of flows, the types and end use of flows. But
the full appraisal of the impact of the flows on economic development is outside
the scope of this study.
Table 3.1
Net ODA from DAC Donors to West Africa, 1980-1989
USSMills., Current Prices and Exchange Rates

COUNTRY 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989
BENIN 36 45 41 41 40 48 73 77 93 138
BURKINA FASO 151 158 147 128 122 122 175 196 219 208
CAPE VERDE 39 36 43 45 39 41 76 63 59 49
COTE DIVOIRE 152 91 102 141 114 110 138 221 226 260
GAMBIA 16 19 24 21 32 31 59 51 54 56
GHANA 107 87 65 61 95 96 120 131 236 350
GUINEA 32 31 27 27 42 60 98 120 160 192
GUINEA-BISSAU 34 42 34 32 30 24 41 48 48 54
LIBERIA 60 86 85 88 108 64 69 51 48 39
MALI 131 133 96 97 224 251 204 222 260 301
MAURITANIA 54 67 62 72 69 100 105 98 111 160
NIGER 105 123 123 107 102 206 184 215 242 200
NIGERIA 17 17 17 29 15 16 39 51 97 310
SENEGAL 182 214 189 212 246 196 316 359 368 536
SIERRA LEONE 57 34 56 36 22 30 51 44 52 72
TOGO 52 37 50 49 53 53 92 86 128 108
TOTAL WEST 1,225 1,220 1,161 1,186 1,353 1,448 1,840 2,033 2,401 3,033
AFRICA
TOTAL AFRICA 6.007 5,960 6,177 6,047 6.818 7,543 8,738 9.872 11.131 10.978 1

Source: UNDP/World Bank, African Development Indicators (Washington. D C : UNDPAVorld Bank. 1992), p. 295.
30 Foreign Aid and Self-Reliance in West Africa

BILATERAL AID

Benin
Traditionally, bilateral foreign aid has been an important aspect of foreign
aid to West African countries. The continued interest of the metropolitan powers
in the economic development of the former colonies has engendered assistance
to them. Also, other developed countries have shown interests in bilateral
assistance in the subregion when this would enhance their national objectives,
such as political influence, economic growth, and strategic considerations.
Benin is one of the economically weak West African countries. It has a high
degree of dependence on agriculture, which accounts for over 40 percent of its
GDP and about two-thirds of all employment. The country has been highly
susceptible to vagaries in the international economy. As a result of these
features, there has been substantial dependence on foreign financial aid for
economic growth. The global economic crisis of the early 1970s further
accentuated this problem by the mid-1970s, and heightened the need for
increased foreign aid to meet the gap created by decreasing foreign exchange
earnings. In this respect, however, the role of bilateral assistance could at best
be described as modest. This was essentially the case as far as the rural and
infrastructural objectives of the country went by the late 1970s. The major
bilateral donors include France, Germany (former West Germany), Denmark,
Canada, Norway, and the United States. These countries have shown continuous
interest in the development problems of Benin with a view to alleviating the
deterioration of poverty. From 1979 to 1988, total foreign aid flow into Benin
increased from US$87.5 million in 1979 to US$98.1 million in 1985 and
US$103.5 million in 1988 (see Table 3.2). As a proportion of total flows,
bilateral aid had declined substantially during this period. In 1979, it accounted
for 55.4 percent of total foreign aid receipts. By 1982, it declined to 50.1 percent
and further to 31.5 percent in 1986, but rising slightly to 35.7 percent in 1988.
The decline in total bilateral flows was, essentially, accounted for by the
negative flows from Norway and the United Kingdom. In the case of the former,
it was US$-3.5 million in 1985, but it rose steadily in the following three years,
rising to US$46.7 million in 1988. In the case of the United Kingdom, it was
US$-1.8 million in 1985, rising to US$-11.4 million in 1987, but subsequently
declining to US$-4.2 million in 1988. During this decade, Germany emerged
as the leading bilateral donor to Benin, displacing France. Its aid to Benin
multiplied threefold between 1979 and 1988. Whereas France has, on the whole,
only managed to maintain an average annual disbursement of about US$19
million. However, there were aberrations of two major low disbursements of
US$6.1 million and US$6.8 million during this period.
If the grant elements are considered, it could be further observed that the total
flows from the Federal Republic of Germany from 1985 to 1988 were 100
Foreign Aid in West Africa 31

Table 3.2
Benin: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988

USSMills., Current Prices and Exchange Rates


DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988

AUSTRALIA . . . 0.0 0.0 0.0 0.0 0.0

AUSTRIA . . . 0.0 0.0 0.0 0.0 0.0

BELGIUM 0.5 0.5 0.5 0.6 13.0 5.7 1.5 0.6

CANADA 4.9 1.5 7.3 2.4 0.4 0.3 2.6 2.0

DENMARK 5.3 1.6 0.4 0.0 4.7 . 0.3 0.3

FINLAND . . 0.0 . . . . .
FRANCE 18.4 16.7 19.2 14.2 6.1 23.8 6.8 22.8

GERMANY (FED. 10.4 10.4 11.4 13.2 17.5 26.8 30.5 29.0
REP.)

IRELAND . . . . . . . _
ITALY 0.1 . 0.2 0.3 0.5 2.6 2.7 14.7

JAPAN 0.0 0.0 1.8 0.2 1.5 2.7 3.8 6.5

NETHERLANDS 1.0 1.0 2.2 3.3 6.9 -5.9 2.5 5.8

NEW ZEALAND . . . . . . .
NORWAY 4.1 2.3 0.2 2.7 -3.5 14.7 16.3 46.7

SWEDEN . . . . . . . .
SWITZERLAND 0.8 0.6 1.1 1.2 2.3 6.2 2.0 2.2

UNITED 0.1 0.2 0.1 0.1 -1.8 -8.6 11.4 -4.2


KINGDOM
UNITED STATES 3.0 1.0 2.0 2.0 3.0 3.0 3.0 4.0
TOTAL 48.5 35.8 46.4 40.1 50.5 30.3 27.3 36.9

MULTILATERAL 36.9 56.3 38.7 38.7 44.7 63.3 64.5 65.5


OPEC COUNTRIES 2.1 1.8 1.3 0.0 _ . . -
EEC + MEMBERS 50.0 43.9 43.1 38.3 52.0 43.4 44.0 97.2
GRAND TOTAL 87.5 93.9 86.4 78.8 98.1 96.3 92.5 104

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1984 and
1985/88), pp. 36 and 60.

percent grants. Whereas, in the case of France during the same period, this rose
from 65.5 percent in 1985 to 89.3 percent in 1987, but falling to 73.2 percent
in 1988.1 This, to some extent, implies that the flows from Germany may have
been more advantageous for economic development purposes. With the signifi-
cant part of flows from France being tied and involving repayments, they may
not necessarily facilitate economic development. And as a corollary, this
32 Foreign Aid and Self-Reliance in West Africa

development could enhance the building of Germany's influence and its eco-
nomic interests in Benin. But this trend has, in part, been seen in the context of
the development within the country itself.
By 1977, the government of President Matthew Kerekou had, through the
document Loifondamentale, confirmed Marxist-Leninism as the official ideol-
ogy, and socialism as the strategy for economic development. The government
instituted a regime that was calculated to lead to "popular democratic dictator-
ship." Major powers were vested in the Parti de la Revolution Populaire du
Benin (PRPB). The government's essential tool of developing the agricultural
sector was collectivization that was also extended to the commercial sector. This
development inevitably elicited different reactions in Europe. The reservations
of France under Valery Giscard d'Estaing to the socialist path in Benin was
made manifest in the cool relations between the two countries. Partly because
of this, the Kerekou government in 1979 linked the French government with
the presence of mercenaries in Benin. While this persisted, foreign aid to Benin
was put in question. Although the Mitterand administration, which replaced it
in 1980, shared a similar ideological orientation, this did not do much to raise
the level of bilateral aid flow to Benin. Hence, the stagnation in the flow of
foreign aid to Benin.
Apart from this, one observation about the flow of bilateral assistance to
Benin after 1985 has been its general decline. This development has undoubt-
edly been disappointing since this was the period of acute economic decline
when foreign aid was needed most in order to rejuvenate the economy. Thus,
there appears to be a conviction on the part of bilateral donors that more of this
form of aid would not be beneficial to economic recovery. To Benin, this
represented a great blow to economic recovery and the alternative to this would
inevitably be multilateral aid. But it remains to be seen how Benin can benefit
from this source in the face of increasing global competition.

Burkina Faso
In contrast with Benin, Burkina Faso has been more favored in the disburse-
ment of foreign aid. But like Benin, Burkina Faso in the late 1970s sought
foreign aid essentially to solve the problems of rural development, agricultural
transformation, and drought.
Four major bilateral donors may be identified vis-a-vis Burkina Faso; namely,
France, Germany, the United States, and the Netherlands (see Table 3.3). The
United States had a steady rise in the first five years by doubling its bilateral
aid to Burkina Faso, reaching US$44.0 million in 1985, but thereafter declined
to US$17.0 million in 1988. The Netherlands, during this period, maintained
an average bilateral flow of about US$22.0 million. On the whole, total bilateral
aid to Burkina Faso increased significantly during the decade of the 1980s.
Foreign Aid in West Africa 33

Table 3.3
Burkina Faso: Official Net Receipts from DAC Countries, Multilateral
Organizations, and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates
DAC 1979 1980 1981 1982 1985 1986 1987 1988
COUNTRIES

AUSTRALIA _ -• . _ . 0.0 . 0.1


AUSTRIA 1.3 0.6 0.5 0.3 -0.1 -0.1 -0.2 -0.2
BELGIUM 2.2 1.6 0.9 1.8 0.9 2.1 2.9 1.7
CANADA 13.3 8.2 7.3 9.8 9.1 12.1 10.7 29.4

DENMARK 0.6 3.4 0.5 3.6 2.8 8.9 1.2 0.5


FINLAND . . 0.1 0.0 . 0.2 _ .
FRANCE 35.6 67.5 53.4 51.3 19.3 33.9 58.3 50.1
GERMANY (FED. 27.7 31.3 32.7 25.9 12.2 22.5 36.2 43.0
REP.)

IRELAND . . . . . . . .
ITALY 0.1 0.0 0.1 7.4 5.4 35.2 20.6 40.0
JAPAN 0.1 1.9 0.2 0.2 5.3 4.3 7.7 7.9
NETHERLANDS 24.8 18.1 19.2 26.5 13.7 17.7 26.9 25.9
NEW ZEALAND . . . . . . . .
NORWAY 1.4 0.2 2.0 . 0.0 3.6 . 1.4
SWEDEN . . 0.2 0.1 0.0 . . 0.5
SWITZERLAND 1.7 2.0 2.2 1.7 1.9 2.7 3.1 4.1

UNITED 0.1 0.2 0.1 0.0 -0.5 -0.3 0.3 0.6


KINGDOM
UNITED STATES 23.0 28.0 39.0 26.0 44.0 26.0 19.0 17.0
TOTAL 132 163 158 155 114 169 187 222
MULTILATERAL 65.8 63.0 56.4 61.7 73.5 104 86.1 79.9
OPEC - - - 3.9 - - - -
EEC + MEMBERS 112 133 126 136 68.6 129 161 185
TOTAL 198 226 215 221 192 284 280 305

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 218.

Furthermore, it is significant to note that the aid flows from Germany, the
United States, the Netherlands, and Italy were, from 1985 to 1988, full grants.
This been a result of the full recognition of the economic handicap of the
country. However, on the contrary, the French flows have been about 80 percent
grant in content.2 Thus, the French government has again underscored the need
that its external aid should be anchored to domestic economic benefits.
34 Foreign Aid and Self-Reliance in West Africa

The continued favorable treatment of Burkina Faso in bilateral aid appears


more to be based on its apparently weak economy. It is one of the least
developing countries of the West African subregion. It is densely populated and
prone to the Sahelian drought. Agriculture, dominated by subsistence farming
of sorghum and millet on small plots, supports over 90 percent of the population.
The need for foreign aid in the country has been further highlighted by the
increasing foreign trade deficit. The gap increased from US$44 million in 1960
to US$224 million in 1983.3 The increasing deficit resulted from the increases
in food imports, the rise in petroleum prices, and costs of capital equipment for
road construction. It has been observed that a steady flow of financial assistance
especially at the bilateral level would be required to avoid the degeneration of
poverty. Thus, for these same reasons, the pattern of flow remained unchanged
in spite of the socialist ideological orientation introduced by the Sankara
government from 1983 to 1987.

Cape Verde
The geographical location and low level of economic development in Cape
Verde in West Africa strongly suggest that it should be a significant recipient of
foreign aid. It has been noted that bilateral aid accounted for over 50 percent of
total aid flows to Cape Verde from 1985 to 1988 as may be observed in Table
3.4. Cape Verde largely depends on the goodwill of bilateral donors for its
economic development. Within this period, all foreign bilateral aid has 100
percent grant content apart from France, whose grant elements were estimated
at 61.4 and 95.8 percent in 1985 and 1986, respectively.4

Cote d'lvoire
The position of Cote dTvoire is unique among francophone West African
countries. It is one of the more economically advanced francophone countries
in the West African subregion, with close links to France. However, like many
other West African countries, it began to experience economic difficulties
beginning in the late 1970s. The windfall earnings from coffee and cocoa in
1976 and 1977 encouraged heavy borrowing by the government from abroad.
Partly as a result of this, its external debt rose to US$8.5 billion in 1988, from
a low level of US$1.7 billion in 1975. At the same time, the country's debt
service ratio rose from 9 percent in 1976 to an uncomfortable level of 40.8
percent in 1987.
In view of the rapid economic growth in the 1960s, Cote dTvoire has been
an important recipient of foreign capital. However, this became reduced as the
recession set in the 1980s. The major bilateral donors include France, Germany,
Canada, Belgium, the United Kingdom, and the United States. And in recent
times, the Japanese and the Italians have also increased the volume of their
Foreign Aid in West Africa 35

Table 3.4
Cape Verde: Official Net Receipts from DAC Countries, Multilateral
Organizations, and OPEC, 1985-1988
USSMills., Current Prices and Exchange Rates

DAC COUNTRIES 1985 1986 1987 1988

AUSTRALIA . . . .
AUSTRIA 1.5 1.7 2.3 1.6

BELGIUM 1.5 0.8 4.1 2.3

CANADA 0.4 0.2 0.4 0.0

DENMARK 0.0 3.3 1.5 0.1

FINLAND 0.1 0.5 1.6 1.0

FRANCE 6.2 5.8 4.9 4.2

GERMANY (FED. REP.) 6.2 6.1 13.2 7.1

IRELAND . . . .
ITALY 7.5 37.9 8.6 8.3

JAPAN 1.1 1.8 2.3 6.4

NETHERLANDS 3.7 5.7 8.2 9.5

NEW ZEALAND . . . .
NORWAY 0.5 0.6 1.4 0.9

SWEDEN 6.6 5.3 8.1 11.6

SWITZERLAND 1.2 1.6 1.6 2.1

UNITED KINGDOM 0.0 0.0 0.1 0.1

UNITED STATES 4.0 8.0 6.0 4.0


TOTAL 40.5 79.3 64.1 59.1

MULTILATERAL 28.3 31.4 23.1 25.0

EEC + MEMBERS 28.2 70.3 46.6 37.8


TOTAL 70.6 112.4 88.3 85.3

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 218.

bilateral aid to Cote d'lvoire, making them important donors to the country.
Bilateral assistance constitutes the major part of total flows to Cote d'lvoire. In
1979, it accounted for about 68 percent of total flows. Bilateral assistance has
ironically diminished with increasing economic difficulties at the close of the
1980s, as illustrated in Table 3.5.
Foreign aid was essentially directed to the social and administrative infra-
structures, economic infrastructures, production, technical cooperation, pro-
gram assistance, and debt reorganization. In 1985, for example, 50 percent of
total inflow went to economic infrastructures. This declined to 10 and 11 percent
36 Foreign Aid and Self-Reliance in West Africa

Table 3.5
Cote d'lvoire: Official Net Receipts from DAC Countries, Multilateral
Organizations, and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC 1979 1980 1981 1982 1985 1986 1987 1988


COUNTRIES
AUSTRALIA 0.0 . . . . - _ .
AUSTRIA 0.2 0.0 0.0 0.0 -3.7 -5.0 -6.0 -6.0
BELGIUM 11.8 10.0 4.9 6.2 -21 -19 -20 -19
CANADA 16.4 9.4 10.6 1.0 13.0 6.0 9.3 23.9
i DENMARK 3.0 0.2 -0.2 0.4 -0.2 -0.2 . 0.0
FINLAND 0.0 _ . . 0.0 0.0 . 0.1
FRANCE 107 133 78.9 114 185 280 -36 -52
GERMANY 20.3 39.6 12.2 12.0 11.7 17.8 6.6 16.1
(FED. REP.)
IRELAND . . . . . . . .
ITALY -4.0 -3.9 -1.0 1.2 3.0 18.8 -15 11.7
JAPAN 0.1 0.2 2.5 1.8 12.1 16.5 6.7 25.5
NETHERLANDS 3.4 2.1 0.6 0.3 -4.6 -9.3 6.0 -23
NEWZEALAND . . . - . . . .
NORWAY 0.2 0.0
- 0.3 0.2 0.1 0.3 0.2
SWEDEN . . - . - . - -
SWITZERLAND 0.2 0.3 0.2 0.2 -1.6 0.2 0.5 0.4
UNITED 6.2 3.6 5.2 2.3 -1.2 3.1 4.3 26.6
l KINGDOM
i UNITED STATES 1.0 28.0 9.0 -5.0 11.0 4.0 -3.0 28.0
TOTAL 165.3 223 123 135 204 313 -45 31.9
MULTILATERAL 78.1 148 66.1 236 36.9 122 372 303
OPEC - - - 0.0 | - - -
COUNTRIES
EEC + MEMBERS 161 200 125 166 177 329 -13 169

TOTAL 243 1 370 189 371 241 435 327 335

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 118.

in 1986 and 1987, respectively, but rising to 58 percent in 1988. Production has
been second in importance. It accounted for 29 percent of total flows in 1985,
but falling to 16 and 21 percent in 1986 and 1987, respectively. It rose again to
27 percent in 1988. Furthermore, technical cooperation has been the third in
the order of priorities to bilateral donors. It was 9 percent in 1985, rising to 15
and 17 percent in 1986 and 1987, but falling to 11 percent in 1988.5 Thus, a
Foreign Aid in West Africa 37

significant part of foreign aid has been directed to the critical sectors of the
economy that are vital to economic growth. The costs of economic infrastruc-
tures, such as roads, railways, and telecommunications, are very high and the
government could not have entirely financed them under the current economic
situation. At the same time, they are indispensable to successful industrializa-
tion. Also, increased aid in the production sector should be important in times
of recession when increased production in the industrial and agricultural sectors
would be fundamental to economic recovery. Additionally, technological coop-
eration would also go a long way in the creation of the basis for sustained
industrialization in Cote d'lvoire. However, it could be observed that the decline
in the proportion of production had been a major setback to the government in
1986 and 1987. More aid in this sector could have assisted in the rejuvenation
of the industrial sector, which was deep in crisis.
Cote d'lvoire, like many other francophone West African countries, also had
the benefit of almost 100 percent grant element in bilateral flows from ODA
countries. The only exceptions, from 1985 to 1988, being France and Germany.
For example, in the case of France, the grant element decreased substantially.
This was 80.6 percent in 1985, 67.8 percent in 1986, and 52.9 percent in 1987,
but rising slightly to 55 percent in the following year.6 Thus, in the views of the
French and German governments, Cote d'lvoire may not necessarily be treated
as one of the economically weak West African countries that seriously lag
behind in economic development because of their structural limitations. But it
would seem that Cote d'lvoire may benefit well by seeking improved relations
with Canada, Japan, and the United States, which have shown interest in its
economic development through somewhat increased bilateral flow. The more
the content of grant elements, the better would be the prospects for economic
growth and development.

Gambia
Gambia represents one of the feeble anglophone West African countries. It
emerged from colonial partition as an independent anglophone state on the
banks of the river Gambia intruding deeply into francophone Senegal.7 The
economy has, since independence in 1965, experienced a somewhat modest
growth. These gains in growth were, essentially, utilized for the expansion of
the public sector; in particular, of government industries, education, health,
public works, and agriculture.
However, there continues to be several limitations to rapid economic growth
and development. The first limitation emerges from its small size and undiver-
sified productive base. The Gambian economy is open and highly sensitive to
shortfalls in agricultural production and to changes in the external terms of
trade. The country is dependent on trade for up to one-half of its food require-
ments, and it imports most manufactured goods and all fertilizers, fuel, and
38 Foreign Aid and Self-Reliance in West Africa

equipment. The second, important constraint on the economic growth and


development of Gambia is its high rate of population growth and underdevel-
opment of human resources. The April 1983 census revealed that the population
was growing at a rate of about 3.4 percent per annum, compared with the 2.2
percent rate derived from the 1973 census. The rate of adult literacy in Gambia
is estimated to be only 20 percent. Maternal and infant mortality rates remain
high as a result of widespread seasonal malnutrition and chronic infectious
diseases.8 The third important factor relates to the bouts of adverse weather
conditions that impede economic development. For example, in 1977, the
country was hit by severe drought. This was followed by seven years of below
average rainfall and another serious drought in 1983/84. As a result of these
conditions, the production of the main food crops—rice, sorghum, millet, and
maize—was reduced by half. On the whole, total foreign aid to Gambia
increased substantially from 1979 to 1988. But within this overall flow, the
proportion of bilateral aid did not increase significantly (see Table 3.6).
The major bilateral aid donors to Gambia include the United Kingdom, the
United States, Germany, France, and the Netherlands. The Japanese and the
Italians have however since 1982 and 1985 been more active in the disbursement
of bilateral aid to Gambia. The drastic fall in total bilateral aid was due
essentially to the reduction in aid from two important donors, the United
Kingdom and France. But it may be noted that the United States has been more
consistent in its aid to Gambia more than the other donors.
Like a few other countries in West Africa, bilateral aid to Gambia is basically
in the form of grants. From 1985 to 1988, all aid flows from bilateral sources
were 100 percent grants. The only exceptions include those from Norway, with
54 percent grant element in its aid flows to the country in 1987. In 1988 France
allowed only 55.3 percent of its flows to Gambia as grants.9 The government
of Gambia would, as such, be better off maintaining good relations with the
United States and the United Kingdom. The government should also seek to
strengthen its relations with Japan and Italy, which could significantly, in the
near future, raise the level of bilateral aid to the country.
It has further been observed that unlike Cote d'lvoire, foreign aid for Gambia
was primarily concentrated in the area of technical cooperation. The preemi-
nence of this was very evident in 1985, when it accounted for 55 percent of the
total aid flows to the country. Production, economic infrastructure, and food aid
accounted for 14.1 and 11 percent, respectively, in 1985. However, the propor-
tion to technical cooperation diminished later, to 19 percent in 1987, but rising
slightly to 22 percent in 1988. Also, production proportion fell substantially to
7 percent in 1987 but rose to 20 percent in 1988. As far as economic infrastruc-
ture was concerned, there was a significant rise after a dive in 1986 to 7 percent.
By 1987, it accounted for 22 percent and rose again to 28 percent in the
following year. Thus, there appears to be a good response to the long-standing
infrastructural deficiencies of the country during this period. The proportion of
Foreign Aid in West Africa 39

Table 3.6
Gambia: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0
AUSTRIA 0.0 0.0 0.0 0.0 -0.3 0.0 0.0 0.0
BELGUIM 0.0 . . 0.1 0.0 -0.1 0.1 0.1
CANADA 0.0 0.1 0.2 0.6 0.9 0.2 1.2 0.3
DENMARK 0.1 0.6 2.4 0.0 0.3 0.1 0.1 4.0
FINLAND . 0.0
- - - .
0.0 0.0
FRANCE . 3.2 0.6 0.9 3.6 11.3 5.6 0.9
GERMANY 4.7 5.0 5.0 7.1 5.2 6.0 8.5 6.3
(FED. REP.)
IRELAND . . - . 0.0 0.2 0.1 0.0
ITALY . 0.1 „ . 1.7 15.3 9.2 8.2
JAPAN . 0.0 0.6 3.8 1.2 1.6 4.5 3.8
NETHERLANDS 2.1 0.6 1.3 1.0 3.0 6.0 1.9 9.0
NEW ZEALAND . . . . - . . .
NORWAY
- 0.2 . . 0.1 -1.6 1.4 4.4
SWEDEN . . 0.1 0.2 0.2 0.0 0.1 0.2
SWITZERLAND 0.1 0.0 0.0 0.0 0.1 0.1 . -
UNITED KINGDOM 5.2 4.5 4.0 3.7 2.5 9.5 10.7 -12.4
UNITED STATES 2.0 4.0 5.0 6.0 10.0 9.0 10.0 11.0
TOTAL 14.2 18.4 19.2 23.5 28.5 57.6 53.3 36.0
MULTILATERAL 19.9 36.6 35.9 21.8 19.7 42.8 47.6 28.0
OPEC COUNTRIES 4.2 7.0 21.0 3.5 . . . .
EEC + MEMBERS 18.1 23.5 27.0 19.4 18.5 58.7 43.7 24.5
TOTAL 38.3 62.0 76.1 48.8 48.9 99.5 100.9 62.0

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 88.

food aid decreased to 4 percent in 1986 but rose sharply to 9 percent in the
following year. Albeit, food aid somewhat diminished with the reduction in the
adverse impact of drought in 1984.

Ghana
The serious decline in Ghana's economy in the 1970s and early 1980s in no
doubt elicited concern and diverse support from a number of DAC countries.
40 Foreign Aid and Self-Reliance in West Africa

Ghana's economy, throughout the 1970s and early 1980s, declined in all major
sectors. The acute shortages of basic food, goods, and services that followed
aided political instability and the poor management that frightened the interna-
tional community from investing in the country. The drought problem that
affected the country in the 1980s did not only create problems in the agricultural
sector but also prevented the Volta dam from attaining the required water level
needed for power production for both internal consumption and exports. It
therefore followed that at the beginning in the 1980s, the economy was in a
state where it required substantial foreign financial assistance in order to return
to the course of growth.
The volume of foreign aid flow to the country increased significantly in
the 1980s. Table 3.7 shows that bilateral aid generally constituted a substan-
tial part of total aid flow to Ghana. Thus, in comparison with Burkina Faso
or Cote d'lvoire, the proportion of bilateral aid to total aid flow has been
lower in Ghana. However, unlike these two countries, more DAC countries
have shown greater interests in bilateral assistance. The key countries in the
bilateral cooperation with Ghana are the United Kingdom, Germany, Can-
ada, the Netherlands, Japan, the United States, and France. Switzerland
began to increase its bilateral assistance to the country during the second half
of the 1980s.
Since 1985, assistance from the DAC countries has been concentrated in the
areas of economic infrastructure, production, social and administrative infra-
structure, and technical cooperation. From 1985 to 1988, the proportion of
economic infrastructure has essentially been about 33 percent. Program assis-
tance rose from 25 percent in 1985 to 33 percent in 1987, but fell to 13 percent
in the following year. For many of the small bilateral donors, the grant element
has been total in their flows to Ghana in the second half of the 1980s. But in
the cases of France, the United States, and Germany during this period, the grant
elements were clearly defined. In the case of France, for example, only 38
percent of its bilateral aid to Ghana was in the form of grant in 1985; 62 percent
was tied to purchases. But the grant element rose to 49.4 percent in 1987 and
to 92.4 percent in 1988.10
Thus, it could be observed that the bilateral financial flows from the DAC
countries have been very valuable to Ghana's economic growth and devel-
opment. In this context, the United Kingdom, Germany, Japan, and the
Netherlands are reliable partners the country could count on for support in
the future with the continuation of good relations and better prospects for
growth. However, the country will need to encourage the United States and
France, major sources of substantial bilateral aid, to increase their flows to
it in the future.
Foreign Aid in West Africa 41

Table 3.7
Ghana: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA 1.9 0.7 0.7 0.5 0.3 0.4 0.3 0,

AUSTRIA 0.2 0.1 0.1 0.1 -0.3 0.2 0.3 0.3

BELGIUM 0.2 0.1 0.1 0.2 -0.1 0.1 0.2 0.2

CANADA 18.7 16.3 7.6 7.5 17.4 20.2 17.9 20.1

DENMARK -0.7 -0.4 -0.3 -0.3 -0.1 -0.2 0.0 10.9


FINLAND 0.0 0.0 0.0 0.1 0.0 0.1 0.1 0.1
FRANCE . 3.3 2.2 2.3 -0.1 14.8 18.6 12.0
GERMANY 13.4 26.1 32.3 28.1 16.2 21.5 18.2 26.1
(FED. REP.)
IRELAND _ _ . . 0.0 0.1 0.1 0.0
ITALY 0.5 0.5 0.3 -1.3 -2.5 -2.7 10.4 16.0

JAPAN 5.6 2.5 5.3 5.2 20.4 24.9 . 20.8 65.2

NETHERLANDS 6.6 5.3 2.8 2.2 0.8 16.1 17.9 24.4


NEW ZEALAND . . . . . . . .
NORWAY 0.7 1.2 0.2 0.2 0.5 4.6 3.7 1.5
SWEDEN 0.5 0.4 0.2 0.1 . . . 0.5
SWITZERLAND 0.1 0.2 0.2 0.2 9.7 3.1 3.8 10.6
UNITED KINGDOM 21.2 34.8 13.3 8.8 15.9 40.2 71.8 55.2
UNITED STATES 19.0 14.0 17.0 4.0 10.9 7.0 13.0 -3.0
TOTAL 88.0 104.9 82.0 57.9 88.1 141.2 196.9 237.9
MULTILATERAL 91.4 83.2 67.8 81.4 117.8 255.1 268.0 233.2
OPEC 16.6 25.2 14.3 3.0 - - - -
COUNTRIES
EEC + MEMBERS 48.6 81.3 73.7 82.1 41.6 127.7 147.1 165.1
TOTAL 196.0 213.4 164.2 142.3 200.1 399.7 460.1 484.3

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 90.

Guinea
Notwithstanding its potential resources in minerals and agriculture, Guinea
is classified among the twenty-five countries with the lowest per capita incomes
in the world.l {The erratic global prices of minerals has generally made earnings
from them highly undependable for sustainable economic growth and develop-
ment. Also, in the past decade, the export of agricultural products has stagnated
42 Foreign Aid and Self-Reliance in West Africa

in spite of subsidies granted to the producers of coffee, bananas and palmnuts.


Part of the difficulties here arose from the reluctance of farmers to participate
effectively in the cooperative arrangements of the government and the adverse
conditions of the climate. While this had been the lot of the country, the structure
and poor state of the economy taken together with its professed socialist
orientation had not encouraged substantial foreign investment. Hence, there has
always been the need for some forms of foreign aid to facilitate the process of
economic development.
The DAC countries have shown extensive interest in the economic predica-
ment of Guinea. At the bilateral level, this became very evident during the
second half of the 1980s. Total bilateral aid from the DAC countries increased
by more than 50 percent from 1980 to 1985. By 1988, the total bilateral inflow
was again over three times the level attained in 1985. These are well illustrated
in Table 3.8. Also, as from 1986, the volume of bilateral inflow became bigger
than multilateral inflow.
The major bilateral donors have been France, Germany, Japan, and the United
States. In 1985, Canada began to make remarkable contributions to the bilateral
assistance to the country. The contributions of France became very significant
from 1980. In particular, the grant element of the aid from France also increased
during this period as the relations between the two countries improved and the
French government gained more confidence in the regime in Guinea.12 Other
important bilateral donors to the country include the Arab countries and the
member states of the Council for Mutual Economic Assistance (CMEA). For
example, in 1981, the flow from the former was US$371 million, making
Guinea the largest single recipient of Arab aid in sub-Saharan Africa for that
year.13
The aid flows to Guinea in the second half of the 1980s were, to a large extent,
directed at the areas of economic priorities while the objectives of the donors
have been preserved. In 1985, 30 percent of foreign aid was toward the
production sector, 23 percent to social and administrative infrastructure, 19
percent to economic infrastructure, 13 percent program assistance, and 9
percent to technical cooperation. Although economic infrastructure suffered a
decline to 6 percent in 1986, it nevertheless rose to 40 percent the following
year but declined to 28 percent in 1988. Donors have thus come to the
conclusion that the economic infrastructure should be improved if meaningful
economic growth and development were to occur. By 1986, program assistance
rose to 36 percent as Guinea implemented economic measures that donors
envisaged would lead to economic growth. Although this dramatically fell to 3
percent in the following year, it nevertheless rose substantially to 20 percent in
1988 once the commitment to the implementation of market-oriented measures
became stronger.
It is important to underscore at this point that the increases in bilateral flow
from France were largely accounted for by the improvement in relations with
Foreign Aid in West Africa 43

Table 3.8
Guinea: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC 1979 1980 1981 1982 1985 1986 1987 1988


COUNTRIES
AUSTRALIA . . . . . . . .
AUSTRIA 0.0 0.0 . . 0.0 0.0 0.0 0.1
BELGIUM 0.2 -0.4 -0.2 0.2 1.5 9.3 2.7 2.6
CANADA 0.0 0.0 0.1 0.6 11.2 2.8 4.8 6.6
DENMARK . . 0.0 0.0 0.7 3.6 2.9 1.1
FINLAND 0.3 0.0 0.1 . 0.0 . 0.0 0.1
FRANCE 0.8 6.5 12.9 13.8 20.0 35.9 51.0 86.8
GERMANY (FED. 1.0 11.4 2.0 6.0 6.7 11.6 24.8 11.4
REP.)

IRELAND . . . . . . . .
ITALY 0.4 0.2 1.9 -0.2 3.2 7.0 7.6 31.4

JAPAN 2.9 1.9 3.0 2.3 5.0 3.2 22.5 26.6


NETHERLANDS 1.5 0.3 0.1 0.2 1.2 0.8 0.4 0.6
NEW ZEALAND . . _ . . . .
NORWAY . . . . 0.2 2.6 1.5 2.5
SWEDEN . . . . . . . 0.2
SWITZERLAND 0.0 0.1 0.0 0.1 -5.6 5.9 0.4 0.6
UNITED - - 0.0 0.1 0.4 0.4 0.7 1.2
KINGDOM
UNITED STATES 3.0 6.0 13.0 2.0 8.0 12.0 23.0 13.0

' TOTAL 10.0 26.0 32.9 25.1 52.5 95.2 142.4 184.5
MULTI- 47.5 63.6 57.8 35.6 57.5 67.1 70.6 80.0
LATERAL
OPEC 9.3 0.1 -0.3 3.6 - - - -
COUNTRIES
EEC + MEMBERS 12.5 38.9 39.4 30.4 44.1 83.5 103.5 145.7
TOTAL 66.8 89.6 90.4 64.3 112.1 166.6 225.0 278.1

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 96.

it. At independence in 1958, Guinean President Sekou Toure took the country
out of the French colonial empire. The Guinean government nationalized many
French investments and the French government retaliated by suspending finan-
cial aid and technical assistance to Guinea. By 1977, however, the Guinean
government agreed to compensate the French firms whose assets were nation-
44 Foreign Aid and Self-Reliance in West Africa

alized. Subsequently, the French President Valery Giscard d'Estaing visited


Guinea from December 20 to 22 in 1978. This signified a revival of cooperation
and hence the increases in the flow of aid to Guinea thereafter. In another
gesture, France agreed to participate in the construction of dams on the
Konkoure River and Elf-Auitaine.14
Apart from these, France also welcomed Guinea's change in government and
the adoption of free market enterprise system. The military coup of April 3, 1984
brought an entirely new, open market philosophy. This new orientation facilitated
the introduction of a structural adjustment program to resolve the fundamental
economic development problems. By the end of 1985, monetary reforms were
introduced to bring Guinea back to the franc zone. Subsequently, on January 7,
1986, there was a change over from the syli to the Guinean franc. A two-tier
exchange rate system was adopted, the Guinean franc was devalued to put it at
parity with the CFA franc. All state banks found to have misappropriated their
customers' funds were wound up in December of the same year. Three French
banks, subsidiaries of the BIAO, BNP, and Societe Generate were further estab-
lished. In addition to these, the government carried out the pruning of the civil
service employment in which about 84,000 ghost civil servants were alleged to be
on the payroll. Thus, as a result of these developments the French Minister for
Cooperation, Michel Aurillae signed four aid agreements in Conakry with Guinea
on June 20, 1986. The agreements covered town planning, gold prospecting,
assistance in the establishment of a new bank, and the restructuring of the public
sector enterprises. In other words, better external relations and economic policies
are vital to the future inflow of bilateral aid. The more this is maintained, the better
the prospects for economic growth in Guinea.

Guinea-Bissau
Guinea-Bissau is one of the economically weak least-developed countries in
Africa. Its main exports are groundnuts and palm kernel, which account for
about 70 percent of total exports. The country lacks substantial industries, apart
from few small plants for brick-making, groundnut-shelling, baking, rice-mill-
ing, and the production of groundnut oil, foam mattresses, fabricated housing,
fruit juices, jams, and soft drinks. The implementation of budgets in Guinea-
Bissau requires continuous injection of foreign aid. However, foreign aid
inflows have been very modest. In comparison with Guinea, Guinea-Bissau has
been less favorably considered by donors in the 1980s as illustrated in Table
3.9. Generally, bilateral aid represents significant part of the foreign aid inflow
to Guinea-Bissau. In 1979, it accounted for 64 percent of total inflow.
Unlike Guinea, the major bilateral donors to Guinea-Bissau are the Scandi-
navian countries, notably Sweden and the Netherlands. Italy has increased its
aid to Guinea-Bissau since 1986, making it the most prominent donor by 1988.
However, the United States, United Kingdom, France, and Japan, have yet to
Foreign Aid in West Africa 45

Table 3.9
Guinea-Bissau: Official Net Receipts from DAC Countries, Multilateral
Organizations, and OPEC, 1979-1988
USSMilI s., Current Prices ami Exchanj»e Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA . . . . . . . .

AUSTRIA 0.0 0.0 0.1 0.1 0.0 0.1 0.2 0.2

BELGIUM -0.3 0.2 0.4 0.3 -0.1 0.3 0.7 0.5

CANADA 0.0 0.1 0.1 0.1 0.6 0.1 0.3 0.3

DENMARK 2.1 1.3 0.8 0.4 0.2 0.3 1.4 '•'


FINLAND . 0.0 . . . . . -
FRANCE 2.5 3.2 2.9 5.5 6.8 5.6 -2.8 6.9
GERMANY (FED. 1.6 1.4 0.8 0.3 0.5 11 2.0 u
REP.)

IRELAND . . . . . . . -
ITALY 0.1 0.1 0.6 1.2 2.1 10.5 10.6 35.7

JAPAN . 0.0 0.9 1.1 1.3 1.5 1.2 2.1

NETHERLANDS 8.2 14.1 12.6 8.4 4.3 6.3 9.5 8.7


- . . . _ . . .
NEW ZEALAND
NORWAY 2.8 0.3 0.3 0.3 0.0 0.1 . .
SWEDEN 14.9 11.3 12.1 11.1 8.8 11.1 12.7 14.8
SWITZERLAND 0.1 0.3 0.4 0.4 0.3 0.8 4.0 4.1
UNITED 0.4 0.1 1.5 0.4 - 0.1 0.1 0.1
KINGDOM
UNITED STATES 1.0 2.0 8.0 4.0 2.0 3.0 4.0 2.0
TOTAL 33.4 34.4 41.4 33.7 26.8 40.8 44.0 78.9
MULTILATERAL 17.0 28.5 25.4 28.8 33.5 27.5 53.1 44.4

OPEC COUNTRIES 1.9 1.4 0.1 7.7 . . . .


EEC + MEMBERS 25.5 31.0 25.6 27.0 20.2 30.3 32.6 62.4

| TOTAL 52.2 64.3 66.9 70.3 63.3 71.9 102.1 129.4

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 98.

react more positively to the financial requirements of Guinea-Bissau at the


bilateral level.
In 1985, 33 percent of aid inflows from the DAC countries were directed to
technical cooperation, which was very significant in the context of the long-term
manpower development needs of the country. Production occupied the second
position since one of the principal problems of the country in the early 1980s
has been low productivity. Food aid came next with 19 percent. This was
46 Foreign Aid and Self-Reliance in West Africa

inevitable in view of the fact that Guinea-Bissau has continued, since 1979, to
experience severe food shortages because the state-operated agricultural coop-
erative arrangements have been far from effective. Also, the bouts of drought
in 1979-80 and 1983 seriously undermined food production. Debt reorganiza-
tion and social and administrative infrastructures were other important targets
in 1985.15
The level of technical cooperation was somewhat maintained till 1988, apart
from 1987, when it fell to 15 percent. Food aid declined with improved food
production. It occupied only 2 and 1 percent in 1987 and 1988, respectively.
However, the contrary has been the case in social and administrative infrastruc-
ture, which rose steadily. It rose by 16 percent in 1986 as against the previous
year and to 46 percent in 1988. Thus, there seems to be an increasing concern
on the building of a genuine basis for meaningful economic development.
Guinea-Bissau has not benefited significantly in the foreign aid of the United
States and the United Kingdom, partly because of its political instability. During
this period, it was one of the most unstable countries in the West African
subregion. The government did not grant a wide degree of political freedom to
its citizens. No opposition parties were allowed to exist. The government had
monopoly over the media and the expression of dissent is not tolerated. On
November 14, 1980, Mr. Joan Bernard Vary became the president after a
successful coup d'etat. On February 16, 1981, the government announced a
sixteen-member provisional government. However, members of this cabinet
have been changed at a very rapid rate as a result of the highly fluid political
situation. Some were expelled for the embezzlement of money.16 But then this
had not prevented further coup attempts. On November 7,1985, the government
identified one of such coups with the first vice president and minister of justice
who ranked second in the party. Thus, there has been considerable uncertainties
about political development in Guinea-Bissau. The United States and the United
Kingdom have further felt uneasy on the commitment of aid when the human
rights and professed socialist philosophy of Guinea-Bissau remain problematic.

Liberia
The 1980s was essentially one of remarkable assistance to Liberia. There was
lack of enthusiasm in the Liberian economy while it was emersed in a political
crisis of large proportions. By April 1980 when Sergeant Samuel Doe came to
power after a bloody coup d'etat, the Liberian economy was already in very
serious difficulties. At the end of the 1970s, there was a slump in the global
price of rubber, one of the principal cash crops. l7 As a result of this, production
became uneconomic and an estimated 5,000 Liberian planters were put out of
business. By 1981, rubber prices dropped by a third and exports reached a low
level of about US$51.6 million in 1982 compared with US$102.2 million in
1980. In other words, an injection of foreign financial assistance was desirable
Foreign Aid in West Africa 47

Table 3.10
Liberia: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA . . . . 0.0 . . .
AUSTRIA 0.0 . . . . 0.0 . .
BELGIUM 0.1 0.1 0.1 0.1 40.0 -93.7 -98.8 -98.6
CANADA -3.2 -9.7 -7.2 -2.9 -0.8 -0.8 5.6 2.3
DENMARK 0.0 0.0 . . 0.2 0.2 4.3 5.1
FINLAND . 0.0 1.2 0.6 -6.5 0.0 . 33.5
FRANCE . 0.8 0.8 1.1 -32.8 -73.6 76 -0.6
GERMANY (FED. -5.0 3.8 13.3 14.5 -3.0 -17.5 -49.7 51.5
REP.)
IRELAND . . . . 0.0 0.1 0.1 0.0
ITALY -0.9 -0.9 0.0 2.5 0.9 0.9 0.7 22.1
JAPAN 1.7 13.9 2.5 7.1 -234 12.1 -267 354

NETHERLANDS 1.0 0.8 1.8 1.0 -9.7 -0.2 24.5 3.9


NEW ZEALAND . . . . . . .
NORWAY . 0.1 _ . -2.3 -0.3 -1.4 0.1
SWEDEN 0.2 0.3 0.1 -0.2 0.2 -0.4 -6.5 -6.3
SWITZERLAND . 0.0 . . -0.4 . 0.0 0.0
UNITED 2.5 0.8 3.5 1.7 -40.0 -40.7 -32.0 -0.9
KINGDOM
UNITED STATES 6.0 29.0 68.0 60.0 -41.0 -71.0 28.0 42.0
i TOTAL 2.4 38.8 84.0 85.4 -335 -285 -316 408.5
MULTILATERAL 57.6 53.0 39.3 29.5 47.1 27.9 27.0 22.9
OPEC COUNTRIES 14.8 9.2 2.4 1.3 . . . .
EEC + MEMBERS 15.9 12.6 24.8 23.4 -41.3 -221 -69.9 -13.3
TOTAL 74.8 101.0 125.7 116.1 -288 -257 -289 431.4

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 138.

if Liberia was to meet its development objectives. However, as it turned out,


Liberia was one of the few countries in West Africa that experienced severe
decline in foreign bilateral assistance during this period as indicated in Table
3.10. The principal bilateral donors include the United States, Germany, Japan,
France, and Belgium.
By 1985,40 percent of the foreign aid received by Liberia was committed to
program assistance, 21 percent for technical cooperation, 12 percent each for
48 Foreign Aid and Self-Reliance in West Africa

social and administrative infrastructures and production, 6 percent for food aid,
5 percent for economic infrastructure, and 4 percent to debt reorganization.
Thereafter, however, the commitment to program assistance declined, falling to
24 percent and 7 percent in 1987 and 1988, respectively. While on the contrary,
the commitment to technical cooperation increased appreciably to 48 percent
in 1987 and 55 percent in 1988. Similarly, commitment to economic infrastruc-
ture was on the increase to 6 percent and 14 percent in 1987 and 1988,
respectively. Hence, there seems to be a modest response to some of the priority
areas of the Liberian economy.

Mali
Mali is one of the poorest countries in West Africa. It was badly affected by
persistent drought since 1971. Its GNP per capita of US$140 makes it one of
the least developed countries on the African continent. In the 1970s, the
government focused primarily on the agricultural sector to promote economic
growth and development. Albeit, the drought of the late 1970s and 1983/84
severely affected government's program of agricultural output. As a result the
country was compelled to be dependent on food importation.
An important aspect in Mali's economy is that there is a persistent budgetary
deficit due to its poor revenue earning capacity and its heavy expenditure on a
disproportionately large bureaucracy. About 70 percent of its current spending
is on manpower. From 1968 to 1981, the budget deficits were made good by
the French public treasury. The government was unable to prune spending or
generate more revenue during the drought years.
In addition, Mali has a persistent deficit on its balance of payments and trade.
This situation was aggravated shortly after independence when it left the franc
zone to establish its own currency. Consequently, foreign aid continues to
constitute a major factor in the development process of the country.
At the bilateral level, the dominant donors include France, Germany, the
United States, the Netherlands, and Canada. But Italy, in the second half of the
1980s, increased its flow to Mali to enhance the development process as may
be observed from Table 3.11. This in itself may not be unconnected with the
1981 coup attempt, which was an indication that the Traore government was
under pressure and that political stability may not necessarily be taken for
granted in Mali.
Bilateral aid from Arab countries played important roles in the second half
of the 1980s. It rose from US$26.8 million in 1985 to US$40.9 million in 1986,
but thereafter declined to US$8.6 million and US$5.4 million in 1987 and 1988,
respectively.18
The commitments of the ODF were essentially directed at social and admin-
istrative infrastructures, economic infrastructures, production, technical coop-
eration, and program assistance. For example, the flows from France in 1980
Foreign Aid in West Africa 49

Table 3.11
Mali: Official Net Receipts from DAC Countries, Multilateral Organizations, and
OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA . . . . . 0.0 . .
AUSTRIA 0.0 0.0 [ 0.2 0.0 0.0 0.0 0.3 0.2

BELGIUM 2.9 1.8 1.4 1.5 4.1 1.7 4.1 2.1

'CANADA 8.0 12.8 1 11.2 9.4 15.1 1 13.5 21.6 12.5


DENMARK . . 0.0 . 1.5 0.6 0.2 3.7
_ . . . . - .
FINLAND 0.3
FRANCE 34.3 45.0 53.0 28.5 124.8 63.8 63.8 85.6
GERMANY (FED. 27.7 27.0 33.5 29.0 27.3 23.7 29.0 31.2
REP.)
IRELAND . . . . . . 0.0 0.0

ITALY 0.0 0.1 . 0.2 9.5 26.4 20.9 33.2


JAPAN 1.9 4.1 5.1 4.7 3.7 5.3 8.9 9.8
NETHERLANDS 5.4 12.5 6.4 3.6 15.5 20.0 22.4 21.8
NEW ZEALAND . . . . . . . .
NORWAY 0.5 0.6 0.5 . 2.7 4.5 2.4 10.3
SWEDEN . . . . . .
SWITZERLAND 1.9 4.1 3.8 6.4 5.4 8.2 10.1 9.0
UNITED 1.0 0.5 0.6 0.2 -0.3 -0.7 -0.8 -1.5
KINGDOM
UNITED STATES 14.0 23.0 18.0 13.0 44.0 30.0 33.0 36.0
TOTAL 97.7 131.8 133.8 96.6 253.2 197.4 215.8 254.0
MULTILATERAL 93.6 103.7 88.7 75.1 100.9 127.2 135.4 162.8
OPEC COUNTRIES 13.3 17.3 6.4 24.7 . . . .
EEC + MEMBERS 102.6 128.7 120.1 81.1 207.1 156.4 172.6 199.0
TOTAL 204.6 252.7 228.6 196.5 380.9 365.5 359.8 422.2

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 146.

were utilized for the establishment of a canning factory, an Institute of Rural


Economy to house 7,000 documents relating to rural development, and a water
development project. Other projects financed by France include the new na-
tional museum, the National School for Posts and Telecommunications, and the
construction of the fruit and vegetable section of the Office des products
agricoles du Mali (OPAM).19 In response to its economic recession in the
mid-1980s, commitments to social and administrative infrastructures accounted
50 Foreign Aid and Self-Reliance in West Africa

for 26 percent in 1985; this declined to 22 and 14 percent in 1986 and 1987,
but rose to 28 percent in 1988. But commitments to economic infrastructures
declined precipitously from 23 percent in 1985 to 10,4, and 5 percent in 1986,
1987, and 1988, respectively. This represented a setback in the drive toward
self-reliance, since the country hitherto lacks the basic infrastructures for
development. The costs of these structures, such as roads and telecommunica-
tions networks, are huge given the vastness of the country and the manner in
which towns are distantly located. The flow to production on the other hand
increased from 19 percent in 1985 to 30 percent in 1986, but thereafter slightly
declined to 29 and 27 percent in 1987 and 1988. Also, the flows to technical
cooperation rose from 20 percent in 1985 to 38 percent in 1987, but declined
to 13 percent in 1988. Program assistance rose from 4 percent in 1985 to 8
percent in 1987 and to 24 percent in 1988. In other words there was a good
response to projects under economic reforms in 1988 only.
The bilateral aid from the DAC countries from 1985 to 1988 was essentially
untied. The only exception was the case of France whose bilateral aid, in 1985,
had 89 percent grant element. It rose to 99.2 percent in 1987 but declined to
78.8 percent in the following year.

Mauritania
Like Mali, drought has been another major factor in Mauritania's economic
development. It was essentially severe in the early and late 1970s and again
from 1982 to 1984. Mauritania's chronic trade deficits in the years up to 1965
were transformed with the arrival of the mining industry, but the huge invest-
ment required in this sector, the rising cost of oil imports and manufactures, and
the cost of the war against Polisario put the budget and the balance of trade back
into deficit. The deficit persisted throughout the late 1970s until the first trade
surplus was established in 1983. Thus, the need for foreign financial assistance
has always manifested itself in Mauritania's economy. At the same time,
however, the inflow of foreign financial assistance to the country has generally
been very modest.
The principal sources of bilateral foreign aid are France, Germany, the United
States, and Italy. Table 3.12 shows the trend in the pattern of foreign aid flows
into Mauritania in the 1980s. A substantial part of French aids in 1982 were for
the projects on hydroelectric irrigation and pasture development in Lake R'Kiz
region near Senegal Valley, improvement of the Nouackchott city water supply,
oceanographic resources research, the establishment of an orthopedic medical
center, and various administrative needs. The United States contributed 20,000
tons of grain, increased its project aid from US$2.7 million in 1980 to US$8
million and US$9.7 million in 1981 and 1982, respectively. Furthermore, the
United States contributed to the Senegal River agricultural development pro-
jects.20 The Arab countries have also been major sources of bilateral foreign aid
Foreign Aid in West Africa 51

Table 3.12
Mauritania: Official Net Receipts from DAC Countries, Multilateral
Organizations, and OPEC, 1979-1988
USSMil Is., Currer t Prices arid Exchan ?e Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA . . . . 0.0 . .
AUSTRIA 0.1 0.1 0.1 0.0 0.7 0.2 0.2 0.2

BELGIUM 1.0 0.3 0.2 0.4 1.0 -0.1 1.1 0.6

CANADA 0.8 0.9 1.1 2.0 4.7 0.2 1.7 3.4

DENMARK . . _ 0.8 0.4 0.4 10.6 2.2

FINLAND . 0.1 . 0.1 . . . .


FRANCE 16.7 19.9 39.1 24.1 43.1 30.9 38.2 50.9
GERMANY (FED. 9.1 11.8 7.8 13.6 8.3 15.1 5.9 15.8
REP.)
IRELAND . . . . . . . .
ITALY . 0.0 . 0.2 10.2 20.0 10.8 10.4

JAPAN 0.2 0.1 2.4 8.1 3.9 11.0 4.5 3.9

NETHERLANDS 0.6 4.7 4.5 1.0 2.5 8.4 6.4 1.6


NEW ZEALAND . . . . . . . .
NORWAY 0.3 . . . 0.1 0.3 1.9 0.5

SWEDEN . . . . . . . .
SWITZERLAND 0.6 0.5 0.4 0.3 0.8 0.0 0.1 0.3

UNITED -0.1 0.1 0.8 0.1 0.7 -2.1 -0.5 0.3


KINGDOM
UNITED STATES 5.0 15.0 20.0 13.0 37.0 18.0 10.0 9.0
TOTAL 34.3 53.3 76.3 63.7 113.3 102.3 90.7 99.0
MULTILATERAL 81.2 36.7 66.5 85.4 52.7 48.3 75.1 73.9
OPEC COUNTRIES 62.4 126.3 100.0 68.3 . . . •
EEC + MEMBERS 85.8 44.3 77.9 62.7 81.0 86.1 80.1 98.8

TOTAL 177.8 216.4 242.8 217.4 237.5 210.4 176.5 171.0

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 148.

for Mauritania. In 1981, Kuwait gave technical assistance in telecommunica-


tions, mining, and highway development. In the same year, Libya assisted in
hydroelectric, road, and water projects, especially in the desert area around the
historic town of Chinquetti. Also, Libya provided subsidies for the new univer-
sity, agricultural works, and a job scheme for emigrant Mauritanian workers.21
In 1985, total aid flows from these countries amounted to US$71 million.
52 Foreign Aid and Self-Reliance in West Africa

However, thereafter the volume of flows declined, falling to US$ 10.7 million
in 1987.
Since 1985, a major part of ODF flows have been directed at technical
cooperation. This accounted for 26 percent of ODF commitments to Mauritania.
It rose 30 percent in 1988. ODF commitment to food aid has, on the other hand,
declined since 1985 as the drought abated and some solutions were found to
problems of food shortage. It declined to 3 percent in 1988 from 22 percent in
1985. Social and administrative infrastructure, which received much attention,
accounting for 19 percent in 1985, ebbed in the following two years but rose
significantly to 28 percent in 1988. Production has had increasing support since
1985. It accounted for 16 percent of total ODF flows to Mauritania in 1985,
rising significantly to 37 percent in the following year but declining in the
following two years to 23 percent and 19 percent, respectively. But program
assistance was not significant until 1987, when the government embarked on
more fundamental economic reforms. Since 1985, a substantial part of the flows
from the DAC countries have had almost 100 percent grant element and
therefore are of considerable benefit to Mauritania's economic development.

Niger
Like Mauritania, Niger is one of the typical Sahelian economies in the West
African subregion. It has probably been more affected by the drought of the
early 1970s and 1980s than any other country in West Africa. It is poor in spite
of the discovery and exploitation of uranium. Niger's economy is highly
dualistic. The modern sector, which operates within an established legal frame-
work, exists next to an informal sector composed of a multitude of small
establishments that often have no legal accountability. In 1988, the modern
sector supplied 27 percent of GDP, yet it employs just 3 percent of the labor
force.22 The modern sector is composed primarily of governmental administra-
tion, mining, transport, and commerce, which contributed 45, 22, 13, and 12
percent of modern-sector activity, respectively, in 1988.
Niger's economic policies have been biased in favor of primary activities
(agriculture, livestock rearing, and mining) and in favor of import-substitution
rather than export-promotion activities.23 A five-year development plan estab-
lished in 1979 had the following major goals: (1) self-sufficiency in food
production; (2) the development of a basic infrastructure; (3) the improvement
of social services; and (4) the expansion of the mining operation. Niger's
1987-91 five-year plan essentially continues the same goals but places more
emphasis on agriculture and the extension of irrigation and less on mining to
reflect the downturn in the world prospects for uranium.
Uranium brought hefty budget surpluses at end of the 1970s but these gave
way to deficits as uranium sales fell away at the very time the economy was
geared to investing more and trying to cope with the droughts of the early 1980s.
Foreign Aid in West Africa 53

A drop in uranium revenues from 1980 onward caused the budgets to move
progressively from surplus to deficit. At the same time, the trade gap soared
from less than US$17.6 million in the late 1970s to nearly US$1.1 billion in
1983 as a result of the rapid increase in the imports of investment goods and
petroleum as well as declining uranium revenues. Thus, under these circum-
stances, the need for foreign financial assistance in Niger cannot be over
emphasized. However, compared with Mauritania, Niger has not been a large
recipient of foreign aid.
The dominant sources of bilateral aid are France, Germany, Japan, the United
States, Canada, and Itqjy. From 1979 to 1981, French aid to Niger increased
substantially, rising to a record level of US$88.1 million in 1981 from US$40.4
million in 1979. The aid flow more than doubled during those three years. The
country has in no doubt been viewed with considerable interest by France
because of its large deposits of uranium. Also, Niger's strategic position has
further enhanced its position in the competition for aid from France. It is
strategically placed, astride the frontier between Arabo-Berber and Black West
Africa. Furthermore, Niger, unlike many other West African francophone states
had hitherto enjoyed a measure of political stability.
Although Germany has been an important donor, it is evident that its flows
to Niger has decreased since the end of the 1980s as illustrated in Table 3.13,
suggesting the disillusionment of the German government on the relevance of
aid flow to the country's development. But this view could hardly be sustained
in light of the harsh economic conditions in Niger, especially during the second
half of the 1980s.
In 1985, the flow from the United States attained an all-time high of US$84
million. This appeared to be a prompt response to the emergency needs of Niger
as a result of the drought of 1981/82, which again reemerged in 1984/85. The
droughts devastated substantial food and cash crops and therefore threatened
the economic survival of Niger. A substantial part of the windfall was directed
at solving the problems generated by the droughts. However, thereafter the flow
from the United States declined precipitously, amounting to only US$19 million
in 1988.
In 1987, the flow from Japan reached a record level of US$84.6 million. The
Japanese massive inflow was in no doubt a reaction to the persistent economic
deterioration of Niger and the acknowledgment of the suitability of the meas-
ures adopted by the government to solve the economic problems. Such magni-
tude of aid was what Niger essentially needed at this time, since tied aid would
have been less useful. However, this turned out not to be the case. In the
following year, the flow from Japan declined to US$41.8 million, thus putting
many of the initial projects in jeopardy.
Since the mid-1980s, the flows of the ODF to social and administrative
infrastructures has increased significantly. It rose from 13 percent in 1985 to 25
percent in 1986, but fell to 19 percent in 1988. At the height of the economic
54 Foreign Aid and Self-Reliance in West Africa

Table 3.13
Niger: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills.. Current Prices and Exchange Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA . . . . . . . .
AUSTRIA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
BELGUIM 6.6 10.1 12.2 3.5 5.9 4.9 4.9 5.7
CANADA 2.5 3.7 3.6 6.0 16.2 17.2 28.4 14.5

DENMARK 0.3 0.2 2.1 1.3 0.7 2.7 . 13.0

FINLAND . _ . 0.3 0.1 0.1 . 0.0


FRANCE 40.4 55.4 88.1 48.4 44.7 47.5 62.1 21.9

GERMANY (FED. 29.2 20.7 32.2 37.5 21.6 20.5 20.8 24.5
REP.)

IRELAND . . . . . . . .
ITALY 0.1 0.2 0.0 0.0 9.8 26.4 15.2 33.6

JAPAN 16.5 6.3 1.1 7.3 -1.0 3.8 84.6 41.8

NETHERLANDS 4.0 3.3 2.0 3.0 3.7 7.5 7.9 12.9

NEW ZEALAND . . . . . . . .
NORWAY 1.0 0.4 1.4 0.9 2.6 3.2 1.7 2.4
SWEDEN 0.1 _ . -0.3 . -0.4 -0.2 -0.2
SWITZERLAND 1.2 1.5 2.0 2.8 3.5 5.4 5.2 7.3
UNITED 2.0 0.1 0.1 0.1 -1.2 -1.7 -1.6 -2.2
KINGDOM
UNITED STATES 16.0 9.0 10.0 21.0 84.0 33.0 41.0 19.0

TOTAL 119.8 111.0 154.6 131.9 190.7 170.0 270.0 194.2

MULTILATERAL 1 74.3 81.5 67.1 44.6 96.2 118.4 127.6 117.5

OPEC COUNTRIES 0.6 1.7 27.8 j 84.8 . _ . .


EEC + MEMBERS 112.7 101.5 151.0 107.7 112.7 133.6 126.6 129.8

| TOTAL 194.7 194.2 249.6 261.2 288.3 295.6 406.1 315.3

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 162.

crisis in 1985, the flows into technical cooperation amounted to 30 percent of


total ODF inflow. But this declined to 19 percent in 1988 as aid was diverted
to more pressing issues. This was aptly explained in the rising allocation to
program assistance, the basic development projects that came up in the wake
of Niger's economic reforms. The commitments to production fell to 17 percent
in 1987 from 23 percent in 1985, but rose slightly to 22 percent in 1988.
Foreign Aid in West Africa 55

However, there was no doubt that this was one of the principal areas where
foreign aid should be directed in order to ensure the rejuvenation of the
economy. Agricultural production was adversely affected by drought. The
government at the time needed to increase the few processing industries and
embark more aggressively on import-substitution industrialization in order to
reduce the import of consumption goods and save foreign exchange. Thus, while
welcoming the assistance of»France, the government could benefit significantly
from strengthening cordial relations with Canada and Japan.

Nigeria
Nigeria, unlike Niger, is one of the more developed countries in the West
African subregion. The economy was buoyant in the 1970s as a result of the oil
boom. But beginning from 1980, the economy began to run into crisis. The
principal factor that set this in motion was the decline in the price of petroleum.
In 1979, the price of petroleum was US$40 per barrel, this fell to US$30 per
barrel in 1980. This, in effect, reduced the foreign exchange earning of the
government and therefore reduced its capacity to support internal development
efforts, especially in the industrial and agricultural sectors. It led to the reduction
of output in both sectors. Unemployment increased with the underutilization of
industrial capacity. Also, the rate of inflation increased with the reduction in
industrial output and limitations on the import of consumption goods. Further-
more, by the mid-1980s, external debt rose to a record level of US$19 billion
with a higher level of debt burden. All of these events demonstrated that the
country requires additional external financial support in order to reverse the
trend in the recession and promote sustainable growth.
Traditionally, the federal government has not emphasized or encouraged the
inflow of foreign aid as a basic requirement for the economic growth and
development of the country. This derived fundamentally from the ideological
orientation of the federal government and the assumed well-being of the country
as perceived in the oil boom. Thus, up to the 1970s, as far as foreign assistance
concerned, the government emphasized technical assistance that was deemed
necessary to provide skilled manpower in several special areas where there were
shortages in the economy. It was for this reason that the flow of aid, even at the
bilateral level, was very sporadic in the 1980s.
During this period, the Japanese were more consistent in their aid disburse-
ments to Nigeria as indicated in Table 3.14. Thus, Japanese aid increased almost
in response to national economic needs as from 1982. It became more signifi-
cant as the federal government embarked on structural adjustment programs to
arrest economic recession and promote economic growth. The attitude of the
French government was very positive to the Nigerian federal government during
this period, with two remarkable flows of US$119.6 million and US$527
million in 1985 and 1987, respectively. But these were subsequently followed
56 Foreign Aid and Self-Reliance in West Africa

Table 3.14
Nigeria: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUTRALIA 0.3 0.3 0.2 0.2 0.4 0.3 0.3 0.7
AUSTRIA 0.8 0.5 6.8 0.3 -12.8 -22.0 -32.6 -32.6
BELGIUM 0.5 0.5 0.3 0.3 -20.1 -18.7 2.1 2.2
CANADA 0.7 0.3 0.8 1.3 1.4 0.6 1.2 2.6
DENMARK 0.1 0.4 21.9 5.8 11.3 -8.9 -13.2 -11.2

FINLAND 0.1 0.1 0.1 0.1 0.0 0.1 0.1 0.2


FRANCE 3.2 37.1 4.1 4.0 119.6 -81.3 527.0 -374.6

GERMANY (FED. 7.6 20.8 12.3 60.3 -60.5 -84.6 190.6 285.9
REP.)

IRELAND . . . 0.0 0.1 0.0 0.0


ITALY 0.3 6.1 1.7 8.9 -29.6 -22.6 -68.6 24.3
JAPAN 1.5 0.3 0.0 3.7 35.2 129.0 358.1 66.8

NETHERLANDS 2.5 3.4 1.0 1.0 -39.8 -28.4 16.6 -67.6

NEW ZEALAND . . _ . 0.0 . . 0.0

NORWAY 1.2 0.4 0.3 0.3 -3.7 -4.2 -4.7 -0.2

SWEDEN . 0.3 0.3 0.1 0.0 0.0 0.4 0.2


SWITZERLAND 0.0 _ . 0.1 0.0 0.0 . 0.0
UNITED 2.3 3.9 2.5 3.5 17.3 241.4 -199.6 -368.0
KINGDOM

UNITED STATES -3.0 -3.0 7.0 -3.0 -116.0 552.0 628.0 295.0

TOTAL 18.0 71.3 59.1 84.8 -97.3 652.9 1.406 -176.5

MULTILATERAL 49.1 64.4 72.4 141.0 255.6 474.3 296.3 78.9


OPEC COUNTRIES . . . 0.1 . . . .
EEC + MEMBERS 19.5 76.8 46.4 95.0 4.6 10.3 478.8 -513.9

TOTAL 67.1 135.7 131.4 225.9 -241.6 1.127 1702 -97.4

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 164.

by outflows from Nigeria to it: US$84.6 million in 1986 and US$374.6 million
in 1988, which could have been invested in Nigeria to facilitate the process of
recovery.
Germany also substantially increased its aid flows to Nigeria during this
decade: from US$7.6 million in 1979 to US$60.3 million in 1982, and to
US$190.6 million in 1987 and US$ 285.9 million in 1988. The major aid flow
Foreign Aid in West Africa 57

from the United Kingdom occurred in 1986, which amounted to US$241.4


million. Thereafter, this was followed by a reverse flow to it. However, the more
significant aid assistance in the second half of the 1980s came from the United
States. By 1986, this amounted to US$552 million and rising to US$628 million
in the following year. But it fell to US$295 million in 1988. Even with this, the
United States remained foremost in bilateral aid to Nigeria. It is also important
to note that the strenuous attempt by the military government to establish closer
links with the Organization for Islamic Conference (OIC), especially during the
second half of the 1980s, did not result in significant aid flows from the Arab
countries as envisaged by the government. In fact, from 1985 to 1988, when
Nigeria was in the throes of economic recession, these countries did not disburse
any aid to the country.
About 96 percent of the ODF flows to Nigeria in 1985 were directed at social
and administrative infrastructures. However, in the subsequent years, this
shifted to economic infrastructures, this accounted for 31, 79, and 31 percent,
respectively, in 1986, 1987, and 1988, respectively. Also, with the structural
adjustment program being implemented, beginning from 1986, program assis-
tance took a larger chunk, 51 percent. In 1988, it rose to 58 percent. Thus, it
was evident that there seemed to be some responses to the development needs
of Nigeria during the second half of the 1980s principally because the developed
countries had faith in the economic reforms of the federal government.

Senegal
In Senegal, the basis for foreign aid in the 1980s was reinforced as a result
of the drought that occurred in the subregion during this period. The drought
led to a substantial reduction in the output of agricultural products, both of food
and cash crops. In 1983 the government had to cope with a budgetary deficit of
US$ 1.6 billion. At the same time, its external debt at the end of 1983 amounted
to a huge sum of US$1.2 billion. Like Cote dTvoire, Senegal represents a major
recipient of foreign aid among the francophone West African countries.
Table 3.15 illustrates the pattern of bilateral aid flows to Senegal in the 1980s.
The preeminence of France is very obvious. France provided bilateral assistance
amounting to US$85.3 million or 55 percent and 62 percent of total bilateral
and in 1979 and 1982, respectively. Senegal enjoys special relations with France
which enables it to secure substantial part of its aid to Africa. Senegal's link
with France economically and culturally remains one of the strongest among
the francophone West African countries. The financial support that Senegal
receives from France goes a long way in facilitating its economic development
process. Canadian aid to Senegal increased significantly during the decade:
from US$13.7 million in 1979 to US$23.9 million in 1988. Similarly, aid from
Italy increased substantially during this period. The flows from Italy rose from
US$4.6 million in 1982 to a record level of US$50.2 million in 1988.
58 Foreign Aid and Self-Reliance in West Africa

Table 3.15
Senegal: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills., Current Prices and Exchange Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA _ . . 0.0 . . . _
AUSTRIA 0.1 0.2 0.4 0.5 0.3 0.6 0.7 1.4
BELGIUM 7.7 6.4 5.5 8.7 8.1 3.4 5.0 5.0
CANADA 13.7 6.4 13.3 15.2 13.8 17.1 25.5 23.9
DENMARK 0.0 . 0.4 6.4 0.1 12.7 9.6 3.0
FINLAND . 0.1 0.2 0.3 0.1 0.2 0.7 2.1
FRANCE 85.3 194.0 127.4 160.5 82.4 225.9 175.7 77.8
GERMANY (FED. 9.7 11.1 10.8 16.9 14.3 19.5 14.3 21.3
REP.)
IRELAND . _ . . . . .
ITALY -0.9 -1.2 1.2 4.6 18.6 31.2 48.5 50.2
JAPAN 3.4 4.6 8.2 5.9 9.9 12.7 23.8 35.0
NETHERLANDS 2.3 5.0 5.6 3.4 3.3 14.7 16.1 22.8
NEW ZEALAND . . . . . . . .
NORWAY 1.5 0.2 0.3 0.4 1.9 -10.7 -0.8 -2.3
SWEDEN . . . 0.2 . . . 0.7
SWITZERLAND 2.3 2.5 3.1 2.8 3.8 11.5 12.7 4.5
UNITED 2.1 0.5 0.6 0.9 1.1 4.9 1.7 1.7
KINGDOM
UNITED STATES 29.0 34.0 35.0 33.0 44.0 39.0 49.0 35.0
TOTAL 156.1 263.6 212.1 259.5 201.6 382.5 382.4 281.9
MULTILATERAL 168.1 105.2 152.6 90.2 63.9 222.7 242.1 168.9

OPEC COUNTRIES 1.4 2.1 56.7 11.4 . . . .


EEC + MEMBERS 214.5 239.7 211.8 245.8 134.4 374.9 341.5 242.9

TOTAL 325.7 370.9 421.4 361.2 311.8 638.8 654.6 474.5

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 182.

While the cold war prevailed, Senegal was one of the half-dozen African
countries with which the United States tried to ensure a special relationship for
political and strategic reasons. Its flow of bilateral assistance to Senegal rose
from US$29 million in 1979 to US$44 million in 1985, and to US$49 million
in 1987. But the flow of aid declined in 1988 to US$35 million. The Reagan
administration in effect ensured that the level of aid was sufficient to guarantee
Foreign Aid in West Africa 59

continuous benign relations with Senegal.24 However, it must be underscored


that this factor may not hold any longer. Since 1992 the cold war has effectively
ended. In the mean time, the Russian Federation, the successor to the Soviet
Union, is currently interested in Senegal's internal economic reforms and the
promotion of economic growth. Also, the United States' urge to strengthen its
strategic position in Africa has somewhat diminished.
Arab countries constitute important sources of bilateral assistance to Senegal.
In 1981, for example, Saudi Arabia gave US$25.5 million in aid. Of this sum
US$21.6 million was directed at the relief of Senegal's internal and external
debts. In the same year, the Saudis also provided another special sum of
US$ 19.0 million to assist in the implementation of the Organisation de Mise en
Valeur du fleuve Senegal (OMUS) project. In 1984, five projects in hydraulic,
roads, and industrial cultivation were executed by Saudi Arabia. Similarly,
Kuwait has been an important Arab aid donor to Senegal. The decisions of Saudi
Arabia and Kuwait to aid Senegal essentially derived from the assumption that
Senegal, an important Islamic country, represents a moderate country to counter
the influence of Libya and the Polisario Front, and with views on the Palestinian
problem not diametrically opposed to those of Saudi Arabia.
Technical cooperation occupies a prominent position in the overall bilateral
aid flow to Senegal. The French workers in Senegal in 1984 were estimated to
be 1,280. About 90 percent of these were paid for by France while the remaining
10 percent were catered for by Senegal. Besides, about 600 French nationals
worked in 1984 in Senegal for scientific or technical organizations such as the
Volunteers for Progress.25
In the early 1980s, most of the U.S. aid assistance to Senegal went to rural
development, particularly to the rivers Senegal, Siloum, and Casamanie, which
offer important potential for the development of irrigation schemes. Part of the
aid from Germany, in 1981 and 1982, went to the OMUS scheme to construct
a dam at Manatali. Canada's aid to Senegal during this period also assisted this
project and the project on an Inter-African telecommunications network. With
this assistance Senegal was able to complete its part of the project in 1982.
In 1985, technical cooperation represented a significant part of the commit-
ment of the ODF. It accounted for 37 percent of its total flow to Senegal.
However, this declined to 18 percent in 1987, but rose slightly to 20 percent in
the following year. It was a trend that needed to be reversed if Senegal were to
solve the problem of shortage of experts, which has been a major constraint to
rapid economic development. On the other hand, the ODF made a major
commitment to program assistance from 14 percent in 1985 to 28 percent in
1987. But it declined slightly to 24 percent in 1988. Flows have basically been
directed to major projects emanating from the economic reforms that the
Senegalese government embarked upon since 1985. Albeit, more support is
required in this area if the economic reforms are to be successfully implemented.
As it is, the Senegalese government has a number of projects that could lead to
60 Foreign Aid and Self-Reliance in West Africa

the creation of more employment opportunities. In this context, it would seem


that donors acknowledged that the inflationary and unemployment problems
could be realistically and effectively tackled through increased production.
Thus, bilateral assistance represents the major part of the foreign assistance
to Senegal. It increased significantly in the 1980s unlike in many francophone
West African countries. France, the United States, Italy, Japan, Canada, and
Saudi Arabia represent important bilateral donors whose support would count
significantly in the promotion of sustained economic growth in Senegal.

Sierra Leone
Sierra Leone has not been a highly favored recipient of foreign financial
assistance in spite of its weak economic position and the impact of economic
recession. Sierra Leone's economy has been in serious crisis since the mid-
1970s. The closure of iron ore mines, a major foreign exchange earner, caused
severe strain on the poor economy. The high food import bill that followed only
worsened the situation. The economy did not get better because of excessive
public spending, and it became aggravated in 1980 when the government hosted
the Summit of the Heads of State and Government of the Organization of
African Unity. Thus, the necessity for foreign financial assistance was accen-
tuated by the combination of these factors.
However, as may be observed from Table 3.16, total bilateral flows from the
DAC countries rose from US$27.5 million in 1979 to US$57.2 million in 1982,
but fell to US$22.1 million in 1985. It rose to US$73.2 million in 1987 but fell
again to US$64.1 million in 1988. The principal bilateral donors were Germany
and the United States. The decline after 1986 may be partly attributed to the
ascendancy of the military regime of Major General Joseph Momoh on January
26, 1986, as military regimes have already proved incapable of dealing with the
economic development problems in other countries of the subregion, particu-
larly as illustrated in the case of Nigeria. The aid flows from the United
Kingdom, Japan, and Canada have not been substantial when viewed against
their flows to other West African countries. Nevertheless, the OPEC countries
have been very valuable as far as bilateral aid was concerned during this period,
with a disbursement of US$0.2 million in 1985, US$5.8 million in 1986 and
US$10.1 million in 1988, respectively.
Between 1977 and 1979, a significant part of the aid from Germany went to
a wide range of projects, notably, the rural section of the Freetown to Waterloo
road, rice production, the timber industry, and the Freetown-Monrovia road.
The US$2.1 million that it provided in 1982 was directed at the expansion of
the Forest Industries Corporation located at Kenema. In the same year, the
United Kingdom's assistance was essentially utilized for the building of accom-
modation for 100 students at the Njala University College. In the same vein,
Foreign Aid in West Africa 61

Table 3.16
Sierra Leone: Official Net Receipts from DAC Countries, Multilateral
Organizations, and OPEC, 1979-1988
USSMills., Current Prices and Exchanj?e Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA 0.0 0.0 0.0 0.7 0.0 4.1 5.0 -2.7
AUSTRIA 0.1 0.0 . 0.0 0.0 0.0 0.0 0.0

BELGIUM 0.0 2.5 0.6 0.5 . 0.1 2.3 2.3

CANADA 0.3 0.3 0.6 0.7 0.9 0.5 0.3 0.2

DENMARK 0.5 2.4 0.3 0.9 0.1 6.2 6.9 1.3


FINLAND 0.0 0.1 0.0 0.0 . 0.0 0.0 .
FRANCE -0.2 5.0 3.4 2.2 0.5 1.3 5.3 5.7

GERMANY (FED. 5.2 16.2 12.4 16.3 8.5 8.2 20.5 20.4
REP.)

IRELAND . . . . 0.1 0.1 0.1 0.1

ITALY 0.0 0.0 2.5 11.0 0.1 11.0 9.4 15.6

JAPAN 0.2 18.0 3.0 10.1 2.2 3.9 3.4 4.0

NETHERLANDS 11.6 4.4 1.8 1.5 1.4 2.1 0.9 1.7

NEW ZEALAND 0.0 0.1 0.0 . . . 0.0


NORWAY . 0.0 . 0.6 0.1 -0.4 0.5 0.5

SWEDEN 0.3 0.4 0.1 0.2 . .


SWITZERLAND 0.0 . . 0.0 0.1 0.0 . 0.0

UNITED 4.5 5.0 5.3 5.4 -1.9 5.0 7.6 6.0


KINGDOM
UNITED STATES 5.0 9.0 6.0 7.0 10.0 12.0 11.0 9.0
TOTAL 27.5 63.4 36.1 57.2 22.1 54.0 73.2 64.1

MULTILATERAL 23.2 33.1 27.6 26.5 34.8 27.1 20.9 35.7

OPEC COUNTRIES 4.0 6.3 1.0 0.3 . . . .


EEC + MEMBERS 24.6 43.3 37.4 44.3 17.0 39.8 57.7 70.0
TOTAL 54.7 102.9 64.6 83.9 57.1 86.9 97.8 109.9

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 186.

the United States provided US$1 million, which was used for research into
agricultural extension work at the university.
Since 1985, a major part of the ODF commitments to Sierra Leone has been
to technical cooperation. This accounted for 10 percent of its total flow in that
year. It rose to 65 percent in the following year, but declined to 55 percent in
1988. The commitments to social and administrative infrastructures also in-
62 Foreign Aid and Self-Reliance in West Africa

creased: from 5 percent in 1985 to 34 percent in 1987, but declining to 17


percent in 1988. A large chunk, 64 percent, also went to debt reorganization in
1985. It declined to 4 percent in 1986 but rose again the following year to 21
percent. Furthermore, as the country continued to experience decline in food
production, food aid increased to meet local demands. In 1985, food aid
accounted for 6 percent of the total ODF commitments. This rose to 22 percent
in 1986 but declined to 14 percent in 1987, and rose slightly to 16 percent in
1988. The contributions toward program assistance by the ODF was not very
significant in the second half of the 1980s. Furthermore, flows into the produc-
tion sector were negligible, indicating that the DAC countries have not endorsed
the reform programs of President Momoh. However, without well-articulated
projects, adequately supported by external funds or major increases secured in
the productive sectors, it is difficult to see how Sierra Leone could emerge from
the dept of recession in which it is neck deep.
The DAC countries aside, it is important to underscore that China has also
been a vital bilateral donor to Sierra Leone. China assisted in the completion
of the sugar plantation and cane mill in the Tonkolili District. The mill has the
capacity to produce both granulated sugar for the local market and molasses-
based alcohol for industrial use. China has further established thirteen experi-
mental agricultural stations in various locations in Sierra Leone. The aim here
was to educate farmers on better techniques of rice and vegetable cultivation.
The Chinese gave further assistance to the construction of the Kambia bridge,
which links Sierra Leone with Guinea, the latter being part of the Trans-African
Highway system proposed by the UNECA in the early 1960s.
Thus, the decline in output and the low inflow of bilateral assistance to Sierra
Leone have been major blows to the government's efforts to ensure rapid
economic recovery. Sierra Leone's prospects for increased bilateral assistance
could be enhanced with the consolidation of relations with Germany, the United
States, Italy, Japan, and the United Kingdom.

Togo
The flow of foreign aid to Togo has on the whole been modest like many
other West African countries, although the need for it was heightened by the
downward trend in its economy in the 1980s. Traditionally, Togo's economy
has thrived on the smuggling of manufactured goods into neighboring countries.
About half of all export earnings are provided by phosphates. Its foreign debts
grew rapidly from the mid-1970s and reached US$1.51 billion in January 1989.
Agricultural output, which rose fast in the 1960s, stagnated in the 1970s and
declined in the early 1980s partly because of drought. In particular, cocoa output
dropped to 9,000 tons in 1982/83 in a drought year compared with a peak
production of 28,000 tons in 1971. Coffee production also suffered the same
fate in 1984, an output of US$5.9 million as against US$11.8 million in 1979.
Foreign Aid in West Africa 63

Table 3.17
Togo: Official Net Receipts from DAC Countries, Multilateral Organizations,
and OPEC, 1979-1988
USSMills., Current Prices and Exchanges Rates

DAC COUNTRIES 1979 1980 1981 1982 1985 1986 1987 1988
AUSTRALIA . . . . . . . .
AUSTRIA 0.0 0.0 0.0 0.0 -1.1 -1.5 0.0 0.0
BELGIUM 1.1 4.3 3.5 8.3 1.8 -9.4 -2.7 -3.3
CANADA 8.0 - 0.6 0.3 0.3 8.6 5.2 1.3 2.0
DENMARK 8.9 8.3 0.4 0.2 0.9 1.6 8.4 5.2
FINLAND . 0.0 . . . .
FRANCE 31.3 78.1 29.4 43.9 4.6 9.9 17.0 90.1
GERMANY (FED. 32.6 19.9 12.3 23.2 11.7 13.7 24.7 24.6
REP.)
IRELAND . . . . . . . _
ITALY 0.1 0.0 0.1 1.1 0.9 2.3 2.4 i.O
JAPAN 0.0 1.3 1.2 0.9 1.7 19.2 3.8 9.7
NETHERLANDS 0.9 0.5 0.5 0.7 0.8 1.3 2.0 0.7

NEW ZEALAND . . . . . . . _
NORWAY . . . 0.2 0.2 1.4 0.2 .
SWEDEN . . 0.1 0.1 . 0.3 . .
SWITZERLAND 7.3 2.3 0.2 0.3 0.3 0.3 0.5 0.4

UNITED 0.1 0.2 0.2 0.1 0.1 0.2 0.2 0.5


KINGDOM
UNITED STATES 6.0 3.0 4.0 7.0 8.0 10.0 12.0 7.0
TOTAL 96.2 118.5 52.1 86.4 38.6 53.4 69.6 137.7

MULTILATERAL 69.8 70.6 23.0 20.5 50.5 72.3 33.5 67.7

OPEC COUNTRIES . 0.0 0.5 3.8 . . . .


EEC + MEMBERS 101.9 131.3 52.9 80.8 28.2 32.7 52.0 125.1
TOTAL 166.1 189.2 75.6 110.7 98.2 133.6 105.6 203.9

Source: OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris: OECD, 1985/88),
p. 208.

The collapse of the world demand for phosphates in 1981 also significantly
reduced the foreign exchange earnings of Togo. In other words, with these
developments the economic recovery of the country may well hinge on the
inflow or the availability of foreign financial assistance.
However, as may be observed from Table 3.17, the trend in the inflow of
bilateral assistance was not particularly encouraging. Generally, the flows from
64 Foreign Aid and Self-Reliance in West Africa

the DAC countries have declined in 1980s. The pattern of decline in bilateral
aid has been a major reflection of reduced inflow from the two major donors,
France and Germany. In the case of France, there was a decline to US$4.6
million in 1985 from a height of US$78.1 million in 1980. It rose slightly to
US$ 17 million in 1987. But the massive rise to US$90 million gave a significant
boost to the overall bilateral aid flow from the DAC countries in 1988. As far
as the United States is concerned, its aid flows to the country rose significantly
during this period: from US$3 million in 1980 to US$12 million in 1987, but
declined to US$7 million in the following year. The bilateral assistance from
the Arab countries was significant in 1985, amounting to US$9.1 million. But
this declined substantially thereafter, falling to a low level of US$2.6 million in
1987.
Since 1985, ODF commitments have essentially concentrated on production.
In that year, that sector alone received 16 percent of total inflow in Togo.
Although this declined slightly in the following year, nevertheless, in 1987 it
rose to 56 percent. Another area of attraction was technical cooperation. This
consumed 9 percent of total ODF flows in 1985, rising to 40 percent in 1986,
but falling to 25 percent and 18 percent in 1987 and 1988, respectively.
Economic infrastructures also enjoyed a rising trend in receipts. From 1 percent
in 1985 to 10 percent in 1986 and 19 percent in 1988. Beyond this, however,
the DAC countries have also demonstrated remarkable interest in the economic
programs of Togo as is well illustrated in the program assistance. This rose from
1 percent in 1985 to 20 percent in 1986. Although it suffered a major decline
to 2 percent in 1987, it recovered to 49 percent in the following year.
Thus, Togo, unlike many other West African countries, experienced appre-
ciable decline in the inflow of foreign financial bilateral assistance in the 1980s.
This may have more to do with the political stability in the country. There was
an increase in the opposition to the rule of President Eyadema who has governed
the country autocratically since 1967. For example, in August 1985, a series of
bomb explosions rocked various key buildings in Lome in violent protest to his
continuity in power.26

MULTILATERAL AID
The contributions of multilateral organizations to economic development in
West Africa vary from one country to the other. These, to a large extent, depend
on several factors, such as the objectives of the organizations, the financial
capacity of the organizations, the economic policies and needs of West African
countries, as well as the political climate of each country at any given time.
From the mid-1970s to the early 1990s, all of these have been strong determi-
nants in the pattern of disbursements to West African countries by the World
Bank, the International Monetary Fund (IMF), and the International Develop-
ment Association (IDA), and the African Development Bank. In addition to
Foreign Aid in West Africa 65

these, the UNDP, an important global development organization of the United


Nations, has during this period made major contributions to the development
of West African countries.
To begin with, it is important to recall that the World Bank, established in
1994, is an institution whose major and best known activity involves the
financing of projects. The bank's ideas about influencing the general economic
policies of developing countries and its methods of doing so are, however, yet
to be properly defined. These have apparently not been formalized since they
were not envisaged in the bank's original statutes.
Furthermore, in addition to its project-lending policies, the World Bank has
also become concerned with the general economic policies of the countries to
which it lends money. In principle, the bank now approves both the project and
the country before it decides to make a loan available.
In the same vein, the IMF was established in 1944 and became operational
two years later. Its Articles of Agreement state that the fund's purposes are to
promote international monetary cooperation; to facilitate the expansion of
international trade and as a result contribute to the maintenance of high levels
of employment and income. The IMF will seek to promote exchange stability
and maintain orderly exchange arrangements. The IMF is to avoid competitive
depreciation of exchange rates. It will assist in the multilateralization of
payments and in the elimination of foreign exchange restrictions on current
transactions.
Since the early 1950s, the IMF has made it abundantly clear that the use of
its resources should be regarded as a means of meeting temporary balance of
payments difficulties through conditional short-term advances. Its concern with
members' domestic policies grew, particularly with those policies considered
likely to promote inflation, especially huge investments on social security
programs. More recently, the IMF has indicated that members wishing to make
drawings from the IMF or stand-by arrangements are to provide a letter of intent,
stating in some detail the policies it intends to adopt. In the case of a stand-by
arrangement, the member may make a drawing from the IMF only if the IMF
considers that it has complied with the conditions of the letter of intent.27
The World Bank and the IMF have always been complementary institutions.
But lending for broad improvements in economic policies has led their staffs to
interact more intensely in the last fifteen years in order to step up their
cooperation. The bank hopes to create a sounder basis for the success of the
specific projects it creates, while the fund tries to promote greater international
monetary stability. The interest rate on World Bank loans to developing coun-
tries changes every six months.
Unlike the World Bank and the IMF, the International Financial Corporation
(IFC) and IDA operate on a somewhat different principle. The IFC was
established in July 1956 to promote economic development in the less devel-
oped countries by encouraging the growth of private enterprises in them. Its
66 Foreign Aid and Self-Reliance in West Africa

three principal objectives are to provide risk capital for private enterprises,
encourage the development of local capital markets, and to stimulate the
international movement of private capital. The IFC attempts to achieve these in
two ways: by bringing together investment opportunities, private capital, and
experienced management, and more importantly, by itself investing in produc-
tive private enterprise when sufficient private capital is not available on reason-
able terms. It does this in association with private investors and without any
guarantee of repayment. The activities of the IFC are therefore, in many
respects, similar to those of an investment banker.
The IDA, established four years later, in 1960, aims at assisting in the
development of the poorest of the developing countries by providing investment
funds on easier terms than are generally available with the World Bank or the
IMF. IDA's assistance imposes far less burden on the balance of payments of
the recipient countries than conventional loans. Thus, the IDA was established
as a "soft" lending agency to meet the special needs of developing countries
with acute balance of payments problems.
In the 1960s, the IDA mainly financed infrastructure projects.28 However, the
poverty reduction strategy introduced in the 1970s expanded the range of
investments by placing more emphasis on programs that more directly benefit
the poor. During this decade, IDA greatly increased its support for agriculture,
rural development, and human resource development. Currently, about a quarter
of IDA lending supports structural adjustment reform programs. Successful
structural adjustment programs require four essential elements in the policy
frame of the IDA. First, the government must be committed to a well-designed
program of policy change. Second, the supporting public investment in infra-
structure must be undertaken without allowing government borrowing to crowd
out new private investment. Third, there must be access to the right amounts of
external assistance at the right time. And, fourth, government financing for
programs that are essential to the country's longer-term development must be
protected.
At the regional level, the agreement establishing the African Development
Bank was adopted and opened for signature by a Conference of African Finance
Ministers held in Khartoum, Sudan on August 4,1963. On September 10, 1964,
the agreement came into force when twenty member countries subscribed 65
percent of the capital stock. The main objectives of the bank include: (1)
contribution to the economic development and social progress of regional
members, individually and jointly; (2) the utility of resources at its disposal for
the financing of investment projects and programs, giving priority to projects
that concern several member countries; (3) the mobilization of resources
through cofinancing with bilateral and multilateral development agencies; (4)
the promotion of international dialogue and understanding on development
issues concerning Africa; (5) the promotion of government and private invest-
ment in Africa through policy reforms; and (6) the provision of technical
Foreign Aid in West Africa 67

assistance as may be needed in Africa for the selection, study, and preparation
of development projects. As of December 31, 1993, the ADB had seventy-five
member countries composed of fifty-one independent African countries (re-
gional), twenty-four non-African countries (nonregional) excluding the states
that formed the former Yugoslavia, which was a member of the bank.29 The
other components of the ADB group are the African Development Fund (ADF)
and the Nigerian Trust Fund (NTF).
In the context of the ADB charter, all regional member countries are equally
eligible for development financing from the bank's resources. However, taking
into account the levels of resource endowment and economic development of
the various potential beneficiary countries, the bank has singled out the poorest
countries as the main target for the allocation of its concessional funds, notably
the ADF and NTF. Eligibility for ADF and NTF loans is restricted to regional
countries with GNP per capita of not more than US$990. However, eligibility
for NTF loans is further subject to case-by-case approval of the Federal
government of Nigeria.
Thus, it is against this background of institutional policies that the pattern of
multilateral aid flows to West Africa could be understood. There are already
laid down macroeconomic and microeconomic conditions of flows that these
institutions should follow. These conditions are designed to achieve several
objectives, such as harmonious growth of the world economy, the survival of
the institutions themselves or the interests of the key members of these institu-
tions. As far as the World Bank and the IMF are concerned, there is need for
adequate and appropriate economic policies in the recipient countries to justify
and guarantee the inflow of funds. It therefore follows that the extent of flows
to West African countries may ultimately depend on the extent to which the
governments could accept wholly or in part the conditions laid down by these
institutions. However, it remains to be seen if national political and economic
interests could be placed before global interests in the efforts to secure increased
financial inflows. Let us now examine the multilateral flows to a number of
West African countries.
Table 3.18 illustrates the overall pattern of multilateral ODA flows to West
Africa from 1980 to 1989. Although there appears to be a rise in the volume of
multilateral flow to the subregion during this period, nevertheless its share of
overall flow to Africa somewhat slightly diminished. From 28.7 percent in 1980
to 26.0 percent in 1985 and to 27.0 percent in 1989. This suggests that there are
growing tendencies for multilateral donors to divert aid to other regions in Africa
and elsewhere. The volume of multilateral aid to West Africa declined during
the first half of the 1980s. Some countries have benefited more while a number
of others did not. It would seem the preference of multilateral donors depends
on a number of circumstances that are best explained in the political and
socioeconomic context of the recipient West African countries. For example,
Table 3.18
Net ODA from Multilateral Donors to West Africa, 1980-1989

USSMills., Current Prices and Exchange Rates

COUNTRY 1 1980 1981 1982 1983 1984 1985 ' 1986 1987 1988 1989

BENIN 53 35 40 43 ! 38 45 1 63 60 67 HI

BURKINA FASO 61 59 62 55 54 72 98 78 77 73

1 CAPE VERDE 24 14 11 14 23 27 32 24 26 26

COTED'IVOIRE 58 32 35 15 14 14 49 33 213 153

GAMBIA 31 28 21 20 20 18 43 49 29 38

|GHANA 59 44 73 54 125 113 247 247 225 201

GUINEA 57 51 35 42 51 57 73 82 89 139

1 GUINEA-BISSAU 24 24 27 26 22 31 27 54 45 46

LIBERIA 29 20 22 30 26 26 28 27 17 21

JMALI 103 90 74 86 88 102 128 136 162 152

1 MAURITANIA 36 50 49 58 57 49 57 73 77 88

] NIGER 64 51 44 50 52 96 118 130 124 95

1 NIGERIA 18 24 20 19 18 16 20 18 23 36

j SENEGAL 79 129 80 62 64 60 218 252 177 103

I SIERRA LEONE 30 26 26 30 25 35 30 21 40 29

TOGO 39 26 23 60 55 52 75 37 73 76

TOTAL WEST 765 703 642 664 732 813 1,306 1,321 1,464 1,387
AFRICA

j TOTAL AFRICA 2.668 2.712 2.604 2,610 2.727 3.116 3.718 4.172 4.605 5,131

Source: UNDPAVorld Bank, African Development Indicators (Washington, D C : UNDPAVorld Bank, 1992), p. 297.
Foreign Aid in West Africa 69

while the flows to Benin and Togo increased appreciably, the flows to Cape
Verde, Liberia, and Nigeria were essentially stagnant.

Benin
The failure of Benin to secure sufficient bilateral aid in the 1980s naturally
compelled it to seek external aid from multilateral sources in order to cope with
the disturbing problems of its economic recession. The problems in the social
and public sectors have compounded those of the private sector; the injection
of foreign assistance was indispensable if solutions were to be found to the
negative effects of these problem on human security in the short and medium
term. However, while the government considered the loan policies of the
International Bank for Reconstruction and Development (IBRD) and the IMF
worthwhile, it does see the entire package as satisfactory in the long-term
interest of the country. In 1979, multilateral aid to the country stood at US$36.9
million, but this rose to US$45 million in 1985 and US$67 million in 1988 as
illustrated in Table 3.18. The government convened a Donors Conference in
Cotonou in March 1983 with the aim of sensitizing donors to the areas of critical
demands for multilateral assistance. In the Development Plan for the period
1983-87, the total cost for development was estimated at US$1,800 million. It
was expected that external sources would provide US$900 million while the
remaining would be raised internally. In effect, the government counted on 50
percent of the cost of development to come in the form of external financial
assistance. But donors at the conference seemed to have their reservations on
the plan. There were pledges amounting to only one-third of this sum by the
ADB and the OPEC Development Fund. Along with them, pledges were made
by Belgium, France, and Japan. Other potential donors were reluctant to make
pledges because of fears that Benin might not be able to pay back given the fact
that its economic recession and development problems then, in spite of strenu-
ous efforts by the government, have defied solutions.
Since 1985, the major sources of multilateral assistance to Benin have been
the IDA, EU, and the African Development Fund. In addition to these, the
UNDP also played a prominent role in the disbursement of multilateral assis-
tance to Benin. IDA flows amounted to US$18.7 million or 36 percent of total
multilateral flows in 1985. It rose to US$26.5 million or 61.1 percent in 1986,
but dropped to US$21 million or 22 percent in 1988. The flow from the EU,
although initially less than that of the IDA, rose substantially during the second
half of the 1980s: from US$5.1 million in 1985 to US$11.8 million in 1987 and
to a record level of US$28.3 million in the following year. Similarly, flow from
the African Development Fund rose from US$3.6 million in 1985 to US$10.4
million in 1986, but thereafter declined to US$5.1 million in 1988. On the
contrary, however, the UNDP apparently maintained an average of US$5.5
million per year during this period. Thus, it has been difficult for many
70 Foreign Aid and Self-Reliance in West Africa

multilateral agencies to increase their aid flows substantially while there were
uncertainties about the prospects for rapid recovery and economic growth. The
difficulties of the government were further highlighted in 1988 when it was
unable to pay the salaries of its teachers and its civil servants in January 1989.
This resulted in strikes that developed into violent incidents where the govern-
ment had to call in the paratroops to restore order. While these strikes prevailed,
the IMF itself could not see how financial assistance could be effectively applied
to the country's economic ailments. It was therefore not until late in 1989, when
the government outlined acceptable austerity measures, that the IMF approved
of financial flows to Benin. The government of Benin, among other things,
restructured two ailing main banks in the country, the Banque Commerciale du
Benin (BCB) and the Banque Beninoise pour le Development, which were crisis
ridden. Consequently, in June 1989, the IMF approved a three-year structural
adjustment facility of US$18.3 million for disbursement to Benin. Thus,
Benin's economic performance remains the highest consideration by multilat-
eral donors for the granting of financial assistance. When this is right Benin can
count on major steady flows from the IDA and the IMF.

Burkina Faso
Unlike Benin, Burkina Faso has not attracted substantial foreign financial
assistance. However, multilateral aid has by and large constituted only a small
proportion of total inflow. Total multilateral aid inflows amounted to US$65.8
million to the country in 1979. This declined to US$62 million in 1982, but rose
to US$98 million in 1986. Thereafter, this declined to US$77 million in 1988
and further to US$73 million in the following year.
The World Bank was a major source of multilateral aid in 1980. Its affiliate,
the IDA, made low-cost loans of US$ 17 million for the Bougouriba agricultural
project, US$6.5 million for irrigated rice at Niena, and US$14.5 million for
reforestation.30 Since 1985, the major multilateral donors have been the IDA,
EU, and the UNDP. Receipts from the IDA amounted to US$20.8 million. This
rose to US$31.3 million in 1986, but thereafter declined, falling to US$19.0
million in 1988. In the case of the EU, there was a decline to US$8.1 million
in 1986 from US$14.8 million in 1985. By 1987 and 1988, it rose to US$14.5
million and US$22.9 million, respectively. The flows from the UNDP amounted
to US$7.8 million in 1985, but the average flow for the following three years
was US$ 11.4 million. It also has to be mentioned that Burkina Faso has to some
extent benefited from the flows from the African Development Fund. The
receipts from it amounted to US$5.5 million in 1985. The flows rose to US$ 12 2
million in the following year but fell drastically to US$4.5 million in 1987.
However, it rose again to US$7.7 million in 1988.
Thus, it is evident that Burkina Faso has since the mid-1980s received a
substantial sum of money from the major multilateral donors. All these have
Foreign Aid in West Africa 71

been vital to the economy in view of the reforms undertaken by the government
to promote economic growth. The country will in the foreseeable future
continue to require steady inflow from these institutions for sustainable eco-
nomic growth and development. However, in order to ensure this, the Burkina
Faso government will, as matter of priority, pay increased attention to its
absorptive capacity. The structures to make concessional external financial
assistance viable must be fully established and maintained in order to ensure
the cooperation of the multilateral institutions.

Cape Verde
In the early 1980s, Cape Verde attempted through its foreign policy to
maximize the inflow of foreign aid in order to provide enough food for the
rapidly growing population and sustain an impressive economic development
program. For example, the 1982-85 Plan projected an investment amounting
to 26 billion CV escudos (US$520 million), a sum three times more than that
of the 1978-81 plan. However, as may be noted from Table 3.18, Cape Verde
did not, in the 1980s, benefit from the growth of multilateral aid to West Africa.
Its receipt plummeted to US$14 million in 1983 from US$24 million in 1980.
In 1987, it attained its 1980 level and slightly rose to US$26 million in 1988
and 1989.
The major response came essentially from the EU. Between 1981 and 1986,
the EU through the European Development Fund provided the sum of US$24
million (EUA17 million). The largest project that received attention during this
period was the water distribution and sanitation scheme for the capital city,
Praia. This consumed a total of EUA7.5 million. The remaining sum was spent
on the improvement of works at the international airport on Sal and the soil and
water resources for agriculture in the Joan Varela region. In 1983, the EU and
Kuwait financed the project to improve water and sanitation services in Pria and
a telecommunication project costing US$11.5 million.31
The precariousness of the islands' economy and their dependence on inter-
national food aid encouraged the government to adopt a highly pragmatic
approach to foreign policy. Cape Verde is strategically located astride Atlantic
shipping lanes. The government of Cape Verde has generally been more inclined
to the development of ties with the West. Hence, it signed the Lome Convention
and formally acceded to the African, Caribbean, and Pacific (ACP) group in
November 1987. The Cape Verde government participates as an observer in the
Franco-African Summits. This was covertly encouraged by the former President
Valery Giscard d'Estaing for strategic reasons. Also, the government allowed
South African Airways to maintain landing rights at the international airport on
the Island of Sal to ensure regular revenue. However, with the termination of
the cold war the strategic importance of the islands has diminished as decoys
for foreign financial assistance. But then, there can be no doubt about the needs
72 Foreign Aid and Self-Reliance in West Africa

of Cape Verde for more multilateral aid for the development of its weak
infrastructures. While the EU assistance is encouraged, the government should
endeavor to secure the cooperation of the IDA and ADB.

Cote d'lvoire
Cote dTvoire enjoys substantial inflow of multilateral aid for its development
when compared with the inflow to other francophone West African countries
as may be noted in Table 3.18. The major sources of multilateral assistance to
Cote dTvoire are the IBRD, EU, and the ADF. For example, the flows from the
IBRD amounted to 75 percent of total multilateral aid flows in 1985 and 78
percent in 1987. The increase in the aid from the EU has been more phenomenal.
By 1988, it had virtually replaced the World Bank as the principal multilateral
donor to Cote dTvoire. There was also an increase in the inflow from the African
Development Fund. The financial flows from it rose from a mere US$0.3
million in 1985 to US$18.4 million in 1986 and to US$104.7 million in 1988.
Cote dTvoire's rapid economic growth since 1960 has required significant
contributions of capital, managerial, and technical expertise and labor from
abroad. Economic growth has again been further aided by the windfall earnings
from coffee and cocoa, especially in 1976 and 1977. However, there has been
growth reversal since 1980, which resulted in rapid deterioration in the standard
of living of the people. The Houphouet-Boigny government did, however,
promptly responded to this development. By 1981, it embarked on some forms
of structural reforms that included the reduction of wages, cuts in public
expenditure, and privatization. The subsequent consolidation of these reforms
by the government was seen as a prerequisite for economic recovery and growth
by France and other developed countries. Hence, there has been a sustenance
of the flow of multilateral assistance. Besides, the comparatively stable govern-
ment in Cote dTvoire was an encouragement for the inflow of multilateral aid
to it.

Gambia
Multilateral assistance to Gambia has on the whole been on a small scale
during the period under study. The major multilateral sources of aid to Gambia
are the EU, ADF, IDA, and the UNDP. Since 1985, the ADF has been a leading
source. For example, in 1986 and 1987, it accounted for 21.3 and 37 percent of
total multilateral aid to Gambia. During both years, the aid from the IDA was
also very significant, accounting for 32.5 and 28.8 percent, respectively. When
compared with bilateral inflow, multilateral aid accounts for a significant
proportion of total flows into Gambia. In 1979, multilateral aid represented 52
percent of the total inflow. It fell slightly to 47 percent in 1981, but rose to 48
Foreign Aid in West Africa 73

percent in 1987. The political and economic importance of Gambia will need
to be brought to the fore if multilateral aid is to increase in the future.
Generally, investment under the First Development Plan (1975/6-1980/81)
was channeled into basic economic social infrastructure (transport and commu-
nications, public utilities, schools, agricultural extension stations, health clinics,
etc.). Gambia initially relied on highly concessional foreign loans and grants to
finance about 70 to 75 percent of its investment programs under the First
Development Plan. The remainder was financed from its current budgetary
surplus and from domestic borrowing.
The World Bank criticized the public investment program implemented under
the First Development Plan for contributing to Gambia's economic deteriora-
tion in the early 1980s because of its low rate of return on investment.32
However, with the drought and the deterioration in the terms of trade severely
reducing real GDP growth over the two-year period 1979/80 to 1980/81, and
export-earnings growth during the three years from 1979/80 to 1981/82, the
World Bank allowed the inflow of financial assistance to the country. The IMF
followed the World Bank with loans to it from its Trust Fund and Compensatory
Financing Loan from 1979 to 1981. There were also further disbursements
under the standby program from 1981 to 1984.
It is significant to note that the growth of industry is hampered by the poor
infrastructure and the extremely small internal market. This, in a way, acts as a
major constraint to the inflow of multilateral assistance. Beyond this, the hopes
of increases in multilateral aid in the future are not bright, as tourism is not
adequately encouraged because the conservative muslims fear that this could
over time destroy their culture and accelerate the rate of crime.

Ghana
Ghana has since the early 1980s been a major recipient of multilateral
assistance from most international agencies and organizations. Total multilat-
eral flows to Ghana increased appreciably during the period considered in this
study. In 1975 the government negotiated US$13.6 million for the cultivation
of rice and cotton, cocoa rehabilitation, and the provision of feeder roads with
the World Bank. It negotiated with the ADB US$3.8 million for the development
of the cotton industry. Furthermore, it sought US$5 million from the Arab Bank
for African Economic Development for the cocoa industry.33
By 1977, Ghana experienced an unprecedented shortage of food and essential
commodities. There was also considerable decline in foreign exchange earnings
as a result of the fall in demand for timber and cocoa. In response to these, the
EU under its STABEX arrangements granted US$0.63 million to compensate
for the shortfall in Ghana's timber earnings. In the same year, a further US$6.9
million from the EU funds was allocated for agricultural projects, road mod-
74 Foreign Aid and Self-Reliance in West Africa

ernization, energy development, manpower training, regional industrial pro-


jects, trade promotion, and industrial cooperation.
Apart from these, the Kpong hydroelectricity project estimated at US$24
million represented one of the significant projects from 1977 to 1980. It
attractedfinancialsupport from a number of multilateral agencies that felt this
was basic to the structuring of the economy for its quick recovery. The World
Bank provided US$39 million, which accounted for 23 percent of the whole
sum required for the project. Other multilateral agencies supporting the project
include the Kuwait Arab Economic Development Bank (US$30 million), the
EDF and the EIB (US$11 million), and the Arab Bank for Economic Develop-
ment in Africa (US$10 million). Canada, the single bilateral donor, gave about
US$35 million.
Since 1982, there has been a steady increase in the total multilateral flows to
Ghana as illustrated in Table 3.18. The preponderance of multilateral assistance
was very obvious in the second half of the 1980s. This contrasts sharply with
the inflow of bilateral assistance during this period. The major contributors to
theseflowswere the ADB, IDA, EU, UNDP, IFC, WFP, and IFAD.
The sustenance of large multilateral inflows since the early 1980s has, to a
large extent, been due to the posture of the Ghana government on solutions to
the country's intractable economic development problems. Flt.-Lt. Jerry Rawl-
ings assumed power for the second time on January 1, 1982.34 He introduced a
number of measures calculated to be vital for rapid economic recovery. Among
other things, the cedi was devalued beginning from April 1983 in the attempt
to increase Ghana's exports. Although his reforms provoked widespread criti-
cism at home, it nevertheless gained general acceptability abroad. The devel-
oped countries, in particular, saw the reform measures as essential instruments
for laying the foundation for recovery and economic growth in Ghana. Thus,
while the economic reforms last and the stable political atmosphere prevails,
the government can count on thefinancialsupport of the multilateral agencies.

Guinea
In Guinea, multilateral assistance rose from US$47.5 million in 1979 to
US$73 million in 1986 and to US$89 million in 1988 as illustrated in Table
3.18. Since 1985, the major sources of multilateral assistance have been the
IDA, EU, ADB, and the UNDP. For example, the IDA accounted for 38
percent of multilateral assistance to Guinea in 1985; this rose to 54 percent
each in 1987 and 1988. The Arab agencies represent other important sources
of multilateral aid to Guinea. However, Guinea may in the future need to
consolidate its market economy in order to ensure increased inflow. The
critical areas in which multilateral assistance are needed are the infrastruc-
tures, which are still inadequate for the promotion of economic growth. Also,
Foreign Aid in West Africa 75

multilateral assistance is urgently needed in the mineral sector, which re-


quires huge capital and technology.

Guinea-Bissau
There was little increase in multilateral assistance to Guinea-Bissau during
this period. The IDA, EU, ADB, and the UNDP have been the principal sources
of multilateral assistance to Guinea-Bissau. The IDA, for example, accounted
for 48 percent of total multilateral assistance to it. But this declined to 32 percent
in 1987. The need for increased foreign aid in Guinea-Bissau cannot be
emphasized. It had considerable budgetary and payments deficits in the early
1980s. A round table meeting of donors was called in Bissau on April 18,1985,
to raise money for the completion of the 1983-86 four-year development plan.
In this plan, about US$21 million was required for priority projects on the
rehabilitation of health centers, for mining research, and projects in forestry as
well as fishing and agro-industry. In the same year, donors pledged US$61.6
million toward some partially financed outstanding projects. However, donors,
have generally not adequately fulfilled their pledges. The IMF appears to have
been the most reliable source of multilateral assistance after the government
took appropriate steps in economic reforms. However, future increases in
multilateral flows to Guinea-Bissau may depend on the government's ability to
ensure political stability: the 1980s was largely characterized by coups and
counter coups, which created substantial uneasiness in the multilateral financial
institutions. Also, the government should take proper measures to ascertain that
its funds are not mismanaged. Corruption in high places, as illustrated in the
reported case of embezzlement by the Minister of Interior in June 1985, should
be eradicated in order to guarantee the confidence of multilateral financing
agencies.35

Liberia
As far Liberia is concerned, the decade of the 1980s was not particularly
propitious with respect to multilateral aid. By 1975, the IBRD/IDA and US AID
jointly provided US$ 11 million for a rural development project. Also, the IBRD
and the ADB provided an additional US$33.5 million for road development.
Thus, the total commitment from multilateral agencies was an all-time high of
US$80 million in 1975, compared with US$53 million in 1973. All loan
commitments were for priority infrastructural and agricultural development
projects.
However, by 1979 the level of multilateral assistance began to decline. In that
year, total inflow amounted to US$57.6 million. It declined to US$22 million
in 1982, but rose to US$26 million in 1985. Thereafter, it declined precipitously,
reaching a record low level of US$17 million in 1988 (see Table 3.18). It may,
76 Foreign Aid and Self-Reliance in West Africa

however, be noted that the Liberian economy began to deteriorate from 1982
partly as a result of the fall in the price of its principal export commodities,
rubber, iron ore, and hard woods. This, in effect, caused a sharp drop in foreign
exchange earnings. Export earnings, from January to September 1982, dropped
to US$372.9 million from US$400 million compared with the same period in
1981. Thus, there was a need for increased foreign assistance to cushion the fall
in export receipts in order ensure the process of sustained economic growth. It
was for this reason that the late President Samuel Doe, on his first trip abroad,
laid emphasis on financial cooperation with the developed countries. However,
the call bore no fruits while his regime was characterized by overt violations of
human rights. For example, on April 6, 1984, thirteen people were sentenced
to death, without proper trial process, for an alleged plot to overthrow the
government. Besides, the Liberian government did not immediately introduce
a concrete reform program to cope with Liberia's economic recession. The
government introduced some ad hoc measures: the freeze on all government
spending and the suspension of payments to government creditors on February
17, 1986. Later in the same year, the government announced the proposal to
privatize eleven public corporations considered nonprofitable. But all these
were seen by foreign donors and multilateral financial institutions as palliative
measures vis-a-vis the enormous problems of the economy. Thus, there was an
evaporation of interest to assist Liberia financially while these factors prevailed.
In 1987, the United States indicated, for example, that its pledge of US$11
million to Liberia would not be released until all political prisoners, held since
the November 12, 1985 coup, were released.36
However, after 1985, there were modest flows from the ADB, EU, IDA,
UNDP, and IFAD. The EU accounted for 26 percent of total multilateral receipts
in 1985 and 19 percent in 1987. Also, the contributions of the UNDP although
very small, averaged about US$2 million each year from 1985 to 1988.

Mali
In the case of Mali, the 1980s was characterized by substantial increases in
the inflow of multilateral financial assistance as may be noted in Table 3.18.
Beginning from 1985, the major sources of multilateral assistance to Mali were
the IDA, EU, WFP, ADB, and UNDP. Besides, Mali, in the second half of the
1980s, also received substantial support from the World Bank, IMF, and the
IDA while it rigorously applied the measures of its economic reforms.
The increase in the inflow of multilateral aid during the second half of the
1980s was largely explained by the turnaround in the economic policies of the
government. The state-dominated development strategy that the government
pursued until the early 1980s led to serious inefficiencies in resource mobiliza-
tion and allocation. Public investment decisions, among other things, gave
Foreign Aid in West Africa 77

insufficient attention to financial and economic selection criteria, such as debt


service and recurrent cost implications.
Thus, confronted with unsustainable fiscal and external deficits, the govern-
ment, in 1982, launched a series of adjustment programs that were supported
by the resources of the IMF and the technical assistance of the IDA. Although
this led to an initial success, the momentum generated could not be maintained,
resulting in a slow down in late 1986. However, two years later, the government
embarked on a new medium-term adjustment program. This program, among
other things, emphasized policies aimed at fostering an environment conducive
to promoting private sector activity, savings and investment, and international
competitiveness. While these have sensitized the multilateral donors to increase
inflow, it however remains very doubtful if the additional inflows have had
major positive impacts on the sectors in which they were concentrated. For
example, the development of infrastructure remains disappointingly inade-
quate. However, with the continuation of reforms by the government and the
introduction of a democratic government in June 1992, there should be reason-
able hope for sustained inflow of multilateral aid.

Mauritania
Multilateral aid to Mauritania in the second half of the 1980s increased
substantially with the government undertaking economic reforms in early 1985.
The Mauritanian government entered into negotiations with the IMF and official
and private creditors and embarked on a comprehensive adjustment strategy
designed to redress the large internal and external imbalances that had emerged
in the early 1980s. The adjustment program was cast in a medium-term
framework. Supported by IDA credits and by an IMF standby, it extended
structural adjustment facilities from 1985 to 1990. The adjustment measures
focused first on the stabilization of the economy, then restructuring to assure
steady growth under the principles of a free market economy.
These notwithstanding, it was clear by 1991 that external aid and new
economic policies were still a long way away from the provision of satisfactory
solutions to the development problems of the country. In 1991 the government
was engaged in the drawing up of a comprehensive program that covered,
among other things, the management of renewable and nonrenewable resources,
demographic growth, public health, desertification, and deforestation. Again,
the economic policy of the government in 1993 greatly underscored the need
to eradicate poverty and the need to improve the environment. The government's
determination to continue with economic reforms and to encourage democratic
practices, as illustrated with the introduction of a new constitution in July 1991
and the formation of opposition political parties, are good gestures that are likely
to help in the maintenance of the inflow of multilateral aid.
78 Foreign Aid and Self-Reliance in West Africa

Niger
Multilateral assistance to Niger, unlike Mauritania, dropped during first half
of the 1980s: from US$64 million in 1980 to US$52 million in 1984. However,
it thereafter rose to US$130 million in 1987 before falling to US$95 million in
1989. The stabilization program launched by the government in 1983 was
supported by the IMF and IDA. Further supports were also received from both
institutions when Niger embarked on structural adjustment programs two years
later.
In spite of these programs, however, the economy of Niger remains in the
doldrums, mainly because of the failure of the government to sustain meaning-
ful adjustment measures in the face of a competitive decline that amplified the
economic and financial crises.

Nigeria
Nigeria was not a large recipient of multilateral aid during the 1980s. Apart
from Cape Verde, its share of multilateral aid to West Africa was the least. In
1980, total multilateral inflow amounted to US$18 million. Although this rose
slightly to US$24 million in 1981, the following four years witnessed a
precipitous decline: reaching an all-time low of US$16 million in 1985.
However, it picked up in the following year and rising to an all time eight of
US$36 million in 1989.
The low inflow of multilateral aid to Nigeria is explained by the low priority
accorded to it in government overall economic policies. The government counts
largely on the receipts from oil exports in carrying out its annual budgets and
development plans. In the attempt to arrest economic recession and promote
economic growth, the government introduced a far-reaching structural adjust-
ment program in 1986, which combined exchange rate and trade policy reforms
aimed at revitalizing the nonoil economy with stabilization policies designed
to restore balance of payments equilibrium and price stability. The program
stressed downsizing the public sector and improving the efficiency of public
asset management. Import licenses and agricultural marketing boards were
eliminated, price controls were lifted, and the banking deregulation was initi-
ated. But then the fact that poverty became aggravated in the country in the
early 1990s, after seven years of implementation of the program raises several
questions about its relevance. By 1993, per capita income fell to US$340 from
US$1,000 in 1980. In real per capita terms, consumption and income are now
no higher than they were in the early 1970s before the oil boom. Indeed, basic
social indicators place Nigeria among the twenty poorest countries in the world.
The productive and social infrastructural sectors are still largely inadequate.
While steady increases may not be guaranteed from the oil sector, it must be
recognized that the development of an effective nationwide infrastructure, for
Foreign Aid in West Africa 79

example, would entail enormous capital and technological know-how. In this


context therefore the increasing role of multilateral aid may not be unduly
discounted by the Nigerian government.
However, if the government's structural adjustment program in recent years
has given some comfort to multilateral donors, the turn of events after the
unilateral annulment of the results of the general elections, which could have
resulted in the election of a democratic government in June 1993, has introduced
new dimensions into the politico-economic scene of the country. The rise in
multilateral assistance that seemed to have picked up in the second half of the
1980s may disappear unless a timely and enduring political solution is found.

Senegal
On the whole Senegal, unlike Nigeria, received substantial multilateral aid
during the decade of the 1980s. It also experienced a considerable increase in
inflow during this period. Total multilateral flows to it rose from US$79 million
in 1980 to US$129 million in 1981. There was a decline all through the
following four years, reaching a low level of US$60 million in 1985—during
the period when the first structural adjustment program suffered major setbacks.
But it picked up the following year to a record level of US$252 million.
However, there were major declines in the subsequent two years, US$177
million in 1988 and US$103 million in 1989, which suggested that multilateral
donors may be having difficulties in the effectiveness of aid in Senegal. While
a structural adjustment program is yet to be pursued to its logical conclusion,
it is obvious, however, that the economy continues to remain in the woods. Since
1990, it has been evident that the key economic sectors have had serious
declines. In 1991, fish processing declined in volume terms by 66.4 percent;
phosphates by 24.1 percent; textiles by 36.8 percent; and the food processing
industry by 45.8 percent. Also, groundnut exports declined in value by 41
percent. Revenues from tourism over the September 1992 to March 1993 season
were the lowest since 1985, partly because of the closure of the Casamance
region to tourism because of political strife. In other words, Senegal requires
an increase in the inflow of multilateral aid if it is to sufficiently cope with the
unresolved economic problems.

Sierra Leone
Like Gambia, Nigeria, and Cape Verde, Sierra Leone was a low recipient of
multilateral assistance in the 1980s. From 1980 to 1984, the average annual
multilateral inflow was about US$27 million. In 1985, inflow amounted to
US$35 million, but declined to US$21 million in 1987. Although it rose to
US$40 million in the following year, it nevertheless fell drastically to US$29
80 Foreign Aid and Self-Reliance in West Africa

million in 1989. In other words, multilateral donors appeared to be uncomfort-


able with the capacity of Sierra Leone to absorb aid in the 1980s.
Part of the difficulties here arose from the reluctance of the government to
pursue comprehensive economic reforms to cope with an apparently intractable
economic recession. It set in after the first oil price shock in 1973 and was
characterized by declines in income in the mining sector from 1975 to 1980.
The initial responses of the government to these were essentially ad hoc fiscal
or monetary measures. The main reform measures did not emerge until 1989
when the government liberalized foreign and domestic trade. It also abrogated
the monopoly of the Sierra Leone Produce Marketing Board, whereby private
traders were allowed to purchase coffee and cocoa from producers at negotiated
prices and retain all export proceeds. Furthermore, all trade licenses except for
gold and diamonds were abolished. Nevertheless, the efforts to stabilize the
economy were disrupted in mid-1990 by the civil war in neighboring Liberia.
The influx of nearly 200,000 Liberian refugees, the equivalent of 5 percent of
Sierra Leone's population, and its participation in the regional peacekeeping
arrangement, the Economic Community of West African States Ceasefire
Monitoring Group (ECOMOG) exerted significant pressure on the finances of
the government. These financial crises further found expressions in other sectors
of the economy. In particular, there was rapid deterioration in the physical and
social infrastructure. Most roads are in poor condition. And the lack of mainte-
nance resulted in severe deterioration of electric power generation systems.
Hence, the need for increases in multilateral aid in the 1990s was a foregone
conclusion and requires no emphasis. In 1990, for example, the total external
assistance of US$72.9 million accounted for 90 percent of the 1989/90 develop-
ment budget.
It is however important to note some of the specific problems associated with
aid flow to Sierra Leone. To begin with, even though the government has the
primary responsibility for the planning and coordination of aid, there is no
central aid coordination mechanism. The Department of Finance, Development
and Economic Planning coordinates the assistance from UNDP and all eco-
nomic aid, including assistance from the governments of France and Germany.
The National Aid Coordination Secretariat coordinates aid from the United
States, and the National Authorizing Office, attached to the State House,
coordinates aid from the EU. Aid from all bilateral sources is managed by the
Department of Foreign Affairs. There is thus an urgent need for proper foreign
aid coordination in order to ensure maximum utility of inflow.

Togo
On the whole, the flow of multilateral aid to Togo increased substantially
during the 1980s after an initial decline in the first two years. Inflow rose to
US$60 million in 1983 from US$23 million in the previous year. Although this
Foreign Aid in West Africa 81

declined to US$55 million and US$52 million, respectively, in the following


two years, it rose to US$75 million in 1986. In 1987, it fell precipitously to
US$37 million, but rose sharply to US$73 million in 1988 and US$76 million
in 1989.
Obviously, this inflow represented a major asset to the ailing economy in the
1980s. They largely represented the faith the multilateral institutions have in
the prospects for economic recovery and growth. The first serious economic
reform efforts occurred in 1983. It was supported by the IMF standby arrange-
ments. World Bank structural adjustment lending, and debt relief from the Paris
and London Clubs. This, to some extent, assisted in ensuring resource mobili-
zation and the reduction of current account and fiscal deficits between 1982 and
1983. The main ingredients of fiscal adjustments consist of civil service salary
freezes and early retirements. These reform efforts reversed negative growth as
real growth, which fell to -1.7 percent a year over 1980-83, rose to 2.5 percent
a year over 1984-86, slightly below the rate of population growth.
This notwithstanding, Togo remains confronted with critical development
issues, particularly in the productive and social infrastructural sectors that
require considerable improvement. But while increases in receipts from the
export of the basic commodities—phosphate, coffee, and cocoa—cannot be
guaranteed because of their low world prices and erratic demand, there is still
need for an increase in the inflow of multilateral aid. In order to ensure this
however, the government needs to pay more attention to making the peaceful
transition to democracy and avoid protracted long periods of political indecision
and social upheavals. On the whole, the need for increases in the inflow of
foreign aid to West African countries is incontrovertible in the face of the
intractability of their economic development problems. Nevertheless, it is clear
that in the foreseeable future, the currently emerging aid policies of the donor
countries would be very decisive as new elements have emerged in the disburse-
ment of aid in a changing world economy. Let us now examine the basis, nature,
and implications of these policies.

POLICIES OF DONORS: THE RECENT TRENDS


In the early 1990s, new developments in the international economy have
prompted donors to have new perceptions on the policies of international capital
movement, particularly of financial flows to the developing countries. The
improvements in the recession of the world economy have remained very
sluggish. Most of the developed countries are still confronted with a high rate
of unemployment apart from Japan and the United States, which have shown
remarkable growth. Also, a number of the developing countries are yet to resolve
fully the problems of inflation, without which their economies cannot be
adequately put on the path of steady growth. More states have been created in
Eastern Europe as a result of the collapse of the Soviet Union. These new states,
82 Foreign Aid and Self-Reliance in West Africa

being very weak economically, are also seeking the support of the international
community for their political and economic survival. On the other hand, the
economies of the newly industrializing countries of Southeast Asia continue to
indicate further growth and with high demonstrative effects for other developing
countries. At the same time, there has been an acknowledgment through Agenda
21, agreed upon by the international community in Rio de Janeiro in 1992, for
an environmentally sustainable global development. Along with these factors,
the economic development of African countries south of the Sahara, including
those in West Africa, has not been very encouraging since the beginning of the
1990s. The several years of application of structural adjustment programs
appear to have procured very little positive results on economic growth. In other
words, the donors are confronted, among other things, with the choice of
judicious application of available resources to increasing and competing de-
mands. Equally, they are concerned that resources made available to countries
should be effectively utilized to assist in the promotion of sustainable economic
growth and development. This section will attempt to describe the present
emphasis of the key donors to West African countries, particularly France, the
United Kingdom, the United States, Germany, Japan, Canada, Norway, Swe-
den, the Netherlands, and Denmark.

Foreign Aid: Institutional Capacity Building and


Sustainable Development
With greater effectiveness of foreign aid as the common denominator, the
emerging policies of donors in the early 1990s have crystallized around the
themes of the establishment of institutional capacity building in both recipient
and donor countries. The argument here is that previous aid disbursements to
developing countries, including those in West Africa, were not effectively
utilized essentially because of their deficiency. Also, the argument that addi-
tional resources to assist the development process in the developing countries
should, particularly, be encouraged where the recipient countries have or are
implementing sound economic reforms. Inappropriate economic policies, it
would seem, have been seen as part of the failures for the effective utilization
of foreign aid in the past. In addition to these, the recipient countries must
include their development process the new thinking, "sustainable develop-
ment," to ensure that the overall global development objective is attained.

France: Technical Assistance and the Strengthening of


the Finacial Capacity of Least-Developed Countries
By the late 1980s, France's bilateral aid continued to focus on African
countries south of the Sahara, particularly, the francophone countries. The
financial conditions of French aid, notably to the poorest countries, improved
Foreign Aid in West Africa 83

in 1989. Aid to the least developed countries within France's traditional area
of concentration has, since 1989, been extended either in grant form or in
loans on the IDA's terms. The terms of French financial assistance to
countries outside France's traditional area of concentration have also sof-
tened. Overall, French assistance has been provided on more favorable terms
than the thresholds set in the DAC terms recommendations subtarget for the
least developed countries. However, in the light of the decisions announced
in 1990 by the French government, it seems likely that the target could be
achieved in the near future.
As already mentioned, program aid consisting of grant budget support,
structural adjustment loans, and debt relief extended to countries implement-
ing internationally assisted structural adjustment programs accounts for a
significant rising share of France's ODA to African countries south of the
Sahara. In May 1989, France announced that it would cancel unconditionally
all the outstanding ODA debt, amounting to 16 billion francs (US$2.7 billion
at 1988 exchange rates) owed to it by thirty-five poorer sub-Saharan African
countries. The Maghreb countries also received substantial amounts of
bilateral ODA.
Technical cooperation, of which France is the largest source among DAC
countries, continues to be a major component of ODA (representing 43 percent
of bilateral disbursements in 1988/89), but its share in aid is gradually declining.
Technical cooperation is increasingly being extended within the framework of
integrated projects and programs. Besides, it has been observed that cooperation
with voluntary and nongovernmental organizations has expanded and the
appropriations to support their activities have rapidly increased. Also, there has
been a growing emphasis on programs to protect the environment in the
recipient countries.
On the whole, France's contributions to multilateral institutions increased in
the 1980s as a result of the increased contributions to IDA and the regional
development banks. In the years ahead, it is expected that the government will
accord higher priority to the UN institutions, where France's participation has
so far been more modest.
The aid policy to the least-developed countries in the form of grant or in the
terms of IDA loans by France since 1989 appears very realistic in the context
of the economic crisis of most West African countries. When this is taken
together with the cancellation of the US$2.7 billion debt, these amount to
considerable financial relief for these countries as they needed additional
financial resources to promote economic growth. But the prospects of develop-
ment in these countries would be brighter if France were to reach the thresholds
established in the DAC terms recommendations, since francophone West Afri-
can countries are, to a large extent, dependent on the external financial assis-
tance of France.
84 Foreign Aid and Self-Reliance in West Africa

Technical cooperation is very important to sustainable self-reliant develop-


ment in West Africa. This is the very crucial time when an increase in this area
is demanded by West African countries for human development.

The United Kingdom: Least-Developed Countries and


Sustainable Development
Compared with the French program, the British program continued to be
characterized by high concessionality. It is largely concentrated on very poor
developing countries with a growing emphasis on technical assistance (program
aid). The British government gives high priority to projects where environmen-
tally sound development and environmental factors are taken into account from
the earliest stage and followed through all subsequent stages up to and including
the ex-post evaluation of aid programs.
Notably, the share of program aid in bilateral ODA gross disbursements
increased from 6 percent in 1984 to 21 percent in 1989, while project aid
decreased from 37 to 20 percent in the same period. It has been observed that
there was also a marked increase in technical cooperation over the same time
period from 37 to 46 percent. The increase in program aid largely reflects a
major reprogramming of British assistance to sub-Saharan Africa to permit
larger flows of quickly disbursing aid in the framework of structural adjustment
programs. British technical assistance is increasingly concentrated on institu-
tional and managerial development, where it often fulfills important tasks in
promoting and assisting structural adjustment reforms.37 However, substantial
part of British aid remains tied to procurement in Britain and it continues to
have one of the highest tying ratios of bilateral aid among DAC members.
The British has thus continued to demonstrate interest in the promotion of
economic development in the poor African developing countries. Its disburse-
ments to Africa has increased in recent years especially in the areas of technical
cooperation. The substantial volume of British aid to the continent attests to its
importance. But the benefits of this flow to West African countries in the future
would be enhanced the more the aid is untied.

The United States: Concessional Flows and Recipient


Absorptive Capacity
The foreign aid policies of the United States in the 1980s were watched
closely by observers of development in developing countries; hopes were placed
on a peace dividend after the termination of the East-West rivalry and a possible
peace era with the gradual dismantling of intercontinental ballistic missiles in
Russia and the United States. The assumption was that part of the huge
expenditure should logically be diverted to global development, especially, for
more financial assistance to the less developed countries. But this is yet to be
Foreign Aid in West Africa 85

seen in an increasingly competitive world where the interests of countries do


not at all times converge.
To a large extent the financial terms of U.S. aid, which were already highly
concessional, softened further in 1989, but the United States was not in
compliance with the DAC Terms Recommendations because of the low level
of ODA commitments. A US$500 million "development pool" which combined
AID and Export-Import Bank resources to finance capital projects tied to
procurement in the United States, was established in May 1990.
In 1988, because of budgetary constraints, the United States provided only
verbal support for theJMF's US$8 billion Expanded Structural Adjustment
Facility (ESAF), which was an arrangement to increase concessional resources
flows to low-income countries experiencing balance-of-payments difficulties.38
The basic characteristics of the US bilateral aid have remained unchanged.
Bilateral aid from the United States is not provided in response to the need of
the recipient countries or to the recipients' ability to use it effectively for
development purposes. It is generally provided in support of the geo-strategic,
political and development objectives of the United States.39 However, since
1989 the US Congress has been reviewing the Foreign Assistance Act of 1961
with the objective of providing a new legislation that will be more relevant to
new international economic relations realities.
The United States is an important bilateral aid donor to Africa in terms of the
volume of its disbursement to the continent. Its contributions toward Africa's
development efforts have been very substantial. However, the existing economic
realities in West Africa, which has most of the least developed countries
experiencing intractable economic recession, require that more aid should be
directed at the subregion in order to arrest the aggravation of poverty. The
assumption is that the ongoing congressional review of foreign aid legislation
will take this into account. With the end of the cold war and a bipolar global
system what is more at stake for mankind now is an equitable world economic
development.
Germany: Strengthening the Capacity of
Least-Developed Countries
It is evident that there have not been substantial changes in the foreign aid
policies of Germany since the late 1980s. The German government continued
to have significant aid presence in all areas of the developing world. In 1987/88,
aid to sub-Saharan African countries amounted to about 27 percent of allocable
bilateral ODA; aid to southern and Southeast Asia, 41 percent; and for Latin
America, 12 percent. Germany had major aid involvements also in North Africa,
the Middle East, and European developing countries. The proportion of German
aid provided to low-income countries (53 percent in 1987-88) corresponds
roughly to the DAC average. The share of German aid channeled through
86 Foreign Aid and Self-Reliance in West Africa

multilateral institutions is of the order of 30-33 percent, including contributions


to the EU, and about 20 percent if these are excluded. About half of bilateral
aid is untied.
And like France, there is a growing emphasis on measures to protect the
environment with increasing engagement in the forestry sector and on antipov-
erty actions, including some interesting innovative approaches to channel aid
for self-help measures through nongovernmental institutions in developing
countries. A relatively large share of bilateral aid supports basic infrastructure
projects in energy, communication, and transportation. The volume of technical
assistance is comparatively large, but includes a significant proportion of
cultural assistance and imputed students' costs. Commodity assistance and
local-cost financing tended to increase during the recent past. Disbursements
of commodity aid under IMF/World Bank-led structural adjustment programs
are small, but they are expected to increase during the next few years. However,
to support the economic reforms of developing countries more effectively, a
new instrument called "structural aid" was introduced in 1987.
The average grant element of German aid meets the DAC terms objectives
but remains below the DAC average. Steps have, however, been taken recently
to improve financial terms together with debt relief actions. Besides, a number
of new initiatives have been taken recently. These include the decision to grant
further debt relief to a selected group of low-income countries and an improve-
ment in the financial terms of loans to all low-income countries. Since 1989,
recipients, other than least developed countries, have been given grants for
self-help oriented measures to fight poverty and for projects in the field of social
infrastructure and environmental protection. Together, more than one-third of
the recipients of German development assistance will see the terms of their
financial assistance improved. Other new initiatives are a reorganization of the
Ministry of Economic Cooperation and of the implementing institution for
technical cooperation (GTZ), aiming at the strengthening of their capacity for
a more strategically oriented country focus approach.
Thus, although there appears to be an improvement in the pattern of German
aid in recent years, nevertheless it is still not very clear if this could lead to
substantial increases in the flows to recipient West African and other developing
countries. However, the consolidation of implementing institutions for technical
assistance could go a long way in establishing the long-term basis for sustain-
able economic development in developing countries, including those in West
Africa. While this may be the case, there has been increasing focus on Japan,
which has emerged as a major global economic power and prominent aid donor
among the DAC countries in the early 1980s. With the determination to
strengthen its economic position vis-a-vis other developed countries, its aid
policies should be seen more in the framework of domestic economic policies.
Furthermore, the reunification of East and West Germany suggests there could
be new thinking in external financial assistance to developing countries. Huge
Foreign Aid in West Africa 87

resources would be required for the promotion of growth in the backward areas
of the new entity, especially in parts of the former East Germany.
Japan: Consolidating National Aid Institutions and
Concessional Aid
Japan is currently in the process of strengthening its aid implementation
system. The government is doing this by (1) expanding staff and upgrading its
developmental expertise through advanced training; (2) reinforcing appraisal
and evaluation; (3) intensifying cooperation with nongovernmental organiza-
tions; and (4) promoting joint activities with other donors, both bilateral and
multilateral. In addition, the government, like the French government, places
greater emphasis on environmental protection in aid programs.
One remarkable step in 1989 was the establishment of the Japan Interna-
tional Development Organization (JAIDO) with public and private funds to
facilitate the promotion of direct private investment in developing countries.
This was apparently a followup to the measures taken by the government in
1988 to consolidate aid coordination and management by setting up a
cabinet-level Council for Economic Cooperation consisting of fourteen
ministers and strengthening the staff both in Japan and in overseas repre-
sentations. Furthermore, in 1989, the Japan International Cooperation Sys-
tem was established with the aim of improving the procurement and
maintenance of equipment financed with JICA (Japan International Coop-
eration Agency) grants. In addition to this, in 1993 the Japanese government
sensitized the international community of the need to reconsider a more
realistic strategy to facilitate the development process in Africa. This action
resulted in the Tokyo International Conference, October 5-6, 1993 and the
Tokyo Declaration on African Development—Towards the 21st Century. It
was a declaration that acknowledged the current efforts at the promotion of
development in Africa but which, in view of the present predicament of the
continent, called for more urgent support from the international community
for humanitarian relief and the financial needs of African countries.
Japan's contributions to multilateral organizations accounted for 27 percent
of total ODA in 1988-89, a ratio close to the DAC average. However, Japan
was not in compliance with the DAC Recommendation on the Financial Terms
of Assistance in spite of a strong increase in the share of grants in total ODA
commitments and a softening of loan terms. But unlike France and the United
Kingdom, about 87 percent of ODA loans in 1988-89 were untied for world-
wide procurement and 12 percent were available for procurement in developing
countries. In addition, a substantial part (51 percent in 1988-89) of bilateral
grant was untied.
The untying of Japan's aid remains a unique feature in its foreign financial
assistance. The more its aid is untied the better the prospects for West African
88 Foreign Aid and Self-Reliance in West Africa

countries that are beneficiaries of bilateral assistance from Japan. Even though
the growing importance of Japan in global foreign aid is acknowledged, the
significance of Canada as a vital donor in the 1990s to Africa's development
cannot, at the same time, be underestimated. Most likely the pattern of aid
policies will be influenced by the implementation of the North American Free
Trade Agreement (NAFTA) and the necessity for Canada to remain competitive
in the global economy during the 1990s.

Canada: The Development of Human Resources


The Canadian Parliament, in March 1988, approved an aid strategy report
entitled "Sharing Our Future." In this report, comprehensive policy guidelines
were articulated for future Canadian aid. The highlights of the report, among
other things, include the easing of procurement restrictions (45 percent of
bilateral ODA commitments were untied in 1988), the decentralization of both
CIDA personnel and authority to the field, and a planned significant expansion
of activities related to human resources development. In the new aid strategy,
high priority was accorded to poverty alleviation. Aid would be concentrated
on poor countries, specific sectors, and poor population groups. This new aid
strategy has been implemented, however, with little detraction by the aid cut of
April 1989 when the government reduced its aid program as part of a general
policy of budget restraint. The government temporarily suspended the ODA
volume targets that it had accepted in 1986 (0.5 percent of GNP until FY
1990/91 and 0.6 percent in FY 1995/96).40
In 1989, all bilateral assistance was extended in grant form and was concen-
trated on very poor developing countries with least developed and other
low-income countries accounting for 74 percent of bilateral allocable ODA. In
1989, aid to sub-Saharan African countries accounted for about 45 percent of
allocable bilateral ODA, aid to southern and Southeast Asia for 30 percent, and
Latin America 19 percent. In addition to this, Canada has adapted its aid
program to the needs of highly indebted low-income countries and quick-dis-
bursing aid forms were expanded in support of recipients' structural adjustment
efforts in cooperation with the IMF and the World Bank.
As far as multilateral aid is concerned, the share of Canadian aid channeled
through multilateral institutions in 1988 was 33 percent. This slightly fell to 32
percent in 1989. In other words, the Canadian government has a tradition and
considerable preference for bilateral assistance to developing countries. But the
traditional strong aid assistance from the Scandinavian countries will continue
to constitute a major force in the overall DAC disbursements to developing
countries, including those in West Africa. How could this policy be maintained
when this group of countries is eventually harnessed into the mainstream of EU
integration arrangement?
Foreign Aid in West Africa 89

Norway: Women and Support for Structural Adjustment


Programs
In 1989, it was clear that Norway continued to maintain its top position
among DAC Member countries. Its total ODA as a share of GNP was 1.04
percent in 1989, although it slightly fell from that of the previous year, which
was 1.13 percent. Following the declared poverty orientation of the Norwegian
aid program, bilateral aid has essentially been concentrated on the poor coun-
tries and about 90 percent of bilateral allocable ODA has been channeled to the
least developed and other low-income countries, a ratio that was almost twice
that of all DAC countries combined. There has been a gradual shift away from
Asian recipients to countries in sub-Saharan Africa, which now accounts for
two-thirds of bilateral allocable ODA as compared to 52 percent in 1978/79.
Like the Netherlands, Norway is committed to the strengthening of interna-
tional cooperation in environment. Renewed emphasis has also been placed on
initiatives aimed at promoting women in development, especially in the agri-
cultural sector.
Also, Norway supports structural adjustment measures led by the World Bank
and the IMF in main partner countries, notably adjustment-related project aid
and commodity import support, as well as through a fund for international debt
relief operations. Furthermore, following the policy objective enumerated in the
early 1970s, a substantial share of the total aid program (about 40 percent in
1989) was channeled through multilateral organizations. Even then, a signifi-
cant proportion of Norwegian aid is disbursed without procurement restrictions.
Thus, Norway shares the same commitment of aid support to developing
countries with the Netherlands. Its increasing focus on aid to poor African
countries would be beneficial to West African countries the more the aid is
increased and directed at the critical areas of development of the recipient
countries in the subregion.
Sweden: Management of Natural Resources and
Infrastructure
It is important to underscore that Sweden was the first DAC-member country
to reach the international 0.7 percent target in 1975, and has since then
maintained it for fourteen consecutive years. In 1989, it was 0.97 percent as
against 0.86 percent for the previous year.
Swedish ODA has been extended entirely in grant form and a relatively large
proportion is untied. It is concentrated on least-developed and other low-income
countries, with a large emphasis on sub-Saharan Africa. Also, like Norway and
the Netherlands, environmental considerations received increased attention in
1988: the protection of the environment was added as a fifth objective to the
existing four-principal objectives for Swedish development cooperation.
90 Foreign Aid and Self-Reliance in West Africa

On the basis of the findings of a comprehensive study of Swedish aid to


sub-Saharan Africa, aid efforts toward it are to be intensified and the guidelines
for Swedish development cooperation with Africa in the 1990s was adopted by
the Parliament in 1989. In these guidelines, priority has been given to economic
growth, improved management of natural resources, strengthened social pro-
grams, rehabilitation of existing infrastructure, and institutional building. Fur-
thermore, quickly disbursing commodity assistance for balance-of-payments
support has been considered as an essential element in supporting the imple-
mentation of structural adjustment policies in a growing number of African
countries. An increasing share of it is directly linked to the financing of
IMF/World Bank-coordinated macro and sectoral adjustment programs.41

The Netherlands: Concessional Aid, Agriculture, and


Rural Development
If expressed as a share of GNP, the Netherlands's ODA fell from 0.98 percent
in 1988 to 0.94 percent in 1989, but it remained well above the 0.7 percent of
GNP target for the nineteenth consecutive year. It is expected that its ODA will
continue to be close to 1 percent of GNP (as it has during the past decade), given
the Netherlands's determination and commitment to devote 1.5 percent of net
national income to development cooperation.
The financial terms of the Netherlands are highly concessional. About 40
percent of its total ODA is untied. Some 40 percent of bilateral aid is extended
to ten low-income "program countries." Substantial amounts of ODA, mainly
in the form of sector assistance, are given to other developing countries. The
shares of the least developed and other low-income countries in its GNP and in
ODA are well above the DAC average. The government of the Netherlands gives
high priority to aid in agriculture and rural development. There is an emphasis
on activities designed to promote the role of women in development and to the
protection of the environment. In the framework of balance-of-payments sup-
port and of cofinancing with multilateral institutions, the Netherlands partici-
pates in international efforts to assist low-income debt-distressed countries that
are undertaking structural adjustment programs. Multilateral contributions,
excluding those to the EU, represented 21 percent of total ODA in 1988/89.
Thus, the commitment of the Netherlands to aid support for the developing
countries is strong. The Netherlands government has steadily ensured, over the
years, that the internationally agreed target for aid flow to the developing
countries is adequately met. This commitment has without doubt been an
obvious advantage to the recipient developing countries, including those in West
Africa. Besides, the financial collaboration of the Netherlands government with
the multilateral institutions on their debt and structural adjustment program
problems represents further significant benefits where West African countries
and other developing countries have been involved. This apart, it has been
Foreign Aid in West Africa 91

observed that the Danish emerging foreign aid policies have similarities with
that of the Netherlands.
Denmark: The Alleviation of Poverty
The ODA net disbursements from Denmark, in 1988, amounted to US$9.22
million. At 0.89 percent, the Danish ODA/GNP ratio exceeded the 0.7 percent
target by a large margin. Danish development assistance is governed by a set of
both quantitative and qualitative principles. The most important of these is a
strong poverty orientation in the developing countries. Poverty eradication is
considered a high priority. Other important objectives are the integration in the
development process of environment considerations, of women's roles in the
development process, and of respect for human rights. One of the quantitative
objectives is that total ODA should be approximately equally divided between
bilateral and multilateral aid. Quick-disbursing aid in the form of commodity
assistance is provided in support of structural adjustment programs in coopera-
tion with the IMF and the World Bank. The share of bilateral ODA allocated to
sub-Saharan African countries is approximately 60 percent.
Furthermore, the Parliament, in 1988, approved a draft Plan of Action for
Danish Development Assistance up to 1993. The plan includes the decision to
abandon loans and thus to provide future aid entirely in grant form. It entails
the decentralization of both Danish International Development Agency
(DANIDA) personnel and authority to the field. Furthermore, aid will concen-
trate on a smaller number of recipients (20-25) over a five-year period, and
there will be a comprehensive country programming for all aid recipients based
on specific country analysis. While Denmark maintains its policy of requiring
that about one-half of Danish bilateral aid be procured in Denmark, it has
introduced a more flexible procurement policy as well as a new country program
system so as to avoid the negative effects of this policy. Beyond these however,
important consideration has to be given to the foreign aid from the Eastern
European countries. Aid from these countries has played a vital role in West
African development especially, in the form of technical cooperation. But the
waive of democratization and economic reforms in the mid-1980s, within these
countries are factors that cannot be discounted in their foreign aid policies as
these countries try to confront their economic growth challenges.
The Russian Federation and Eastern European Countries
The developments in the former Soviet Union (now Russian Federation) and
Eastern European countries in the mid-1980s have also elicited new policies on
aid flows to Africa. Hitherto, aid from these countries and other CMEA
countries to African countries and other developing countries rose from
US$2.83 billion in 1980 to US$4.64 billion in 1986. It rose further to US$5.01
billion in 1987 but declined to US$4.69 billion in 1988. However, as the several
92 Foreign Aid and Self-Reliance in West Africa

years of unabated economic recession compelled the Soviet Union and other
Eastern European countries to embark on major economic and political reforms,
these have, inevitably, had far reaching consequences on their broad external
foreign economic policies.
In the Soviet Union, beginning from 1988, aid administration was reorgan-
ized under the Ministry of Foreign Economic Relations. Following the restruc-
turing of the economy, Soviet enterprises were expected to be self-financing
and profitable and were expected to implement projects directly in countries
receiving Soviet aid. Emphasis was laid more on efficiency in both Soviet aid
administration and in the recipient countries.In former Czechoslovakia (now
Czech and Slovak Republics) and GDR (now Germany), students graduating
from their universities and technical colleges now work for about two years
after the completion of their studies to reimburse the scholarships.
Thus, given the ongoing reforms in these countries, West African countries
and other developing countries are not likely in the near future to have increased
aid inflow from the Russian Federation and other East European countries.

MULTILATERAL AID POLICIES: THE RECENT TRENDS


In recent years, there have been major policy reviews in most leading
multilateral agencies with far-reaching implications for future aid flows to West
Africa. In the case of the World Bank, there was a discussion on the extent to
which the bank's emphasis on structural adjustment has led it into "quick-dis-
bursing" operations. There has also been a reconsideration of the long-term
development process that exists to support, rather than back into the narrow
traditional concept of project lending. The emphasis on specific policy priori-
ties, such as poverty alleviation, support for adjustment programs, the environ-
mental aspects of development, and the scope for development of the private
sector, has become very strong.
The slow growth of multilateral assistance since the mid-1980s took place in
the context of a firm consensus among donor countries that the system of
multilateral agencies is a central component of intentional development coop-
eration efforts, and that disbursements generally should be intensified in par-
ticular in connection with the debt strategy.
In the recent findings, the ADB has been strongly supported by donors, as
an expression of their more general concern with Africa's special problems.
However, the extent to which bilateral donors and international agencies are
now themselves concentrating their efforts on Africa creates a situation in which
the particular role of the ADB may be difficult to categorize. As far as realistic
development policy is concerned in Africa, the major initiative has come from
the World Bank in the context of structural adjustment programs. To be more
relevant to Africa's economic development, ADB should consolidate its existing
capacities in resource mobilization, project preparation and implementation,
Foreign Aid in West Africa 93

country programming, and the development of new initiatives in areas of current


concern.
With respect to the UNDP, new policy directions have been consistently
stipulated in the Administrator's reports to the meeting of the Executive Board.
In the June 1989 report, the administrator stated that the main role of the UNDP
lies essentially in support for developing countries' efforts to enhance their
capacities in the management of the development process. Its realization will
in time require an improvement in the analytical and managerial capacity of the
specialized agencies at the country level, both in the field and at the headquar-
ters. This wider context is implicitly recognized in the UNDP's guidelines for
the Management Development Program, where a link has been made with the
UNDP's evolving role in aid coordination. More importantly, The UNDP's fifth
cycle (1992-1996) country programs stress greater ownership of projects by
Africans themselves through national execution and participation by all sectors
of African society. Also, the UNDP shares the current view of the "20:20"
concept: that at least 20 percent of government spending and 20 percent of
development assistance flow into human development priority areas, especially
education and health as well as access to credit. The UNDP assumes that this
is the realistic strategy of poverty alleviation—employment generation, social
stability, and integration, rather than investing in the formation of people's
capabilities and enabling them to help themselves.42
However, this may not be easily undertaken by the UNDP. Difficulties may
emerge in conflicts of interest between the UNDP in its operational role and the
UNDP in its central funding role vis-a-vis other UN agencies.

CONCLUSION
The flow of foreign aid to West African countries from the mid-1970s to the
early 1990s has, on the whole, been considerable at both bilateral and multilat-
eral levels. However, the volume of inflow varies from one country to another
depending on the political and economic circumstances of each country and the
relationship with the donors. For most countries, the DAC countries remain the
essential sources of bilateral aid. But to this category of donors have been added,
in recent years, the donors from the oil-producing countries in the Middle East.
At the multilateral level, the World Bank, IDA, IMF, ADB, and the UNDP
constitute the essential sources of aid to West African countries with a high
inclination to assist in their development process. To a large extent, both bilateral
and multilateral aids have been directed at the development of the infrastructures
and the strengthening of the productive sectors of the economies of West African
countries. However, while many countries in the subregion continue to remain
at a low level of economic development, it has not been difficult to conclude
that the impact of foreign aid on their development process has been marginal.
94 Foreign Aid and Self-Reliance in West Africa

There are still considerable constraints on the flow and utilization of foreign
aid in West Africa. From the side of the donors, greater aid untying should be
encouraged to increase the value of aid to West African countries. Also, attention
should be paid to the economic interests and special needs of the recipient West
African countries. The role of bilateral donors has been remarkable in several
emergency situations in West African countries. However, these countries
would be better off if they were able to develop the autonomous means to cope
with emergencies as they arise. Of course, the recipient West African countries
themselves have to take more appropriate steps to eliminate the constraints to
the effectiveness of foreign aid. They should, as a matter of urgency, establish
appropriate institutional structures for the effective coordination of foreign aid.
Also, necessary measures should be adopted to address the questions of
mismanagement and corruption in the administration of foreign aid by those
countries seriously concerned. The failure to do this in a timely manner may
eventually result in the marginalization of the affected countries in disbursement
from the donors, since competition for aid becomes more intense from other
developing countries and economies in transition.
The prospects for increases in foreign aid in the future clearly depends largely
on the emerging foreign aid policies of the donor countries. The disappearance
of the East-West rivalry and the universal acceptance of democratic principles
have introduced new dimensions into the thinking of foreign aid. Strategic
considerations now play less of a role in the disbursement of foreign aid bilateral
donors. The economic interests of the donor countries have assumed more
importance. Besides, the capacity of the recipient countries to absorb aid now
plays a critical role. In fact, this thinking has been abundantly shared by the
multilateral donors. In its various dimensions, the capacity to absorb foreign
aid would, among other things, include the implementation of economic
reforms by the recipient West African countries and the strengthening of the
institutional support for aid utilization. Furthermore, aid utilization is expected
to take on board the idea of sustainable development effectively. The economic
growth and development of the developing countries should be environmentally
sustainable. The more the development policies and objectives of West African
countries reflect this, the better their chances for increased foreign aid from both
bilateral and multilateral donors.

NOTES
1. OECD, Geographical Distribution of Financial Flows to Developing Countries (Paris:
OECD, 1990), p. 61.
2. Ibid., p. 71.
3. Linda Van Baren, New African Yearbook 1991-92 (London: I C Publications, 1991), p.
42.
4. OECD, Geographical Distribution, p. 7.
5. Ibid., p. 101.
Foreign Aid in West Africa 95

6. Ibid.
7. O. R. Davidson, A Study on Development Strategies in Anglophone West African States
in the Fields of Education, Science, Culture and Communication (UNESCO: Major Program
1, mimeo, August 1987), p. 14.
8. Carthy L. Jabara, Economic Reform and Poverty in the Gambia: A Survey of Pre- and
Post-ERP Experience, Cornell Food and Nutrition Policy Program, Monograph 8, December
1990, pp. 3-4.
9. OECD, Geographical Distribution, p. 127.
10. Ibid., p. 129.
11. Guinea has very large deposits of bauxite, iron ore, and diamond. Mining accounts for
one-third of its GDP and nearly all export earnings. Guinea is the world's second largest
producer of bauxite after Australia.
12. OECD, Geographical Distribution, p. 139.
13. Linda Van Baren, New African Yearbook, p. 144.
14. Ibid., p. 142.
15. OECD, Geographical Distribution, p. 141.
16. Linda Van Baren, New African Yearbook, p. 150.
17. The other important cash crops are coffee and cocoa.
18. OECD, Geographical Distribution.
19. C. Legum, Africa Contemporary Record 1980/81 (London: African Publishing, 1981),
p. B542.
20. C. Legum, Africa Contemporary1 Record 1981/82 (London: African Publishing, 1982),
p. B457.
21. Ibid., p. B487.
22. International Labour Organization (ILO), Contribution a Une Politique Nationale de
VEmploi Rapport d'Une Mission Multidisiplinaire du BIT (Niamey: Republique du Niger,
mimeo, 1990), pp. 20-30.
23. Louis Berger, Etude sur les Mesures d'Incitation a VIndustrie. Report prepared for the
Government of Niger, Ministere du Commerce de 1'Industrie et de l'Artisanat (East Orange,
N.J.: Louis Berger International Inc., 1989).
24. C. Legum, Africa Contemporary Record 1982/83 (London: African Publishing, 1983),
pp. B564-B565.
25. C. Legum, Africa Contemporary Record 1983/84 (London: African Publishing, 1984),
p. B569.
26. Linda Van Baren, New African Yearbook, p. 355.
27. T. Hayter, Aid as Imperialism (Middlesex: Penguin Books Ltd., 1974), pp. 25-45.
28. For example, IDA credits helped to finance irrigation and drainage projects in India and
Pakistan, where greater agricultural output was vitally needed to keep pace with growing
populations. The association also supported the construction of highways and roads in Latin
America, financed municipal water supply systems in cities such as Amman and Taipei, and
helped build power plants and ports in developing countries.
29. The fifty-one regional member countries include: Algeria, Benin, Botswana, Burkina
Faso, Burundi, Cameroon, Cape Verde, Central African Republic, Chad, Comoros, Congo, Cote
d'lvoire, Djibouti, Egypt, Equatorial Guinea, Ethiopia, Gabon, Gambia, Ghana, Guinea,
Guinea-Bissau, Kenya, Lesotho, Liberia, Libya, Arab Jamahiriya, Madagascar, Malawi, Mali,
Mauritania, Mauritius, Morocco, Namibia, Peoples Republic of Mozambique, Niger, Nigeria,
Rwanda, Sao Tome and Principe, Senegal, Seychelles, Sierra Leone, Somalia, Sudan, Swaz-
iland, Tanzania, Togo, Tunisia, Uganda, Zaire, Zambia, and Zimbabwe. The twenty-four
nonregional member countries are: Argentina, Austria, Belgium, Brazil, Canada, China, Den-
mark, Finland, France, Germany, India, Italy, Japan, Korea, Kuwait, the Netherlands, Norway,
96 Foreign Aid and Self-Reliance in West Africa

Portugal, Saudi Arabia, Spain, Sweden, Switzerland, the United Kingdom, and the United
States. In 1992, Yugoslavia ceased to be a member of the bank and the fund. According to a
decision of the ADB Board of Directors made in early January 1993, the successor states of
Bosnia and Herzegovina, Crotia, Mecedonia, Slovenia, Serbia, and Montenegro cannot auto-
matically acquire any legal claim to membership of the bank or fund by reason of their having
previously been component organs of Yugoslovakia before its dismemberment.
30. Legum, Africa Contemporary Record 1981/82, p. B570.
31. Legum, Africa Contemporary Record 1983/84, p. B420.
32. World Bank, The Gambia: Development Issues and Prospects (Washington, D.C.: World
Bank, 1985).
33. C. Legum, Africa Contemporary Record: Annual Survey and Documents 1974/75
(London: Rex Collings Ltd., 1975), p. B652.
34. Flt.-Lt. Jerry Rawlings was first the head of state and government from June 4 to
September 24, 1979, after a military coup d'etat.
35. Linda Van Baren, New African Yearbook, p. 151.
36. Ibid., p. 182.
37. OECD, Development Cooperation: Efforts and Policies of the Members of Development
Assistance Committee (Paris: OECD, December 1990), pp. 151-52.
38. Carol Lancaster, US Aid to Sub-Saharan Africa: Challenges, Constraints and Choices,
vol. 10, no. 6, Significant Issues Series (Washington, D.C.: Center for Strategic and International
Studies, 1988), p. 1.
39. Ibid., p. 2.
40. Ibid., p. 160.
41. OECD, Development Cooperation: Efforts and Policies of the Members of the Develop-
ment Assistance Committee. Report by J. C. Wheeler, Chairman of the DAC (Paris: OECD,
1980), p. 151.
42. James G. Speth, Seeking a New Consensus on Development, An Address by the Admin-
istrator of the UNDP at the NGO/DPI Annual Conference, General Assembly Hall, UN
Secretariat September 8, 1993, p. 3.
4

Self-Reliance in West Africa

INTRODUCTION
Since the mid-1970s most West African political leaders have made spirited
efforts to promote economic growth and development through the policy of
self-reliance. The main goals of West African leaders during this period, among
other things, consisted of: building the key sectors of their economies, agricul-
ture and industry, on a sustainable basis; and raising the standard of living of
their peoples and the alleviation of poverty. The determination of the West
African governments in the pursuit of these objectives was irrevocably reflected
in their consistent and strong statements on the virtues of self-reliance in their
Development Plans and annual Budgets. The call for self-reliant development
was inadvertently reinforced by the worldwide economic recession beginning
from 1973 after the first world oil price shock. The rise in the price of oil was
devastating to most countries in the subregion, which are largely nonoil pro-
ducing (except Nigeria), because they have to buy oil and manufactured goods
at higher prices. The recession became aggravated in the late 1970s as the
foreign debt of these countries rose to high levels. Several countries borrowed
in the mid-1970s in the effort to meet the increased cost of oil and manufactured
imports to sustain the process of economic development.
In the wake of this recession, additional new economic policies in the context
of structural adjustment programs became inevitable and were applied, in their
different forms, across West Africa. While these programs were designed to
ensure economic growth, they have not, to a large extent, eroded the vision of
self-reliant development in the subregion. The programs, as they were, seemed
98 Foreign Aid and Self-Reliance in West Africa

to reinforce, through some of their measures, the drive toward self-reliance. For
example, such major measures on privatization and commercialization, trade
liberalization, reduced role of government in the economy, cut in public
expenditure, to mention a few, hold promises for self-reliant development if
effectively and adequately implemented.
However, the attainment of self-reliance in West Africa has proved very
difficult and elusive. Progress in this direction has not been significant, in both
its individual and collective dimensions. The mobilization of internal resources
has not been adequate for the effective development of identified sectors of
national economies. As a result, it became necessary to seek external financial
resources while not compromising the ideals of self-reliant development. It also
became clear that self-reliant development would call, among other things, for
an accelerated development of human resources, the provision of better and
commensurate health services, a better and higher standard of education with
diverse specializations, in particular, in the natural sciences, and technology.
Besides, the process of self-reliant development, it would seem, would benefit
more in situations where the climatic conditions provide support for the
production of food and cash crops to ensure the sustenance of a growing
population and higher earnings in revenue. In this connection also, a favorable
international trade environment would be an asset. Improvement in terms of
trade and better prices for commodity exports are vital to an increase in the
import capacity for capital formation by West African countries.
Experience during 1970s and 1980s suggests most of the desirable supportive
factors for self-reliant development were deficient. These were very obvious in
a number of key sectors that were the targets for self-reliant development,
namely: agriculture, industry, technology, energy, and foreign trade. In the same
vein, the attempts at collective self-reliance or regionalism encountered several
political and economic difficulties. This chapter will essentially examine the
main initiatives, trends, and problems in connection with self-reliance in the
West African subregion. First, however, efforts will be made to describe the
pattern of growth of production.
Table 4.1 illustrates the average annual growth rate of production in West
Africa from 1965 to 1991. It is obvious from the table that the average annual
growth rate of the GDP for West Africa declined in the period 1980-91, 2.8
percent as against 3.3 percent for the period 1965-80. This is very significant
as it clearly indicates that the various economic policies toward self-reliant
development as well as those on structural adjustment have had no real
substantial positive impact on the process of economic growth and sustainable
development. This is particularly ominous for the subregion, given the fact that
the average rate of growth of the population for West Africa during the period
1980-91 was about 3.1 percent.1 In other words, it was a period characterized
by a general decline in the standard of living in West Africa. The decline in GDP
Table 4.1
The Growth of Production in West Africa
Average Annual Growth Rate (Percent)

GDP AGRICULTURE INDUSTRY MANUFACTURING SERVICES

COUNTRY 1965-1980 1980-1991 1965-1980 1980-1991 1965-1980 1980-1991 1965-1980 1980-1991 1965-1980 1980-1991
BENIN 2.1 2.4 1.8* 4.9 1.4* 3.6 4.8 2.7* 0.5

BURKINA FASO 4.4* 4.0 1.0* 3.2 2.5* 3.8 4.1* 2.6 19.9* 5.4

CAPE VERDE . . . . .
COTE DTVOIRE 6.8 -0.5 3.3 -1.2 10.4 -1.6 9.1 8.6 0.8
GAMBIA . . . .
GHANA 1.4 3.2 1.6 1.2 1.4 3.7 2.5 4.1 1.1 6.6
GUINEA 3.8 _ . .
GUINEA-BISSAU 2.4* 3.7 3.7* 5.0 2.1* 2.6 . 2.8
LIBERIA 3.3 5.5 2.2 10.0 2.4
MALI 3.9 2.5 2.8 2.4 1.8 4.0 _ 7.6 2.4
MAURITANIA 2.0 1.4 -2.0 0.7 2.2 4.9 . 6.5 0.5
NIGER 0.3 -1.0 -3.4 11.4 . 3.4
NIGERIA 6.9 1.9 1.7 3.5 13.1 -0.4 14.6 7.6 3.1
SENEGAL 2.1 3.1 1.4 2.7 4.8 3.8 3.4 5.1 1.3 3.0
SIERRA LEONE 2.6 1.1 2.3 2.7 -1.0 -0.8 4.3 -1.4 5.8 0.9
TOGO 4.5 1.8 1.9 5.3 6.8 1.5 2.5 5.4 -0.2
TOTAL 3.3 2.8 1.7 2.8 4.6 1.6 6.9 3.0 12.0 2.4

Note: * = Figures for 1970-1980; - = Figures not available.


Source: World Bank, World Bank Report 1989 and 1993 (Oxford: Oxford University Press, 1989 and 1993), pp. 166 and 240, respectively.
100 Foreign Aid and Self-Reliance in West Africa

has, during the 1980s, been largely due to the catastrophic decline in the average
annual growth rate in industry and services.
In the 1980s, the average annual growth rate was 1.6 percent as against 4.6
percent in the period 1965-80. Those for the services were 2.4 and 12.0 percent,
respectively. On the contrary, there was an improvement in the average annual
growth rate in agriculture, 2.8 percent in the 1980s, compared with 1.7 percent
during 1965-80. This suggests that, on the average, subregional agricultural
development policies in the 1980s have had a somewhat positive impact and
that producers of agricultural products could have experienced some increases
in income. Such general broad agricultural policies should therefore be consoli-
dated to ensure increased agricultural production in the decade of the 1990s.
This is very important in the drive toward self-reliance and sustainable devel-
opment given the fact that the agricultural sector accounts for over 80 percent
of the GDP of the West African subregion and provides livelihood for over 85
percent of the working population.
However, it must be underscored that the average annual growth rate for the
subregion as a whole does not truly reflect the disappointing decline in many
countries. The cases of Nigeria and Cote dTvoire are, for example, very
illustrative. The average annual growth rate of the GDP for Nigeria in the 1980s
was 1.9 percent compared with 6.9 percent in 1965-80; the corresponding
growth rate for Cote dTvoire during these periods were -0.5 and 6.8 percent,
respectively. Only very few countries such as Ghana, Senegal, and Guinea-Bis-
sau succeeded in raising their growth rate in the 1980s.

AGRICULTURAL DEVELOPMENT
As already noted, the agricultural sector represents a major sector in terms
of its contribution to the GDP of West African countries. An advancement in
this sector therefore represents a precondition for a meaningful self-reliant
development in West Africa. Progress in agricultural development would not
just imply an increase in food output but also increases in the production and
export of cash crops. Progress in both areas are tied, in the first place, to adequate
economic policies and good weather conditions. And as far as cash crops are
concerned increases in the world prices and demand for commodities by the
industrially developed countries represent important stimulants for higher
output. There were some increases in production in the 1980s in the agricultural
sector. In what areas were these? What accounted for the increases and what
should have been done to ensure higher output, especially in those countries
with modest increases in order to enhance the prospects for self-reliance?
The major food crops in West Africa consist of rice, maize, yams, cassava,
millet, plantains, sorghum, palm oil, palm kernel, and groundnuts. For most
countries in the subregion, in the 1980s, the output of these crops increased
substantially to meet internal demand. For example, in the case of rice, it may
Self-Reliance in West Africa 101

be noted that Cote dTvoire increased its output from 42,000 metric tons in 1980
to 650,000 metric tons in 1989, an increase of about 55 percent.2 On the contrary
however, Burkina Faso, Gambia, and to some extent Sierra Leone experienced
decline in their rice output during the 1980s. The output of maize was more
phenomenal for a number of countries in which output in 1989 was about double
the output in 1980. The cases of Benin, Burkina Faso, Gambia, Ghana, Guinea-
Bissau, Mali, Nigeria, Senegal, and Togo, to mention a few, are very illustrative.
However, unlike these countries, Mauritania had general decline in the output
of maize, partly as a result of bouts of drought. Other crops with substantial
increases in output are sorghum, millet, and cassava. However, on the whole,
the output in palm oil and palm kernel were not very substantial during the
decade.
These are generally good signs for the subregion in terms of the reduction in
food importation and the drive to self-sufficiency in food. It implies that some
of the countries were, in the 1980s, in the position to conserve foreign exchange
earnings for the importation of capital goods. This pattern of development also
appeared to have taken shape at the beginning of the 1990s. The aggregate
import requirement of cereals in 1991/92, mainly wheat and rice, was estimated
at 3.6 million tons, some 3 percent lower than that of 1990/91. But commercial
imports, estimated at 2.9 million tons, are anticipated to cover some 80 percent
of the aggregate requirement for 1991/92. Food aid needs are estimated at
677,000 tons, which were already fully covered by donor pledges.3
Thus, while some appreciable progress seems to have emerged and consti-
tuted a pattern in the 1980s in food crop output in West Africa, the total need
of the subregion remained to be comprehensively attained. The efforts of West
African governments would, therefore, need to be strengthened in order to
reduce food import to the barest minimum or make it superfluous.
In the case of cash crops such as cocoa, coffee, groundnuts, and so on, the
performance has been characteristically dismal in the 1980s. Table 4.2 shows
the value of agricultural exports from 1980 to 1990 in West Africa. The table
indicates that total agricultural exports of the subregion declined from US$4.1
billion in 1980 to US$2.8 billion in 1983, but rose thereafter to US$4.1 billion
in 1986. However, it again declined precipitously as from 1987 when it
amounted to US$3.7 billion and US$3.4 billion in 1990. This decline was
largely accounted for by the export decline of the three largest exporters of the
subregion, Cote dTvoire, Ghana, and Nigeria.
Thus, the decline in agricultural exports during the 1980s was a considerable
setback to many West African governments in their efforts to promote self-re-
liant development. This in effect reduced their capacity to import capital goods
for development. It also, resulted in a drastic fall in the income and the standard
of living of West African farmers. Besides, it may be added that the lot of the
farmers had not been made easier because many of these countries at the same
time experienced a steep rise in the rate of inflation. In other words, as a matter
Table 4.2
West African Agricultural Exports, 1980-1990
USSMills., Current Prices and Exchange Rates
COUNTRY 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

| BENIN 55 22 20 30 79 73 69 74 77 75 89
1
| BURKINA FASO 80 63 48 53 72 50 51 87 81 97 108

1 CAPE VERDE 1 2 1 1 0 1 1 1 1 2 2

COTE D'lVOIRE 2,009 1.696 1.412 1,280 1.866 2,144 2.420 2.067 1.737 1,619 1,748

GAMBIA 28 18 16 26 29 17 12 7 19 8 13

GHANA 744 436 422 269 382 403 504 538 481 425 387

1 GUINEA 33 28 29 33 21 18 25 25 26 32 22

GUINEA-BISSAU 6 8 7 6 12 8 7 13 11 13 13

| LIBERIA 151 124 89 107 129 120 108 107 119 162 68 |

[MALI 192 201 197 174 228 157 182 226 203 228 287

MAURITANIA 39 43 41 35 33 36 32 31 33 33 33

1 NIGER 86 87 69 46 77 62 65 48 48 49 45

1 NIGERIA 446 429 348 448 348 310 376 251 444 251 255

SENEGAL 115 64 167 190 157 103 105 118 132 209 214

1 SIERRA LEONE 59 34 35 28 35 54 49 42 31 22 17

|TOGO 77 67 56 51 77 79 101 99 100 93 82

|TOTAL 4.121 3,322 2.957 2.777 3,545 7.573 4.107 3.734 3.542 3.318 3,383

Source: UNDP/World Bank, African Development Indicators (Washington. D.C.: UNDPAVorld Bank, 1992), p. 230.
Self-Reliance in West Africa 103

of urgency, the governments of West African countries would need to find


lasting solutions to the fundamental problems of agricultural exports, both in
the demand and the supply dimensions, in order to ensure a sound financial
basis for self-reliant development.
The patterns of output of both food crops and agricultural exports in the 1970s
and 1980s were largely dependent on the specific agricultural policies of the
West African governments and a host of other internal and external factors. The
cases of Nigeria and Niger are, in this context, very illustrative. In Nigeria, for
example, there were consistent government agricultural policies to increase
food production. The federal government and the state governments established
food production companies: an Agricultural Credit Guarantee Scheme was
instituted to complete an earlier Nigerian Agricultural and Co-operative Bank;
river Basin Development Schemes were instituted for virtually all of Nigeria's
major water resources to bring the federal, state and local governments together
in a unique cooperative approach to effective coordination of primary produc-
tion and supporting services in specific areas; and improved inputs to farmers
were provided through the National Accelerated Food Production Program, the
Fertilizer Procurement and Distribution Program, the Seed Multiplication Pro-
gram, and the Tractor Hiring Scheme.
In this connection, relevant institutions have also further been established.
The growth of farmer's cooperatives has been encouraged as a medium for the
introduction of new inputs and new farming techniques. Furthermore, a Land
Use Decree was promoted to facilitate the removal of an outmoded land-tenure
system and make it easier to attract foreign entrepreneurs and foreign capital
into agricultural production. The government went further to complement these
with the creation of research institutions, such as the Cocoa Research Institute
of Nigeria and the Nigerian Institute for Oil Palm Research, to conduct research
into the best ways to control pests and diseases and the production of high-yield-
ing seedlings.
These were at the same time complemented by a number of programs, but
most of which met with limited success because of economic and social
constraints. For example, in 1975 the government launched an Operation Feed
the Nation (OFN) campaign in order to increase food production. However, the
program did not get off the ground partly because of the failure of the govern-
ment to channel sufficient funds to it for implementation. In the following two
years, the federal government spent just US$61.5 million on the implementa-
tion, a sum approximately the size of the recurrent expenditure to maintain the
Cabinet Office for one year. Over the same period, the total federal recurrent
expenditure on agriculture declined by 49.7 percent, while capital expenditure
declined by 38.8 percent—from US$316.8 million in 1976 to US$ 193.8 million
in 1978. In the following year, the Green Revolution Program was introduced
to replace OFN. This suggests the strong commitment of the federal military
government to find a lasting solution to the problem of food production. It was
104 Foreign Aid and Self-Reliance in West Africa

very clear to the government that the country could face considerable difficulties
in the near future if dependence on food importation, which had been a main
feature in its imports since the mid-1970s, was not removed. However, oddly
enough, without learning any lessons from OFN, the Green Revolution col-
lapsed shortly after its formation. The program ran into difficulties partly as a
result of poor management, with fertilizers and other inputs not getting to the
farmers at the appropriate time. In addition, the program was hastened to its
death as a result of massive corruption and mismanagement of its funds by
government officials.
By 1987, the military government began to look into the problems of food
production from a broader perspective. The Directorate of Food, Roads and
Rural Infrastructure (DFRRI) was established to look into all aspects of food
production. The program attempted not only to increase food production but to
also solve the related problems, the supportive structures for production and
distribution of food, without which the costs of food would be high. Substantial
efforts under this program were directed at the infrastructural aspect. A number
of feeder roads were constructed to open up food production areas to consumers
or to provide water to rural communities. But by mid-1993, it was clear that the
program has done very little for food production. To a large extent, the
importation of food still constituted a major aspect of total imports. The
difficulties here were not just in over-focusing attention on infrastructural
development but also in mismanaging funds. Thus, it was clear that adequate
funding and efficient management as well as the identification of priority areas,
are prerequisites in the direction of food self-sufficiency in Nigeria.
In the case of Niger, agricultural policy, before the introduction of structural
adjustment, was characterized by a preference for state monopoly and numerous
regulations. The government gave parastatals the legal responsibility for secon-
dary and, in most cases, for primary marketing of nearly all agricultural outputs.
Input supply, including provision of credit, was linked to official marketing to
reinforce the primary marketing monopoly.
Several parastatals were connected with agricultural output and input mar-
keting in Niger. For example, an important one is the Office des Produits
Vivriers du Niger (OPVN), which purchases millet, rice, and sorghum, espe-
cially from other parastatals. Also, the Societe National de Commercialisation
de 1'Arachide (SONARA) purchases peanuts and cowpeas and sells them at its
price to industrial establishments.
It is important at this point to state that the 1979 to 1983 five-year plan
established a national grain reserve stock of 100,000 tons, of which 65,000 tons
were to compose a security stock. The security stock served as a buffer to supply
grain to deficit areas until commercial or food aid imports could arrive in the
event of a food shortfall. This stock was placed under the management of OPVN
in order to add to its crop purchase responsibilities. Besides, OPVN was also
responsible for the sale of grain to consumers at officially determined prices.
Self-Reliance in West Africa 105

But then, the quantity of grain that could be purchased from OPVN at these
prices was always limited, especially in periods of shortage when market prices
exceeded official prices. Other important parastatals include the Orginisation
Nigerien de l'Amenagement Hydro Agricole (ONAHA), which manages rice-
growing farm cooperatives, supplies inputs and irrigation services. The Union
Nigerienne de Credit et de Cooperation (UNCC), which manages the coopera-
tive movement, supplies farmers with inputs and credit through branch subsidi-
aries (for example, Centrale d' Approvisionnement), and serves as primary
agent for SONARA, and OPVN, among others in the primary marketing of
crops.4
As a result of the several measures on stabilization and structural adjustment
program, a number of changes were advocated for OPVN and SONARA. In
1984, the government ended the monopoly of OPVN in cereal and of SONARA
in groundnut. In 1986, OPVN operations were limited to the management of
80,000 tons in security stock. Also, OPVN was confined to the renewing of a
third of this stock every year. But this did not entirely solve the problem of
pricing and supply.
It will be noted that in 1983, the trend in Ghana when the economic recovery
program began that has been toward the liberalization of output pricing through
Agricultural Commodity Pricing Committee. In Burkina Faso, the agricultural
policy of the Sankara administration in the 1980s consisted of nationalizing
land, doubling the share of agriculture in budget spending to 40 percent, and
raising producer prices for both cash and food crops.
Thus, as far as self-reliance is concerned in agricultural development in West
Africa, the various governments in the subregion have demonstrated a very high
degree of commitment. The common objectives were increases in the output of
cash crops and the attainment of self-sufficiency in food production. Increased
output of cash crops was desirable in order to increase foreign exchange
earnings and provide funds for other development programs within the econ-
omy. Also, self-sufficiency in food production was necessary not only to reverse
the rising trend of food imports of the early 1970s and save foreign exchange
but also to provide a comfortable base for self-reliant development.
The determination of the West African leaders to ensure the attainment of
these objectives has been illustrated in their consistent articulation of the
relevant policies and measures since the second half of the 1970s in their
development plans and annual budgets. Such policies and measures have
covered several aspects of agricultural production and distribution as well as
certain institutional matters. In fact, the policy orientation for increased produc-
tion in the subregion was further strengthened since the mid-1980s, as many
countries in West Africa embarked on structural adjustment programs in order
to find a lasting solution to the endemic problem of economic recession and to
promote economic growth. Agricultural reforms under structural adjustment
programs underscored not just appropriate prices for cash and food crops but,
706 Foreign Aid and Self-Reliance in West Africa

also stressed basic institutional changes in order to open up the sector to market
mechanisms of demand and supply. Also, while large-scale farming was en-
couraged, the governments of many West African countries took steps that
would enhance an increase in the participation of the private sector in the
agricultural sector.
However, as it is today, the results of these efforts across the West African
subregion could at best be described as modest. There are little improvements
here and there from one country to another, but the problems of increased
production of cash crops and self-sufficiency are not comprehensively solved.
This is an indication that there are still many unresolved problems. In the first
place, it is obvious that the successful implementation of agricultural policies
would require increased external assistance. External assistance would be
required especially in the areas of inputs and research into high-yield crops and
seeds. Secondly, many countries would need to find an immediate solution to
the administrative malpractice and corruptions that pervade the administration
of inputs into the agricultural sector. Thirdly, better world prices for commodi-
ties are still very fundamental for increased production. Higher world prices
would enhance the commitment of farmers to the intensification of output.
Fourthly, the method of production should be improved to ensure more me-
dium- and large-scale mechanization. But this should not imply the abandon-
ment of the small-scale farmers, which constitute the bulk of the farming
population. Fifthly, attempt must be made to find lasting solutions to adverse
weather conditions, especially of drought and desertification, which have had
far-reaching negative consequences for higher output of cash and food crops,
particularly in the Sahelian countries. Of course, progress in industrial devel-
opment appears not to have brought much relish to West African government.
The slow progress in this sector has apparently confounded the observers of
economic development in Africa, given the strong potential to make advance-
ments in the sector.

INDUSTRIAL DEVELOPMENT
For many West African governments since the early 1960s, rapid industrial
development has been at the forefront of the agenda for economic growth and
development. This was considered necessary in order to reduce over depend-
ence on the agricultural sector, as well as to extricate the economy from its
dualistic structure. Also, it was deemed necessary as the path to an accelerated
improvement in the standard of living of their peoples. After independence,
West African governments generally felt that the few processing plants estab-
lished by the metropolitan countries should be rapidly transformed into full
manufacturing industries, while new ones would be established to cope with
the industrial needs of the peoples. Industrialization, as it was commonly
envisaged, would move from import substitution industrialization through
Self-Reliance in West Africa 107

intermediate industries to the level of heavy industries. All these were again
restated and put in better focus within recasted industrial policies in the early
1970s, when West African countries emphasized the goal of self-reliant devel-
opment. It was then more evident that industrial development would enhance
their foreign exchange earning capacity and should be part of the cornerstone
of the whole plan of self-reliant development.
However, as has been observed, most West African countries have yet to make
remarkable progress in industrial development. This has particularly been
illustrated in the area of manufacturing where most countries are still decades
behind newly industrializing countries of Southeast Asia and Latin America, let
alone the industrially developed countries. It has become increasingly clearer
that progress in this area would necessitate more efforts on the part of the
government and the private sector to surmount a number of internal and external
formidable political and socioeconomic obstacles.
Table 4.3 illustrates the structure of manufacturing value added for West
African countries. It is obvious that only a few countries have seriously
embarked on manufacturing. Cote dTvoire, Ghana, Mali, Nigeria, and Senegal
are the few countries in West Africa where industrialization appears to have
made a start. But then, it is obvious that manufacturing activities are essentially
in the food, beverages and tobacco, and textile and clothing industries. Machin-
ery and transport equipment as well as chemicals represent a small proportion
of total manufacturing establishments. In Ghana, for example, food, beverages,
and tobacco accounted for 34 percent of manufacturing value added in 1970.
Textile and clothing 16 percent, machinery and transport equipment 4 percent,
and chemicals 4 percent. By 1988, food, beverages, and tobacco increased its
share to 40 percent of value added in manufacturing while textile and clothing
declined to 6 percent. Also, manufacturing value added in machinery and
transport equipment declined to 1 percent. But the manufacturing value added
in chemicals rose to 7 percent.
Cote d'lvoire has a seemingly diversified manufacturing sector. But this
structure has not altered over the years. Food, beverages, and tobacco, together
with textile and clothing, are very predominant in manufacturing. However, the
proportion of manufacturing and transport equipment is substantial. The manu-
facturing value added of this sector was 10 percent in 1988 as in 1970.
It is thus clear that West African countries, by the end of the 1980s, were
generally at the level of import substitution. Progress in the areas of intermediate
and heavy industries by Cote d'lvoire, Ghana, Mali, Nigeria, and Senegal,
which made some incursions into these areas, has been very minimal. Conse-
quently, the external dependence of West African countries on the industrially
developed countries for both capital and consumption goods remained very
strong at the end of the 1980s. Table 4.4 illustrates the structure of merchandise
imports of West African countries. The table shows that machinery and transport
equipment together with other manufactures constitute large proportions of the
Table 4.3
West Africa: Structure of Manufacturing Value Added
Distribution of Manufacturing Value Added (percentages)

Food, Beverage, and Textiles and Clothing Machinery and Other Chemicals
Tobacco Transport Equipment
COUNTRY 1970 1980 1988 1970 1980 1988 1970 1980 1988 1970 1980 1988
BENIN 59 . . 14 0 . . ' 6 .
BURKINA FASO 69 . _ 9 . . 2 . l

CAPE VERDE . _ _ . . . . . .
COTE DTVOIRE 27 35 . 16 . . 10 10 . . 5 .
GAMBIA . 35 . . 2 . 0 . . 3

GHANA 34 37 40 16 11 6 4 2 1 4 5 7

GUINEA . . . . . . . .
GUINEA-BISSAU . . _ . . . . .
LIBERIA 27 . . . . .
MALI 36 . _ 40 . . 4 5 . 1
MAURITANIA . . . . . . . . . . I
NIGER . . _ . . . . . .
NIGERIA 36 . . 26 . _ 1 6 1
SENEGAL 51 48 48 19 19 15 2 4 6 6 8 7
IERRA LEONE . 65 . . , . . 0 . . 4

TOGO - - - - - - - - 4

Note: - = Nol applicable.


Source: UNDPAVorld Bank, African Development Indicators (Washington. D.C.: UNDP/World Bank, 1992), p. 249.
Table 4.4
Structure of Merchandise Imports of West African Countries, 1970 and 1991
Precentage Share of Merchandise Imports

Food Fuels Other Primary Machinery and Other


Commodities Other Transport Manufacturing
Equipment
COUNTRY 1970 1991 1970 1991 1970 1991 1970 1991 1970 1991
BENIN 12 16 4 7 8 11 21 21 55 45

BURKINA FASO 19 23 8 16 8 5 27 24 37 31

CAPE VERDE . . .
COTE D'lVOIRE 15 18 5 21 3 3 33 23 44 34

GAMBIA . . . . . -
GHANA 20 9 6 31 4 3 26 26 44 31
GUINEA . . . .
GUINEA-BISSAU 28 32 7 7 4 3 16 15 45 43
LIBERIA . .
'
MALI 29 18 9 28 6 2 21 25 36 28
MAURITANIA . . . . . . .
"
NIGER 13 15 4 20 6 6 26 28 51 31
NIGERIA 8 18 3 , 3 5 37 36 48 41
SENEGAL 28 26 5 20 5 5 25 21 38 29
SIERRA LEONE 23 24 7 28 4 3 22 19 44 46
TOGO 16 20 4 7 11 6 22 24 47 43
TOTAL 19 20 6 17 6 5 25 24 45 37

Note: - = Not available.


Source: World Bank, World Bank Development Report 1993 (New York: Oxford University Press, 1993), p. 266.
110 Foreign Aid and Self-Reliance in West Africa

imports of West African countries. For a number of countries, such as Cote


d'lvoire, Burkina Faso, Guinea-Bissau, Nigeria, Senegal, and Sierra Leone,
there was a percentage share of merchandise decline in machinery and transport
equipment in 1991 as against the figure for 1970. This does not necessarily
reflect improvement in this sector, but it is more as a result of economic
measures to reduce imports. Even then, for a few countries, there were slight
increases in the 1991 figures over that of 1970 figures in this sector. The
countries in this category are Niger, Mali, and Togo. This indicates that there
has been an increase in dependence by them on the industrially developed
countries.
Furthermore, the item "Other Manufactures" remains very significant. Al-
though this indicates a decline in 1991 vis-a-vis 1970 for all countries, never-
theless, it is clear that this still accounts for about 40 percent of merchandise
imports of most West African countries. This is an indication that the import
substitution industries have not been able to completely satisfy the local
demands of each West African country. This is in fact not surprising because
many industries in West Africa have been relegated to production at very low
levels. Production capacities have not been fully utilized because of several
input constraints, such as the availability of raw materials and funds for the
procurement of spare parts and the expansion of the industries. Besides, the
growth of industries has been constrained by a number of other difficulties such
as inadequate infrastructures and inefficient telecommunication systems both
within and with the external world.
The specific case of Ghana offers more insight into these difficulties. It may
be noted that from 1983 to 1989, the policy reforms that affected the industrial
sector were those that affected the real exchange rate. Other economy-wide
measures that had an impact on industry include the decontrolling of prices,
periodic adjustment of minimum wages, and change in interest rates. A high
priority for government investment in the five years after economic restructur-
ing has been the development of infrastructure: poor network of roads and
railways, inadequate supply of electricity and water, lack of adequate schools
and hospitals have all directly or indirectly affected industrialization.5
In general, the government wanted to promote private production; once it has
removed the major obstacles, it has limited instruments to actually promote
private sector investments, particularly small-scale investments. The recovery
program did, however, actively seek foreign investment after a decade and a
half of discouraging and often prohibiting it. An early step was to draw up a
new investment code and to adopt policies that allow easy repatriation of profits.
Among the first sectors to attract investment has been mining. For example, the
government and Lonhro, assisted by the IFC, put together a US$160 million
investment package in 1984, aimed at revitalizing gold mining.
As far as manufacturing industries are concerned, the problem has much to
do with capacity utilization. As may be noted in Table 4.5, there were production
Self-Reliance in West Africa 111

Table 4.5
Ghana: Estimated Production Rates in Several Manufacturing Industries,
Large- and Medium-Scale Factories, 1982-1987

Percentage of Capacity

Industry 1982 1983 1984 1985 1986 1987


Textiles 10.0 16.0 17.3 19.7 17.0 24.0
Garment 20.2 25.0 20.2 25.5 27.0 25.0
Metals 42.5 55.0 20.1 16.2 - 42.0
Electronics 31.5 44.0 8.3 33.2 30.0 36.0
Plastics 20.0 25.0 30.4 28.0 30.0 39.0
Bicycle/Motorcycle Assembly 15.0 20.0 7.6 19.9 - 10.0
Tobacco/Beverages - 65.0 19.5 39.6 40.0 45.0
Food Processing - 25.0 22.9 31.2 36.0 42.0
Leather 18.0 26.0 11.9 21.5 - 15.0
Pharmaceuticals 20.0 35.0 - 16.6 - 26.0
Cosmetics 15.0 20.0 - - 25.0 29.0
Paper/Printing 25.0 30.0 17.3 14.5 - 30.0
Nonmetal Mineral Manufactures 15.0 22.0 12.0 35.0 - 37.0
Chemicals 15.0 20.0 22.3 20.2 25.0 30.0
Rubber 27.0 22.0 15.0 16.0 23.0 28.0
Wood Processing 20.0 20.0 28.1 32.5 - 43.0
All Manufacturing 21.0 30.0 18.0 25.0 25.0 35.0

Sources: Government of Ghana, Quarterly Digest of Statistics (Accra: Ghana Statistical Service, 1989); H.
Alderman, Downturn and Economic Recovery in Ghana: Impacts on the Poor (Cornell Food and Nutrition
Policy Program, Monograph 10, March 1991), p. 70.

increases during the first four years after the introduction of the recovery plan.
The short-term increase was due to effective demand increases. Also, it was
aided by the deregulation of inputs and intermediary investments. But produc-
tion in many manufacturing industries remained below 50 percent of capacity
four years into recovery. This was, in part, due to several years of mismanage-
ment. Besides, in Ghana, local investorsfindit difficult to obtain capital through
either share investment or loans.

TECHNOLOGY
Technology may be considered as the systematic application of scientific
principles acquired through cumulative but systematic research to the solution
of problems, especially by exerting control over nature.6 It is a matrix of the
knowledge, skills, methods, and procedures that are involved in the production
of goods and services intended for the enhancement of the quality and standard
of living of man. In this context therefore, four main attributes may be identified.
In the first place, it is a major instrument for the creation of wealth. Secondly,
it represents an instrument for the easing of the exercise of social control.
Thirdly, it affects the modes of decision making to achieve social change.
Fourthly, it is a central area where innovations are uncovered.7
112 Foreign Aid and Self-Reliance in West Africa

West African countries have broadly recognized the importance of technol-


ogy in the process of self-reliant development. It is considered vital in the
context of the rapid transformation of the industrial and agricultural sectors for
an autonomous development. Appropriate technology should be imported and
local technology evolved to reduce the dependence of West African countries
on the industrially developed countries, who at the moment have the monopoly
on technology. However, it has been observed that this has been one of the areas
where West African countries have not made tangible progress because enor-
mous difficulties are associated with the transfer and development of technol-
ogy. The case of Nigeria provides a vivid example.
In Nigeria, the greater part of existing technologies was imported. The
dominant mechanism of acquiring technology was by purchase of machinery,
equipment, and other artifacts of production. However, the most important
question has been the suitability and appropriateness of such technologies.
Since the second half of the 1980s, one important objective of the federal
military government has been the development and utilization of local technol-
ogy with a view to promoting self-reliance in technological development. The
expectation is that such technologies would be less costly, more readily avail-
able, and within the reach of small and medium entrepreneurs who would use
them. In order to achieve this goal, an increased application of local Research
and Development (R&D) efforts was encouraged. In the view of the govern-
ment, goods and services produced in the country should reflect its resource
endowment. And the technology utilized in the production of goods and services
should be more appropriate and sustainable.8
Subsequently, there appeared to be some actions here and there. There was
an increase in the use of local raw materials by the large multinational corpo-
rations. The existing lines in the flour-milling plants in Nigeria was converted
and adapted to handle maize. Similarly, the breweries adapted their processes
to sorghum malt consumption in beer production employing technologies
developed by the Federal Institute of Industrial Research, Oshodi (FIIRO). On
the whole, the national average degree of dependence on imported inputs
declined from about 70 percent of total cost to less than 60 percent between
1983 and 1987.9
Also, it has been noted since then that local machine fabricators have been
enjoying booming patronage from firms whose only choice has been either to
use locally produced machines, spare parts and components, or be forced to
close down production lines and bear huge fixed costs. Many of them are now
commissioned to produce components and spare parts for the big companies.
A good example is the fabrication of machines for the processing of limestone
for a company located in Calabar, Cross River State, by another company
located in Sapele, in Bendel State.
Another important development has been the emergence of local metal-work-
ing industries producing capital goods. These are spread throughout the country.
Self-Reliance in West Africa 113

Such capital goods include feed-milling machines; cassava-processing ma-


chines; and industrial bakery and allied food-processing machinery such as
ovens, dough dividers, auto-mixers, slicers, and soap-making machines. One
of the foremost companies in this respect has been the Bus and Refrigerated
Van Manufacturers Company (BUREM), located in Lagos, which has produced
a bus largely from local inputs and components with local value added of about
80 percent. Institutions such as the Federal Institute of Industrial Research
(FUR), the Industrial Development Center (IDC), and the Project Development
Institute (PRODA) have also intensified their fabrication of machines and
equipment for a variety of uses.10
In the context of institutional development, the government has introduced
major innovations to ensure that these are more productive. Interaction between
them has been encouraged while collaborative research has been promoted to
reduce overlapping efforts. For example, a Raw Materials Research and Devel-
opment Council, to promote the use of local raw materials by Nigerian industrial
establishments, has been created. The council draws up policy guidelines and
action programs on the acquisition, exploitation, and development of raw
materials; reviews the availability and utilization of raw materials; advises on
ways of adopting available machinery and processes for the use of local raw
materials; and encourages publicity on research activities through workshops,
symposia, and seminars. Also, the initiative for the launching of the National
Science and Technology Fund (NSTF) on July 28, 1987, represents another
milestone in the drive toward technological self-sufficiency.
However, the structural adjustment program of the country has its drawbacks
in technological advancement. To begin with, the general increase in costs
generated by the Foreign Exchange Market (FEM) resulted in high prices
(sixfold in many cases) for agricultural equipment such as harvesters and
shredders, which cannot immediately be produced locally. This high cost, taken
together with a host of other factors, especially the nonaccessibility of some of
these facilities and inputs, reduced the farmers' inclination to adopt improved
technologies on the farms. In the same vein, the high import costs of the inputs
for many industries resulted in the closure of many plants and the loss of
thousands of jobs.11 These notwithstanding, the more general problems in
technological advancement have on the whole made major progress difficult in
Nigeria.
In most cases, a large proportion of imported technologies has proved
unsuitable for local conditions due to a number of factors. Prominent among
these are the failures to correctly select technologies from the wide range
available, and the failure to correctly apply the technologies or combination of
technologies to the appropriate stages of the production cycle. Also, there was
the problem of complete disregard for the socioeconomic environment of the
nation, particularly the resource endowments.
114 Foreign Aid and Self-Reliance in West Africa

There were few training facilities and these were confined to the areas of
operational and managerial know-how. Only few establishments were commit-
ted to local R&D. In fact, less than 20 percent of the establishments had
provisions specifically designed for R&D. Even then, these were meager. In the
light consumer-based subsector, for example, total annual expenditure on R&D
between 1983 and 1985 was about N1.6 million compared to an estimated total
capital input of about N380 million. Consequently, the technologies generated
locally from existing manufacturers and R&D establishments were very few.
Besides, the efforts of the latter have been severely hampered by the low rate
of commercialization of their findings. Because of all these, the process of
learning-by-doing, which is just as important now as it was at the beginning of
the European Industrial Revolution, was not open to most Nigerians.12
Furthermore, in the view of A. Adubifa, the science and technology system
was plagued by many weaknesses: in particular by the lack of modalities for
implementation of objectives; grossly inadequate and sometimes misdirected
funding; the absence of national programs for the mobilization of the public
appropriately for the understanding of science and technology; the lack of any
serious effort to develop a national information system for scientific and
technological activities; and the inability of the research institutes to recruit and
retain appropriate scientific and technical skill.13 These difficulties, which are
typical for many other West African countries, should be speedily addressed if
West African countries are to make tangible progress in self-reliant develop-
ment.

ENERGY
Energy in its various forms—solids, liquids, gases, electricity, and traditional
fuels—constitute important inputs into the process of economic growth and
development. They form vital factors in the manufacturing and commercial
sectors in the process of production. Also, in the private sector, they are very
important factors for daily existence. For self-reliant development, the West
African governments have recognized that it is an aspect of the development
process that must be accorded a pride of place. The provision of energy at the
required quantity would ensure continuous growth. Excessive dependence on
external sources would expose the development process to dangers of undue
disruptions. Reduced supply or higher prices for imported energy could have
the unpleasant effect of reducing output or increasing the cost of output. West
African countries are differently endowed with natural resources. The extent of
independence in energy supply would in the first place be a function of the
ability to exploit the energy resources available to each country.
The basic forms of energy required by West African countries include liquids,
gases, primary electricity, and traditional fuel. But the countries with require-
ments for solids are Niger and Nigeria. Solid fuels include hard coal, lignite,
Self-Reliance in West Africa 115

peat, and coke. The countries with large demand for liquids include Nigeria,
Cote dTvoire, Senegal, Ghana, and Mauritania. In Nigeria, the demand for
liquids rose to 444,000 terajoules in 1990 from 284,000 terajoules in 1980. In
the case of Cote dTvoire, it rose from 51,000 terajoules in 1980 to 91,000
terajoules in 1987, but declined to 61,000 terajoules in 1990. There was a
considerable increase in the case of Mauritania, from 8,000 terajoules in 1980
to 43,000 terajoules in 1987, but demand declined to 34,000 terajoules in 1990.
In Senegal and Ghana, the requirements declined during this period. In the case
of Senegal, it fell to 30,000 terajoules in 1990 from 36,000 terajoules in 1980.
In Ghana, it was a decline to 26,000 terajoules from 31,000 terajoules in 1980.
Apart from Liberia, with a major decline in requirements, possibly as a result
of the civil war, all other West African countries generally maintained the level
of their requirements for liquids in the 1980s.
In the subregion, Nigeria is the only country with requirements for gases. Its
requirements increased considerably during the 1980s. It rose to 166,000
terajoules in 1989 from 52,000 terajoules in 1980. But fell to 145,000 terajoules
in 1990.
The countries with large demand for primary electricity are Cote dTvoire,
Ghana, and Nigeria. For these three countries, the demand was more or less
stable. As for Cote dTvoire, this was an annual average of about 5,000
terajoules, Ghana 17,000 terajoules and Nigeria 8,000 terajoules. Thus, Ghana
had the largest requirements for primary electricity in West Africa in the 1980s.
As already noted, the largest energy requirements in West Africa in the 1980s
was in the area of traditional fuels. The largest requirements were recorded for
Nigeria, Ghana, Cote dTvoire, Burkina Faso, Mali, Senegal, Niger, Benin, and
Liberia. For all these countries, there was a steady increase in traditional fuels
requirements during this period. In Nigeria, for example, it rose to 977,000
terajoule in 1990 from 725,000 terajoules in 1980. Also, in Cote dTvoire, it rose
from 69,000 terajoules in 1980 to 99,000 terajoules in 1990. The high and
increasing requirements for traditional fuels in the subregion indicates a failure
to provide affordable prices and cleaner forms of energy for domestic use by
West African governments. However, this development may need to be halted
and reversed in order to ensure sustainable and environmentally sound devel-
opment to ascertain that the subregion is in the mainstream of current global
development efforts. The only exception is Cape Verde, which apparently
depends less on traditional fuel, possibly by geographical design and/or gov-
ernmental efforts, for domestic purposes.
However, while the energy requirements of West African countries have
generally increased during the 1980s, it has been noted that there has not been
corresponding increases in production. For a number of countries, total produc-
tion fell far short of requirements. During this period, Nigeria was the only
country that was able to meet its commercial energy needs, importing a very
small proportion of its requirements. Its exports of commercial energy was 4.08
116 Foreign Aid and Self-Reliance in West Africa

million terajoules in 1980, but this declined to 3.24 million terajoules in 1990.
Whereas Burkina Faso, Cape Verde, Gambia, Guinea-Bissau, Senegal, and
Sierra Leone substantially depended on the import of commercial energy. It
therefore follows that for many countries in the subregion, self-reliance in
energy production remain an elusive goal. The governments of West African
countries would therefore have to adopt more purposeful policies to exploit
more meaningfully their resources in this area. This will in no doubt require
huge investments of capital and technology. However, careful packages and
arrangements with foreign partners are the shortest escape routes from these
difficulties.

FOREIGN TRADE
Foreign trade constitutes an important sector in the process of economic
growth and development. Its importance lies in raising funds for economic
growth and development. The more the increases in the exports of a country the
better are the chances for the promotion of economic growth if the prices the
exports do not fall. However, to increase exports on a sustainable basis, it is
vital that the components of exports are diversified. Also, the trading partners
must be varied to reduce the vulnerability of the exporting country. The
diversification of export components is desirable in order to avoid shocks in
earnings that may follow from a fall in the price of one or two export items.
Trading patterns should also be diversified in order to ascertain that a fall in the
demand for an export item does not unnecessarily lead to a drastic fall in the
earnings of the country.
Self-reliant development, as already noted, involves reduced dependence on
foreign trade. Trade disengagement is a call for partial reduction in the magni-
tude of international economic transactions with the industrially developed
countries. Since the objective is to reduce the magnitude and influence of
foreign goods, it is normally in the area of imports that policy measures should
be directed. Comprehensive trade disengagement must therefore include poli-
cies directed at exports. Their objective is not to decrease exports as such but
to decrease reliance on export receipts for national income.14 However, it has
been very difficult to attain this goal in West Africa. As may be observed from
Table 4.6 on the structure of merchandise exports, the subregion has not, at a
general level, succeeded in the diversification of exports. The major exports are
fuels, minerals, metals, and primary commodities. In 1965, fuels, minerals, and
metals accounted for 25 percent of West Africa's exports. Although it fell to 18
percent in 1970, nevertheless, it rose to 34 percent in 1991, which is an
indication of the poor performance of the subregion in industrial development
in the 1970s and 1980s. Other primary commodities rose to 71 percent in 1970
from 67 percent in 1965 but fell to 55 percent in 1991. The increase in the
proportion of the export of fuels, minerals, and metals in the subregion between
Table 4.6
Structure of Merchandise Exports of West African Countries
Percentage Share of Merchandise Exports

Fuel Minerals and Other Primary Machinery and Other Other Manufacturing Textiles and Clothing
Metals Commodities Transport Equipment
COUNTRY 1965 1970 1991 1965 1970 1991 1965 1970 1991 1965 1970 1991 1965 1970 1991

BENIN l 0 3 94 89 67 2 3 3 3 8 28 0 6 1

B U R K I N A FASO I 0 0 94 95 88 1 1 4 4 3 8 2 0 2

CAPE VERDE . . . . . . .
COTE DTVOIRE 2 2 11 93 92 79 1 1 2 4 5 9 1 1 2

GAMBIA . . . . . . _ . . . . . . .
GHANA 13 13 15 85 86 84 1 0 0 2 I 1 0 0 0

GUINEA _ . . . . . . . . . . . . .
GUINEA-BISSAU . 0 0 . 98 97 . 1 . . 1 0 0

LIBERIA 72 . . 25 . . 1 3 . 0

MALI 1 1 0 96 89 93 1 0 0 2 10 7 I 8 6

MAURITANIA 94 88 86 5 11 9 1 0 4 0 0 1 0 0 0

NIGER 0 0 86 95 96 12 1 1 0 4 2 1 1 0 1

NIGERIA 32 62 96 65 36 3 0 . 0 2 1 1 0 0 0

SENEGAL 9 12 22 88 69 56 1 4 3 2 15 20 1 6 0

SIERRA LEONE 25 15 34 14 22 33 0 . 60 63 32 0 0 .
TOGO 49 25 49 48 69 42 1 2 1 3 4 9 0 1

TOTAL 18 34 67 71 55 1 10 1 2 1
25
' 2 7 9

Note: - = Not available.


Sources: World Bank, World Development Report 1988 (New York: Oxford Univcrsily Press, 1988), p. 194; World Bank. World Development Report 1993 (New York: Oxford University Press,
1993), p. 268.
118 Foreign Aid and Self-Reliance in West Africa

1970 and 1991 was largely due to the rise in the export of these commodities
by Niger, Nigeria, Senegal, Sierra Leone, and Togo. The fall in the proportion
of other primary commodities in the subregion between 1970 and 1991 was
essentially due to decreases in the export of these commodities by Niger,
Nigeria, Senegal, Sierra Leone, and Togo. The share of the export of machinery
and transport equipment rose to 2 percent in 1991 from 1 percent in 1956. This
suggests that West African countries have not made tangible progress in the
areas of intermediate and heavy industries. The share of other manufactures in
exports rose slightly; from 7 percent in 1965 to 9 and 10 percent in 1970 and
1991, respectively. The countries which have, to some extent, increased the
share of machinery and transport equipment in their exports are, Benin, Burkina
Faso, Cote dTvoire, Mauritania, and Senegal. But as far as other manufacture
exports are concerned, Sierra Leone, Benin, Senegal, Mali, and Cote d'lvoire
have performed better than the other countries in the subregion. Also, it has
been noted that the structure of West African imports has not changed substan-
tially. There is high dependence on the import of food and fuels. The latter, in
particular, rose dramatically between 1970 and 1991 from 6 to 17 percent of
merchandise imports. In 1991, the subregion virtually maintained the level of
the shares in the import of other primary commodities and machinery and
transport equipment that was attained in 1970. As regards other manufactures,
there was a decline to 37 percent in 1991 from 45 percent in 1970. All countries,
except Sierra Leone, had a reduction in the import of other manufactures during
this period.
From 1980 to 1990, the performances of both exports and imports of West
African countries have essentially been on the downward trend for the subregion
as a whole. Total exports of West Africa declined to US$15.6 billion in 1983
from US$33.5 billion in 1980.
It picked up in 1984 and rose to US$19.3 billion in 1985, but thereafter
proceeded on a precipitous decline to US$2.1 billion in 1990.15 This seems to
indicate that the structural adjustment programs in many countries in West
Africa had only a short-lived effect on the export of primary commodities. Trade
liberalization and exchange rate measures have not produced the expected
desired result of trade expansion. The bulk of the exports in West Africa is
accounted for by few countries, namely, Nigeria, Cote dTvoire, Ghana, Senegal,
Niger, Guinea, Liberia, and Togo.
The imports of West Africa declined during this period. Although it rose to
US$26.5 billion in 1981 from US$22.9 billion in 1980, it fell steeply to US$9.9
billion in 1986. But thereafter, it rose to US$12.5 billion in 1990. This was an
indication that economic activity did not pick up in the 1980s to encourage the
importation of more capital and consumption goods.
Given this similar pattern of downward trend in both exports and imports,
the subregion recorded deficits in its balance of trade from 1981 to 1983, but
had surpluses in its trade balances in all other years. However, this does not
Self-Reliance in West Africa 119

reflect the true situation across the subregion. In a number of the economically
weak countries such as Benin, Burkina Faso, Cape Verde, Gambia, Guinea-Bis-
sau, Mali, Niger, Sierra Leone, and Togo, trade deficits were common features
in their trade balances during this period. In addition to these countries both
Ghana and Senegal experienced trade deficits in many years. The trade deficits
of these countries were in part accounted for by the increases in the import of
manufactures and food. Also, deficits were further fueled by the decline in
export commodities of some countries during this period.
In the direction of trade, the indications are that most countries have not
sufficiently diversified their foreign trade. For some countries, the number of
foreign trade partners has increased. However, this notwithstanding, the pre-
ponderance of the metropolitan countries is still very significant.16 In the case
of Benin for example, exports to France accounted for 22 percent of total exports
in 1981; this fell to 8 percent in 1987 as exports to the United States and
Germany increased. For Cote dTvoire, exports to France represented 19 percent
in 1981 but declined slightly to 17 percent in 1987, when there were substantial
increases in the exports to Germany, the United Kingdom, and the United States.
In 1981, the United Kingdom accounted for 1 percent of the exports of Nigeria,
but this rose to 3 percent in 1987. There were major export increases to both
the United States, France, and Germany. The reason for this being that the
United Kingdom, an oil producer, needs little or none of Nigeria's petroleum.
Imports have, to a large extent, continued to be from the metropolitan
countries. As may be observed, about 20 percent of the imports of Benin in 1981
came from France. But this declined slightly to 19 percent in 1987. The imports
from Japan and Germany have risen significantly during this period. In Cote
dTvoire, imports from France represented 31 percent of total imports in 1981,
but this increased to 34 percent in 1987. Other major sources of imports were
Germany, Japan, the United States, and the United Kingdom. In the case of
Nigeria, the United Kingdom accounted for 19 percent of its imports in 1981,
but this declined to 16 percent in 1987. This is partly due to the general
governmental policy to cut down imports in the wake of the economic recession
beginning from 1980. This notwithstanding however, countries such as Ger-
many, France, the United States, and Japan emerged to be prominent trading
partners of the country by the end of the 1980s.
The practical problems of trade disengagement in West Africa have, to a large
extent, been vividly illustrated in the case of Nigeria. The Second, Third, and
Fourth National Development Plans sought reduction in the country's depend-
ence on the external sector in general, including the petroleum sector.17 In the
first place, this implied a decrease in the reliance on nonoil export receipts for
national income. However, paradoxically, the government has at the same time
underscored the role of foreign exchange in the process of economic growth
and development. Thus, the Second Plan further clearly indicated that increased
earnings of foreign exchange was critical, since the country in its growth process
120 Foreign Aid and Self-Reliance in West Africa

Table 4.7
Nigeria: Importation of Passenger Cars, 1967-1978

N Mills.

Year 1 2
Value of Car Value of Total I as a
Import Import Percentage
of 2

1967 15.7 447.1 3.5


1968 5.9 386.4 1.5
1969 5.5 497.4 1.1
1970 13.8 756.4 1.8
1971 29.4 1075.4 2.8
1972 60.2 990.1 6.1
1973 76.7 1224.8 6.3
1974 97.0 1737.3 5.6
1975 220.5 3721.5 5.9
1976 271.2 5148.5 5.3
1977 339.4 6881.3 4.9
_
1978 8151.7 -

Note: - = Not available.


Sources: Federal Republic of Nigeria, Economic and Statistical Review 1976
(Lagos: Federal Office of Statistics, 1976); United Nations, 7979 Yearbook of
International Trade Statistics (New York: United Nations, 1979); and United
Nations African Statistical Yearbook (Addis Ababa: UNECA, 1979).

depends much on the import of capital goods. In other words, disengagement


was put into question because of the reliance on foreign capital and technology.
Disengagement was therefore perceived more in the context of the reduction in
the importation of luxury goods and goods for which local substitutes could be
found. Even then, the attempts to reduce luxury imports have not been very
successful. These reductions naturally led to large-scale smuggling that the
government could not effectively contain as a result of the porosity of the
Nigerian borders. For example, Table 4.7 illustrates the failures in respect to the
import of passenger cars as a luxury item from 1967 to 1978.

Regional Integration
In its collective context, self-reliance has been demonstrated in increasing
involvement in regionalism. The basic rationale for regional integration are,
among other things, found in the large market that it will provide for the
integrating states. The markets of most West African countries, apart from
Nigeria, are very small to sustain rapid industrialization. A large West African
market could ensure the right location and the establishment of industries at
Self-Reliance in West Africa 121

optimum level. When industries produce at the optimum level, this would
procure production at the lowest cost per unit in output.18 Also, it has been
observed that regional economic integration was a prerequisite for the foreign
trade expansion of West African countries. These countries, like many develop-
ing countries elsewhere, experience considerable constraints in the export of
goods to the industrially developed countries as a result of the latter's import
restrictions. With the trade liberalization regime of regional economic integra-
tion, it would be easier for West African countries to expand their foreign trade.
It is important to underscore from the outset that West Africa has had
considerable experience in varying forms of economic cooperation, commenc-
ing, in particular, during the colonial times when the metropolitan countries
devised these arrangements to ease the administration of the territories under
their rule. At the moment, there are about 40 cooperative intergovernmental
arrangements in the subregion dealing with different aspects of economic
cooperation.19 However, the Economic Community of West African States
(ECOWAS), established on May 28, 1975, has been the most important as its
membership consists of all the sixteen anglophone, francophone, and lusophone
countries in West Africa.20
The main purpose of the ECOWAS was to promote the expansion of trade
among the member states; foster industrial and agricultural development among
them; and assist in social, cultural and scientific cooperation for the overall
development of the West African subregion.21 Along with the ECOWAS, special
recognition may also be accorded to the West African Economic Community
or Communaute Economique de 1'Afrique Occidentale (CEAO), established in
1973 and consisting of Benin, Burkina Faso, Cote dTvoire, Mali, Mauritania,
Niger, and Senegal; and of Mano River Union (MRU), also established in 1973
and made up of Liberia and Sierra Leone. The objectives of these two groupings
are identical to those of the ECOWAS and both have continued to operate after
the formation of the ECOWAS.
The community has, since its inception, taken a number of integrative steps
aimed at achieving the objectives set in the treaty. Among other things, it has
commenced on the development of infrastructure; adopted agricultural and
industrial cooperation programs; established a program for the creation of a
single monetary zone; and introduced the ECOWAS immigration program,
visa-free travel program for the citizens of the community. These citizens also
have the right to reside and settle in any country in the subregion.
This notwithstanding, it is a well-known fact that these have not contributed
in any remarkable manner to the process of self-reliant development in West
Africa. The process of integration in the ECOWAS has disappointingly been
constrained by a number of endogenous and exogenous factors. Many of these
are well-known but it will be instructive to underscore here some of the most
prominent ones. For example, as it is today, the legacy of national sovereignty
affects the regional integration process. The ECOWAS member states tend to
122 Foreign Aid and Self-Reliance in West Africa

consider national interests first in all issues relating to subregional economic


integration and development. Also, colonial experience continues to influence
national institutions and attitudes in political, legal, educational, and adminis-
trative matters. Whereas, a more independent national outlook would facilitate
the process of integration in the subregion.
At another level, the ECOWAS is hunted by the question of domination. The
smaller economically weak countries often suspect goals of domination in the
genuine support for subregional development efforts by the economically
stronger member states.22 These fears, often based on external influence, cannot
in many instances be justified but have disappointingly removed the wind out
of the sails of regional economic integration. Consequently, the integration
process has tended to spill around the more the small member states covertly
express reservations on integrative measures.
The process of integration in the ECOWAS has also suffered considerably
because of political upheavals within and among the Member States. The
Liberian crisis, which has claimed hundreds of lives since its inception in
1989, has been a major digression from the process of integration. The crisis
has engaged the full efforts of the interim government with little or no
energies left for regional integration. Similarly, it has been a significant
preoccupation of the community. The Summits of the Heads of State and
Government have, since the beginning of the civil war, been more concerned
with the reestablishment of peace and the prevention of the conflict from
spreading to other neighboring countries. Such preoccupation would natu-
rally leave less time for decisions on measures toward the consolidation of
the ECOWAS. All of these factors put together have had adverse effects on
the commitment to and consolidation of the community. Thus, peace and
security are indispensable aspects of economic integration in the subregion.
The community will, as a matter of urgency, need to ensure the implemen-
tation and adoption of the measures on trade liberalization and common
external tariffs to move toward progressive integration.
The failure to implement the decisions of the community has been another
major setback in the drive toward self-reliant development in West Africa.
Some measures, especially those on trade liberalization, free movement of
persons, common external tariffs, nonaggression, and mutual defense assis-
tance pacts, have not been effectively implemented by the member states
because of perceived disadvantages to national interests or as a result of poor
national administrative machinery for the implementation of the ECOWAS
decisions. The prospects of self-reliant development could be enhanced if
the member states implement the decisions of the community promptly.
Furthermore, integration and self-reliance have run into difficulties while the
community could not be guaranteed with strong and effective leadership. The
community, like the state, requires leadership with vision on how best to achieve
the goals of economic integration. Economic integration is a complex process.
Self-Reliance in West Africa 123

It is more difficult in the case of developing countries, where the community


needs to face the task of the provision of basic infrastructures and at the same
time confront limited financial resources. It follows, therefore, that careful
choices must be made on each integrative measure and resource that could
facilitate the attainment of self-reliant development. Nigeria has in the past
attempted to provide such leadership through support for community programs
and projects.23 A leadership role could entail some sacrifices in the short-run,
and it is better enhanced when more countries act jointly to give direction and
support to the community.
In addition, it is important to also underscore that the contribution of the
community to self-reliant development has been undermined partly because
of the paucity of funds for its projects. Many member states have been unable
to adequately support regional projects in which they are beneficiaries for
lack of financial resources. Their ability to do so has been eroded as national
projects and subregional projects have to compete for diminishing resources
from foreign exchange earnings arising from the fall in the prices and demand
for commodity exports. At the same time, as already noted, most of these
countries are confronted with the obligation of servicing external debts. In
this connection, it is important to stress that the implementation of subre-
gional projects has not been made easy as a result of the recent "aid fatigue"
by the aid donors. Without any doubt, all these require a reversal in the short
run in order to ensure that the community plays an important role in the drive
toward self-reliance in West Africa.

CONCLUSION
Self-reliant development is a dream yet to be realized in West Africa.
Economic policies and specific sectoral areas of focus were clearly articulated
in the early 1970s by many West African countries in order to attain this goal.
But the achievements by the second half of the 1990s, as could be observed, are
nothing to write home about. It is evident that there are a number of obstacles
in the capacity to implement such policies. Also, progress in sectoral areas for
self-reliant development ran into difficulties because of overwhelming endo-
genous and exogenous factors, some of which are beyond the control of West
African countries, individually or collectively. Clearly a major and in fact
foremost problem is the machinery for implementation of policies.
In many countries the institutions, the government departments, are neither
adequate nor well staffed. The paucity of sufficient and dedicated professional
staff militated against a systematic implementation of the policies in most
countries. In addition, the problems were compounded in some countries where
these departments were operated by corrupt officials.
It is obvious that the question of food self-sufficiency cannot be adequately
solved in most countries if the problems of the mode of production are not
124 Foreign Aid and Self-Reliance in West Africa

imaginatively tackled. Sufficient weight would need to be accorded to mecha-


nization in countries where the terrains encourage it. At the same time lasting
solutions need to be found to the adverse effects of climatic conditions such as
drought, desertification, flood, and soil erosion. As far as cash crops are
concerned, the basic issues relate to the increases in the world prices for these
commodities, increased demand, and better methods of production. In addition,
the farmers in West Africa require better access to credits if they are to increase
their production.
It has been difficult to make significant advancement in industrial develop-
ment where the issues of inputs could not be effectively solved. The poor level
of internal savings of most countries in West Africa made it difficult for local
entrepreneurs to have sufficient capital for investment. Foreign investments
were not forthcoming, as foreign investors find most West African countries'
investment codes unsatisfactory and become disillusioned about the prospects
for economic growth.
Self-reliance in technology suffered serious setbacks as the capacity for this
undertaking was not adequate. The research institutions in West African coun-
tries are few, poorly equipped, and inadequately staffed by professionals. The
West African governments do not adequately fund these institutions, and a
significant part of the professional staff have left many institutions for the
United States and Europe as the unabated economic recession continued to
undermine incomes and create harsher conditions of living. But then, learning
from imported technology has not been made easy. Many industries were forced
to close down in the wake of the recession and the adverse effects of structural
adjustment programs. Also, the importation of new technologies was not easy
as a result of the lack of access to them and their high costs.
The West African subregion is endowed with vast energy resources. Some of
these are yet to be fully tapped. The move toward self-reliance in this area has
suffered setbacks partly because of the failure to exploit these resources. At the
same time, the exploitation of these resources requires the technological and
financial support of the industrially developed countries.
It has been difficult for West African countries to reduce dependence on
foreign trade. The reasons for these are not far-fetched. The progress in
industrialization has been slow. While this remains, West African countries have
been obliged to continue to import both capital and consumption goods. West
African countries would therefore need to strengthen the factors for accelerated
industrialization in the production of consumption goods in order to reduce
dependence on imports. This would, among other things, entail the development
of human resources, better investment codes, increases in domestic savings, and
the rapid development of infrastructures.
Regionalism has not effectively influenced the course of collective self-reli-
ance in West Africa. The principal integration arrangement in the subregion, the
ECOWAS, would need to be strengthened in order to fulfill this function. This
Self-Reliance in West Africa 125

will require greater political commitment by the member states through the
implementation of community decisions, payment of contributions, effective
support of subregional projects, prevention of conflicts, and the support of the
international community.
These issues are critical to the future of economic development in West
Africa. The pace of economic development in West Africa in the foreseeable
future is likely to be determined by the extent to which solutions are found to
these fundamental problems. It is for this reason that the next chapter of this
study is devoted to the critical elaboration of some of these problems.

NOTES
1. World Bank, World Bank Development Report 1993 (Oxford: Oxford University Press,
1993), p. 288.
2. UNDPAVorld Bank, African Development Indicators (Washington, D.C.: UNDP/World
Bank, 1992), pp. 225-28.
3. FAO, Food Supply Situation and Crop Prospects in Sub-Saharan Africa: Special Report
(No. 2, June 1992), p. 10.
4. Carthy L. Jabara, Structural Adjustment and Stabilization in Niger: Macroeconomic
Consequences of Social Adjustment\ Cornell Food and Nutrition Policy Program, Monograph
11, June 1991, pp. 77-79.
5. These are utilities or firms involved in transportation and communication. Also, the
government intends to retain control of the Ghana Cocoa Board and the State Mining Corpo-
ration.
6. Nigerian Institute for Social and Economic Research (NISER), The Technological Impact
of Nigeria's Structural Adjustment Programme (SAP) (Monograph Series, No. 3, 1988), p. 1.
7. Ibid.
8. Statement by Nigerian General I. B. Babangida at the launching of the SAP on June 26,
1986.
9. A. Adubifa, Technology Policy Failures in Nigeria (Dakar: IDRC, 1987), p. 12.
10. Ibid., p. 14.
11. Ibid., p. 20.
12. National Office of Industrial Property (NOIP), Annual Report 1986 (Lagos: NOIP).
13. A. Adubifa, Technology Policy Failures in Nigeria.
14. O. Ojo, "Self-Reliance as a Development Strategy," in C. Ake (ed.), Political Economy
of Nigeria (Lagos: Longman, 1985), p. 147.
15. UNDPAVorld Bank, African Development Indicators, pp. 63-64.
16. IMF, Direction of Trade Statistics 1988 (Washington, D.C.: IMF, 1988).
17. Federal Republic of Nigeria, Guidelines for the Fourth National Development Plan
1981-1985 (Lagos: Federal Ministry of National Planning, 1980), p. 20; Federal Republic of
Nigeria, Second National Development Plan 1970-1974 (Lagos: Ministry of Economic Devel-
opment and Reconstruction, 1970), pp. 33-37; and Federal Republic of Nigeria, Third National
Development Plan 1975-1980 (Lagos: Federal Ministry of Economic Development, 1975), p.
30.
18. For details, see R. L. Allen, "Integration in Less Developed Areas," Kyklos, 3(14), 1961,
pp. 315-334; G. M. Meier, International Economics: The Theory of Policy (New York: Oxford
University Press, 1980); F. Andic, Suphan Andic, and Douglas Dosser (eds.), A Theory of
126 Foreign Aid and Self-Reliance in West Africa

Economic Integration for Developing Countries (London: Allen and Unwin, 1971); and P.
Robson, The Economics of International Integration (London: Allen and Unwin, 1980).
19. Abass Bundu (Executive Secretary), ECOWAS and the Future of Regional Integration
in West Africa, Paper presented at the IDRC-ECOWAS International Conference on West
African Integration, Dakar, January 11-15 1993, p. 4.
20. The ECOWAS consists of Benin, Burkina Faso, Cape Verde, Cote d'lvoire, Gambia,
Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra
Leone, and Togo.
21. Article 2, Treaty of the Economic Community of West African States (ECOWAS), 1975.
22. Abass Bundu, ECOWAS and the Future, pp. 12-13.
23. R. Omotayo Olaniyan, "Nigeria and ECOWAS," in G. O. Olusanya and R. A. Akindele
(eds.), Nigeria's External Relations: The First Twenty-Five Years (Ibadan: University Press
Limited, 1986), pp. 130-133.
5

Critical Issues in Foreign Aid,


Self-Reliance, and Economic
Development

INTRODUCTION
Deliberate efforts have been made by West African governments since the early
1970s to raise the standard of living of West African peoples. This was based
on the recognition that it is the primary duty owed to the people and without
which they could be severely handicapped in the comity of nations. The goal
of economic development is not controversial; however, there were disagree-
ments on how best to achieve it. Whatever strategies that were adopted, the
nature and economic circumstances of these countries were generally the major
determining factors. Considerable weight is given to the historical, political,
and sociocultural development. What is the level of economic development?
What factors are locally available for economic development? Also, in the
adoption of the strategy for economic development attention is given to the
understanding of the influence of the positive and negative factors. How could
the positive factors be strengthened and promoted and the negative ones
contained or eliminated in order to ensure development on a sustainable basis?
Traditionally, West African countries have been recipients of foreign aid from
the metropolitan countries during the colonial days. This practice continued
after independence as the metropolitan countries endeavored to maintain and
strengthen their influence in the former colonies. However, the poor economic
performance beginning from the early 1970s, as manifested in part in the decline
in foreign exchange earnings and poor internal savings, convinced West African
political leaders that increased foreign aid should be sought not only from the
metropolitan countries but also from other industrially developed countries.
128 Foreign Aid and Self-Reliance in West Africa

Foreign aid, as was calculated, would be beneficial in building infrastructures


and the establishing institutions.
At the same time, decisions were taken by the various governments on
self-reliance as a realistic strategy for an accelerated economic growth and
development. The international economic environment, as it was perceived, was
such that would not guarantee the rapid economic transformation that was
eagerly sought by the political leaders. This philosophy should enable them to
harness internal resources, coordinate these, and build an internal momentum
to propel the economy.
However, it has been made abundantly clear in the preceding chapters that
foreign aid and self-reliance are loaded with a number of constraints in the
process of economic development. The disbursement and utility of aid are
associated with several complex political, economic, and social issues. There
are also difficulties in the extent to which self-reliance could be implemented
given the fact that West African economies are export and import oriented and
well-integrated into the world economy. The general problems associated with
all these have been mentioned in the earlier chapters. While these have been the
case, new developments in the world economy and the individual countries
themselves brought new dimensions into the ways in which foreign aid and
self-reliance should be perceived and what other development strategy options
should be considered.
In light of these experiences, therefore, the main purpose of this chapter is
to examine more critically the basic issues that are fundamental to foreign aid,
self-reliance and economic development of West African countries. On these
issues, it is desirable to understand the contributions and limitations imposed
by colonial hangover, donors' interests, foreign aid management, technology,
human resources development, drought, foreign debt, commodity prices, and
structural adjustment programs, among several others. Besides, special atten-
tion should be accorded to new development thinking: sustainable development
with its goal of environmental preservation. What are the implications of this
for West African countries? The prospects for economic growth and the devel-
opment of West African countries would depend on the extent to which the
positive elements are harnessed and appropriate solutions are found to the
negative limitations.

COLONIALISM
For most West African countries, colonialism'continues to constitute an
important influential factor in foreign aid, self-reliance, and economic devel-
opment. Admittedly, colonial administration laid the foundation for several
political and socioeconomic structures in West African countries. These, to a
large extent, contributed to the uplift of the political and economic structures
with the introduction of Western civilization, but questions continue to be asked
Foreign Aid, Self-Reliance, and Economic Development 129

on the sufficiency of these contributions in view of the economic growth in the


metropolitan countries during this period. Besides, the more crucial questions
have been on the implications of the political and economic links with metro-
politan countries for economic development in West Africa. Except for Ghana
in 1957, most of the countries in West Africa became independent in the early
1960s after almost half a century of colonization by the British, French, the
Portuguese. However, sinccthen it has been easier said than done to evolve an
autonomous approach for accelerated economic development. The political and
administrative institutions of West African countries were largely, at inde-
pendence, modeled after those of the British, French, and Portuguese. The
British parliamentary system reigns in Nigeria, Ghana, Sierra Leone, and
Gambia, while the French parliamentary system prevails in Benin, Burkina
Faso, Cote dTvoire, Niger, and Mali, to name a few. The same applies with
equal force in the case of the Portuguese and Guinea-Bissau.
Similarly, West African economic systems are based on the market economic
systems of the British, French, and Portuguese. In countries such as Guinea and
Burkina Faso, where attempts were made to establish socialist systems, these
programs encountered internal and external opposition. They could not be
sustained and were ultimately scrapped. In Benin, the Kerekou regime, which
came to power in 1972, achieved a shaky but unprecedented stability. The
Marxist rhetoric introduced in 1974 culminated in repressive military rule in
the late 1970s, but this had largely ceased by the early 1980s. In Burkina Faso,
Captain Thomas Sankara took power on August 4, 1983 and set up a National
Revolutionary Council, or Conseil Revolutionnaire National, with himself as
the head of state. In the following year, he renamed the country (formerly Upper
Volta) as Burkina Faso, meaning the "Land of Incorruptible People." He further
ordered all government officials, including himself to open their bank accounts
to public scrutiny. His government lasted until 1987 when he was overthrown
by Captain Blaise Compaore. The urban dwellers objected to lower standards
of living, while sections of the peasantry expressed unhappiness with ill-devised
development schemes. Furthermore, the left accused the government of soften-
ing its anti-imperialist stance in order to secure foreign aid. Similarly, Nigeria's
experiment with a presidential system, introduced in 1979, after nineteen years
of parliamentary system, has remained controversial, as its operation has been
effectively put in abeyance by successive military interventions and rule. In
effect, the metropolitan political, administrative, and economic arrangements
remained together with the influence of the British, French, and Portuguese.
The system of interdependence between the former colonies and metropoli-
tan countries continues to be nurtured and strengthened. The foreign trade of
West African countries is basically with Britain, France, and Portugal. The only
exception being Liberia, which was not colonized. For the French-speaking
West African countries, this has been compounded with the creation of a
common currency CFA franc, which is fully backed up by the French franc.
130 Foreign Aid and Self-Reliance in West Africa

Besides, there is also financial dependence: the metropolitan countries provide


a substantial part of the funds for development in most countries of the
subregion. This is particularly the case for a number of francophone West
African countries with weak financial resources, whose implementation of
annual budgets depends, to a large extent, on the subventions from the French
government. The dependence on these countries has, in recent years, been
increased as a result of their poor economic performance in the aftermath of the
unabated global economic recession.
While colonial hangover has impact on the direction of aid and the extent to
which individual self-reliance could effectively serve as a strategy for economic
development, its greatest problems appear more to be in the domain of collective
self-reliance. In its context of regional economic integration, collective self-re-
liance requires trade expansion among the member states. It requires the steady
creation of industries in the member states and their allegiance as well as the
surrender of part of their sovereignty to the supranational authority.
As it is today, regional economic integration in West Africa, especially in the
ECOWAS, in part suffers from the lack of these attributes. The loyalties of the
member states to this organization are not very strong. National interests and
strong ties with the metropolitan countries have made the operations of the
regional economic integration scheme problematic. Regional economic inte-
gration has in effect tended to spill around because of the diverse political and
administrative backgrounds and feeble loyalties of the member states. In order
to make regional economic integration meaningful, therefore, adequate efforts
must be made to reduce the foreign trade preponderance of the metropolitan
countries and other developed countries. Regional economic integration should
ensure the rapid consolidation and establishment of manufacturing industries.
Special consideration should be accorded to the industries involving machinery
and transport equipment, which constitute major imports from the metropolitan
and other developed countries. It is through these tactics that the extra-subre-
gional trade dependence could be reduced. An international culture of admini-
stration should be evolved, which should be an excellent harmonization of all
past administrative experiences of the member states. In other words, an
economic integration arrangement should remove all colonial hangovers in
order to make collective reliance a reality. However, given the global changing
economic circumstances and their implications for each country and the general
decline in the volume of foreign aid to West Africa in recent years, the basic
questions are on what could be expected in the foreseeable future from the
metropolitan countries and other traditional sources.

DONORS' INTERESTS
The interests of donors as determined principally by international and
national economic development will play a critical role in the volume of foreign
reign Aid, Self-Reliance, and Economic Development 131

aid flows to West Africa in the future. These have played a significant role in
the past and will continue to assume a preeminent position in the flow of aid to
the subregion as circumstances change in the political and economic spheres at
both national and international levels. For a number of aid donors, the assistance
to developing countries is not based on the needs of these countries. As already
noted in Chapters 2 and 3, the rationale for aid flows to developing countries,
among other things, include economic growth promotion of the donor countries,
their political influence, and the strategic importance of the recipient countries.
Of these three determinants, the first two are likely to play a more powerful role
in West Africa in the foreseeable future. The case for strategic interests has been
weakened following the collapse of the former Soviet Union in 1990. With the
collapse of the Soviet Union and the weakening influence of socialism world-
wide, the East-West ideological rivalry that characterized international relations
in the cold war years has been relegated to the background in global politics.
The broad focus of the United States and the international community at large
now is the promotion of democracy, conflict resolution, international peace,
security, and development.
The economic growth interests of the donor countries will continue to be a
primary consideration while many of them endure the process of world eco-
nomic recovery. The promotion of economic recovery for them, among other
things, entails increasing investments and the creation of more employment
opportunities at home while taking the measures to reduce the rate of inflation.
There is a strong link between the economic growth of the donor countries and
the flow of foreign aid to West African countries. The other motives of aid
notwithstanding, the performances of the economies of the industrially devel-
oped countries are very important determinants of the pattern of aid flows. The
pattern of aid flow in the past indeed strongly supports this proposition. Table
5.1 illustrates the trend of bilateral aid flows from the OECD countries to
low-income countries, many of which include West African countries, over the
period 1965 to 1990. It is clear from the table that foreign aid as a percentage
of donor GNP declined from 0.20 percent in 1965 to 0.07 percent in 1985, but
rose slightly to 0.09 percent in 1990 for the OECD countries as a whole. The
major declines occurred in the United Kingdom, Belgium, Germany, the United
States, and Japan. But France and Canada tended to maintain their level of
disbursement. Whereas Italy, the Netherlands, Austria, Denmark, Finland,
Sweden, and Switzerland increased their disbursements to the low-income
countries.
It is a development that appears to correlate with the growth rate of the OECD
countries from 1970 to 1991, as illustrated in Table 5.2. The average annual
growth rate of the GDP of the OECD countries fell to 2.9 percent in 1980-91
from 3.1 percent in 1970-80. The table shows that Belgium, Germany, the
United States, and Japan experienced a decline in growth rate. Also, increases
in the average annual growth rate of the GDPs of Austria, Denmark, Sweden,
132 Foreign Aid and Self-Reliance in West Africa

Table 5.1
OECD: Total Bilateral Flows to Low-Income Economies
As a Percentage of Donor GNP

Country 1965 1970 1975 1980 1985 1990


Ireland . , _ 0.01 0.03 0.01
New Zealand - - 0.14 0.01 0.00 0.00
United Kingdom 0.23 0.09 0.11 0.01 0.07 0.05
Australia 0.08 0.00 0.10 0.07 0.04 0.05
Italy 0.04 0.06 0.01 0.00 0.06 0.09
Netherlands 0.08 0.24 0.24 0.32 0.23 0.25
Belgium 0.56 0.30 0.31 0.13 0.13 0.09
Austria 0.06 0.05 0.02 0.11 0.05 0.01
France 0.12 0.09 0.10 0.06 0.11 0.13
Canada 0.10 0.22 0.24 0.13 0.14 0.10
United States 0.26 0.14 0.08 0.06 0.06 0.05
Germany 0.14 0.10 0.12 0.07 0.13 0.10
Denmark 0.02 0.10 0.20 0.17 0.26 0.24
Finland - - 0.06 0.03 0.09 0.17
Norway 0.04 0.12 0.25 0.28 0.34 0.37
Sweden 0.07 0.12 0.41 0.26 0.24 0.25
Japan 0.13 0.11 0.08 0.12 0.10 0.10 j
Switzerland 0.02 0.05 0.10 0.07 0.11 0.11
I TOTAL 0.20 0.13 0.11 0.08 0.07 0.09

Source: World Bank, World Development Report 1993 (New York: Oxford University Press. 1993), p.
275.

and Switzerland appear to justify their increases in the disbursements to the


low-income countries.
The decrease in the average annual growth rate of the GDP of the OECD
countries has much to do with the global economic recession of the early 1970s
caused by the first oil price shock of 1973 .This generated a high rate of inflation,
increased unemployment, and depressed economic growth in many OECD
countries. Since then, a number of these countries have managed to arrest the
recession and stabilized growth, but it has been difficult to procure a higher rate
of economic growth as full recovery is yet to be restored in the world economy.
Thus, in 1992, the overall real growth in GDP among the twenty-four OECD
countries was at an all-time low of 1.6 percent. Unemployment rates increased
by more than 8 percent during the year. In the United States, the growth rate of
the GDP reached 2.1 percent, but unemployment continue to increase, reaching
7.3 percent in 1992. In Canada, unemployment moved to 11.2 percent as against
10.2 percent in 1991. Furthermore, until recently, recovery in the United
Kingdom remained elusive as economic activity eased by 0.6 percent and
unemployment rose to 9.9 percent as against 8.7 percent in 1991. In Japan,
although falling interest rates and the fiscal-stimulus package of August 1992
(with a larger one proposed in April 1993), are expected to help contain
recessionary forces, substantial uncertainties—including those about the dura-
Foreign Aid, Self-Reliance, and Economic Development 133

Table 5.2
OECD: Average Annual Growth Rate of GDP
Percentage
Country 1970-1980 1980-1991

Ireland 4.9 3.5

Israel 4.8 3.7

New Zealand 1.9 1.5

Spain 3.5 3.2

Hong Kong 9.2 6.9

Singapore 8.3 6.6

United Kingdom 2.0 2.9

Australia 3.0 3.1

Italy 3.8 2.4

Netherlands 2.9 2.1

Belgium 3.0 2.1

Austria 3.4 2.3

France 3.2 2.3

Canada 4.6 3.1

United States 2.8 2.6

Germany 2.6 2.3

Denmark 2.2 2.3


Finland ' 3.1 3.0
Norway 4.8 2.7
Sweden 1.9 2.0
Japan 4.3 4.2

Switzerland 0.5 2.2

TOTAL 3.1 2.9

Source: World Bank, World Development Report 1993


(New York: Oxford University Press, 1993), p. 241.

tion of the dampening effects of the asset deflation—remain. In the case of


Germany developments were dominated by the increased strain procured by the
expansionary fiscal policy that followed unification and the tight monetary
policies that were subsequently adopted. Domestic demand was restrained by
high interest rates, which, along with cost pressures, also weakened the export-
oriented manufacturing sector. In France, economic growth was weak, 1.3
percent for 1992. Inflation was at record lows, and although the export sector
showed improvement early in 1992, indicators of consumer confidence re-
134 Foreign Aid and Self-Reliance in West Africa

mained weak, and unemployment rose to an historically high level of 10.2


percent compared with 9.4 percent in the previous year.1
In other words, while full recovery remains elusive in most OECD countries,
major governmental efforts should concentrate on ensuring the implementation
of monetary and fiscal policies that would stimulate the economy to increase
job opportunities. Under these circumstances, West African countries cannot
necessarily count on real increases in aid flows from the OECD countries. It
therefore follows that aid-tying would continue to pose problems to West
African aid recipients.
As already noted in Chapter 2, approximately 67 percent of British aid to
West Africa is tied. Also, the bilateral aid from the former West Germany to
West African countries is tied by about 80 percent. This implies a sizable loss
to the West African recipient countries. An untied aid would give them the option
to purchase goods at cheaper alternative sources. In fact, as T. L. Hutcheson and
R. C. Porter noted in their study of U.S. aid to the developing countries, most
of the aid is spent in the United States; in effect, a substantial proportion of aid
comes back to U.S. business as profits. The tying of aid is calculated to raise
prices from 10 percent to 40 percent more than comparative goods from other
countries.2 Tied aid artificially increases the capital costs of aid-financed
projects, since goods obtained under tied aid will tend to be significantly more
expensive than similar goods obtained at world prices. Also, it will tend to
increase the operating costs of aid-financed projects, since tied aid is likely to
lead to a continuing flow of relatively expensive imports in the form of spare
parts and ancillary equipment complementary to the aid-financed imports. In
effect, all these will reduce the competitiveness of recipient countries to alter
the pattern of investment and lower productivity as well as reduce the rate of
growth below what otherwise could have been obtained.
Thus, while bearing in mind the interests of the donor countries, it is
important that the value of aid given to West African countries is enhanced in
order to ascertain its more meaningful contribution to economic development.
Bilateral donors to West Africa would go a long way in assisting development
efforts the more they reduce the proportion of tied aid.
However, political influence will remain a secondary determinant of aid flow
to West African countries. The metropolitan countries, Britain, France, and
Portugal, will continue to strengthen their relations in the face of competing
interests among them and with other industrially developed countries that seek
to have a foothold in the potentially large market of the subregion. Even then,
it must be acknowledged that politically motivated foreign aid has its limitations
while it is essentially targeted at grandiose projects to reestablish the image of
the donor country. The more foreign aid is directed at elephant projects, the less
would be its contribution to the alleviation of poverty and the promotion of
economic development in West Africa. Beyond these, however, what has even
Foreign Aid, Self-Reliance, and Economic Development 135

raised more questions is the way foreign aid has been managed by both donors
and recipients.

FOREIGN AID MANAGEMENT


The management of foreign aid constitutes a critical factor on the effective-
ness of foreign aid in economic development in West African countries. As
already mentioned in Chapter 3, foreign aid has developed from a transitory
phenomenon involving a few donors in any given country to an elaborate and
virtually permanent system taking on board, along with the government, several
agencies in the economies of the recipient countries. For a number of the
least-developed countries in West Africa, foreign aid is substantial in the public
development budget and has provided invaluable balance-of-payments support.
In fact, the occurrence of substantial public investments has been dependent on
the availability of aid finance. The operation of existing facilities in some
countries is contingent upon donor support for recurrent import requirements.
While the needs of many West African countries for aid are substantial, the
greatest concern has been on how the available funds have been managed for
meaningful development. It has been noted that there is considerable deficiency
in the institutional arrangements for foreign aid implementation that has seri-
ously negatively affected the contribution of aid to the development of West
African countries.
In a number of countries, the governments have established departments,
ministries of external affairs, trade or commerce and sometimes with the
cabinet, through which donor sources and spending agencies are coordinated.
The size of many programs have been enormous with attendant difficulties in
implementation by the several agencies. Besides, it has been noted that a
coordinating agency rarely has adequate capacity to establish or enforce tight
aid priorities. In most cases, an official in the relevant coordinating ministry
typically takes responsibility for liaisons with one or more agencies, but he or
she is often without the full authority or knowledge to assert a view over the
range of sectoral interests represented in a donor's project portfolio. In addition,
many aid projects suffer because of the frequent changes in local personnel in
the ministry. Consequently, the possibilities of building up a body of knowledge
and a set of working relationships around the aid program tends to be nonex-
istent.
Even though one ministry plays a dominant role in coordination, the initiative
in the promotion of projects is located throughout the gamut of the government
system. In order to enhance the possibilities of financing their own projects, the
implementing agencies in many cases maintain intensive direct relations with
donor representatives. Consequently, the personalities of top officials in minis-
tries and agencies play an important role in the success of the resulting lobbying
process. For this reason, aid coordination by the recipient government is weak.
736 Foreign Aid and Self-Reliance in West Africa

On the other hand, the organization of the donor varies substantially. In


the first place, the staffing of the local office varies from a one-person bureau
to US AID, with several staff members. The management requirements of the
large number of donors and their great diversity are immense. Each donor
has its own charter that determines the kind of development activities it can
pursue. Each has its own project preparation requirements, its own project
implementation procedures, and its own reporting requirements; and each is
responsible to its own governing council. There is a commitment to coordi-
nate in principle on the part of the donor. However, this is tempered by the
desire to accelerate program implementation, and to work with particular
parts of the system in the pursuit of objectives attractive to the particular
agency.
Furthermore, given these administrative limitations, donors seek ways to
facilitate implementation by developing their own connections with key per-
sonnel in the system, by training manpower for their own projects, and in some
cases by financing local costs for their projects. The attempt to improve
management and coordination by both the donors and recipients has resulted
in a variety of coordination arrangements meeting different purposes:
macro/multisectoral of the sort characterizing World Bank consultative groups;
country level information exchange among donors and host governments; joint
operations; sectoral policy and operational coordination; and conceptual or
intellectual coordination of donors with respect either to geographic or func-
tional fields, usually detached from a particular country setting.
The commitments of West African governments to the idea of consortia or
consultative groups for fund raising have not been very significant. In 1985, for
example, consultative groups were established for the first time for Mauritania
and Senegal. The formal consultative group for Senegal has its aim at agreement
between Senegal and its principal aid donors on ways to reorient part of that
country's investment program toward urgent rehabilitation efforts. Apart from
this, the consultative group for Ghana was reactivated in November 1983 in
support of that country's recovery program. But these groups later became
increasingly built around a policy dialogue with developing countries in con-
nection with structural adjustment and other broad, policy-oriented lending in
support of a mutually agreed investment and expenditure program, often
complementing the IMF stabilization agreement.3 The UNDP organizes round
tables for least-developed countries as a followup to the UN Conference on
Least-Developed Countries held in Paris, September 1981. A condition for
organizing a round table is that it should be requested by the government
concerned. The recipient provides the chairman and the UNDP assists in
organizing the meeting.4 These meetings are occasions where aid seekers are
able to present their requirements to donors as a group. Also, donors use the
opportunities offered by these meetings to familiarize themselves with the
Foreign Aid, Self-Reliance, and Economic Development 137

development problems and aid needs of the countries concerned and to enter
into an active dialogue.
Although the UNDP-sponsored round tables have increased considerably for
the least-developed countries, nevertheless, such meetings have not been very
substantial for West African countries. Since the motivating force for holding
round tables is the recipient country itself, UNDP's role as the provider of
services to these countries has been passive: the organization has merely
performed the task of an honest broker on behalf of the recipient country toward
the donor community. As a result of this, round tables have suffered from weak
chairmanship. Furthermore, enough attention has not been paid to adequate
preparation of all partners for policy dialogue. Hence, there has been lack of
focus on major development issues at these meetings.5
Apart from these, it should also be noted that coordination in recipient
countries has been subjected to a number of difficulties. At the moment, there
is a wide range of coordination activities carried on at the "local" level in most
developing countries, including those in West Africa. Such activities, largely
informal, have been tailored to the special circumstances of the individual
countries. Generally, the UNDP resident representative prepares an annual
report on donor aid activities, providing important baseline data for use in
planning programs. A variety of "technical teams" from the World Bank, EU,
UN agencies, regional banks, and donor countries undertake joint studies or
reviews at all levels of the economy with particular emphasis on the sector and
project levels. These undertakings involve contacts with other members of the
donor community, but mainly with the recipient government development
agencies.
Since 1985, the emergency relief area has been the most extensive and
effective area of aid coordination. In some cases, bilateral donors are taking on
responsibility to play a lead or supportive role in selected areas. Thus, for West
Africa for example:

local coordination arrangements have been institutionalized as a continu-


ous process in countries such as Mali (the Cereals Marketing Recon-
struction Project, NGOs) and Senegal (Food Aid);
permanent steering committees, joint monitoring committees, local con-
sultative groups or similar arrangements are operating in Benin
("Comite Mixte") and Ghana (Joint Monitoring Committee);
agreement has been reached in a number of countries on initiating or
widening the scope of in-country aid coordination, for example in Mali
(health and population, nonproject aid, recurrent costs and structural
adjustment), Niger (desertification control, transport, livestock),
Senegal (agriculture, water supply and sanitation, maritime fisheries and
138 Foreign Aid and Self-Reliance in West Africa

industry, education and tourism) and Togo (infrastructure projects,


social sectors, nonproject financing);
in a number of cases, agreements have been reached or recommendations
have been made at consultative group or round table meetings regarding
the need and modalities to strengthen aid coordination at the local level,
for example in Ghana; and
in Burkina Faso, (water supply and sanitation), bilateral donors have taken
the lead in organizing or doing major support work for the country
consultations.6

Albeit, much still needs to be done in order achieve more effective coordi-
nation. A large number of sectoral meetings or consultations that have been held
locally have not been satisfactory. In many instances, project concerns predomi-
nate, and followup measures by the recipient governments and donors have been
inadequate.7
Furthermore, basic problems have emerged from the quality of donor pres-
entation in the recipient countries: perceived political risks and staffing and
budgetary problems that acutely hinder the ability of donors to prepare and
participate in local aid coordination adequately and effectively; inadequate
communication between headquarters and the field; insufficient delegation of
authority to local staff; an excessive number of participants in local meetings
(particularly UN agencies); and differences in donor aid procedures.8
Thus, for foreign aid to be more meaningful in the development process in
West Africa, it is imperative that solutions be found to the bottlenecks in aid
coordination and management. As the first step, donor policies should be
adequately harmonized in order to facilitate coordination with the economic
policies of the recipient West African countries. Secondly, there should be a
single, designated focal point, a ministry, in the recipient West African country
solely authorized for the coordination and management of foreign aid. The
ministry, with a well-trained staff, should liaise with donor agencies on all
aspects of the cycle of foreign aid: project appraisal, implementation, monitor-
ing, and evaluation. Thirdly, for greater effectiveness of aid in development,
donors would be helpful to the development process by directing aid to priority
areas designated by the recipient West African countries. The more this is
practiced the better the prospects for West African countries' development.
Fourthly, assistance should be given to institutional capacity-building of recipi-
ent West African countries, the training of manpower, and providing adminis-
trative infrastructures that would enable the countries deficient in these areas to
be able to cope effectively with aid coordination and management. This alone,
it must be acknowledged that the overall economic development in West African
countries primarily rests on a stable political environment. At this point, one
Foreign Aid, Self-Reliance, and Economic Development 139

may underscore that this has been a rare commodity for a number of countries
in the subregion from the 1970s to the 1990s.

POLITICAL STABILITY
When the general development of West African countries is put in perspec-
tive, political stability constitutes an important critical variable. As a matter of
fact, the ideal thing for economic development is a complementary political
system that develops progressively without major conflict within and among its
institutions. The political parties and pressure groups as well as other political
institutions should become more articulated and consolidated to enable the
smooth transition from one government to the other. This would guarantee the
atmosphere in which development issues could be continuously and effectively
addressed. However, very few countries in West Africa enjoy political stability.
Beginning from the second half of the 1960s, many West African countries have
experienced varying forms of political instability. The cases of a number of
countries have been very illustrative.
In 1966, the army intervened in Nigeria in an attempt to create a unitary
government. This precipitated regional rivalries and in the following year, Igbo
officers from eastern Nigeria declared a secessionist republic of Biafra. After
three years of warfare the federal government of General Yakubu Gowon
liquidated Biafran independence. Gowon tried to prevent future secession
attempts by enlarging the number of regional states to twelve (increased to
nineteen in 1976 and latter to thirty during the Babangida administration), but
his government lost support because of its perceived reluctance to surrender
power. Gowon was toppled in 1975 by a coup led by Brigadier Murtala Ramat
Mohammed, who was himself assassinated in 1976. The army continued to be
in power under General Olusegun Obasanjo, who instituted measures to restore
Nigeria to civilian rule. In 1979, multiparty elections led to the formation of the
Second Republic under President Alhaji Shehu Shagari, who in mid-1983 won
a second term. By then, the revenues generated by Nigeria's oil boom in the
1970s were drying up. There was a widespread assumption that Nigeria's oil
wealth had been corruptly squandered, and at the end of 1983, the Second
Republic was replaced by a military regime under Major General Mohammed
Buhari. In 1985, Buhari was replaced in a military coup by General Ibrahim
Babangida, who promised to return Nigeria to civilian rule in 1992. He did not
do this, however, until he was forced out of office after annulling the result of
a general election in June 12, 1993. It was widely reported that a wealthy
southerner, Chief M.K.O. Abiola won the election. In August 1993, General
Babangida handed over the government to Chief Shonekan, who served with
him in his transitional government. Three months later, Chief Shonekan was
toppled by General Sanni Abacha.
140 Foreign Aid and Self-Reliance in West Africa

In the case of Ghana, the army toppled the government of Kwame Nkrumah
in 1966. In 1969, under military tutelage, the Second Republic was instituted
under Kofi Busia. In 1972 the army again intervened, but the successive regimes
of Generals Ignatius Kutu Acheampong and Frederick W. K. Akuffo failed to
resolve Ghana's deepening economic crisis. The military reluctantly promised
a return to civilian rule in 1979. In June of that year, however, a group of junior
officers under Flight Lieutenant J. J. Rawlings carried out a coup, purged senior
figures in the army, and held elections. But the Third Republic, headed by Hilla
Limann, proved incapable of reversing Ghana's economic decline, and in 1981,
Rawlings led another coup. In the 1980s the government pursued broadly
socialist programs of democratization. At the same time it tackled Ghana's
long-term economic decline and concluded a wide-ranging structural adjust-
ment program with the IMF and the World Bank.
These experiences have been well-repeated in varying forms in Sierra Leone
beginning from 1967 when the army installed Siaka Stevens; in Liberia in 1980
after the coup led by Samuel K. Doe; in Niger in 1974 when the army removed
Hamani Diori; in Burkina Faso in 1983, when Captain Thomas Sankara
assumed power; in 1978 in Mauritania, when Moktar Ould Daddah was
overthrown through a coup; and in Guinea in 1984 after the death of Ahmed
Sekou Toure. There have been about three military interventions in Togo since
1960. Also, Benin has experienced about five military coups after its achieve-
ment of independence.
The several military takeovers in West Africa have been attributed, in the eyes
of the coup leaders, to the failures of the civilian regimes to promote economic
growth and development. However, it is doubtful if all these coups could be
justified in the face of continuous poor economic performance across the
subregion. In most of the countries with series of military coup d'etats, there
has been the aggravation of poverty. For example, the GNP per capita of Nigeria
in 1990 was US$266 compared with US$1,029 in 1980; that of Togo fell to
US$392 in 1990 from US$414 in 1980. In the Gambia, it fell from US$348 in
1980 to US$260 in 1990.9 In fact, in many of the these military regimes, the
waste of resources had reached unprecedented levels while corruption had
assumed unimaginable proportions. The emergence of several millionaires
among the ruling elites is a sign that the interests of these ruling elites are
elsewhere. These are strong indications that the military regimes have not been
efficient in implementing the appropriate economic policies and in arresting the
tide against economic development. Furthermore, the policies of the military
regimes in West Africa have become increasingly controversial and problem-
atic, as they often lack sufficient understanding of the role of the international
community for development. The summary trials and executions of presidents,
ministers, and political activists as illustrated in the administrations of Rawlings
in Ghana, Doe in Liberia, and recently of Abacha in Nigeria (with the hanging
of Ken Sarowiwa and eight other political activists), seem to indicate a lack of
Foreign Aid, Self-Reliance, and Economic Development 141

priority to international cooperation for development. The answers to the


development issues in West Africa would lie more in the toleration of construc-
tive criticisms from both within and without and the cultivation of international
partnership and the observance of international standards that they are all
already commited to implement.
At best, military regimes have promoted discontinuity in economic policies.
The rapid turnover of ministers in Nigeria, for example, has led to massive
failures in the implementation of well-formulated economic policies. These
developments at the same time sent wrong signals to foreign investors. Uncer-
tainties in the economic policies of West African countries under military
regimes have led to the drying up of much-needed foreign investments.
Political stability should be accorded highest priority in order to ensure
progressive development in the subregion. Ironically, the Summit of the Heads
of State and Government of the ECOWAS in 1991 declared their commitment
to the ideals of democracy and good governance. This commitment should be
speedily implemented and the principle of accountability entrenched in the
political process. West African countries cannot be left out of the mainstream
of global development process. Frequent coups are signals of inconsistencies
in economic policies as new regimes tend to alter the previous administration's
policies that do not conform to its orientation. As already noted by Professor
C. H. Dodd, military regimes are reformist in nature. The case for their inter-
vention can only be justified if it promotes development and creates the political
institutions and infrastructures for progressive political development.10 Let us
now look at the major economic policies that have been the main instruments
of the military and nonmilitary governments for economic development in many
West African countries from the mid-1980s to the mid-1990s. What have been
the main assets and limitations of these policies? And what should be done in
policy terms in the near future to ensure enduring growth and development.

THE STRUCTURAL ADJUSTMENT PROGRAM (SAP)


Although the main objective of the structural adjustment program in West
African countries is to promote economic growth, the program appears not to
have included the basic dynamics of economic growth in its application in the
subregion. It therefore follows that the adjusting countries continue to search
for the missing link. The structural adjustment program (SAP) has been the
most singular economic policy that had profound impact on foreign aid,
self-reliance, and economic development in West Africa in the 1980s. In the
wake of the recession in the early 1980s, many West African countries, after the
advice of the World Bank and IMF, basically came to the conclusion that
structural adjustment programs were desirable in order to overcome economic
recession and to establish the basis for sustainable economic growth and
development. The assumption was that most of the previous economic policies
142 Foreign Aid and Self-Reliance in West Africa

of West African countries, like those of other developing countries, have been
inadequate and poorly implemented. Since these programs have, to some extent,
shifted focus from self-reliant development, there are considerable doubts about
their positive impacts on economic recession and the promotion of growth and
development in the subregion. Partly because of this, the degree of commitment
to the implementation of the program varies from one country to another. And
as scholars of West African development have generally observed, the programs
have to a large extent generated a number of undesirable and unintended
economic and social problems while attempting to promote economic growth.
In West Africa, Ghana, Nigeria, Cote dTvoire, Senegal, Niger, and Gambia,
among others, have embarked on various forms structural adjustment programs.
Generally, structural adjustment programs in West Africa have the hallmark of
conventional Keynesian economics. The broad objective is to promote eco-
nomic growth while maintaining external balance: that is, the maintenance of
the level and rate of growth of economic activity at a high rate while ensuring
balance of payments at least in the medium term. * * Although there is a common
agreement on what the objectives of structural adjustment programs should be,
the strategies adopted toward reaching it often vary nevertheless. In spite of
these variations, however, some common approaches may be identified,
namely: deregulation and privatization, trade liberalization, foreign exchange
price flexibility, financial structure reforms, and international cooperation.
The SAP prescribes for the deregulation of utility prices in order to achieve
cost recovery in the public supply of water, energy, transportation, and commu-
nication as well as other utilities. It is assumed that excessive regulation of
public utility prices constitutes an important source of budget deficits. Deregu-
lation will reduce budget deficits. But then, it should be pointed out that one
fundamental problem of cost recovery is the inevitability of negative political
and social effects. The principle of equity will be lost because this will reduce
the supply of basic needs to the vulnerable groups in society.
Trade liberalization implies tariff rationalization, discontinuation of import
licensing, and the elimination of marketing boards.12 Higher tariff and nontariff
barriers generate the high effective protection rates that make domestic produc-
tion inefficient and noncompetitive against foreign products. The rationaliza-
tion of tariff will promote efficiency in domestic industries. The discontinuation
of the system of import licensing will remove the channels for corruption, but
the elimination of marketing boards will generate fresh problems.13
Foreign exchange rate represents the core of adjustment program for most
countries in the subregion. This is, for example, well illustrated in cases of
Gambia, Ghana, Sierra Leone, Mauritania, and Nigeria. It has been central to
the demand management policy. The measures suggested avoid the periodic
shocks of currency devaluation in favor of smooth market-oriented currency
depreciation resulting in market-determined exchange rates through Central
Foreign Aid, Self-Reliance, and Economic Development 143

Bank auction or forex bureaux, in which commercial banks and private vendors
purchase and sell foreign exchange on the free open market.14
It is calculated firstly that if foreign exchange flexibility is achieved, it will,
among other things, attract the inflow of remittances and other foreign transac-
tions away from the parallel market and reverse capital flight. As regards the
supply-side price incentive, the flexible exchange rate permits the raising of
producer prices to stimulate production and supply of export products which,
all things being equal, should lead to increased export revenues, lower import
costs as demand for imports falls, and therefore of improvements in the balance
of payments.
The financial structure reforms would, among other things, involve the
expansion of rural branch banks and the introduction of mobile banks to the
weekly run rural market days and the integration of the credit unions and
cooperatives into the formal financial system. But as regards interest rates, all
deposit rates would be raised above the current or expected inflation rate to yield
positive real interest on deposits, for this is the only way to attract savings into
the financial system. The relatively higher costs of credit would ensure that only
projects with higher social rates of return are undertaken.
The cooperation of the international community constitutes an important part
of the reform package for West African countries. The paucity of capital has
generally been a limitation to the implementation of economic development
programs in the past. But increased financial resources would be required as
new projects would be proposed in the productive sectors under SAP. The
cooperation of the international community is expected in the promotion of
better prices for commodity exports to increase the foreign exchange earnings
of the adjusting countries and assist in foreign debt reduction.
However, the general survey of West African economies has indicated that
the program has, on the whole, had very little positive impact on economic
growth and development since 1985. Table 5.3 illustrates the pattern of growth
of the GDP of adjusting countries in West Africa. It is clear from the table that
although for most of the "strong adjusting" countries in West Africa there were
increases in the growth of the GDP in first three years after 1985, nevertheless,
growth declined for almost all thereafter. In fact for a number of them the growth
rates in 1990 were worse off than what was obtained at the height of the
economic recession in 1980. This is illustrated, for example, in the cases of
Mauritania, Niger, and Togo. For the "weak adjusting" countries, the growth of
the GDP has not been significant compared to those of the strong adjusting
countries. Mali has significant growth in 1986 but declined in the following
year. Growth rose to 9.2 percent in 1989 but fell precipitously to 0.3 percent.
The reasons for these are very obvious. In the first place, as far as exchange
rate policy is concerned, the standard conditions of domestic supply and
demand, as well as foreign demand, which must hold to make devaluation
successful, are often not satisfied. This is especially so because the entrenched
Table 5.3
Growth of GDP of Adjusting West African Countries, 1980-1990

Percentage Annual Change


COUNTRY 1980 1981 1 1982 1983 1984 1985 1986 1987 1988 1989 1990

STRONG ADJUSTING

COTE DTVOIRE -0.9 4.3 1.6 -1.2 -1.0 3.7 3.7 \ -0.2 1 -1.8 1-1.3 -6.1

GAMBIA 9.8 10.2 12.8 -5.3 3.0 0.6 2.8 6.0 8.0 4.7 4.5

GHANA 0.6 -2.9 -6.5 -4.5 8.8 5.1 5.1 4.6 6.2 6.1 4.1

[GUINEA . 0.7 1.8 1.2 -2.7 5.1 7.1 3.0 5.9 4.3 4.7

GUINEA-BISSAU -18.8 18.8 4.5 -3.2 5.5 4.3 -1.0 6.0 6.8 5.0 3.1

MAURITANIA 4.0 3.8 -2.1 j 4.9 -7.3 2.8 5.6 3.1 3.7 3.4 0.3

NIGER 4.8 1.2 -1.2 -1.8 -16.9 3.1 6.4 -2.4 5.0 -3.5 3.1

NIGERIA 3.4 -5.7 -0.2 -6.2 -7.3 8.7 2.0 -4.6 4.8 5.8 5.3

SENEGAL -2.7 -0.5 14.8 2.5 -4.7 3.8 4.6 4.1 5.1 -1.5 4.5

TOGO 14.7 -3.4 -3.7 -5.2 5.9 3.2 3.4 1.5 5.0 3.7 1.9

|| Subtotal -0.5 2.7 2.2 -1.9 -1.7 4.0 4.0 2.1 4.9 2.7 2.5
WEAK ADJUSTING
BENIN 20.9 9.0 6.8 -2.0 2.0 6.4 -1.7 -3.9 1.2 2.4 1.1

1 BURKINA FASO -0.1 4.5 10.0 0.8 -1.8 9.8 10.0 1.8 7.4 -0.2 1.7

LIBERIA -4.5 -1.2 -2.0 -1.6 -2.1 -0.8 -1.7 -1.0 . .


MALI -1.3 4.6 6.7 -4.5 1.3 -0.4 17.9 1.4 2.4 9.2 0.3

SIERRA LEONE 15.2 8.7 0.0 -3.1 2.3 -3.4 1.9 5.4 0.0 -0.7 2.6

1 Subtotal 6.0 5.1 4.3 -2.1 0.3 2.3 4.5 0.7 2.2 2.1 1.1

TOTAL 1.7 3.5 2.9 -2.1 -1.0 3.5 4.2 1.7 3.4 2.5 2.1

Note: - = Not available.


Source: UNDPAVorld Bank, African Development Indicators (Washington, D.C.: UNDPAVorld Bank. 1992), p. 31.
Foreign Aid, Self-Reliance, and Economic Development 145

technological structures do not easily permit the substitution of local inputs for
imported ones. In the case of countries whose main exports are primary
commodities that are subject to quotas and whose prices are externally deter-
mined and/or whose imports are essentially (petrol, capital goods, spare parts,
medicine, etc.), devaluation can only have a negligible effect on the improve-
ment of the balance of payments.15
Secondly, the justification of trade liberalization derives basically from the
classical theory of comparative advantage, that is not compatible with situations
in which import elasticities far exceed export elasticities. In the context of the
present West African situation, excessive trade liberalization is not a feasible
policy in view of the protectionist practices of the industrially developed
countries against exports from Africa.
Besides, the excessive reliance on markets and prices as allocative mecha-
nisms in stabilization and adjustment programs in West Africa is based on the
assumption that markets are competitive and that resources are perfectly mo-
bile.16 It is for this reason that SAP recommends liberalization, deregulation,
and the minimization of the role of the state in resource allocation. However,
in West Africa, the existence of widespread market imperfections and structural
rigidities make such assumptions invalid. Most government's excessive reliance
on the price mechanism underestimated the necessity for selective governmen-
tal interventions that may be absolutely essential when a country experiences
structurally induced shortages and skewed income distribution.
Thus, since the measures in SAP in West Africa are fraught with several
limitations it was inevitable that they would generate a number of unintended
problems. In particular, poverty has been aggravated in many adjusting coun-
tries in West Africa. In most countries of the subregion, this is not just a
phenomenon in the rural areas but an overwhelming situation in the urban areas,
where the middle class has been completely wiped out of the social strata
because of the devaluation of local currencies, spiral inflation, cuts in public
expenditure, and privatization and commercialization. The latter two issues
have served as major sources for the aggravation of the problem of unemploy-
ment. Table 5.4 illustrates the trend in poverty in West Africa with dependent
population as an indicator. Although the average for the subregion as a whole
showed somewhat of a decline in dependent population during the 1980s, this
does not however represent the true picture for most countries that experienced
a significant increase in dependent population. As may be observed, in Benin,
Burkina Faso, Cote d'lvoire, Ghana, Guinea-Bissau, Mauritania, Senegal, and
Togo the number of dependent population increased substantially. The others
have slight decreases, for example, Cape Verde and Nigeria.
The menace of these problems has drawn the attention of the World Bank
which responded by supporting specific actions to mitigate poverty in the
adjusting countries. The measures taken by the World Bank, among other things,
include: (1) protection of the most vulnerable groups; (2) compensatory actions
146 Foreign Aid and Self-Reliance in West Africa

Table 5.4
Poverty in West Africa: Dependent Population

Number of Dependent Population


per 100 Persons of Working
Population
COUNTRY
1980 1985 1990

BENIN 96 98 101

BURKINA FASO 88 90 95

CAPE VERDE 111 100 97

COTED'IVOIRE 102 105 105

GAMBIA 84 82 87

GHANA 91 98 99

GUINEA - 90 95

GUINEA-BISSAU 80 87 87

| LIBERIA 91 93 92

MALI 95 98 99

MAURITANIA 88 88 92

NIGER 99 95 99

NIGERIA 102 99 100

SENEGAL 89 97 98

1 SIERRA LEONE 86 83 87

TOGO 91 100 105

TOTAL 93 94 91

Source: UNDP/World Bank, African Development Indicators


(Washington, D.C.: UNDPAVorld Bank, 1992) p. 316.

and transitional arrangements; (3) measures to ensure that the poor effectively
participates in the growth process; and (4) protection of the long-term interests
of the population. These actions may be part of a structural adjustment loan or
a sectoral adjustment loan, or have as their vehicle other projects and instru-
ments.17
A number of West African countries have benefited from these actions. As
far as the protection of vulnerable groups is concerned, the most vulnerable
groups in the society are the poor generally, and women and children specifi-
cally. The key services they benefit from need to be protected from the possible
adverse effects of budget cuts. This is done primarily through shielding public
expenditure on key health, education, nutrition, and other basic welfare serv-
ices. In Senegal in fiscal 1990-92, an education sector loan supported the
Foreign Aid, Self-Reliance, and Economic Development 147

reorientation of government expenditures and investments in the sector.18 Other


countries supported during this period include Burkina Faso, Mali, and Niger.
In compensatory actions or transitional arrangements, compensation may be
necessary for individuals who face substantial costs in adjustment, for example,
redundant civil servants can receive a severance pay. In some cases special
privileges, for example food or subsidies, may be required or fixed-income
individuals in the wake of devaluation. Under this heading, Guinea has a system
of severance payments for laid-off public servants and has introduced bonuses
for voluntary departures from the public sector. In Senegal, there is a retraining
and rural resettlement scheme for laid-off civil servants and extension workers,
while a comparable fund has been established for laid-off workers in the
manufacturing sector. In Gambia, retraining and job counseling for laid-off civil
servants is supplemented by a line of credit to fund new cooperative ventures.
In Ghana, there is a system of severance payments for retrenched public sector
workers and bonuses for voluntary departure from public service employment.
Also, Mauritania has introduced food-for-work programs with better targeting
of food distribution to the neediest groups and also has a system of temporary
reassignment for banking sector employees to be laid off in the course of
streamlining. As regards the participation of the poor in the growth process, it
is important that opportunities be given to them to participate in the economic
growth process through enhancing their access to assets and increasing returns
to those assets already in their possession. Land reforms, resettlement schemes,
special credit opportunities, and training programs are immediate types of
interventions. In terms of specific interventions, Cote dTvoire has a small-
holder credit scheme in the rubber sector, improved agricultural extension for
small farmers, increased water supply connections to poverty areas, a rural roads
upgrading and rehabilitation program, and an informal sector micro-credit
scheme. Senegal has taken steps to ensure access for the landless to the
ownership of lands becoming available under irrigation projects. In Ghana, the
government is implementing a program of rehabilitation and construction of
basic rural roads to facilitate access to markets from remote rural areas and to
encourage the development of informal sector micro-market schemes. In Gam-
bia, a small- and medium-enterprises (SME) operation has a special component
focusing on the role of women. In Mauritania, a similar SME project provides
a line of credit for artisans. In the same vein in Guinea, the government has
devised informal sector micro-credit mechanisms (with NGOs), and there is an
emphasis on the local administration of the renovation and construction of
educational facilities.
In addition, the World Bank, in conjunction with the UNDP, ADB, and other
donors, have embarked on actions on Social Dimensions of Adjustment Project.
The main goal here is the better comprehension of the social aspects of
adjustment programs and monitoring of the shifts in socioeconomic conditions
experienced by particular population groups. Also, the program aims to
148 Foreign Aid and Self-Reliance in West Africa

strengthen the institutional capacity of governments to integrate the social


dimension into the design of future structural adjustment programs.19 In this
respect, project activities have been initiated for twenty-five countries in
sub-Saharan Africa.
However, the fact that the West African subregion continues to experience
serious economic difficulties suggests that structural adjustment programs,
along with the other measures by the international financial institutions,
organizations, and donors, have not been effective in arresting the recession
in the subregion and promoting economic growth. Structural adjustment as
a policy package needs to be reviewed and fine-tuned to take into full
consideration the structures and market situation of West African countries.
Among other things, it is obvious that the measures on trade liberalization
cannot be meaningful unless diversification into the export of industrial
products is immediately carried out by West African countries. For it is
through this that West African countries could significantly stabilize and
increase foreign exchange earnings. Also, the success of SAP in West Africa
will hinge on improved managerial capability of West African governments.
Efforts must be made to improve internal tax collection and the scarce funds
available must be judiciously spent.
While the response of the international community has been laudable with
respect to the adjustment efforts of West African countries, it is obvious,
however, that more cooperation is required for an authentic economic growth
and development in the subregion. Additional flows of funds would be required
for the implementation of projects and programs under structural adjustment
programs. There should be an increase in foreign investments in response to the
new more generous investment codes adopted by West African countries. But
an important element that appears to have acquired more significance in the
adjusting countries is the paucity of trained manpower. This was manifested in
all sectors of West African economies and constitutes a major hiatus between
policy and economic growth.

HUMAN DEVELOPMENT
The promotion of economic development in West Africa requires in the first
instance the effective promotion of human development. Human development
has been defined as the process of enabling people to have wider choices. These
choices include income, health, education, good physical environment, and
freedom of action and expression. It stresses the need to develop human
capabilities and how the capabilities are used, especially by people who can
participate freely in social, political, and economic decision making and who
can work productively for development.20
Like other developing countries, West African countries have, to some extent
in recent years, improved their capabilities. In life expectancy and basic
Foreign Aid, Self-Reliance, and Economic Development 149

education, they have closed the gap between them and the industrially devel-
oped countries. However, in other areas the gaps are widening, particularly in
higher education, technology, informatics and labor productivity. Since 1960
West African countries, like many other African countries, have had their infant
mortality rate reduced by 37 percent, and life expectancy has increased from
forty years to fifty-two years. Adult literacy increased by two-thirds between
1970 and 1985.21 But over half the population has no access to public health
services. About two-thirds lack safe drinking water. Tropical diseases afflict a
high proportion of the population, including sleeping sickness and malaria,
which kills hundred of thousands of young children each year. Furthermore, in
recent years AIDS has devastated many families. Urgent action is therefore
needed in public health services.
Besides, since 1980, the lack of job opportunities at home has led many of
the better educated to emigrate in search of work. This has been very significant
in the cases of Nigeria and Ghana, which have lost hundreds of highly special-
ized medical personnel and university professors to the industrially developed
countries because of better remuneration. These cases have, to a large, extent
constituted a major drain to the economy and a serious handicap to the effective
promotion of economic growth and development.
Given the importance of human development to overall economic growth and
development, it is a primary issue that West African countries must urgently
promote. The priority areas of the multidimensional problems of human devel-
opment should be ascertained. The goals on these issues should be clearly
defined and appropriate strategies for achieving them stipulated. While the
specific needs and priorities of each country may differ, there is no doubt that
it is imperative for all countries to consolidate the gains that they have made in
human development in the 1970s through the 1990s if the goals of self-reliant
development are to be ultimately attained. The modest gains here are in the area
of education: primary, secondary and university, and health, both in the preven-
tive and curative aspects. But special efforts are required to promote advanced
skills in new technological frontiers. The East Asia industrial "Tigers'1 have
widely demonstrated their relevance to economic growth and development.
The way in which these objectives are achieved would, however, in the first
instance depend on the priorities given to them in scheme of things and the
availability of funds. Governments differ greatly in how much of their spending
goes to social areas like nutrition, health, and education. For many countries in
West Africa, the trend in social spending has been disturbing. For example, in
the case of Burkina Faso, expenditure on education and health increased by 34.7
percent between 1973/75 and 1985/87. But a drastic decline was recorded for
Liberia during the same period: 16.2 percent between 1973/75 and 1979/81 and
-14.0 percent between 1979/81 and 1985/87.22 Many governments in the
subregion were confronted in the 1980s with the urgent task of overcoming
economic recession. The focus of most governments was more on the revival
150 Foreign Aid and Self-Reliance in West Africa

and promotion of growth in the agricultural and industrial sectors. But for some
others experiencing or perceiving internal or external threat to security, expen-
ditures on arms have been substantial.
It was also clear that many countries' capacity to finance human development
eroded considerably in the 1980s as they continued to experience decline in
their foreign exchange earnings. At the same time considerable strain has been
placed on the financing of human development because of the need to service
external and internal debts. All of these problems will need to be resolved in
order to increase expenditure on human development. While the need to
mobilize internal resources is vital, the external resources represent a very
useful source in the short run for many West African countries.
The aid to the social sector for human development in West Africa will need
to be increased. Aid social-sector ratios have fallen in recent years as far as many
developing countries are concerned. For example, health, population, and
education accounted for 24.5 percent of total bilateral aid to developing
countries in 1979. However, this fell to 17.4 percent in 1989. Aid to the social
sector has fallen as a result of the current general "aid fatigue."
Aid donors are therefore likely to assist West African development more
meaningfully if they reassess their aid priorities and commit themselves more
to the support of human development. It is essentially through this that genuine
self-reliant development could be attained in the short run in the subregion. At
the same time however, it is equally imperative that West African governments
steadily increase their budgetary allocations to human resource development.
This may entail reductions in expenditures in other areas such as defense. The
latter has, in recent years, turned out to be superfluous for many countries where
there are no immediate threats to territorial sovereignty. At the same time the
cost of military hardware has risen considerably, partly as a result of global
inflation. The governments of West African countries should increase their
commitments to the effective implementation of policies on human resource
development without which genuine development could prove elusive. A not
too distant question to human development is the issue of technological ad-
vancement in West Africa. Progress in this area hingesfirston human develop-
ment, in particular, of broad based education and increased concentration in the
sciences. It is an area in which the dreams and promises of West African
countries are yet to be fulfilled.

TECHNOLOGY
It is clear from the analysis in Chapter 4 that poor technological advancement
constitutes a major bottleneck in the process of self-reliant development in West
Africa. Technology has apparently negligible input into the process of devel-
opment in West Africa. Also, there is a dearth of relevant policies and a
deficiency in local technological culture. West African countries appear gener-
Foreign Aid, Self-Reliance, and Economic Development 151

ally to lack the prerequisites for technological advancements, in particular of


the capacity to import, adapt, and improve on technology for local conditions.
Today, there are various mechanisms for the transfer of technology to develop-
ing countries, namely: (1) Technology transfer through a general exchange of
information; the traditional type of communication and information concerning
technological data. (2) Technology transfer through trade; takes place through
international trade. (3) Technology transfer through patents and licenses. (4)
Technology transfer through direct investment; those of transnational enter-
prises. (5) Technology transfer through technical assistance. All these notwith-
standing, it must be underscored that technology transfer through direct
investment appears to be the most important.
Technology flows to Africa in the 1980s did not make appreciable progress.
Technological flows in the area of capital goods declined to US$18 billion in
1989 from US$23 billion in 1980. In the area of foreign direct investment, there
was an increase to US$4.3 billion in 1989 from US$0.3 billion in 1980. Also,
in technical cooperation, there was a rise from US$3.1 billion in 1980 to US$5.0
billion on 1989. But it is clear that Asia and Latin America continue to be the
destination of most of the technological flows to developing countries, particu-
larly in capital goods and foreign direct investment. For example, the flows to
Asia rose to US$96 billion in 1989 from US$57 billion in 1980. Similarly, the
flows in foreign direct investment rose from US$3.3 billion in 1980 to US$16.7
billion in 1989.23 Flows of foreign direct investment to developing Asia surged
especially during the second half of the 1980s, by which time this region
surpassed Latin America as the major recipient of foreign direct investment
among developing countries. The main beneficiaries in recent years have been
Singapore and Hong Kong and, more recently, Malaysia and Thailand, which,
by the end of the decade, had joined the former two countries on the list of the
ten largest host countries for such flows. The rapid growth in Asia, their
concentration on manufacturing, good export performance, and their relatively
undervalued currencies, coupled with a skilled and low-cost workforce, have
acted as a powerful magnet for the attraction of foreign direct investment.
On the contrary, in the case of Africa, the debt crisis and the deterioration in
commodity markets weakened the region's ability to import technology.
Throughout the 1980s, imports of capital goods declined in nominal terms.
Foreign direct investment has been concentrated in a relatively small number
of oil-exporting countries. Algeria, Cameroon, Egypt, Nigeria, and Tunisia
absorbed over 90 percent of all capital inflows during the first half of the 1980s.
But by 1989, only two countries, Egypt and Nigeria, accounted for 86 percent
of such flows to the region. Foreign investment flows to nonoil sub-Saharan
countries, many of which are least-developed countries, have remained below
US$0.5 billion since 1981, despite the enactment of legislation favorable to
investment. The least-developed countries continue to be unattractive. Commer-
752 Foreign Aid and Self-Reliance in West Africa

cial technology flows to them as a group, including those in West Africa, have
remained unchanged during the decade.24
There are several problems associated with the transfer of technology to
developing countries that are directly related to the conflicting interests of the
foreign investors and the host countries. Although transnational enterprises
differ in goal orientation, there are some generally valid primary goals that guide
their operations. These are growth, security, and profit maximization. Thus, the
prime motivation is commercial, and the foreign investor expects return from
his or her investment.25 In this context, therefore, foreign investors attempt to
apply as well as exploit the technological and commercial organizational
know-how specific to their business to the greatest advantage.
The technologies made available in the mother country and the know-how
acquired there are transferred without significant modifications and thus with-
out considerable additional costs to the subsidiaries in the developing countries.
In this way, foreign investors gain a competitive edge vis-a-vis other enterprises,
especially local firms. In effect, the efficiency potential tied to these products,
production methods, and technical-organizational know-how, and transferred
via direct investment, is oriented toward the socioeconomic requirements of the
mother countries.
To West African countries this form of technology is characterized by high
capital intensity, high consumption of energy, heavy use of raw materials (partly
with nonrenewable resources), and the replacement of labor by capital (mecha-
nization, automation). West African countries, like other developing countries,
have generally found themselves in weak bargaining positions in the negotia-
tions on these issues. They have, in part, been handicapped by the lack of
adequate knowledge concerning technological developments and the absence
of adequate knowledge on the components that are frequently tied in a package
in which the specific technological content is integrated.26
As opposed to the diminishing volume of technology transfer to developing
countries in recent years, international technology markets have become more
diversified and open. The forms of technology transfer more commonly applied
and of the sources of supply have both been widened. This has been a significant
development for developing countries, as it has increased the range of options
available to technology-receiving firms and allowed them to assume a greater
involvement in design construction and the operation of investment projects.
The most obvious has been the trend toward nonequity or minority-owner-
ship forms of technology transfer, as compared to that through majority-owned
affiliates. These forms include joint ventures, licensing and know-how agree-
ments, machinery imports, management contracts, leasing and countertrade
arrangements involving technology transfer. This trend has been influenced by
several factors. Firstly, the policy and legal measures adopted by host-country
governments in the 1960s and early 1970s relating to foreign direct investment
encouraged joint ventures and new forms of transfer of technology. Secondly,
Foreign Aid, Self-Reliance, and Economic Development 153

the relative importance of Japan and Western Europe, as compared with


US-based, firms as suppliers of technology to developing countries has grown.
The former have had a relatively greater propensity than the USfirmsto share
ownership with local partners and to supply technology to nonaffiliated enter-
prises. Thirdly, it is likely that there has been a reaction by potential foreign
investors to the uncertainty created by the economic slowdown in the developed
market-economy countries and the high volatility of foreign exchange markets.
A tendency to shift from long-term investment commitments to a greater
reliance on other mechanisms for exploiting technological advantage in devel-
oping countries involving a shorter time perspective, was probably seen as a
way of reducing financial exposure. Fourthly, there has been rapid internation-
alization of a variety of services ranging from advertising and accounting to car
rentals, hotels, and fast foods. In these service activities, the common technol-
ogy transfer arrangements involve management, marketing and technological
assistance contracts, and, in particular, franchising and licensing of trademarks
without any direct or only minor equity participation. Fifthly, since the early
1970s, there has been an emergence of small- and medium-sized enterprises
from developed market-economy countries, as well as firms from developing
countries that act as technology suppliers in international markets with a more
diversified approach to technology transfer than in the past.
What is important to underscore, however, is that technology flows to
developing countries are influenced essentially by macroeconomic conditions,
technological capabilities, and government policies. Government policy re-
forms aimed at revitalizing flows have not been successful. The financial
constraints of West African countries represent a critical limitation. Besides,
there is the question of absorptive capacity or technological dynamism; the
ability of countries to absorb and efficiently deploy new technologies, adapt
them to local conditions, improve upon them and ultimately create new knowl-
edge.
Many West African countries have yet to possess the technological dynamism
for technological advancement. The most successful of the developing coun-
tries, such as the Republic of Korea, have promoted local equipment manufac-
ture selectively, while importing large amounts of foreign equipment to retain
export competitiveness. Some, like Argentina, Brazil, and India, have pursued
stringent import-substitution in capital goods, thus creating a broad domestic
capability in design and manufacture. The domestic production of capital goods
has a special significance for technological dynamism because of the central
role of machinery manufacture in generating and diffusing technology. Most
sub-Saharan African countries have low domestic equipment manufacturing
and rely largely on foreign capital goods. The low level of skills and techno-
logical ability hinders their ability to deploy their capital stocks efficiently. Also,
their ability to import in recent years has been reduced because of economic
shocks.
154 Foreign Aid and Self-Reliance in West Africa

The accumulation of physical capital in manufacturing cannot be efficient if


it is not accompanied by the creation of new skills, the import of new technolo-
gies, and the launching of domestic technological effort. The skills needed for
industrialization are diverse. At the lowest level, literacy helps the labor force
to be productive and is an important determinant of labor productivity in very
simple industries. Secondary education, and in particular vocational training,
becomes increasingly important for shop-floor skills as industry grows more
complex. Tertiary-level skills, especially in the science and engineering fields,
are needed for all industries, but they increase sharply in significance with
growing industrial complexity. In this connection, however, it is important to
stress that the skill base must be effectively combined with adequate incentives,
institutional development and linkage to world technologies in order to ensure
national technological advancement.27

FOREIGN INVESTMENT
As already noted, foreign investment is a key issue that needs urgent attention
in the effort to promote self-reliance and economic development in West Africa.
Although self-reliance to many West African countries implies less and less
dependence on the external world, nevertheless, the role of foreign investment
from the start was seen as inevitable if development were to make any head
way. The reservations of West African governments on unfettered foreign
investments have, to a large extent, been based on the perceived massive
repatriation of profits and the large-scale exploitation of labor as well as the
plundering of natural resources without significant benefits to the host coun-
tries. However, given the fact that most countries in the subregion have not been
able, to increase their levels of savings to appropriate levels for desired invest-
ments, and are not likely to be in the near future, the various governments have
recognized and shown keen interests in foreign investment. The desire for
increases in the inflow of foreign investments has further been strengthened
with the economic decline of West African countries since the beginning of the
1980s. The commitment of West African governments to the encouragement of
investment inflows was further illustrated in various forms of improved foreign
investment codes that they introduced as part of the measures to complement
the successful implementation of structural adjustment programs. In spite of all
these measures, as already noted, there have not been significant increases in
the inflow of foreign investments to West African countries in recent years. This
suggests that there are important problems to be understood and resolved in
order to ensure the contribution of foreign investments to economic develop-
ment in the subregion. Let us now look at some of the important aspects of the
new investment policies for some selected countries.
In Ghana, after the overthrow of Busia, the government's policies discour-
aged foreign participation in the economy. Foreign debts were repudiated and
Foreign Aid, Self-Reliance, and Economic Development 155

majority ownership was acquired in foreign-owned timber and mining opera-


tions, including the Ashanti Goldfields. Business indigenization laws as well as
exchange-rate distortions and delays in repatriation of capital virtually isolated
Ghana from international capital flows. While Hilla Limann attempted to
encourage foreign investment, net capital continue to flow outward during his
brief leadership. Domestic investment was also discouraged by the nationaliza-
tions under Acheampong as well as by the difficulty in obtaining foreign
exchange for investment goods.
However, since 1983, the Ghana government has introduced a number of new
measures with the objective of enhancing the inflow of foreign investment.
Among these are the accelerated depreciation allowance, investment tax allow-
ance of 7.5 percent to 10 percent, income tax rebate on tree crops and livestock
activities, waiver of import duty on imported machinery, duty drawback, income
tax rebate ranging from 25 percent to 75 percent, tax holiday up to five years,
and 100 percent deductibility of research and development (R&D) expendi-
tures.28
In Nigeria, up to 1988, the foreign investment policy had tended to encourage
limited areas of activities for foreign investors. The Indigenization Decrees of
1972 and 1979 clearly defined the specific industries in which foreign investors
could operate. In the wake of the oil boom in 1971, the Federal Military
Government assumed that it was necessary to encourage the evolvement of local
investors in order to ensure that Nigerians benefit substantially from the growth
of the economy. However, after the adoption of the structural adjustment
program in 1986, there were pressures from the private sector for a more liberal
foreign investment policy. In response, the Nigerian government introduced a
new industrial policy with major and increased incentives in 1989.
In the context of the new industrial policy, companies granted pioneer status
are entitled to tax holidays on corporate income for a period of three years in
the first instance, and an extension of two years thereafter. During the period of
exemption, the companies accorded pioneer status29 would be expected to seek
and achieve an acceptable level of productivity and a reasonable degree of
profitability.30 A unique feature of the pioneer status under the new industrial
policy is that the aforementioned incentives apply to both public and private
limited liability companies, whereas these applied only to government-owned
companies in the past.31 The tax holiday years should provide reasonable returns
on invested capital by the pioneer industries.
Any company that carries out R&D activities in any given year would be
entitled to a tax-deductible allowance that would amount to 120 percent of the
cost of research. Where the R&D involves local raw materials, the company
receives a higher tax relief of 140 percent of the amount expended.32 This
incentive aims at the promotion of the development of locally sourced inputs
and the creation of linkages between industry and other sectors of the economy.
156 Foreign Aid and Self-Reliance in West Africa

Further vital incentives to foreign investors took the form of customs con-
cessions. Within this framework, import duties paid on raw materials used for
producing export goods are to be repaid in full. The incentive is enhanced by
the opportunities of investors to retain all export proceeds in a domiciliary
account.33
In spite of these varying forms of incentives in several West African countries,
foreign investments have not increased significantly to assist in the process of
development. Table 5.5 illustrates the pattern of the flow of foreign direct
investments to West Africa from 1980 to 1990. The table shows that there was
a general decline in the inflow of foreign direct investment to the subregion
except in 1989, when it rose to US$2,037 million compared to US$1,036
million in 1980. This was particularly due to an exceptional rise in foreign direct
investment to Nigeria in that year. Foreign direct investment to West Africa fell
to the lowest level in 1984 with a total inflow of US$327 million. It rose
thereafter, reaching US$710 million in 1990, but which was far below the figure
for 1980.
The West African totals do not compare favorably well when viewed vis-a-vis
the flows to North African countries during the same period. For the North
African subregion, total inflows rose from a mere US$45 million in 1980 to
US$ 1,528 million in 1986, but declined to US$ 1,167 million in 1988. The Arab
Republic of Egypt and Libya were the principal beneficiaries of foreign direct
investment in North Africa during this period.34
In the West African subregion, Benin, Cote dTvoire, Mauritania, Liberia,
Niger, Sierra Leone, Senegal, and Togo suffered substantial reductions in
foreign direct investment during this period. The reduction ranged between 50
and 70 percent for these countries by 1990 compared with the figures for 1980.
In contrast, there appeared to be some little increase for a handful of countries,
especially as illustrated in the cases of the Gambia and Mali. Although there
was a drastic fall in the case of Ghana to US$2 million in 1983 and 1984 as
against the three previous years when US$16 million each was invested, it
picked up again in the following year and rose to US$15 million in 1989 and
1990. This figure was still less than what was received in 1980 but still shows
improvement thanks to the introduction of economic reforms. Liberia, it would
seem, had suffered a major setback since the escalation of its internal conflict
in 1988. In Nigeria, the figure for 1990, US$588 million was far below US$740
million for 1980. The decline in foreign direct investment in Nigeria obviously
has much to do with the economic and political uncertainties about the future
of the country under the grip of military regimes.
The general decline in foreign direct investment in West Africa in the 1980s
was due to a number of factors that need immediate attention. Firstly, there is
the problem of poor economic growth of most of the countries. In spite of
structural adjustment programs, economic growth has not picked up in many
West African countries. The high rate of inflation and the erratic rate of
Table 5.5
Foreign Direct Investment in West Africa, 1980-1990
USSMills., Current Prices and Exchange Rates

COUNTRY 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

BENIN 4 2 1 I 1 1 1 1 1 1 2

BURKINA FASO 0 2 2 2 2 1 3 6 2 2 2

CAPE VERDE . . . . . . . 3 0 1 2

COTE DTVOIRE 95 33 47 38 22 29 71 88 56 78 48

GAMBIA . 2 . . 1 2 6 1 1 15 9

GHANA 16 16 16 2 2 6 4 5 5 15 15

GUINEA 34 _ 0 0 0 0 5 5 7 10 11

GUINEA-BISSAU . . _ . . _ . . . 0 1

LIBERIA . . 35 49 36 15 17 39 . .
MALI 2 4 2 3 10 3 8 6 1 15 6

MAURITANIA 27 12 15 I 9 7 3 1 1 3 7

NIGER 44 7 25 0 1 10 . . . .
NIGERIA 740 546 433 344 200 478 167 603 377 1882 588
SENEGAL 13 20 10 36 27 19 13 3 0 10 8
SIERRA LEONE 19 8 5 2 6 31 140 39 23 5 3
TOGO 42 10 16 2 10 17 7 7 _ 8
TOTAL 1036 662 607 480 327 619 445 807 474 2037 710

Note: - = Not available.


Source: UNDPAVorld Bank, African Development Indicators (Washington. D.C.: UNDPAVorld Bank. 1992), p. 70.
158 Foreign Aid and Self-Reliance in West Africa

exchange of local currencies were sources of worry for foreign investors.


Foreign investors have been generally reluctant to increase their investments as
the prospects for economic growth in the near future appear not to be bright.
Internal demand for production can only be enhanced if steady economic
growth is ensured. Economic growth would enhance demand capacity for
locally produced goods.
Besides, the continuous fall in the rate of exchange of local currencies for
some countries, for example Ghana and Nigeria, represent a serious disincentive
to foreign investors. The margin of profits and dividends is significantly eroded
with the fall in exchange rates. It is therefore important that West African
governments should seriously address the question of stable exchange rates.
This is even more important especially in the francophone countries of West
Africa that devalued the CFA by 50 percent in January 1994. The prospects of
foreign investment in these countries depend much on the extent to which they
could maintain a stable exchange rate.
Moreover, it is important to state that the foreign investment codes of most
countries will still need to address further other areas of incentives for foreign
investors without compromising national interests. For example, export-free
zones should be created in many areas of West African countries to encourage
foreign investors. This has been done in Indonesia, Malaysia, and Thailand, to
mention a few. For example, in Malaysia there are eight export-processing zones
located mainly along the west coast that offer tenants tariff assistance. Besides,
West African countries should, like the Southeast Asia countries, provide capital
incentives to foreign investors. This could be through the provision of infra-
structures to support large projects. All these are very important in order to lure
foreign investors into the subregion. International comparison of incentives
tends to direct foreign investors to countries where better incentives would
enhance higher profits.

FOREIGN DEBT
In the short run, the attainment of self-reliant development in West Africa
would much depend on the extent to which solutions are found to the problems
of foreign debt. Many West African countries have the problems of domestic
debt. Nevertheless, foreign debt has, in the 1980s, been a major constraint to
the promotion of development in spite of several national and international
efforts.
Table 5.6 illustrates the extent of external debt of West African countries in
1980 and 1989. The numbers show that the external debt of the subregion rose
from US$24.3 billion in 1980 to US$70.2 billion in 1989. A substantial part of
the increase has occurred in the area of multilateral borrowing. The concessional
multilateral assistance for the subregion rose from US$1.9 billionin 1980 to
US$7.5 billion in 1989. The nonconcessional rose to US$7.7 billion in 1989
Table 5.6
The Structure of External Debt of West African Countries
USSMills., Current Prices and Exchange Rates

Bilateral Multilateral Private Total


COUNTRY
Concessional Nonconcessional Concessional Nonconcessional Guaranteed Other

1980 1989 1980 1989 1980 1989 1980 1989 1980 1989 1980 1989 1980 1989

BENIN 82 256 24 74 100 404 20 38 116 285 75 121 417 1178

BURKINA FASO 89 101 30 18 150 464 9 67 8 34 47 72 333 756


CAPE VERDE 3 34 0 10 17 67 0 13 0 3 0 3 20 130
COTE D'lVOIRE 351 827 355 2046 160 206 428 2315 1556 600 2997 9416 5847 15410

GAMBIA 32 67 0 19 45 188 13 30 16 6 31 31 137 341


GHANA 624 549 60 72 234 1615 150 627 115 172 131 45 1314 3080

GUINEA 598 905 208 406 93 523 72 100 163 63 83 178 1117 2175

GUINEA-BISSAU 56 124 5 74 29 193 I 16 34 25 7 26 132 458


LIBERIA 179 371 50 109 73 200 147 522 57 65 180 494 686 1761

MALI 453 1231 8 41 194 762 19 55 35 13 24 54 733 2156

MAURITANIA 404 1002 54 194 135 445 52 163 120 38 79 167 844 2009

NIGER 42 140 70 289 130 594 29 86 60 1 532 468 863 1578

NIGERIA 413 454 21 11630 131 111 440 3057 380 10342 7549 7238 8934 32832

SENEGAL 221 1376 169 752 232 1090 166 423 327 135 353 364 1468 4140

SIERRA LEONE 103 128 42 122 71 190 50 87 110 88 53 440 429 1055

TOGO 155 101 210 294 118 488 33 87 307 15 221 201 1044 1186

TOTAL 3805 7666 1206 16150 1912 7540 1629 7686 3404 11867 12362 19318 24318 70245

AFRICA 23757 47508 12182 56615 7974 24976 7360 27003 23324 36495 34562 57560 109159 250157

Note: - = Not available.


Source: UNDPAVorld Bank, African Development Indicators (Washington, D C : UNDPAVorld Bank, 1992), p. 160.
160 Foreign Aid and Self-Reliance in West Africa

from US$1.6 billion in 1980, with far-reaching consequences for economic


growth and development. In the bilateral area, there was a substantial increase
in the nonconcessional aspect: from US$1.2 billion in 1980 to US$16.1 billion
in 1989. Also, the concessional bilateral debt more than doubled during the
decade. But private external debts presented major difficulties. Guaranteed
private debt increased fourfold during the period, while other private debts had
a leap of about US$7 billion. Thus, the critical problem areas in external debt
by the end of the 1980s were bilateral nonconcessional and all forms of
multilateral and private external debts.
However, what has been important to note is that the total West African debt
does not show the difference among countries, as may be illustrated in the cases
of those countries most seriously affected. The countries in this category include
Benin, Burkina Faso, Cape Verde, Cote dTvoire, Ghana, Guinea, Guinea-Bissau,
Nigeria, Senegal, and Sierra Leone. For most of these countries, the increases in
foreign debt has occurred essentially at the multilateral and private levels.
As far as the West African countries are concerned, the critical problem in
external debt has been the debt service ratio. Debt servicing as a proportion of
export earning rose to very high levels toward the end of the 1980s. For the
subregion as a whole, this was 38 percent in 1989. However, many countries,
as illustrated in Table 5.7, are above this average. The cases of Cote dTvoire,
Guinea-Bissau, Niger, and Nigeria are very illustrative. The release of this
proportion of foreign exchange earnings to debt servicing reduces, substan-
tially, the amount of funds available for development purposes. Such propor-
tions cannot be sustained if these countries are to attain self-reliant development
in the short run.
Several reasons have been adduced for the phenomenal growth of African
countries' external debt. Of these, however, the most prominent include the
expanded access to the sources of lending and the second oil shock in the 1980s.
After the 1972-77 oil shock, the international banking system was in the
position to recycle the huge OPEC surpluses.35 Thus, the Euromarket became
an important source of financing for a number of governments that had never
borrowed in it before. For example, Senegal, Togo, and Liberia; only Cote
dTvoire had used the Euromarkets previously, but for much smaller amounts.36
Major Euromarket borrowings were also undertaken by private entities, primar-
ily mining companies, as in Guinea and Niger.
Although certain financial credits were used for general budgetary support
(for example, Liberia in 1977), most commercial bank lending in the 1970s was
directly linked to major public projects. For project financing during this period,
the distinctions between bank, supplier, and other credits are not easily made,
as banks, suppliers, and official export promotion agencies began putting
together more coordinated project packages. Suppliers' creditors often extended
beyond the traditional small individual credits into large credits with the
supplier acting as financial intermediary. Since the demand in the industrialized
Table 5.7
External Debt and Debt Service Ratios of West African Countries, 1989
USSMills., Current Prices and Exchange Rates

Country Debt-GDP Ratio Total External Percentage of Debt-Export Ratio Debt-Service Export Ratio
Debt/Capital, Debt Disbursed
Nonconcessional US$
Concessional Concessional Nonconcessional Ex ante Ex post

BENIN 39 31 264 73 199 156 27 6


BURKINA FASO 22 7 89 60 211 71 21 13

CAPE VERDE 36 10 369 69 150 43 16 8


COTE D'lVOIRE 11 154 1370 93 33 457 78 41

GAMBIA 115 39 415 71 152 52 11 10

GHANA 41 17 220 71 243 103 27 49


GUINEA 52 27 403 71 192 101 36 15
GUINEA-BISSAU 187 83 487 69 1229 547 105 32
LIBERIA . . 731 97 . . . .
MALI 96 8 270 79 577 47 13 18
MAURITANIA 144 56 1078 78 297 116 38 19
NIGER 36 41 219 81 199 229 49 31
NIGERIA 2 109 298 90 7 283 72 21
SENEGAL 53 36 592 82 196 133 30 28
SIERRA LEONE 34 78 269 82 263 610 31 3
TOGO 44 45 351 84 120 122 13 17
TOTAL 61 49 464 78 271 205 38 21
AFRICA 27 65 446 84 104 253 48
-
Note: - = Not available.
Source: UNDPAVorld Bank, African Development Indicators (Washington, D C : UNDPAVorld Bank, 1992), p. 163.
162 Foreign Aid and Self-Reliance in West Africa

countries was slack for many of the suppliers' products, such financing re-
mained readily available throughout the 1970s. Thus, from 1972 to 1979
suppliers' credits increased at an annual rate of 19 percent to the African
continent.37
The export credit agencies played a large role in the debt evolution. The
majority of export credit was either directly extended through official bilateral
agencies or officially guaranteed by export credit agencies, where the latter can
be converted to official credit in the event of arrears or rescheduling.38 Also,
most of the nonconcessional credit from the DAC countries can be assumed to
be export-related.
Much of the external borrowing went to finance large public investment
projects that spanned the range of economic efficiency. Nigeria, in particular,
engaged in massive public expenditure and investment programs. There were
a number of examples of public investments in nonproduction categories whose
external financing was burdensome. Large-scale commercial borrowing was
used tofinanceconference centers, administrative buildings, new capitals, and
university centers.
In the "productive" sectors, many of the externallyfinancedprojects, proved
to be economically unviable. Ill-conceived projects include luxury hotels, oil
and sugar refineries, and steel mills. Certain major agricultural projects proved
inviable because of weak administrative framework. World price trends have
also weakened the viability of many projects in both the agricultural and mining
sectors. Ambitious infrastructural projects were often externally financed at
terms much shorter than the profile of returns. These include hydroelectric
projects, airports, and highways.
New global developments in the early 1980s also contributed significantly
to the aggravation of the foreign debt crisis in West Africa. The oil price increase
in 1979-80 contributed to the sharp drop in the terms of trade for oil importers.
With limited short-term flexibility in the volume of imports, the second oil
shock sharply increased their oil import bill and their current accounts deficits.
On the other hand, the expectations of continued oil price strength allowed oil
exporters, especially Nigeria, to continue their ambitious investment programs,
and their external debt grew as a result.
Unlike the first oil shock when export commodity price booms offset some
of the balance-of-payments difficulties of the oil importers of the subregion, the
second shock was not accompanied by any such offset. Rather, the world
recession beginning from the late 1970s and extending into the early 1980s
contributed to a decline in export earnings. The terms of trade for oil importers
in West Africa fell by an average of 11 percent between 1980 and 1982. The
current account pressures of these purely exogenous factors led to the expansion
of external debt in the early 1980s.
International real interest rates rose from low levels in the 1970s to over 8
percent in the early 1980s. For the whole of sub-Saharan Africa, all loans rose
Foreign Aid, Self-Reliance, and Economic Development 163

from -7 percent to over 6 percent in 1982 and 1983; for nonconcessional loans
from -5 percent in 1979 to 10 percent in 1982.39 The high-interest impact was
felt immediately through loans carrying variable interest rates, primarily inter-
national bank lending, and through short-term loans. The countries mainly
affected were Niger, Liberia, Senegal, and Cote dTvoire.
As the adverse impact of the external debt crisis became more acute in the
mid-1980s, African countries and the international community have shown
considerable concern to find solutions in order to ensure economic growth and
development. At the United Nations, for example, discussions at the General
Assembly have led to international impulses for new policy departures in several
international fora. The international community has sought to alleviate the
immediate debt-servicing burden of countries in debt crisis and reduce the "debt
overhang" that impedes a return to normal access to international finance in the
three principal areas of African debt, namely, commercial debt, bilateral official
debt and multilateral debt.
In the area of commercial debt, the attempt has largely been to reduce the
burden of interest payments to release resources for debtor African countries.
In this case, each debtor African country has been dealt with separately,
depending on its economic situation and the disposition of the creditor banks.
Generally, commercial banks select from menus that have employed three
main categories of options (not all are necessarily available in each case): debt
reduction, debt-service reduction, and new loans. Debt reduction can involve
buybacks at discounts or swaps of debt for bonds with a lower face value than
the original loans (discount bonds). In both cases, the discounts largely reflect
the market value of the debt at the time of negotiation, as indicated by the
discount prevailing in the secondary market for such debt. Debt-service reduc-
tion, normally in the form of interest-reduction bonds, has been offered in three
ways. The first is below-market fixed-rate bonds. The second is the so-called
"step-down/step-up" arrangements, where a very low interest rate is paid in the
first year, but it gradually increases in a prearranged schedule. The third is
temporary interest-reduction bonds, where interest rates start from a very low
level and rise over several years, followed by payment of a variable interest rate
calculated as a floating international base rate plus a fixed margin. Finally, new
loans (called the "new-money" option) can be offered with or without conver-
sion bonds.
The discount bonds and par bonds were generally made more attractive to
the creditors with the purchase by the debtor of collateral in the form of
zero-coupon US Treasury securities that would mature on the same day as the
debtor-country bond (equivalent securities from other countries could be used
to cover nondollar bonds).
However, in order to assist low-income countries, additional international
measures are often needed. For example, the World Bank established a Debt
Reduction Facility for low-income countries in 1989, set to last until June 1992,
164 Foreign Aid and Self-Reliance in West Africa

to which the bank contributed US$100 million. Nevertheless, the initial utili-
zation of the facility was slow, owing to difficulties faced by the debtor countries
in pursuing their structural adjustment programs and in concluding negotiations
with the commercial banks. Thus, by March 1992, when the life of the facility
was extended through June 1994, only two countries had carried out buyback
operations (Niger in March). Nevertheless, the facility was broadened at the
time of the extension to cover, for example, consultation fees to prepare for the
debt-reduction operations and to cover short-term debt. Since then, Seirra Leone
and other African countries, for example Sao Tome and Principe and Zambia,
have engaged in the process of buyback operations under the facility.40 Apart
from these, debt conversions have also taken place through many forms of swaps
of debt for equity in a local enterprise or on a smaller scale for local government
commitments to environmental or other expenditures. Also, debtor countries
have bought back their debt on the secondary market.41
International debt reduction strategies at both bilateral and multilateral levels
have had limited effect on the debt growth and burden of West African countries.
For example, the Trinidad Terms (proposed by the governments of the United
Kingdom of Great Britain and Northern Ireland) would cancel two-thirds of the
entire stock of eligible debt. The remainder would be rescheduled at market
rates over twenty-five years with afive-yeargrace period. An assessment of the
impact of alternative rescheduling terms may be carried out by measuring the
reduction in the present value of debt-service obligations they are expected to
produce. This measure captures the outright debt forgiveness and the larger
degree of concessionality of rescheduled debt resulting from lower interest
charges. The impact is expressed by the ratio of the present value of debt exports.
When simulations were made to assess the impact of alternative terms on the
severely indebted low-income countries, it was found that even after the
application of the Trinidad Terms and assuming the forgiveness of all bilateral
concessional ODA loans, the debt-to-export ratios remain unsustainable for a
number of African countries.42 However, the summit meeting of the seven major
industrialized countries held in Tokyo, Japan, in July 1993 could not reach
agreement on the implementation of these terms. Hence, the heads of state and
government urged the Paris Club to consider extending further debt relief to the
low-income heavily indebted countries, noting, in particular, the matter of the
stock of debt.
The debt owed to multilateral financial institutions is the only category of
developing-country debt that has no formal framework of restructuring. Indeed,
any rescheduling of debt-servicing obligations is expressly forbidden. Some
countries became unable to make their payments and have accumulated arrears
to these institutions, particularly to the IMF. As of the end of January 1993,
US$4.6 billion in debt-service obligations owed to the IMF by ten countries
were overdue six months or more.
Foreign Aid, Self-Reliance, and Economic Development 165

Thus, it is clear that the external debt of West African countries still consti-
tutes a major impediment to their process of economic growth and development.
These countries are denied the resources that are essential for the revamping of
their economies while they are compelled to use them for debt-servicing. West
African economies continue to face considerable difficulties in the sector as a
result of the unfavorable international economic environment. The decline in
the prices of commodities in the 1970s and 1980s continues to undermine
severely the possibilities for higher earnings of foreign exchange for economic
development. Also, as already noted, foreign investments have declined over
the years in spite of their economic reforms and the introduction of more
generous foreign investment incentives. Furthermore, West African countries
have, in the 1980s, been experiencing a decline in the real value of foreign aid
while doubts are being expressed by the developed donor countries about the
effectiveness of additional financial aid. However, it is very obvious that a more
imaginative approach to the question of external debt would, in a long way, ease
the difficulties of the debt-distressed West African countries. This will call for
an intensification of efforts at both national and international levels.
The debtor West African countries will need to ensure that their present
economic reforms are reviewed while taking adequate care to overcome the
undesirable adverse social effects generated by them. The industrial and agri-
cultural sectors must be rejuvenated and growth promoted. They must also make
more efforts to ensure that higher levels of industrialization are attained while
they engage in the process of the diversification of commodity exports.
At the international level, there will be the need to ensure better prices for
the commodities of West African countries in order to enable them to have
increases in their foreign exchange earnings. These taken together with in-
creases in foreign investments would enable West African debtor countries to
build up the capacity within their economies to address, on a long-term basis,
the question of external debt.
Furthermore, at the international level, there will be a need for the adoption
of a more effective strategy to cope with the immediate adverse impacts of
external debt on African countries. A creditor and debtor conference may
provide an appropriate forum to spell out clearly the formula to apply for the
unloading of the commercial bank debts, bilateral debts, and multilateral debts.
As far as the commercial debts are concerned, better arrangements should be
devised not only for the reduction of interest payments but for a significant
reduction in the capital without jeopardizing the interest of the commercial
banks. On the bilateral official debts, this calls for more political will on the
part of the creditor countries. The low-income, heavily indebted West African
countries would require the write-off of a substantial part of their external debt
in order to be able to promote economic growth and development. Furthermore,
international financial institutions should ease the external debt of West African
166 Foreign Aid and Self-Reliance in West Africa

countries with the adoption of better terms for interest payments and increased
inflow of concessional finance.

COMMODITY
In order to promote authentic self-reliance and economic development in
West Africa, it is imperative that solutions should be found to the problems of
commodity. As already noted in Chapter 4, commodity exports such as cocoa,
coffee, cotton timber, bauxite, oil, iron ore, groundnut, and rubber, to mention
a few, account for over 85 percent of total exports. In effect, they constitute the
main source of foreign exchange earnings. Over the years West African coun-
tries, like other African countries, have experienced a marked decline in
earnings. For example, leaving aside fuels, commodities earned US$18 billion
for Africa in international markets in 1988. This was 26 percent lower in real
terms than in 1980 and 35 percent lower than in 1970.43
There are many reasons for the decline in export earnings of African coun-
tries. At the national level, the causes are to be found essentially in low
productivity and uncompetitive production. There are also the limitations
imposed by ill-advised government policies, the paucity of agricultural scien-
tists and extension officers, and the limited knowledge of international markets.
Other causes are lack of investment in transport and other infrastructures
necessary for effective competitive production. Given all of these causes, it has
been difficult for West African countries to ensure an increase in output of export
commodity.
Beyond these however, the problems of commodity exports of West African
countries have been more profound at the international level. The prices for
most primary commodities of the subregion have fared poorly compared with
those for manufactured goods. The terms of trade for nonfuel commodities with
respect to manufactured goods have fluctuated and have on the whole declined
since 1960; they have been lower than at any time since 1960 from 1987 to
1990.44
At various times in the past, several International Commodity Agreements
(ICAs) functioned satisfactorily and played a useful stabilizing role. However,
because of the inadequacies of the structure of many of these agreements, the
lack of adequate support by participants, and the lack of financial support, the
price mechanism has not been satisfactory: it has been characterized by severe
imbalances between supply and demand. Thus, there is an urgent need for
commodity cooperation between consumers and producers regionally and
globally.
All these problems should be more imaginatively approached in order to
promote self-reliance and economic development in West Africa. Among other
things, West African governments should elaborate on a commodity strategy
within overall process of economic development. This should take into account
Foreign Aid, Self-Reliance, and Economic Development 167

the macroeconomic environment, resource needs, requirements for human


resources development, and research and technological development. In addi-
tion, their macroeconomic policies and social policies (notably exchange rate,
taxation, price, and other policies affecting producer incentives) should be
geared toward giving more impetus to the commodity sector. These policies
should, as a matter of necessity, be backed up by improved administration. Also,
along with these, it is important that West African governments should establish
within the commodity policy package measures aimed at improving the effi-
ciency of the marketing chain. Although production is the essential starting
point, marketing is nevertheless the key to competitiveness. It should therefore
be central in the commodity policy package.
In order to tackle these problems effectively, there will be a need for
diversification into nontraditional exports to world and African markets. These
could include new commodity or commodity-related products such as minor
crops, fisheries, and forestry products; and in some cases labor-intensive
manufactures. The world market may not continue to absorb increased expan-
sion of traditional exports. If the diversification program is successful, this
would reduce the vulnerability of West African economies to the instability of
export receipts and extend the commodity sector's economic links to other parts
of the economy.
At the subregional level, West African governments should cooperate in
research and education, both of which are vital for the future development of
the commodity sector. Such cooperation should be intensified within the
framework of the ECOWAS. The costs of the development are likely to be lower
for each country in the context of regional economic integration arrangement.
In the face of difficult and competitive international economic environment,
there is a strong need for greater commodity cooperation between consumers
and producers. It is important that agreed price levels should be market-related
and compatible with dynamic market conditions. Provisions should be included
for adjustment to changes in market situations. Where possible, such provisions
would be advantageous if they were automatic or semiautomatic.
In this connection therefore, international efforts should be increased to
ensure the establishment or reestablishment of price stabilizing international
commodity agreements for major West African commodities especially coffee
and cocoa.
The barriers to some of West Africa's exports are significant and in many
cases constitute major disincentives to reform and diversification in the subre-
gion. Besides, as West African countries grow, expand the range of the products
they export, and generally diversify their exports, limits to market access could
become more inhibiting than they are for traditional commodities. It is therefore
important that the industrialized countries should, among other things, accept
as afirmlonger-term objective the abolition of quantitative limits of commodi-
768 Foreign Aid and Self-Reliance in West Africa

ties important to West Africa, and in the meantime commit themselves to


liberalizing such controls substantially.
Also, other barriers consist of administrative protective measures that reduce
substantially the gains that West African countries might otherwise obtain from
the preferential arrangements under the Lome Convention. Restrictive rules of
origin measures, and voluntary export restraints as well as antidumping meas-
ures have affected West African exports such as textiles. There is therefore a
need for the review of administrative protection and economic organizations in
the developed countries to ensure that this does not hinder diversification efforts
in the subregion.

DROUGHT
Climate conditions are strong determinants of the future course of self-reliant
development in the subregion. Many of the countries in West Africa lie in the
Sudano-Sahelian region, which is constantly affected by drought, desiccation,
and dryland degradation. Of all these however, the impact of drought appears
to pose a major threat to economic development.
There have been two distinct droughts since 1960. The nadir of the first
drought was in 1970. The second drought, which was more severe, was in 1984.
The recovery between these droughts never reached the rainfalls of the 1950s
of 1960s. The period since 1984 has witnessed a steady recovery in rainfalls in
most areas until the late 1980s when it ebbed. The recovery was somewhat
modest in Burkina Faso, Mali, and Niger. The effects of these droughts have
been devastating on cultivated crop yields and pastoral production.45
Although the great Sahelian drought started in the western Sahel in 1970, the
first major response at the subregional level did not occur until 1973 through
the establishment of the Permanent Interstate Committee for Drought Control
in the Sahel or Commite Permanent Inter-Etats de Lutte contre la Secheresse
dans le Sahel (CILSS). With its headquarters in Ouagadougou, its original
members besides Burkina Faso were Chad, Mali, Mauritania, Niger, and
Senegal. Cape Verde and Gambia became members in 1977, and Guinea-Bissau
in 1986. One of the main objectives of CILSS is to achieve subregional food
self-sufficiency by the year 2000. It organizes many subregional forums on
drought and acts as an animator for subregional projects on efficient woodburn-
ing stoves, butane promotion, pest control, seed banks, and soil erosion control,
to mention a few.
In 1976, major aid donors established, under the OECD auspices, the Club
des Amis du Sahel, committed to supporting CILSS's objective through the
mobilization and coordination of aid to the Sahel. Both agreed that their joint
goal should be in "food self-sufficiency and ecological equilibrium." There
would be an acceleration of the growth in the production of both the
traditional food crops and livestock to a rate higher than the rate of population
Foreign Aid, Self-Reliance, and Economic Development 169

growth, achieving a much higher rate of growth in rice production to meet


the requirements of increasing urban populations and slowing the migration
of people from the rural to the urban areas. Moreover, it was envisaged that
the intensification of agricultural and rural development should be accom-
plished while halting the erosion of the fragile Sahelian soils and the
deforestation resulting largely from overgrazing and the large demand for
fuel in the form of wood.
It is worth noting that the studies and policy dialogues by the CILSS and
Club des Amis du Sahel secretariats and by individual donors and international
organizations have elaborated the principles and functional elements of a more
systematic effort to achieve the food and ecological objectives. However, this
subregional consultative arrangement was not designed to address all aspects
of Sahelian nations' policies and operational systems affecting food supply and
nutrition in their individual country settings, nor was it to coordinate all aid at
the country level. Consequently, from the outset, there was a gap between the
CILSS-Club des Amis du Sahel aspirations and the means to achieve it.46
By 1982, more than one-third of the aid was allocated to the operation and
maintenance of the economies, institutions, and facilities of the Sahel; some 9
percent was allocated to rainfall crop projects and 1.5 percent to forestry.
As far as regional organizations are concerned it is important to state that
they have shown keen interests in the drought problems of the West African
countries. Both the Organization of African Unity (OAU) and the United
Nations Economic Commission for Africa (UNECA) have worked closely with
the Sudano-Sahelian countries as a whole, and CILSS and the United Nations
Sudano-Sahelian Office (UNSO) on drought and desertification problems in
the subregion. Both played leading role in the implementation and monitoring
of the United Nations Program of Action for African Economic Recovery and
Development (UNPAAERD), especially the chapter on desertification and
drought.47 In the same vein both are currently cooperating in the negotiations
of an international convention on drought and desertification as recommended
from the Rio de Janeiro Agenda 21.
At the national level, drought strategies include monitoring, food storage,
drought contingency planning, and improved infrastructure. However, these are
still not adequate when viewed against the magnitude of the problems. For
example, poor infrastructure constituted a major barrier to solving drought
difficulties. The roads that could take heavy vehicles were insufficient. Roads
were impassable in the wet seasons. There was insufficient capacity at the ports.
There were insufficient storage facilities, poor boat transport in the Cape Verde
Islands, and poor maintenance and spare-parts services for vehicles, to mention
just a few.
Thus, while difficulties still prevail in the efforts to address the question of
drought at both international and national levels, the bouts of drought continue
to pose serious problems to self-reliance and the development of the Sahelian
170 Foreign Aid and Self-Reliance in West Africa

countries in West Africa. Moreover, the difficulties are more disturbing the more
the growth rate of the population continues to outstrip the growth rate of food
production. Consequently, there should be a more comprehensive design and
long-term pursuit of coherent national food strategies to address training,
technical research and institutions, infrastructure, and finance.
Also, there is a growing recognition that the original concept of the Club des
Amis du Sahel needs to be reaffirmed by donors and the Sahelian governments
should reaffirm their commitment to the preference for long-term development
through which a lasting solution could be provided on the main problems of
drought in the subregion.48

REGIONALISM
It is important to state that the poor advancement in regional economic
integration constitutes one of the weakest factors in the process of economic
development in West Africa. Regionalism on the whole has suffered consider-
ably for several reasons. The difficulties of regionalism as already noted ranged
from competition for the same resources by different economic groupings to a
number of historical, political, and socioeconomic limitations.
However, as it is today, the ECOWAS remains one of the foremost integration
arrangements for collective self-reliance in the subregion. But it can only fulfil
this purpose through effective consolidation. The nineteen years of existence
of the ECOWAS has, in spite of a stated gradualist approach, indicated that there
has been very little commitment to the strengthening of the community. The
member states will need to pay special attention to the question of implemen-
tation community decisions among the several factors militating against the
progress of the community.
Decisions of the Authority of the Heads of State and Government and of the
Council of Ministers constitute the legal bases for the implementation of the
provisions of the treaty. They also form the structure for additional measures to
enable the ECOWAS to cope with new political, economic, and social demands
as integration proceeds.
The salient aspects of the ECOWAS treaty cover the common market
provisions. These consist of trade liberalization, common external tariffs, the
harmonization offiscalincentives, and monetary integration. Regional integra-
tors have, from the outset in 1975, been very selective as to which of these
provisions should be implemented given the economic situation of the member
states and the need to build the necessary momentum into the process of
integration. Within this context, decisions and protocols have been adopted at
different times, notably those on the free movement of persons, trade liberali-
zation, nonaggression, and a mutual defence pact, to mention a few. However,
these have not been promptly implemented at the national level with the result
that the protocols do not have the subregional development impact that they are
Foreign Aid, Self-Reliance, and Economic Development 171

intended to have. In other words, regional economic integration remains weak-


ened and directionless. The former executive secretary of the community, Abass
Bundu, effectively underscored this when he said, "with ECOWAS, certain
difficulties have been encountered over the years which adversely affect the
regional integration process. Among these problems are the slow rate of
implementation of Community Acts and Decisions, delays in reacting to
requests for information from Member States, [and] poor attendance at
ECOWAS meetings."49 In other words, this is an important bottleneck that
regional integrators should pay due attention to in order to ensure meaningful
integration in the ECOWAS.
Several problems are associated with the poor implementation of commu-
nity acts and decisions. The most prominent of this has been the slow
legislative procedures in the member states. In the member states with
democratic institutional arrangements, the review and adoption of acts and
decisions by the legal department and both arms of parliament entail a very
long process because of their cumbersome administrative process. In order
to overcome this limitation, it is important that the heads of state of the
member states give deadlines to their administrative organs for the ratifica-
tion of adopted acts and decisions. Besides, improved performance of these
administrative organs would also require improved administration, both of
manpower and in administrative techniques.
Secondly, there are difficulties at the level of implementation. The various
governmental departments that are to supervise the implementation of the
acts and decisions of the ECOWAS are not fully geared toward the ideals of
the community. There are problems of inadequate staff without proper
knowledge of the workings of the community. There is also a gap in the
dissemination of ECOWAS information—the integrative measures to the
general public, especially to the private sector. Also, information to other
government departments not directly connected with the negotiation of acts
and decisions are in some cases nonexistent. But this is very important given
the fact that economic integration is all-embracing in the process of economic
growth and development.
The third important reason for the slow implementation of acts and decisions
is to be found in their short-term economic implications. In situations in which
Acts and Decisions are perceived to lead to the loss of revenue and erosion of
sovereignty, as in the trade liberalization program and common external tariffs,
the member states have been reluctant at implementation, especially when
complementary compensatory measures are calculated as inadequate. This
aspect is significant to many countries because duties on imports are important
sources of state revenue.
Thus, while acknowledging the relevance of other impeding factors, it is
assumed that the implementation of acts and decisions should be given the
highest priority by the member states. It is basically through this that the
172 Foreign Aid and Self-Reliance in West Africa

ECOWAS could be effectively related to self-reliance and economic develop-


ment in the subregion. Regional economic integration without prompt and
effective implementation of acts and decisions would at best stagnate.

SUSTAINABLE DEVELOPMENT
"Sustainable development," yet to acquire a universally accepted definition,
poses some challenges and opportunities to the overall development in West
Africa. The major challenge for the world community in the 1990s and beyond
is the promotion of sustainable development. With the adoption of Agenda 21
in Rio de Janeiro, the international community agreed that global development
in our time should be environmentally sustainable.50 In this context, the eco-
nomic policies of individual countries and international economic relations
have vital roles to play. To fully ensure this, national economic policies should
be effectively supported by an appropriate international economic policy on the
environment. Within this thinking, the three broad issue areas in sustainable
development therefore related to: (1) social and economic dimensions, (2)
conservation and management of resources for development, and (3) strength-
ening the role of major groups.51
Thus, the global program on sustainable development is all-embracing,
dealing with all aspects of development for both developed and developing
countries. For West African countries, this has widened the scope and dimen-
sions in the concept of self-reliance for development with far-reaching impli-
cations on financial resources. To some extent, the program is complementary
in some aspects to some initiatives already taken at the subregional level on
development issues especially in the areas of desertification and drought and
the dumping of toxic waste. The program is also useful as it stresses global
partnership and cooperation in external issues such as foreign trade, external
financial assistance, and the transfer of technology to developing countries. For
example, the several issues to be tackled under the conservation and manage-
ment of resources for development would require enormous funds even though
the cooperation of the international community is envisaged.
Agreement was reached on the Convention on Desertification and Drought
in early 1995. Furthermore, the Global Environmental Facility (GEF) has been
reorganized to act as an important catalyst in the integration of global environ-
mental concerns into national development goals.52
The GEF draws collaboratively on the experience and expertise of three
existing international agencies: the UNEP, the UNDP, and the World Bank. The
UNEP provides the Secretariat with the Scientific and Technical Advisory
Panel, offers environmental expertise for the facility, and supports research and
information dissemination. The UNDP is responsible for technical, operational,
and capacity-building activities and is charged with managing the Small Grants
Foreign Aid, Self-Reliance, and Economic Development 173

Program for NGOs. The World Bank on its part chairs and administers the pilot
facility, manages the trust fund, and is responsible for investment projects.53
However, in view of the fact that the GEF was not originally designed for
Agenda 21 and again because of its pilot nature, questions have been asked on
how it could effectively play a catalytic role in integrating global environmental
considerations into the regular development assistance programs of bilateral
and multilateral agencies.
In West Africa, poverty is a complex multidimensional problem with origins
in both national and international domains. The main objectives of the program
at the national level, in this regard, include: (1) the opportunity to earn a
sustainable livelihood; (2) the implementation of policies and strategies that
promote adequate levels of funding and focus on integrated human development
policies; (3) the development for all poverty-stricken areas integrated strategies
and programs of sound and sustainable management of the environment,
resource mobilization, poverty eradication and alleviation, employment, and
income; and (4) the creation of a focus in national development plans and
budgets on investment in human capital, with special policies and programs
directed at rural areas, the urban poor, and women and children.
The actions of national governments for the realization of these objectives
are very fundamental even though the support of the international community
is anticipated. The first national action is in the empowerment of communities.
Women should be empowered for full participation in decision making. Also,
it would entail the establishment of a network of community-based learning
centers for capacity-building and sustainable development.54
In management-related activities, the government, with the assistance and in
cooperation with appropriate international, nongovernmental and local com-
munity organizations, is expected, among other things, to generate remunerative
employment and productive occupational opportunities compatible with coun-
try-specific factor endowments, on a scale sufficient to take care of prospective
increases in the labor force and to cover backlogs and implement mechanisms
for popular participation, particularly by the poor.55
However, the prospects for the implementation of this aspect of Agenda 21
appear gloomy because of the weak autonomous financial capacity of West
African countries. Thus, to effectively tackle the problems of poverty in the
context of sustainable development in West Africa, there is a need to strengthen
external financial resources as well as the earning capacity of the countries in
the subregion.
Another important issue of concern to West African countries is technology.
Technology is both the source of assaults on the ecosystem and the potential
solution to the apparent conflict between increased material prosperity for all
and improvement in environmental quality. Sustainable development program
requires that technology should be environmentally sound.
174 Foreign Aid and Self-Reliance in West Africa

However, the promotion of the use of environmentally sound technology in


developing countries raises several problems. In the first place, the conditions
for the successful transfer, application, and development of such technology in
developing countries are much the same as those for technology generally. The
greater a country's existing knowledge and skill base, the greater the ability of
its enterprises to select, make efficient use of, and adapt and modify imported
technology, including the hardware component of more environmentally benign
technologies. Thus, as far as West African countries are concerned, this would
require the acceleration of human resource development.
Secondly, as West African countries are beset by the immediate pressing
needs of young and rapidly growing populations, by financial instability and
sociopolitical turbulence their leaders and planners have a relatively short time
perspective that limits their attention to those environmental problems having
immediate consequences for the health or livelihood of their citizens. Thus, to
promote environmentally sound technologies, they will require additional
financial resources.56
Thirdly, and in connection with the aforementioned factors, the resource
requirements of West African countries will have to be highly concessional in
order to support the added cost of importing environmentally benign technol-
ogy. In particular, the additionality of concessional financing such as that
provided by the GEF is crucial if West African countries are to divert resources
to attacking the more universal problems of ozone layer depletion, global
warming, loss of biodiversity, and the pollution of international waters.
Fourthly, accessibility to environmentally sound technology presents a criti-
cal problem. Although clean technologies are available and generally part of
the public domain, information about them is not universally accessible. More
effective arrangements (including the possibility of an international register)
for the dissemination of information on existing environmentally sound tech-
nologies and on the environmental risk of technologies currently on the inter-
national market, including information about comparative costs, productivity,
and so on, are needed in order to guide decision making in West African
countries.

CONCLUSION
There are critical issues that need urgent solutions if West African countries
are to secure increased foreign aid and promote economic development. In the
first place, aid recipient West African countries should strengthen their absorp-
tive capacity in order to enhance the inflow of foreign aid. In this connection,
special attention should be accorded to aid coordination and management by
West African governments in order to ensure that the aid inflow is effectively
utilized for development. Foreign aid donors on the other hand would need to
cooperate with the recipients in the disbursement of aid. The recipients would
Foreign Aid, Self-Reliance, and Economic Development 175

benefit more if aid were directed to the areas of priority in national development.
While acknowledging the interests of the donors, misdirected aid would serve
no purpose in the efforts at the promotion of economic development. For most
West African countries, the critical areas where foreign aid is urgently required
is in human resource development and infrastructural development. Both are
basic requirements for sustainable and self-reliant development.
In order to promote economic development, the problems of drought should
be effectively tackled to reduce and eliminate incessant food shortages and
erratic reduction in foreign exchange earnings. The implementation of devel-
opment plans and annual budgets suffers considerably with irregular and
unpredictable earnings in foreign exchange. In the same vein, the cooperation
of the international community is desirable on the commodity problems of West
African countries. The diversification of exports is very fundamental for eco-
nomic growth. Also, growth and development in West Africa would be enhanced
with better prices for their export commodities at the international market.
Structural adjustment programs, which are basic instruments for economic
growth, have produced very little positive impact on development in West
African countries. The unintended negative effects have on the whole removed
the dynamics in the growth process of the adjusting countries. There are
problems in policies if they generate inflation, increase unemployment, and lack
appreciable capacity to promote growth in key economic sectors. Thus, a major
review of structural adjustment programs is desirable if the aggravation of
poverty is to be averted in the subregion.
Sustainable development has broadened the concept of self-reliance and
economic development in West Africa. While its requirements are very com-
plementary to the requirements of development in West Africa, there is however
no doubt that it is not without additional cost to the weak economies of West
African countries. It will entail competition with urgent priority development
issues of West African countries. To cope with these preconditions and the
prescribed financial demands at the national level in areas of poverty and
technology application, it would be desirable that the international community
pay special attention to the countries of the subregion. The need for this is
underscored by the fact that a significant part of the forty-one least-developed
countries in the world are in West Africa.

NOTES
1. World Bank, The World Bank Annual Report 1993 (Washington, D.C.: World Bank, 1993),
pp. 25-28.
2. T. L. Hutcheson and R. C. Porter, The Cost of Tying Aid: A Method and Some Colombian
Estimates, RED Reprints New Series, No. 29, 1972.
3. J. C. Wheeler, Development Co-operation: Efforts and Policies of the Members of the
Development Assistance Committee (Paris: OECD, 1987), p. 113.
176 Foreign Aid and Self-Reliance in West Africa

4. R. M. Poats, Development Co-operation: Efforts and Policies of the Member of the


Development Assistance Committee (Paris: OECD, 1983), p. 132.
5. Wheeler, Development Co-operation, p. 116.
6. Ibid., p. 121.
7. Ibid.
8. Ibid.
9. UNDPAVorld Bank, African Development Indicators (Wahington, D.C.: UNDPAVorld
Bank, 1992), p. 32.
10. C. H. Dodd, Political Development (London: The Macmillan Press, 1972), pp. 50-54.
11. S. Please, The Hobbled Giant: Essays on the World Bank (London: Westview Press,
1984), p. 18; E. Osagie, "Problems of Structural Adjustment in West African Sub-region," in
A. O. Philips and E. C. Ndekwu (eds.), Structural Adjustment Programme in a Developing
Economy: The Case of Nigeria (Ibadan: Wernilore Press, Ltd. and NISER, 1987), p. 233.
12. Osagie, "Problems of Structural Adjustment," p. 236.
13. Ibid.
14. P. K. Quarcoo, "Structural Adjustment Programs in Sub-Saharan Africa: Evolution of
Approaches," African Development Review, 2(2), December 1990, p. 13.
15. UNECA, African Alternative Framework to Structural Adjustment Programs for Socio-
Economic Recovery and Transformation (AAF-SAP), E/ECA/CM.15/6/Rev.3, p. 19.
16. Ibid., p. 20.
17. Ismail Sarageldin, Poverty, Adjustment, and Growth in Africa (Washington, D.C.: World
Bank, 1989), pp. 49-50.
18. World Bank, Implementing the World Bank's Strategy to Reduce Poverty: Progress and
Challenges (Washington, D.C.: World Bank, 1993), p. 20.
19. UNDP, Regional Program for Africa: Fourth Cycle-Assessment of Social Dimensions of
Structural Adjustment in Sub-Saharan Africa Project, No. RAF/86/037/A/01/42, World Bank,
Washington, D.C., April 1988.
20. UNDP, Human Development Report 1992 (New York: Oxford University Press, 1992),
p. 13.
21. UNDP, Human Development Report 1991 (New York: Oxford University Press, 1991),
pp. 35-36.
22. Ibid., p. 46.
23. UNCTAD Secretariat, UNCTAD VIII: Analytical Report by the UNCTAD Secretariat to
the Conference, TD/358, New York, 1992, p. 132.
24. UNCTAD, Transfer and Development of Technology in Least Developed Countries: an
Assessment of Major Policy Issues. Report by the UNCTAD Secretariat in cooperation with L.
Krieger Mytelka, Carleton University, Ottawa and LAREA/CEREM, Universite de Paris.
(UNCTAD/ITP/TEC/12), August 1990.
25. For a detailed discussion of the theories of foreign direct investment, see John M.
Dunning, "The Determinants of International Production," Oxford Economic Papers, No. 3,
November 1973, pp. 289-330.
26. J.E.A. Manu, "Problems of Technology Transfer in ECOWAS," in A. Orimalade and R.
E. Ubogu (eds.), Trade and Development in Economic Community of West African States
(ECOWAS) (New Delhi: Vikas Publishing House PVT Ltd., 1984, pp. 283-290.
27. Other countries with ample human resources may have suffered from inappropriate
incentive structures, inadequate technological effort, or institutional weaknesses as illustrated
in the cases of Eastern European countries where there was long in existence an ample stock of
human capital and technical skills. UNCTAD Secretariat, UNCTAD VIII, p. 146.
28. World Bank, Ghana 2000 and Beyond: Setting the Stage for Accelerated Growth and
Poverty Reduction (Washington, D.C.: World Bank, 1993), p. 65.
Foreign Aid, Self-Reliance, and Economic Development 177

29. The pioneer status represents an important cornerstone for the encouragement of new
investments. It was based on the Income Relief Act of 1958, which was amended in 1971 by
Decree No. 22.
30. Federal Ministry of Industries, Industrial Policy of Nigeria: Policies, Incentives, Guide-
lines and Institutional Framework (Abuja: Federal Ministry of Industries, 1989), pp. 8-9.
31. R. Omotayo Olaniyan, Private Foreign Investment and Nigeria's Economic Recovery:
Problems and Prospects for Increases in Inflow, mimeo, A study for the Social Science Council
of Nigeria, 1990, p. 22.
32. Federal Ministry of Industries, Industrial Policy of Nigeria, pp. 22-23.
33. For details, see Olaniyan, Private Foreign Investment, pp. 19-26.
34. UNDPAVorld Bank, African Development Indicators, p. 70.
35. P. A. Volcker, The Recycling Problem Revisited (New York: New York University, March
1980).
36. K. Larrecq, Foreign Borrowing in the Mid-Seventies and the Role of International
Commercial Banks, Report No. 2239-WA, World Bank, October, 1978.
37. K. L. Krum, The External Debt of Sub-Saharan Africa: Origins, Magnitude and Impli-
cations for Action, World Bank Staff Working Papers No. 741, p. 10.
38. Ibid.
39. Ibid., p. 14.
40. World Bank, Financial Flows to Developing Countries, Quarterly Review, July 1993, p.
19.
41. UN General Assembly, External Debt Crisis and Development: The International Debt
Strategy as of Mid-1993, Report of the Secretary-General, A/48/345, September 9, 1993.
42. World Bank, World Debt Tables 1992-93, p. 32.
43. UNCTAD Secretariat, Africa's Commodity Problems: Toward a Solution, A Report by
UN Secretary General's Expert Group on Africa's Commodity Problems, UNC-
TAD/EDM/ATF/1, 1990, pp. 15-16.
44. Ibid., p. 29.
45. P. M. Newhouse, Les conditions de croissance dans les pays saheliens et les pays de
Vouest coders de I'Afrique occidentals Food and Agriculture Organization of the United
Nations (FAO), Rome, 1987; R. T Wilson, R. N. de Leeuw and C. de Haan, CIPEA Rapport de
Recherche, 5, Centre International pour l'Elevage en Afrique, Addis Ababa, 1983, pp. 19-23;
UNSO, Assessment of Desertification and Drought in Sudano-Sahelian Region 1985-1991
(New York: UNSO, 1991), pp. 28-29.
46. R. M. Poats, Development Co-operation, pp. 17-18.
47. UNSO, Assessment of Desertification, p. 59.
48. Poats, Development Co-operation, p. 20.
49. Abass Bundu, ECOWAS and the Future of Regional Integration in West Africa. Paper
presented at the IDRC-ECOWAS International Conference on West African Integration, Dakar,
January 11-15, 1993.
50. UNCED, Adoption of Agreements on Environment and Development, A/CONF.151/4
(Part I), April 22, 1992, p. 4.
51. Ibid.
52. World Bank, The World Bank and the Environment: Fiscal 1993 (Washington, D.C.:
World Bank, September 1993), p. 112.
53. Algeria, Austria, Belgium, Brazil, Canada, China, Cote d'lvoire, Denmark, Egypt,
Finland, France, Germany, India, Indonesia, Italy, Japan, Mexico, Morocco, the Netherlands,
Nigeria, Norway, Pakistan, Portugal, Spain, Sweden, Switzerland, Turkey, and the United
Kingdom.
178 Foreign Aid and Self-Reliance in West Africa

54."UNCED, Adoption of Agreements (Part I), pp. 21-22.


55. Ibid., pp. 23-24.
56. UNCTAD, UNCTAD VIII, p. 156.
6

Conclusion

There is tremendous potential for accelerated and sustainable economic growth


and development in West Africa. The subregion is blessed with abundant natural
and human resources that should be the basis for a sustainable rising standard
of living of West African people. Since the mid-1970s, West African political
leaders have made major efforts to promote economic development, overcome
the aggravation of poverty, and improve the social conditions of the people.
These efforts have been anchored to a number of diverse economic policies that
were deemed appropriate for the achievement of these goals. The national
efforts of individual country and the collective efforts at the subregional levels
have also been complemented by international assistance at both bilateral and
multilateral levels.
However, as it is today, these set goals have remained largely elusive.
Poverty is all-pervasive in the major strata of the society, in particular in the
low- and middle-income strata of West African countries. The growth rate of
the GNP of most countries in the subregion has declined in the last decade
while there has been an increase in the growth rate of the population. With
a population growth rate of about 3.5 percent in the 1980s, the standard of
living in the subregion fell precipitously. Generally, the central issues in
economic growth and development for most countries have largely remained
unresolved. Industrial and agricultural development have not progressed
satisfactorily. West African countries, as they are now, are broadly at the level
of import substitution industrialization in an age when a number of develop-
ing countries in Southeast Asia and Latin America have advanced into
mainstream high-technology industrialization.
780 Foreign Aid and Self-Reliance in West Africa

Agricultural development has not satisfactorily solved the problem of food


production in many countries in West Africa. Also, in this sector many questions
are still left unanswered on the expansion and diversification of commodity
exports. West African countries are presently, on the whole, confronted with the
problems of rising rates of inflation and unemployment. Most West African
governments have not succeeded in providing the basic social amenities that
are the fundamental primary conditions for progressive advancement in eco-
nomic development. Hospitals and schools are grossly inadequate in many West
African countries. The supply of electricity and water are still disappointingly
inadequate for both human consumption and industrial requirements. The
economies of many countries are characterized by poor infrastructural devel-
opment, insufficient communications systems, inadequate networks of roads
and railways. Air transportation in most countries is poorly developed for both
domestic and international travel. Also, inland waterways have not been prop-
erly developed in countries where large rivers should be a good medium for the
transport of bulky goods within and between countries in the subregion.
All of these problems suggest that there have been considerable difficulties
in the implementation of measures and strategies adopted over the years to
tackle development problems. The measures and strategies must be reexamined
in the light of new economic circumstances in the subregion and in the world
economy. Also, the chronic economic development problems of the West
African countries will need to be addressed with a fresh approach in order to
ensure sustainable economic growth and development. Complementary meas-
ures and strategies should be introduced on a timely basis in order to achieve
this objective.
Foreign aid will therefore continue to constitute an important component of
the inputs for economic development in West Africa. There is a need for an
increase in the real value of both bilateral and multilateral aid flow to most of
the countries to supplement their meager and rapidly diminishing national
revenues. However, to ensure an increase in the flow of aid, it is important that
West African countries in the first place combat the growing aid fatigue of the
donor countries, which derives from donors' disillusionment with the results of
aid. West African governments should, as the first step, coordinate foreign aid
more effectively. They should take appropriate actions to ensure that disbursed
foreign aid is properly expended on earmarked projects. Appropriate actions
should be made to eliminate all corruption and mismanagement of funds
associated with foreign aid utility in the past.
It is also important, however, that there should 6e a better understanding of
some of the critical constraints on the increase in foreign aid to West Africa even
though it is obvious that an increase in aid has been highly manifested in recent
years. One important question is the growth of the donor countries. Slow
economic growth coupled with balance-of-payments difficulties have generally
undermined the capacity of the donor countries to increase aid disbursements
Conclusion 181

to developing countries. West African countries would therefore be likely to


have the benefits of increased aid with improvements in their economic growth.
And as a matter of fact, as already noted, such improvements would hinge on
the pursuit of sound economic reforms by West African governments.
In addition, there is an increase in the global demand for foreign aid as a
result of developments in the world economy in the second half of the 1980s,
whereby the collapse of the Soviet Union led to the emergence of a number new
states. Most of these new states are economically weak and they have increased
demand for financial support from the international community. Thus, the
developed countries and the multilateral financial institutions are in the 1990s
confronted with new demands. Ironically, however, the resources of many donor
countries or multilateral financial institutions have not increased significantly
in recent years to allow them to cope with the increasing demands. It therefore
follows that West African countries could perhaps only expect some increases
in the fast-growing countries or those not substantially affected by recession,
for example, Japan or the oil-producing countries, such as Saudi Arabia, Kuwait,
and so on. Major increases in assistance from the UNDP may not be expected
in the foreseeable future because of the current drying up of the voluntary
contributions of the donor countries and the restructuring and revitalization of
the UN system.
While major increases may not be anticipated in the near future, it is crucial
that the available volume of foreign aid should be well-targeted to the priority
areas of development of West African countries if it is to have a positive impact
on their process of economic growth and development. In particular, donor
countries should harmonize their aid and ensure that it is directed to the priority
development projects of recipient West African countries. Political considera-
tions should play a lesser role in the disbursement of aid to make it more
meaningful to the development of recipient West African countries. In addition
to this, the donor countries should reduce the proportion of aid-tying so that aid
could contribute more to the promotion of economic growth and development
in West Africa.
Above all, the recipient West African countries should evolve more sound
and credible institutions for the coordination, implementation, and monitoring
of bilateral and multilateral aid. A Ministry of Foreign Aid with a well-trained
staff familiar with the knowledge of the art and administration of aid is very
important for the effective use of foreign aid and the implementation of aid
programs. The ministry should work closely with the officials of foreign aid
agencies located in the country and harmonize aid disbursements with the
development priorities of other government departments, such as the ministries
of health, social development, education, economic development, environment,
and so on, which largely utilize foreign aid. With a ministry of foreign aid, a
systematic pattern of aid implementation would emerge, better foreign aid
182 Foreign Aid and Self-Reliance in West Africa

policy would be articulated, and the impact of foreign aid would be more
positive on the development process of West African countries.
Self-reliance and economic development as strategy and objective are com-
plex processes. Both, in practice, require the creation of the right political
climate and an effective mobilization of internal and external resources. In
principle, West African countries have accepted the philosophy of democracy
as the basis for political development. The main platforms of governance would
be political parties, and governments would be responsive to the demands of
political institutions and pressure groups, the people, and, in general, the main
practices of democratic processes. However, this is still far from the case in a
number of countries in the subregion, where the rule of the military still prevails
in many of them. The military should relinquish political power as soon as
possible to democratically elected governments in such places as Benin, Burk-
ina Faso, Gambia, Ghana, Nigeria, and Sierra Leone, to name a few. Governance
by the military should be discouraged, as their constant interventions in political
processes have been a major source of political instability. The constant
interventions have negatively impacted the evolution of durable democratic
systems through learning. In most cases, they have failed to promote economic
development and national unity. With poorly conceived and implemented
economic policies as well as failures in the arrest of mismanagement and the
eradication of corruption, military regimes in most West African countries have
ended up leaving economies in worse situations than what they were when they
first seized power. Also, their failures to come to full grips with national
questions, broadening the base of participation and the promotion of equitable
development, have in most cases led to civil wars that have threatened the
existence of these countries. Examples abound in cases such as Nigeria's civil
war (1967-1971), and the ongoing civil war in Liberia. The more the prevalence
of political instability, the less are the chances of increased foreign financial
assistance. Political instability creates a mountain of uncertainties about the
effectiveness of foreign aid in the recipient countries.
As it is, most West African countries still lack the critical internal mass for
self-reliance and economic development. There is a need for well-articulated
domestic economic policy based on the realities of the domestic and interna-
tional economic situations. The domestic economic policy should be well-fo-
cused to address critical microeconomic and macroeconomic issues that would
spontaneously lead to cumulative economic growth and development. Exam-
ples of growth targets could be accelerated food and agricultural production or
of increased industrial expansion based on specific identified products. There
is also a need for a more rigorous and disciplined approach to the implementa-
tion of economic policies. A number of well-intended policies have failed in
the past partly as a result of the attitudes of the bureaucrats and a lack of
sufficient information on the nature and objectives of the policies to both the
public and private sectors. The success of most of the newly industrializing
Conclusion 183

countries in Southeast Asia are partly due to the excellent and disciplined
approach to economic policy implementation. A sound, effective, honest, and
efficient bureaucracy is a basic prerequisite for meaningful economic develop-
ment.
In this connection, it is obvious that the structural adjustment programs
embarked upon by most of the countries in West Africa have been less beneficial
to overall economic growth and development. Any microeconomic and macroe-
conomic policies in the future should take into full consideration the social
implications. Besides, it is equally important to underscore that the foreign
investment policies of West African countries should be more liberal and made
more comparable with those of the other developing countries as well as those
of the economies in transition, since West African countries are inevitably in
competition with them over scarce resources in the industrially developed
countries and in the same international financial institutions. It is natural that
international capital would move to countries that offer maximum returns on
profits. At the same time, maximum efforts should be made by West African
governments to ensure higher levels of domestic savings in order to increase
the level of domestic investment.
Human development constitutes an important area that should be accorded
high priority in the agenda for self-reliance and economic development in West
Africa. It is important that adequate provisions are made for all levels of
education without which the skills necessary for development may not be
available. Universal primary education should be provided and strengthened
where they now exist. Better high schools should be provided with modern
facilities to enhance the quality of education before admission into the univer-
sities. The universities of West African countries should be well-structured to
meet the demands of the different economies. In particular, special attention
should be paid to the training of West Africans in technical fields. An emphasis
in this area is vital in order to put West African countries in the mainstream of
global technological advancement. West African countries should strive to
evolve a sound technology policy upon which the culture of West African
technology could be built. In this connection, the relationship between popula-
tion and development should also be brought into focus. Clear population
policies should be formulated and effectively implemented by West African
countries to ensure the control of population growth. The standard of living will
continue to be undermined the more the rate of population growth, currently at
3.0 percent per annum, continues to outstrip the growth rate of the GDP,
currently estimated at 2.5 percent per annum.
At the international level, a better international economic environment is a
prerequisite for the promotion of self-reliance and economic development in
West Africa. The absorptive capacity of foreign investment of West African
countries should be strengthened through increased financial assistance from
multilateral financial institutions such as the IDA, ADB, Arab Development
184 Foreign Aid and Self-Reliance in West Africa

Bank, and so on, for the improvement of transportation and communications


systems in West African countries. The effective development of both systems
is currently very difficult to carry out within and among West African countries
because of high costs and the decline in their revenue earnings. While attempts
are being made to consolidate transportation and communications, a change in
the attitude of the multinationals on investments in the subregion is desirable.
Increased investments are needed to rejuvenate the industrial sectors of West
African countries, most of which have suffered reversals in the aftermath of the
structural adjustment programs. The greater the increase in foreign investments,
the better are the opportunities for economic recovery and the promotion of
growth.
Foreign debt represents a serious bottleneck in the process of economic
development of most indebted West African countries. The burden of debt
service obligations to the tune of over 30 percent of export earnings for most
countries seriously undermines their capacity for the implementation of devel-
opment projects in annual budgets and development plans. Also, the frequent
rescheduling of debts in the London and Paris Clubs has generally drained the
meager financial resources of these countries while at the same time consuming
the energies that might have been concentrated on national recovery efforts. The
creditor countries and international financial institutions would give a tremen-
dous boost to West African development by writing off the debt of the distressed
least-developed countries of the subregion and by working out arrangements
much better than the Trinidad and Tobago terms. Besides, it is important also
to note that the external debt of West African countries has also served to reduce
the inflow of foreign investments. The greater the external debt of countries,
the lower ratings for the receipt of foreign investment, as this would entail higher
debt burden obligations to be shared by all economic actors. Also, continuous
debt burden inadvertently militates against the securing of more lines of trade
credit by West African countries as the ability to repay at deadlines would be
put to question.
In order to address the problems self-reliance and economic development
fully, the international community should, as matter of urgency, assist in finding
appropriate solutions to the problems of commodity. West African countries are
essentially exporters of primary commodities. For some, a few of these, one or
two constitute the main export products. Primary commodities have in recent
years suffered considerable price decline. Also, the demand for some have
declined where substitutes have been found in the developed countries. Because
of these developments most West African countries have experienced a decline
in foreign exchange earnings with the result that there has been a constant
erosion of the ability of West African countries to promote economic growth
and development. The international community would go a long way in
assisting West African development by ensuring appropriate increases in the
Conclusion 185

price of commodities. This could have a significant multiplier effect on West


African economies as well as raising the income from exports.
Sustainable development should of course be perceived in the overall devel-
opment process of West Africa. This global concept of development requires
the preservation of the ecosystem in order to preserve this planet for future
generations. The ozone layers must not be unduly depleted as a result of rapid
industrial processes. Natural resources should be utilized with due regard to the
future and its implications for the environment. As far as West African countries
are concerned, their immediate concern is the arrest of desertification and the
overcoming of drought. There are no immediate concerns for the cleaning of
the atmosphere arising from pollution due to heavy industrialization. However,
as industrialization progresses in West Africa, the countries would be compelled
to make the choice of environmentally sound technology. In all these aspects
additional funding may be required. West African countries would therefore
need an increase in international assistance on these issues if self-reliance and
economic development processes are not to be derailed.
In its collective approach, self-reliance is a basic condition for an authentic
economic development of a number of mini-states in West Africa. The logic of
industrialization requires that these countries should come together to take
advantage of a larger market made available through economic integration. The
desire for regional economic integration has not been lacking in West Africa:
the subregion is one with the most concentration of economic cooperation
arrangements. However, the progress in them, especially the all-embracing
ECOWAS, remain very intangible. Several historical, political and socioeco-
nomic factors in West Africa account for the lackluster performances of these
integration schemes. There are also external political and economic impedi-
ments arising from colonization and foreign interests. But all these will need to
be surmounted if the ECOWAS were to make significant contributions to the
process of economic growth and development of the member states and of the
subregion as a whole. The subregional integrators themselves should constitute
the basic lever for integration. They must provide the momentum for integration
through the strengthening of their political will and the rapid implementation
of integrative measures.
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Index

Abacha, Sanni, 139 sidies, 41-42; support for, 90; transfor-


Abiola, M.K.O., 139 mation of, 9, 32; trend in output, 101—
Acheampong, Ignatius Kutu, 140 103
Africa, 14; accelerated growth, 21; eco- Akuffo, Frederick W. K., 140
nomic development, 19, 82; import sub- Algeria, 151
stitution, 16; relevance of structural Arab aid, 42, 48, 50-52, 59, 64
theory, 19 Arab Bank for African Economic Develop-
African Development Bank (ADB), 64, 69, ment, 74; multilateral aid for cocoa in-
73, 74, 75, 76, 92, 93; aims and poli- dustry, 73
cies, 66-67 Argentina, 153
African Development Fund (ADF), multi- Asia, 14, 151
lateral assistance, 69, 70, 72 Austria, 131
Agenda 21, 6-8, 169, 172; functions of or-
ganizations, 173; impediments to, 173- Babangida, Ibrahim, 139
174; mechanisms of, 172-173; Baer,W., 18
objectives of, 173; role of governments, Belgium, 47, 69, 131
173 Benin, 2, 140, 160, 182; bilateral aid, 30-
Agriculture: cash crops, 101; cocoa produc- 32; dependence on agriculture, 30, 32;
tion, 62; coffee production, 62; collec- dependence on foreign aid, 30; Do-
tivization, 32; cooperatives, 42, 46; nors Conference, 69; economic meas-
development, 100-106, 179, 180; devel- ures, 70; foreign exchange earnings,
opment of irrigation, 52; development 30; major institutions, 69; major
problems, 100, 106, 123-124; food im- sources of foreign aid, 30; Marxist-
portation, 101; food production and self- Leninism, 32; multilateral aid, 69-70;
sufficiency, 52,' 168-169, 170; food nature of bilateral aid, 30-31; obsta-
shortage, 73; growth rate, 100; impact cles to development, 70; performance
on other sectors, 9; major food crops, of bilateral aid, 30; poverty allevia-
100; phosphates output, 62; preponder- tion, 30; volume of exports, 2; volume
ance of, 34; reduction in output, 57; sub- of flow, 69
198 Index

Bilateral aid, 9, 30-64; aid tying, 84; con- 168; price stabilizing arrangements,
straints in, 94, 138-139; destination of, 167; role of policy, 166-167. See also
38,40, 45; donors' interests, 30; envi- Agriculture
ronmental considerations, 89,90; food Compaore, Blaise, 129
aid, 38, 45, 48, 50, 62; grant element, Cote dTvoire, 2, 40, 57, 107, 142, 147,
33, 34, 37, 40, 52, 89, 90; program as- 160, 163; bilateral aid, 34-37; eco-
sistance, 40, 42, 57; relevance to pro- nomic performance, 34; export diversifi-
ductive sectors, 37, 42; social and cation, 2; grant element, 37; gross
administrative infrastructure, 42, 57; domestic product, 2, 100; import substi-
support for low-income countries, 90; tution industrialization, 2; improved re-
support for women in development, 90, lations with donors, 37; multilateral aid,
91; technical cooperation, 38,40, 42, 72; relations with France, 34; relevance
48, 54, 59, 64, 83, 84 of technological cooperation, 37; role
Brazil, 153 of the World Bank, 72; volume of ex-
Buhari, Mohammed, 139 ports, 2
Burkina Faso, 2, 40, 138, 140, 147, 160, Council for Mutual Economic Assistance
168, 182; agricultural policy, 105; bilat- (CMEA), 42, 91
eral aid, 32-34; economic reforms, 71;
foreign trade deficit, 34; grant element Daddah, Moktar Ould, 140
of bilateral aid, 33; multilateral aid, 7 0 - Democracy: encouragement of, 77; transi-
71; predominance of agriculture, 34; tion to, 81
volume of exports, 2; weak economy, 34 Denmark, 131; cooperation with multilat-
eral institutions, 91; foreign aid policy,
Cameroon, 151 91; Plan of Action for Danish Develop-
Canada, 40, 42, 48, 53, 57, 60; aid unty- ment Assistance, 91
ing, 88; foreign aid policy and human Dependence theory, 18-20
resources development, 88; grant ele- D'Estaing, Valery Giscard, 32,44,71
ment, 88; poverty alleviation, 88; pro- Developmentalism, 9; importance of capi-
ject implementation, 59; reorganization tal accumulation, 17; problems of, 24;
of Canadian International Development role of terms of trade, 17; theory of, 17-
Agency (CIDA), 88; support for multi- 18
lateral aid, 74 Development Assistance Committee
Capital: accumulation, 18, 21, 153; move- (DAC), 39,40,42, 60, 83, 84, 87, 89,
ment, 23. See also Foreign investment 90, 93; contributions to program assis-
Cape Verde, 160, 168; bilateral aid, 34; tance, 62; decline of flow, 63-64; tech-
end use of multilateral aid, 71; multilat- nical cooperation, 45, 50
eral aid, 71-72; trend in the flow of Diori, Hamani, 140
multilateral aid, 71 Dodd,C. H., 141
Cardoso, E, 18, 19 Doe, Samuel, 46,76, 140
Chad, 168 Donors: aid-tying, 31; donor-oriented theo-
China, development of plantation and cane ries, 16—17; Donors Conference, 69; do-
mill, 62 nors' policies, 81-92, 94, 168, 169,
Colonialism, 128-130; economic linkage, 170, 175; international relations theo-
129-30; political linkage, 129 ries, 17
Commodities, 166-168,175,184-185; bet- Dos Santos, T, 18
ter prices of, 143, 165; decline in earn- Drought, 32, 38, 48, 50, 52, 53, 73, 168-
ings, 166; demand for primary 170, 175; effects on food production,
commodities, 24, 27, 151; diversifica- 46; impact on agricultural production,
tion, 167; international commodity 55, 57; institutions for, 168-169; Perma-
agreements, 166; international prob- nent Interstate Committee for Drought
lems of, 166; Lome Convention, 71, Control in the Sahel or Commite Perma-
Index 199

nent Inter-Etats de Lutte contre la ments, 73; role of European Develop-


Secheresse dans le Sahel (CILSS) and ment Fund (EDF), 74; role of European
the Club des Amis du Sahel, 168-169; Investment Bank, 74
problems of, 169; role of regional or- Exports, 2, 46; composition of, 3, 116; di-
ganizations, 169; trend of, 168 rection of exports, 119; export indus-
tries, 16; obstacles to exports, 3;
Economic Community of West African oil-exporting countries, 151; trend in,
States (ECOWAS): basic mechanisms, 116-118. See also Foreign trade
22; commitment of members, 22; imple- External debt, 3, 57,90,151, 158-166,
mentation of protocols, 22; lack of infra- 184; structure of, 158-160
structures, 22 External debt and international efforts,
Economic Community of West African 163-166; concessional bilateral assis-
States Ceasefire Monitoring Group tance, 160; concessional multilateral as-
(ECOMOG), 80 sistance, 158, 159; commercial debt,
Economic development, 1, 37, 166, 168, 163-164; debt conversions, 164; debtor
179, 182; defined, 14; external depend- conference, 165; debt-reduction facility,
ence, 48, 107, 110; function of capital 163-164; debt service ratio, 160, 161;
formation, 8; goals of, 97; impediments effect on foreign investment, 184; effect
to, 10, 37; integrated approach to, 7; na- on foreign trade, 184; Export credit
ture of, 18; private sector, 182; rele- agencies, 162; guaranteed private debt,
vance of economic infrastructures, 42; 160; ill-conceived projects, 162; inter-
role of domestic economic policies, 7; est-reduction bonds, 163; most affected
rural development, 49; socialism and, countries, 160; multilateral borrowing,
32; underdevelopment, 9. See also 158, 159; nonconcessional loans, 163;
Agenda 21; Capital nonproductive use of, 162; role of Euro-
Economic development process, 1; eco- market, 160; Trinidad and Tobago
nomic tools and concepts, 1; role of Terms, 164, 184
technology, 1; essential ingredients of, External debt burden, 3, 55, 160, 184; con-
172; partnership with developed coun- straints of, 7, 27, 34; growth of, 62,
tries, 7, 141; role of savings, global re- 160, 162-163; reduction of, 7; relief of,
cession, and sustainable development, and Paris Club, 81, 184
6-7, 172-174, 175, 185. See also External financial assistance, 27, 98
Agenda 21 Eyadema, Gnassingbe, 64
Economic growth, 21, 27, 28, 37, 71, 74,
131, 165, 179; autonomous, 24; growth Faletto, E., 18
models, 15-16; impediments to growth, Finland, 131
15; self-sustaining growth, 15, 22, 23, Foreign aid, 2; absorptive capacity, 28, 94,
141, 179; stages of growth, 15-16 174, 184; conditions of, 8, 15, 180-181;
Economic policies, 27, 28, 71, 72, 73, 74, consultative groups, 136-137; coordina-
75-76,78, 165, 182; demand manage- tion of, 28, 80, 136-138, 174; defined,
ment, 142; fiscal adjustments, features 13; donor objectives, 16; donors' for-
of, 81; implementation of, 123, 141- eign aid policy, 82-92; donors' foreign
142, 150, 175, 180, 182-183. See also policies, 28; donors' interests, 30, 130-
Structural adjustment program 135, 181; effectiveness of, 9, 28; emer-
Economic recession, 21, 74, 78, 141, 142; gency relief, 137-138; implications of
worldwide, 97 aid tying, 134; implications for savings,
Egypt, 151 5; influence of donors' domestic poli-
Energy: forms of, 114; importance of, 114; cies, 28; institutional constraints, 135-
requirements of, 114-116, 124 136; institutional development,
European Union, 69, 71, 72, 76, 90, 137; 181-182; management, 135-139; Mar-
multilateral aid under STABEX arrange- shall Plan, 8; origin of, 14; performance
200 Index

on target, 4-5; priority projects, 8; pros- ment, 37, 40,42, 47; performance in
pects for, 181; for public sector develop- foreign aid target, 4; support for eco-
ment, 5; rationale for foreign aid, 5; nomic reforms, 86; support for rural
rejection of, 21; relationship with for- projects, 60; tied aid, 134
eign trade policies, 5; relevance to eco- Ghana, 2, 136, 137, 138, 140, 142, 147,
nomic growth, 5; rural development, 154, 160, 182; agricultural policy, 105;
32; skepticism, 27; sources of, 28; as bilateral aid, 39-40; economic perform-
supplement for savings, 15; support for ance, 39-40; end use of multilateral aid,
social sector, 150; target of, 4, 134; utili- 73; grant element, 40; gross domestic
zation, 28, 94. See also Donors product, 2, 100; industrialization, 107,
Foreign exchange, 21, 30, 60; reduction of 110-111; major sources of bilateral aid,
earnings, 63, 76, 127, 143 40; multilateral aid, 73-74; rate of infla-
Foreign investment, 1, 20, 124, 151, 154- tion, 2; trend in the flow of multilateral
158; diversion of, 3-4; export-free aid, 73; volume of bilateral aid, 40; vol-
zones, 158; infrastructures, 158; institu- ume of exports, 2
tion of, 18; role of, 154; negative trans- Global Environmental Facility (GEF), 172,
fer of resources, 7; obstacles to inflow, 173,174
156, 158; policies for, 154-156; rela- Gowon, Yakubu, 139
tionship with foreign aid, 13, 14; role of Great Britain. See United Kingdom
exchange rate, 156-157; trend in in- Guinea, 147, 160; bilateral aid, 4 1 ^ 4 ; eco-
flow, 156, 157, nomic performance, 41-42; free-market
Foreign policy, 71 enterprise system, 44; grant element,
Foreign trade, 1, 116-120, 124, 16; bal- 42; multilateral aid, 74-75; problems of
ance of trade, 118-119; deficit, 34, 48; economic development, 42; relations
direction of trade, 119; problems of dis- with France, 42-44; socialist orienta-
engagement, 119-120; role in develop- tion, 42; trend in multilateral aid, 74
ment, 116; tariff and nontariff barriers, Guinea-Bissau, 160; agricultural coopera-
20,22,23, 142 tives, 46; bilateral aid, 44-46; corrup-
France, 38, 40, 44, 48, 50, 55, 64, 69; aid- tion, 46; economic features, 44; food
tying, 30; budgetary support, 83; debt- aid, 46; growth rate, 100; industrial de-
relief, 83; economic interest, 28, 53; velopment, 44; multilateral aid, 75; po-
grant element of bilateral aid, 33, 37, litical instability, 46; problems of
42, 47; influence, 28, 134; preeminent corruption, 75; technical cooperation, 46
position of, 57; strategic interests, 53;
strengthening financial capacity, 82-83; Haberler, G., 17
structural adjustment loans, 83; techni- Hirschman, A. O., 14
cal cooperation, 59, 83 Hong Kong, 151
Frank, A. G„ 18 Houphouet-Boigny, Felix, 72
Furtado, C , 18 Human rights, 76

Gambia, 142, 147, 168, 182; bilateral aid, Imports: cost of imports, 3; food import, 9,
37-39; destination of bilateral aid, 38; 34, 60; import-substitution, 52; protec-
economic performance, 37; food aid, tionism, 9; rise in global price of oil, 3;
38-39; impact of drought, 38; major sources of, 119; volume of imports, 3,
sources of bilateral aid, 38; multilateral 118
aid, 72-73; obstacles to economic India, 153
growth and development, 37-38; vol- Individual self-reliance, 21; international
ume of bilateral aid, 38 negotiations, 21; problems of, 98; proc-
Germany, 4, 38,48, 50, 53, 56,60, 64, ess of reassociation, 21; relevance to
131; debt relief, 86; foreign aid policy, West Africa, 21-22, 24. See also Self-re-
consolidating capacity, 85-86; grant ele- liance
Index 201

Industrial development, 106-111, 179, ing institutions, 87; foreign aid policy,
180, objective of, 106. untying of aid, 87-88; role of Japan In-
Industrialization, 9, 14, 37; capacity utiliza- ternational Development Organization
tion, 18, 55; economies of scale, 18; ef- (JAIDO), 87; importance of Tokyo Inter-
fects of protectionism, 18; import national Conference on Africa's devel-
substitution, 14, 17, 22, 24, 55, 107, opment, 87
153; new industries, 22; role of capital,
18; role of entrepreneurship, Ig; techni- Kerekou, Matthew, 32, 129
cal cooperation, 24 Korea, Republic of, 153
Industrialization, progress in, 107; interme- Kuwait, 59; Kuwait Arab Economic Devel-
diate and heavy industries, 107; manu- opment Bank, 74; technical assistance
facturing, 107; problems of, 110-111 in, 51
Industry, acceleration of, 22, 124
Inflation, 4, 55; in developed countries, 28; Lagos Plan of Action, 21
global inflation and development, 5; Latin America, 14, 19, 23, 151; import sub-
role of SAP, 4 stitution, 16, industrialization, 17, 18;
Infrastructures, 28, 35, 37, 38, 40, 42, 50, role of market in development, 17
180, 184; economic infrastructures, 50, Liberia, 2, 140, 160, 163; bilateral aid, 46-
57; social and administrative, 46, 48, 48; end use of bilateral aid, 48; gross do-
52,57,61-62 mestic product, 2; major sources of
International Development Association bilateral aid, 47; multilateral aid, 75-
(IDA), 64, 69, 72, 76, 83, 93; aims and 76; politics and economy, 46; program
policies, 66; low-cost loans, 70; multi- assistance, 47, 48; technical coopera-
lateral assistance, 69, 74; support of tion, 48; trend in multilateral aid, 75-
credits, 77; support for stabilization pro- 76; volume of bilateral aid, 47
gram, 78 Libya, provision of subsidies, 51
International economic development: ad- Limann, Hilla, 140, 155
vancements in science and technology,
23; interdependence, 23; international Malaysia, 151
division of labor, 23; primary commodi- Mali, 2, 137, 147, 168; aid from Arab coun-
ties and decline in price, 24; sustainable tries, 48; balance of payments deficits,
global development (Agenda 21), 82; 48; bilateral aid, 48-50; costs of infras-
world economic recession, 81-82 tructural development, 50; destination
International economic policy, 22 of bilateral aid, 48; external depend-
International Financial Corporation, princi- ence, 48; gross domestic product, 2; in-
ple and policies, 65-66, 74 dustrialization, 107; Institute of Rural
International Fund for Agricultural Devel- Economy, establishment of, 49; multilat-
opment (IFAD), 74, 76 eral aid, 76-77; program assistance, 50;
International Monetary Fund (IMF), 20, rural development, 49; sources of major
64, 69, 89, 91, 93, 140, 141, 164; activi- bilateral aid, 48; sources of major multi-
ties, 65; policies, 65; role in multilateral lateral aid, 76; structure of the econ-
aid, 75; stabilization agreement, 136; omy, 48; technical cooperation, 50;
support for stabilization program, 78; trend in multilateral aid, 76; volume of
support through standby credits, 77, 81. exports, 2
See also Structural adjustment program Mauritania, 136, 140, 142, 147, 168; bilat-
Investments, 23, 24; nationalization of, 43, eral aid, 50-52; characteristics of the
155. See also Foreign investment economy, 50; multilateral aid, 77; trade
Italy, 38, 44,48, 53, 57, 131 deficits, 50; war against Polisario, 50
Mikesell, R. F, 16-17
Japan, 38, 40, 42, 44, 47, 53, 55, 60, 69, Mohammed, Murtala, R., 139
131, 153; foreign aid policy, strengthen- Momoh, Joseph, 60, 62
202 Index

Multilateral aid, 9, 183-184, 185; influen- for economic reforms, 59; technical co-
tial factors, 64, 67; pattern of flow, 6 7 - operation, 59, 60, 64,
69; policies, 92-93; problems of, 80
Political development, 127, 128-129, 141;
Netherlands, 38, 40, 44,48, 89; coopera- civil war, 182; governance, 141, 182;
tion with multilateral institutions, 90; national questions, 182; role of the mili-
foreign aid policy, 90-91 tary, 182
Niger, 2, 137, 142, 147, 163, 164, 168; ag- Political instability, causes of, 16; prob-
ricultural polices, 104-105; bilateral lems of, 46, 75, 79, 139-141; promo-
aid, 52-55; economic policies, 52; fea- tion of, 24
tures of the economy, 52; importance of Population growth, 145, 146, 150, 170,
Uranium to the economy, 52-53; multi- 173,179
lateral aid, 78; self-sufficiency in food Portugal, 129; political influence, 134
production, 52; uranium industry, 2; vol- Poverty, 1, 173; alleviation of, 24, 27, 91,
ume of exports, 2 145; degeneration of, 34, 179; eradica-
Nigeria, 2, 60, 79, 139, 141, 142, 151, 155, tion of, 7; vicious circle of, 1
160, 162, 182; agricultural policies, Prebisch, Raul, 17, 18
103-104; bilateral aid, 55-57; develop- Protectionism, 23, 24; of developed coun-
ment plans, 119; development of tech- tries, 145, 167-168
nology, 112-113; economic features,
55; factors in economic recession, 55; Rawlings, Jerry, 74, 140
foreign aid policy, 55; growth rate, 100; Regional integration, 10,24,120-123,130,
industrialization, 107; industrial policy, 170-172,185; Caribbean Community
155-156; multilateral aid, 78-79; presi- (CARICOM), 22; Council for Mutual Eco-
dential system, 129; principal bilateral nomic Assistance (CMEA), 22; Economic
aid partners, 55-57; problems of agri- Community of Eastern and Southern Afri-
cultural programs, 103-104; protection- can States (COMESA), 22; Economic
ism, 22; rate of inflation, 2 Community of West African States
Nigeria Trust Fund, mode of operation, 67 (ECOWAS), 17-18, 121; erosion of sover-
Nkrumah, Kwame, 18, 140 eignty, as instruments of economic poli-
Norway: foreign aid policy, 89; support for cies, 22; European Community (EC), 22;
least-developed countries, 89; support impediments to integration, 121-123,124-
for SAPs, 89; support for women, 89 125, 171-172; Mano River Union, 121;
progress in ECOWAS, 121,170-171; ra-
Obasanjo, Olusegun, 139 tionale for, 120-121; relevance of political
Official Development Assistance (ODA), will, 24; research and development, 167;
4,37,83,84,87,88,89,90,91 role of regional integrators, 185; Southern
Organization for Economic Cooperation African Development Community
and Development (OECD), 4, 168; eco- (SADC), 22; West African Economic Com-
nomic growth, 132-134; performance munity (CEAO), 121
in aid target, 4; promotion of export in- Resources, mobilization of, 5, 98, 128, 173,
dustries, 16 174, 182, 185; budgetary allocations,
Organization of African Unity (OAU), 5, 150; definition of, 148; human develop-
21,60,169 ment of, 98, 124, 148-150, 179, 183; im-
Organization of Petroleum Exporting provement in, 148-149; problems of,
Countries (OPEC), 5; Development 149, 150; promotion of, 149-150; role
Fund, 69; performance in foreign aid, 5 in technological advancement, 153
Overseas Development Fund (ODF), 52, Rostow, W.W., 14,15-16
53-54, 57; commitments to production Russian Federation (former Soviet Union):
sector, 64; program assistance, 59; sup- foreign aid policy, 91-92; interest in,
port for debt reorganization, 62; support 59; role of loans, 8
Index 203

Sankara, Thomas, 129, 140 146-148; support for, 77, 84, 86; sup-
Sao Tome and Principe, 164 portive actions, 145-148; trade liberali-
Saudi Arabia, 59 zation, 142
Savings, 21, 124, 143, 154, 183. See also Supplemental theories, 15-16
Resources, mobilization of Sweden, 44, 131, foreign aid policy, 89-90
Self-reliance, 5, 120, 121, 122, 123, 130, Switzerland, 40, 131
150, 154, 158, 166, 168, 182; collective
self-reliance, 21; defined, 13; as devel- Technology, 14,21, 150-154; charac-
opment strategy, 5, 23, 97, 128; disen- teristics of, 152; definition, 111; devel-
gagement from world economic system, opment or adaptation of, 20; dynamics
20; importance in national development of, 153-154; environmentally sound,
plans, 5; mobilization of internal re- 173-174; flow of, 151-152; forms of
sources, 5; origin of, 5; reduction of de- transfer, 152-153; importance of domes-
pendence on the international economy, tic effort, 153; importance of techno-
5; reduction of international economic logical cooperation, 37; influencing
transactions, 20; restructuring economic conditions, 153; market of, 152; mecha-
transactions at national and interna- nisms of, 151; policy, 150-151; prob-
tional levels, 21; theory of, 20-23. See lems of, 152-153; promotion of, and
also Individual self-reliance; Regional problems, 112-114, 124; role in self-re-
integration liance, 112; technological know-how,
Senegal, 136, 137, 142, 147, 160, 163, 23; transfer in services, 153
168; bilateral aid, 57-60; industrial Terms of trade: deterioration, 24, 73, 162;
growth rate, 107; multilateral aid, 79; improvement in, 98
problems in economic development, 57; Thailand, 151
rural development, 59; strong ties with Togo, 138, 140, 160; bilateral aid, 62-64;
France, 57 decline in coffee output, 62; demand for
Shagari, Alhaji Shehu, 139 phosphates, 63; destination of bilateral
Sierra Leone, 2, 140, 142, 160, 164, 182; aid, 64; foreign debt, 62; issues in the
bilateral aid, 60-62; diamond export, 2; economy, 62; multilateral aid, 80-81;
issues in development, 60; multilateral preponderance of phosphate, 62; trend
aid, 79-80 in bilateral aid, 63-64,
Singapore, 151 Toure, Sekou, 43, 140
Smuggling, 62 Transnational corporations, 9; objectives,
Southeast Asia, 23, 82, 183 152
Stephens, Siaka, 140 Transnational enterprises, 18; and local
Structural adjustment program (SAP), 4, economy, 19; vertical integration, 19.
28, 55, 78, 90, 97-98, 141-148, 154; See also Transnational corporations
aims of, 4, 142; characteristics of, 80; Tunisia, 151
deregulation, 142; financial structure re-
forms, 143; foreign exchange rate, 142— Underdevelopment, 9, 14
143; impact on technological United Kingdom, 38, 40, 44, 57, 60;
advancement, 113; international coop- economic interest, 28, 134; external
eration, 143; measures of, 98, 142; per- financial support, 8; foreign aid pol-
formance of, 4, 143; problems of, 78, icy and high concessionality, 84; in-
79, 143-145; problems of devaluation, fluence of, 28, 134; sustainable
143, 145; role of banks, 143; role of development, 83; technical assis-
concessional flow, 4; social dimensions tance, 84; tied aid, 134; support for
of, 147-148; social effects, 183; strong Njala University, 60
adjusting countries, 144, weak adjust- United Nations, 4, 65; agencies, 137; Con-
ing countries, 144; structural adjust- ference on Least-Developed Countries,
ment/sectoral adjustment loan, 136; promotion of development, 4
204 Index

United Nations Conference on Trade and mitment to democracy and good govern-
Development (UNCTAD), problems of ance, 141; corruption, 140, 182; de-
international development, 19-20 fense expenditures, 150; economic
United Nations Development Programme growth, 2; export components, 2; ex-
(UNDP), 65, 147; multilateral assis- ports, 2; external dependence, 8-9; fac-
tance, 69, 70, 72, 74, 76, 93; round ta- tors affecting exports, 3; gross domestic
bles, 136-137 product, 2, 98-100; implementation of
United Nations Economic Commission for Agenda 21, 6-7; important minerals, 8;
Africa (UNECA), 5, 14, 21; and the import substitution, 22; improvements
Trans-African Highway, 62, 169 in balance of payments, 143; industriali-
United Nations Economic Commission for zation strategy for development, 17; in-
Latin America and the Caribbean (UNE- flation, 2; landlocked countries, 2;
CLA), 14, 18 least-developed countries, 2; limitations
United Nations Environment Programme of self-reliance theory, 24; limitations
(UNEP), 172 of the theory of comparative advantage,
United Nations Sudano-Sahelian Office 145; military leaders, 16; mismanage-
(UNSO), 169 ment, 182; oil price shock, 27; prob-
United States, 4, 38, 40, 42, 44, 47, 48, 50, lems of privatization and
57, 60, 64, 131, 153; congressional re- commercialization, 145; relevance of de-
view of foreign aid legislation, 85; velopment theories, 24; relevance of for-
emergency needs, 53; foreign aid pol- eign aid theories, 23-24; standard of
icy, absorptive capacity, 84-85; foreign living, 98; tribal division, 16; volume of
aid target, 4; political and development imports, 3
objectives, 85; role of Export-Import World Bank, 64, 91, 92, 93, 136, 137, 140,
Bank, 85; role of loans, 8; role in multi- 141, 145-148, 163-164; activities, 65;
lateral aid, 75; strategic considerations, policies, 65, 72, 73, 89; provision of
58-59, 85, support for Njala University structural adjustment lending, 81; rural
agricultural extension, 60-61 development project with IDA and
USAID, 76; support for Kpong hydro-
Vary, Joan Bernard, 46 electricity, 74
World Food Programme (WFP), 74, 76
West Africa: balance of payments difficul-
ties, 162; budgetary deficits, 142; com- Zambia, 164
About the Author

R. OMOTAYO OLANIYAN is currently Economic Adviser to the Permanent


Observer Mission of the Organization of African Unity to the United Nations. Dr.
Olaniyan has co-edited four books on economic development, and has published
articles in scholarly journals on international development issues.