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The Forum > Article Comments > Rockers deaf to aid realities > Comments

Rockers deaf to aid realities : Comments

By Helen Hughes, published 1/7/2005

Helen Hughes argues international NGOs, led by Geldof, are facilitating yet another betrayal of Africa.

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Has anyone thought about the effect of business taxation in the situation here?
(A business does not pay tax, just adds a margin to it and sends it on its compounding way, widening the gap between primary and tertiary pricing)

Business taxation is a compounding of taxes down to the lowest economic level, i.e. agriculture and the 3rd world countries.

They get to pay the tax as they can not pass it on.

The 3rd world hierarchy live as they are in a 1st world country with wages and benefits to match, but with out the wealth to match.

Result extreme poverty and debt (with corruption)
Posted by dunart, Monday, 4 July 2005 9:25:33 AM
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Helen, are you giving the whole picture in what you say about debt?

You highlight the debt-to-governments issue: "Almost all poor countries' official debt owed to Western governments had been forgiven in the years to 2000 and that remaining was then cancelled through the Paris Club of aid donors" and say that "forgiving debt that they are not servicing from African countries is much easier than reducing the subsidies..." as if there wasn't much debt and it wasn't being repaid anyway.

But on the makepovertyhistory website they say that, including the debt to the IMF, World Bank etc, "Only 10% of the total debt owed by low-income countries has been cancelled" and that "Despite these initiatives, in country after country governments are spending more on repaying debts than they are on health or education... In Malawi, for example, more is spent on servicing the country's debt than on health, despite nearly one in five Malawians being HIV positive. In Zambia, debt repayments to the IMF alone cost $25 million, more than the budget for education despite 40% of rural women being unable to read and write."
That website also has debt-relief good news stories: "In Benin, 54% of the money saved through debt relief has been spent on health including rural primary health care and HIV programmes.
In Tanzania, debt relief enabled the government to abolish primary school fees, leading to a 66% increase in attendance.
After Mozambique was granted debt relief, it was able to offer all children free immunisation.
In Uganda, debt relief led to 2.2 million people gaining access to clean water."

So, it seems that further, much bigger, properly handled, debt relief would be a good thing, and it certainly goes too far to claim that "The international NGOs, led by Geldof and his singers, are facilitating yet another betrayal of Africa".
Posted by solomon, Monday, 4 July 2005 1:11:29 PM
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Dunart – I am not sure what credentials you may or may not claim for understanding the dynamics of business taxes or the very nature of corporations, their responsibilities under law, the nature of their ownership or the problems we would face if they had not been invented. I can, however, assure you that without “businesses” your very existence would be very precarious – unable to find any organisation with sufficient resource as to produce anything beyond a sack of porridge – certainly not the PC from which you are posting nor the bandwidth you are utilising (actually Mugabe understands this and is consolidating his power by turning Zimbabwe back into a feudal society - supported by feudal economics).

Certainly changing the structure and nature of joint stock companies, the legislation which enshrines them and the taxation regime to which they subscribe a significant portion of their performance result is going to do nothing for Africa – except possibly turn the future of the developed world backward and into the mire in which Africans presently finds itself.
Posted by Col Rouge, Monday, 4 July 2005 1:44:02 PM
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I appreciate your comments here Helen.
I hope I am not alone in feeling somewhat disturbed that rock stars are leading economic policy debates and being heeded more than people with qualifications.
Posted by Noos, Monday, 4 July 2005 1:51:03 PM
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Many of these people with qualifications, Noos, who are supposedly trained in helping the poor become rich and head institutions such as the IMF and the World Bank, unfortunately have a pretty bad track record when it comes to eradicating poverty. The textbook economic models they apply and the remedies they accordingly force developing nations to employ are frequently totally inappropriate and have lead to disasterous results. These people also include many whose motives in assisting with development is questionable, given that they often come from Wall Street and head back to Wall Street when their tenure is over. The appointment of Paul Wolfowitz to head the World Bank is only the latest demonstration of how much these institutions are only extensions of powerful interests of the developed North.
On the other hand you have people like Jeffrey Sachs, who also is a person with qualifications. A renouned economist, his tireless efforts show that he is dedicated to eradicating poverty, but critical of the simple neo-liberal approach to development. He, for example, has invited Bono, a rocker, to write an introduction to his new book, The End of Poverty. If rockers, given their celebrity, have a greater ability to create awareness of a problem than intelligent, but colourless economists, why not?

The opposition to aid that has emerged in response to the Make Poverty History campaign is sad and perhaps reflective of a general increase in apathy towards others. The $600 billion in aid over 40 years is not "throwing money" ($600 billion is the size of Australia's GDP of one year, with a population of less than 3 per cent of that of Africa) and, as Solomon mentioned, debt relief can do good. Yes, the negative effects of aid donation need to be addressed and alternative methods devised and implemented, but surely there must be more constructive actions than criticising the rockers.
Posted by Meg, Monday, 4 July 2005 3:20:01 PM
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It's always wonderful to hear people championing rich country agricultural sector reform, and enhanced trade opportunities for poor country producers - thanks Helen!

However, the tired old 'trade NOT aid - and CERTAINLY NOT more debt relief' line really needs to be put to bed. Aid, trade and debt relief are 3 key drivers for the reduction of poverty and we need further action on all of them.

Despite Helen Hughes' assertion that the evidence that 'aid flows are inversely related to growth and development is incontrovertible', the evidence for positive correlations of aid and growth is significantly stronger than the evidence for the aid-sceptics' position.

A recent Center For Global Development study http://www.cgdev.org/Publications/?PubID=130 demonstrates that well-targeted aid actually raised output (and incomes) by $1.64 for every $1 of aid spent in sub-Saharan Africa.

And Mark McGillivray, pulling together a mass of OECD data (http://www.oecd.org/dataoecd/18/39/34353462.pdf), finds "overwhelming evidence that aid increases growth and other poverty-relevant variables. By implication, therefore, it can be inferred that poverty would be higher in the absence of aid."

More and better aid!
More debt relief!
Fair trade!

The not outlandish calls of a movement seeking to Make Poverty History.
Posted by Ben Thurley, Monday, 4 July 2005 5:42:58 PM
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