A few years ago, there appeared on the scene a book Dead Aid, from which I used to read in African Business, like any other overseas magazine that we used to read in the Kamuzu era have gone with the wind.
Foreign aid has existed for a long time, especially in the form of government to government. There is enough evidence that it will continue to exist for many years to come. This is because at no time in the course of a country are countries equally well–off or free from disasters. While in the past, aid was exclusive between governments these days it takes many forms; private charities are active. There are international donors such as the International Monetary Fund (IMF), church agencies and non-governmental Organisation (NGOs).
Why do governments need aid from other governments or private charities? Either, because of sudden crises, droughts and famines or developmental plans.
The phrase we hear about these days is there is no such thing as free lunch. Aid Agencies give only to those who fulfill certain conditions. The recipient in the development plan must have high commitment and willingness. The donor does not generally give money and say use it as you please. Instead, the donor asks the recipient to specify the project for which he wants the aid. The donor then approves or disapproves. The recipient may want to extend its railway system and say they seek trucks and equipment. Donors do not give money for the recipient to buy from its citizen within the country. This often means that the recipient does not necessarily obtain the machines from the cheapest source who may be in another country.
Countries seek development aid when proceeds from their exports fail to raise enough foreign reserves to buy all the machinery it requires in a project that is meant to feed the gap when donor says it has given $300 million several components are involved. It may consist of money to be spent in the donor countries; salaries of administrator in the home office who handle the process, technical assistant, and men who are sent to the recipient country to install machines and prepare local staff to take over.
The donor pays the domestic pay of the technical advisor in his own country and the local currency.
The recipient country pays the expatriates salary tax free and housing. Thus, a grant or loan can result in a strain on the local budget.
Donors prefer to broadly assist those who share the same political system as they do, are friendly, have the same cultural affinity. French investors go for Francophone while British usually favour Commonwealth.n