Ghanaian economist warns against aid dependency

African countries must stop relying on aid since it has not transformed their economies, a senior economist at the Institute of Economic Affairs in Ghana has said.

John Kwakye said the continent’s dependence on foreign aid had led to complacency in seeking alternative sources of mobilising development resources.

Map of Ghana

Delivering a paper on the topic: “Overcoming Africa’s addiction to foreign aid: A look at some Financial Engineering to Mobilise Other Resources,” Kwakye said aid had not done enough to spur development because most often donors did not fulfil their pledges.

“Africa’s dependence on foreign aid, however, comes with costs.

“Aid resources have not matched Africa’s vast development needs, particularly relating to building physical and human capital,” he said.

Kwakye also noted that increased the continent’s indebtedness because of high debt servicing costs.

He said this meant that reasons were diverted away from development and social projects.

African countries need to broaden their tax base by roping into the tax net f informal operators and self-employed, reducing exemptions and enforcing compliance, Kwakye said.

He said there was the need to curtail non-essential spending to create space for priority spending and use of domestic capital market to provide long-term funds for the budget and other developmental activities.