This Legislative Alert draws attention to African countries’ addiction to foreign aid. It points out that this has not entirely helped the continent’s development because aid has been inadequate and has increased Africa’s indebtedness with considerable servicing costs. Further, aid volatility, bureaucracy, and “tying” have often curtailed and frustrated African budgets.
The paper encourages African countries to explore alternative means of mobilizing resources to avoid the pitfalls of aid and better foster the continent’s development. Among the vehicles suggested to this end are: the budget; domestic capital markets; remittances; other Diasporean capital; future foreign exchange flows; and “reverse capital flight.”