On July 2, the Live 8 concerts took place in nine countries and 10 cities across four continents under the banner of "Make Poverty History." They were timed to precede the three-day Group of Eight Summit held from July 6 to July 8 at the Gleneagles Hotel in Perthshire, Scotland.
The previous Live Aid concert was held in 1985. The organizers regarded the contribution of financial aid to African nations as a show of compassion. In the 20 years since, huge sums of money have flowed into Africa. But not only have such funds failed to improve the quality of life of the people there, but these African countries remain mired in debt. At UN meetings, their incessant demand is for debt relief.
The recent G8 summit was a prelude to Western nations honoring their commitment to write off such debts. British Prime Minister Tony Blair, the summit's host, challenged the rest of the G8 countries to double aid to Africa from the current total of US$25 billion to US$50 billion by 2010. In the end, US President George W. Bush and the leaders of seven other major industrialized nations pledged to double the amount of aid for Africa over five years and substantially raise it for other poor countries. Additionally, the World Bank, the African Development Bank and the IMF all agreed to offer annual debt relief worth US$2 billion to the world's poorest nations.
But at the same time, each of the G8 nations also asked for something in return. The US, for example, demanded that aid recipient nations should privatize state-owned businesses and purchase US services and products, the IMF and the World Bank demanded that aid recipients should meet strict free-market regulations, and Germany and Italy emphasized the importance of building a fully-established support system to clearly demarcate the scope of such aid. On poverty reduction, a deal was hammered out by G8 nations prior to the summit to forgive the debt of 18 nations, 14 of them in Africa.
One reason why today's African nations remain poor is because of their inefficient governments. Therefore, no matter how much aid they receive, very rarely will the money go to the impoverished people because of the prevalence of government corruption.
The cancellation of the debts of the most heavily indebted poor countries should not be unconditional. Instead, the aid should be received by local, impartial non-governmental organizations responsible for building houses, providing agricultural cultivation techniques, establishing schools, as well as providing education and other tasks like distributing food to households. Only in this way can the benefits of aid be enjoyed by the poor.
The demand made by the IMF, the World Bank and the African Development Bank is the most unreasonable since these poverty-stricken nations do not have any concept of how to develop their own industries, let alone operate within a free-market environment. The US demand is also far-fetched, given the low income levels in these poor nations. How could they have the money to purchase services and products from these developed countries?
Many impoverished African villages have abundant land for the cultivation of crops. It could at least be used to make these villages self-sufficient in terms of food.
Therefore, agricultural teams, like the ones from Taiwan, that can provide African nations with agricultural cultivation techniques, are the primary step to stop poverty in Africa. Many unemployed adults should enter the work force in labor intensive manufacturing.
Other important practical measures to change African nations' low living standards are to provide loans to small- and medium-size businesses to invigorate local business development and establish incentive policies to introduce direct foreign investment.
As to industries and enterprises that can benefit poor African nations, many have already been built up in China, India and Southeast Asian nations. Therefore, the World Bank, the IMF and G8 nations should work on ways to use tax incentives to persuade international enterprises to invest in Africa based on the motivation of humanitarian assistance.
It is too early to talk about free markets without first forming agricultural, industrial, and trade systems in each of these poor nations. A simple system of barter or labor in exchange for goods is probably more appropriate to Africa's current needs.
The spirit of the Live 8 concerts is to lead a historic effort for compassion and justice. I hope after the closing of the G8 summit, this spirit can be realized.
Chiu Chen Lee-in is a research fellow at the Chung-hua Institution for Economic Research.
TRANSLATED BY LIN YA-TI
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