Could US budget cuts mean slashing aid to Africa?

Yet like a Wal-Mart that keeps costs low by buying in bulk, PEPFAR’s very size may actually give it an advantage in bringing down the costs of its programs. In the past year, PEPFAR has negotiated with drug companies to reduce the cost of ARVs by 50 percent, thereby allowing it to increase its global reach to 3.2 million HIV patients. In addition, because PEPFAR was designed to help recipient countries manage their own HIV crisis response efforts, PEPFAR is doing what few aid projects do. It is putting itself, slowly, steadily, out of business. Here in South Africa, for instance, all purchase of ARVs is done with South African tax money, but purchased through the PEPFAR’s bulk-buying system.

This makes PEPFAR a possible model for other US aid programs, USAID Deputy Secretary of State Thomas Nides said in a recent meeting with reporters in Johannesburg.

“As someone who has now probably in the last 72 hours gone to four or five sites where these dollars are spent … they’re fantastic dollars spent,” said Mr. Nides. But “this program was always set up to transition this program to allow the country to take on more and more of the responsibility of the program, not only for it to execute the program, to manage the clinics distribution centers, but to take on more of what we believe is their responsibility. We’re well aware this cannot happen overnight but I think if you talk to the South Africans, as I have, they’re very much desirous to do this.”

Some economists see the current budget crisis as an opportunity to change entirely the way in which US foreign aid is spent, while others like former World Bank economist and Zambian native Dambisa Moyo favor discarding all foreign aid altogether.

“Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased,” Ms. Moyo wrote in her provocative 2009 book “Dead Aid.” Because foreign aid generally ends up being administered by incompetent or corrupt local government officials, it often ends up enriching the few while destroying economic opportunities for the poorer majority, Moyo argues. “Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world.”

Yet such critiques of foreign aid are misapplied, says Shah, the USAID administrator. Today’s foreign aid now looks for ways to stimulate private-sector solutions that will be sustainable over the long term, he says, and the programs that work with host governments are designed to require local governments to take on aid responsibility.

“South Korea had a lower food production per capita, a higher degree of malnutrition and hunger, and a lower economic growth rate than Kenya in the early 1960s, and USAID partnered with South Korea over a number of decades and today South Korea is a donor country,” says Shah. “President Obama believes that African leaders and entrepreneurs who make the right decisions can achieve that kind of success and has asked us to make sure we’re good partners in that process.”

As for the budget, it’s not over yet, Shah says. The budget “is a real fight for us. But I would point out that members of both parties have fought for our development commitments to Africa.”

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