Donald Kaberuka, President of the African Development Bank, was recently in the U.S. for an award ceremony at the U.S. Treasury. In this article for Handshake, he touches on the irony of winning for a project on traditional aid in an environment that celebrates innovative approaches, and expands on the ways aid to Africa has been transformed in an era of private investment.

There is a massive change in outlook across the African continent. The emphasis is on what we can do with Africa, not what we can do for it.
Given all the talk about new approaches to aid which mobilize private investment, was it not ironic that the reason for my visit to D.C. was to celebrate traditional aid, as administered by the Multilateral Development Banks through their concessional windows, such as the African Development Fund (ADF) and the International Development Association (IDA)? Indeed, the African Development Bank came to the podium twice at the U.S. Treasury ceremony to receive awards for what the ADF does in fragile states, and for what it does to increase farmers’ productivity and incomes. We are impacting people’s lives in meaningful and lasting ways, and the two winning projects were perfect examples of what was being achieved.

Equal opportunities

The first project, in Côte d’Ivoire, represented our commitment to gender equality, to inclusion, and to fragile states. The transformation of Africa requires that no one is left behind, and that men and women receive equal opportunities so that each can play their part in building the prosperity of their nations. We know that in places where there is conflict, women and girls suffer disproportionately, so the issue of gender
is central to inclusive development.

The emphasis is on what we can do with Africa, not what we can do for it.

The second project, in Uganda, represented our commitment to empower rural farmers by enabling them to increase their incomes. We do this by providing public goods and opportunities to help them move up the value chains, however modestly, and to lessen the dependence on aid and handouts.

The results were plain for all to see. Across 26 districts of eastern and central Uganda, thousands of kilometers of roads were built, rural markets were established, and units of agro-processing production were built, from coffee and rice hullers, to maize mills and milk coolers. The rise in farm-gate prices was as astounding as it was quantifiable: the price for cassava went up two-and-a-half times, maize 20 times, milk four times, bananas two times. Travel costs and times involved in taking produce to market were cut in half, and post-harvest losses were cut by a fifth.

The time is ripe for “smart aid.” The concept of aid as a closed envelope has come to a close.

This project strengthened my belief in several things. First, in how relatively small investments can generate very large returns. Second, in how international institutions working together (in this case we worked with the International Fund for Agricultural Development), each in their field of comparative strength, yields a superior result. Third, in how infrastructure is critically important for agricultural development.

Aid and trade

Was it ironic that we were celebrating the work of the ADF (an aid instrument) and seeking to mobilize additional resources for it, while saying that we should be focusing on trade and investments? My answer is simple. We are proud of what we are achieving. The two projects show that aid money can be very effective, especially (as in the Uganda project) when it frees the recipient from aid dependence. It enables people to step up and step out, or to “graduate.”

This ties in with my fundamental belief that the time is ripe for what we should call “smart aid,” which leverages further resources from the private sector, remedying social ills but also paving the way for graduation. The concept of aid as a closed envelope has come to a close. We need to be less doctrinaire, and to rise above the tendency to answer modern problems by asking old questions and using old tools. If we can do that, Africa will continue to “graduate” from being part of the global challenge to being part of the global solution.