International DevelopmentNews

How is the United States government shutdown affecting development in Africa?

MONROVIA — Many nongovernmental organizations who received approval for projects from USAID are now being told that they will not receive funds due to the partial government shutdown in the United States. Consequently, some of these organizations are tapping into their reserves and disbursing thousands of dollars to keep their programs afloat.

While many salutes the United States for it’s near-perfect political and economic systems, some fear that chaos created from partial government shutdowns are significant flaws and revelations that the system isn’t as perfect as some imagine.

In the U.S., a government shutdown takes place when nonessential government offices can no longer remain open due to lack of funding. The lack of funding can occur when the government can’t approve the federal budget promptly. While the shutdown is in effect, many federally run offices stop operating at full capacity. In some instances, essential organizations are required to remain open and operate on cash reserves until reserves run out. Other agencies including the transportation safety agencies and prison systems will force employees to work without pay. Considering there have been over 20 funding gaps which led to government shutdowns, African countries who are heavily reliant on U.S. aid should be very concerned.

“The Government of Liberia and other developing countries need to wane themselves off reliance on foreign aid.”

Although some NGO’s, when contacted by Globe Afrique, claimed the 4-week extended shut down in the U.S. hasn’t had a significant impact on their operations, some are concerned over their long-term relationship with USAID as a dependable affiliate. Still, others believe that the current shutdown and President’s Trump threat of gutting the U.S. State department’s budget through his “America First” agenda should be a wakeup call for African leaders to stop depending on foreign aid.

The Government of Liberia, like many other poor corrupt and underdeveloped countries, is heavily reliant on foreign aid, particularly from the United States. During the period 2013 – 2017, the U.S. government obligated US$1,9 billion in foreign aid to Liberia. As a region, Africa accounts for around 20 percent of all U.S. aid, with Egypt, Kenya, and South Sudan being the biggest beneficiaries; while, on a per capita basis, Liberia is one of the largest recipients of U.S. aid.

Liberia has been a recipient of U.S. aid since its independence. While it’s irrefutable that some U.S. development assistance programs in Liberia, particularly the country-centered projects from the Millennium Challenge Corporation (MCC) have shown lasting results in stimulating the Liberian economy, Professor Larry Kennedy, who teaches finance, argues that aid from the West has created a society of mental enslavement in Africa. Rather than using foreign aid to foster economic relationships and create enabling environments, mainly through the African Growth and Opportunity Act (AGOA), many African leaders rely on a false sense there will always be U.S. aid to strengthen their budget.

According to an article in Devex, Catholic Relief Services obtained authorization in early December from USAID for a current program in Malawi and submitted the necessary documents but was then told by USAID it could not disburse the funds because of the partial U.S. government shutdown. CRS had to use its own money — hundreds of thousands of dollars — to keep the program going as it waits for the government to reopen.

Small and indigenous organizations in Liberia may feel the impacts first because they lack cash reserves, access to capital and experience to stay afloat. Large organizations such as FHI 360 will sometimes use working capital to cover costs where a donor has promised funding and wanted an activity to start, but the funding is not yet available.

The shutdown has led to a slowdown of work, as planning and consultations take longer or are delayed, so program activities are slowed down. The day-to-day discussions with USAID outside of formal approvals have also been limited. According to Professor Kennedy, the Government of Liberia needs to take the next 12 months to scale up international development policies and strategies that will induce economic growth. The government also needs to create an enabling environment that will lead to private sector jobs and thus begin to wane itself off foreign aid while inviting foreign direct investments into the country.

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