The Role of Development Aid

July 5, 2013

My own research as well as the research of
other scholars show that the control of donor resources allowed the ruling
Ethiopian People’s Revolutionary Democratic Front (EPRDF), not only to
consolidate political power that it seized in 1991, but also virtually
penetrate the Ethiopian society at the grassroots level and expand its
repressive and predatory tentacles.¹

This paper also makes use of my ongoing
studies regarding corruption in Ethiopia. The concluding part of the paper ties
the corruptive practices of the TPLF/EPRDF when it was a liberation front (that
is, the humanitarian aid-corruption nexus) with its current and similar
activities (that is, the capture and misuse of development aid.) The paper
exclusively focuses on the development aid -corruption nexus.

The paper uses theme-based cases (heavily
donor-funded projects) in order to illustrate the captured nature of
development aid and extent of corruption in the country. The theme-based cases
used as examples of capture include corruption within the so-called Productive
Safety Net Programs, privatization of state owned enterprises, trade mispricing
and illicit financial outflows, the judicial system, resettlement and
villagization programs, health extension programs and corruption within the primary
and higher education expansion programs.

I use the concept of state capture (the highest
and most intractable form of corruption) as a framework of reference to explain the predatory nature
of the Ethiopian state. State
capture
is a form of grand corruption initially observed in post-communist countries evolving to captured-economies during their
political and economic transitions. The concept gained traction after experts
working for the World Bank and the International Monetary Fund described the
phenomenon of corruption that was found in transition countries of Eastern and
Central Europe and the former Soviet Union. The paper shows the Ethiopian
corruption experience being a stronger form of the state capture that was
observed in East and Central Europe and the former Soviet Union.

The paper establishes that, by creating opportunities to the highly
organized groups and elites, donor aid has led to a legacy
of corruption, maladministration, cruelty, brutality, money laundering and
the establishment of a ruthless oligarchy in Ethiopia. I show that the type of
corruption which has transpired in Ethiopia is the strongest and highest form
of corruption known as State Capture. The paper documents
how various powerful
ethnic, social, personal, regional, political and economic groups in Ethiopia
were able to extract rents and use it for their own political survival and
hegemony. The case studies in the paper show
the captured nature of the donor-funded projects by the ruling
elites in Ethiopia and how those who are able to capture the foreign aid
resources are using them as tools of control and repression. The work also shows how, when it comes to Ethiopia, donor aid has poisoned the wells with deep corruption and, by
implication, the unholy alliance between donor aid and corruption and donor aid
and tyranny.  In addition to
foreign aid being used to finance repression, it has exacerbated the extent and
level of the income gaps between the haves and the have-nots while at the same
time increasing the vulnerabilities of the poor.  The increased level of rent-seeking that one
finds in the country indicates that foreign aid has undermined governance in
the country.

By
exploring the heavy-handed use of
development aid by the ruling party and the culpability of donors and aid
agencies, the paper provides analytical support behind aid and
corruption, aid and extraction of rents and the type of corruption that one finds in Ethiopia. The
paper also shows that misusing and abusing of foreign aid by the TPLF/EPRDF is
a learned behavior it acquired when it was a guerrilla force.

Taken
together, therefore, both humanitarian aid and a large portion of development
aid have exacerbated the already worse governance structures of the country.
Despite the huge annual influx foreign aid (to the tune of $3.3 billion by 2009
and rising), life in Ethiopia has gotten worse, not better- with the poor
getting poorer, income inequality worsening, citizens leaving their country in
drones trying to escape the onslaught of poverty and oppression that has been
aided and abetted by foreign aid and,
close to 20 million Ethiopians still depending on foreign aid.  In short, all that foreign aid begat is absolute dictatorship, repression, kleptocracy,
aid dependence. The paper inescapably concludes that development
has been a curse and both Ethiopia and its people would have been better off
without foreign aid than with it.