By Daniel Teferra (PhD)*
Ethiopia has been hailed by the international organizations as the fastest growing economy. The Western media is now telling the world that Ethiopia needs food aid because of a widespread drought.
Economic growth is a change in total output between two consecutive years expressed as a percentage. Economic growth, however, does not tell us the components of growth. In the last ten years, Ethiopia’s growth has been in building and infrastructure constructions; not in food.
Thus, the government in Ethiopia has recently appealed to its international partners for food aid to feed 8.2 million people. According to U. N. reports, the number of people needing help may reach 15 million by 2016.
The regime in Ethiopia always appeals for food aid whenever the country is affected by a drought. Then its international aid partners will deliver the food. This has become routine.
Since the early 1970s, Ethiopia has been affected by a drought frequently. As a result, the country has become dependent on food aid despite its rich potential.
The regime’s food aid partners are Western governments, international organizations, including the United Nations and its specialized agencies, as well as NGOs. Presently, they are all working hard to avert another famine in Ethiopia.
A number of initiatives have been declared in the past by the United States and its Western allies in response to a global food problem. For instance, in 2009, at the G8 Meeting in L’Aquila, Italy more than $22 billion was pledged for a global food security campaign.
In 2012, a symposium on global agriculture and food security was held in Washington, D.C. At that symposium, the President of the United States launched his New Alliance for Food Security and Nutrition.
The President stated in his remarks that the new initiative would be a better alternative than simply handing out food. This was well said.
Thus, according to the President’s New Alliance, G8 nations will honor the commitment, they made in L’Aquila. Second, African governments, “committed to agricultural development will build on their own plans making tough reforms and attracting investment.”
Third, donor countries will “closely align their assistance with these country-plans.” Fourth, the private sector, that is, the World Bank, international development agencies, multinational corporations, NGOs and civil societies will coordinate their involvements with the other partners.
The President in his remarks rightly said, “The whole purpose of development is to create the conditions where assistance is no longer needed, where people have the dignity and the pride of being self-sufficient.” The President’s New Alliance, however, leaves a lot to be desired.
First, it is not based on the successful experience of America’s agricultural development. America has a lot to offer to help Africa modernize its agriculture. The United States of America is a world leader in agricultural productivity thanks to the Homestead Act of 1862.
The Homestead Act created numerous privately owned family farms. The government made credit sources available to make the purchase of land and farm machinery by the people feasible. The Homestead Act was a strong democratizing measure because it gave Americans private property, which is the foundation for individual rights.
Second, The New Alliance does not incentivize African countries so that they should modernize their agriculture. On the other hand, the U. S. applied incentives to influence Southeast Asian countries to develop their agriculture.
For instance, Japan would not have abolished landlordism and established owner farmers without American involvement. The American Occupation in 1946 used its power to enforce a land reform law, which was against the interest of wealthy and powerful landlords.
The United States pushed for similar land reform laws in South Korea and Taiwan. Thanks to American involvement, South Korea and Taiwan today are among the prosperous nations in the world (see Table below).
For example, in 1961, Ethiopia, South Korea and Taiwan all had per capita incomes less than $120. By 2014, South Korea’s per capita income was 60 times larger than Ethiopia’s and Taiwan’s per capita income was almost 100 times bigger.
During 1961-2014, Ethiopia got poorer while South Korea and Taiwan got richer. Furthermore, the income gap between South Korea and the United States decreased by almost 50%. And the income gap between Taiwan and the United States shrank by 80%. On the other hand, Ethiopia’s per capita income as a percentage of America’s per capita income declined from 2.3% to 0.8%.
From 1951 through September 30, 2013, the United States provided loans, grants/food aid to Ethiopia amounting to $11.7 billion in constant dollar. Ethiopia received most of the aid between 1991 and 2013 under the present government (see USAID chart below). However, the current regime is not committed to agricultural development.
If America really wants to help Ethiopia modernize its agriculture, giving food aid is not the answer. In the first place, food aid is not sustainable in the long-run because it has budgetary consequences for America.
Secondly, food aid encourages the government in Ethiopia to postpone land reform, which is essential for agricultural transformation. For instance, the current regime has vowed that land privatization will happen over its dead body. This does not sound like a government committed to agricultural development.
In Ethiopia, government landlordism is the major impediment to agricultural development. Thus, America should leverage food aid to reform the government’s land monopoly and help Ethiopia modernize its agriculture.
The government in Ethiopia has to agree to privatize land and capitalize the rural sector in return for receiving food aid. Only then can Ethiopia be able to develop its rich agricultural potential and end its dependency on food aid. Only then can the people of Ethiopia “have the dignity and the pride of being self-sufficient.”
*Emeritus Professor of Economics at Ferris State University; UWW-Whitewater, email@example.com