Ibrahim Anoba of Nigeria has some words of tough love for Somalia and supporters of sending foreign aide. STOP! He wrote about this in FEE this week. Ibrahim joins the Young Voices podcast to explain why well intentioned foreign aide is doing more harm than good.
The eastern African country of Somalia is currently suffering from a drought that has lasted for more than two years. A drought in an underdeveloped agrarian country that also lacks basic sanitation systems means further complications stemming from a lack of food production, subsequent malnourishment, and outbreaks of bacterial diseases such as cholera.
In fact, Somalia is currently reporting 200-300 cases of cholera a day. It’s a treatable condition, but aid agencies are consistently stifled in getting affected Somalis the care they need because the worst areas hit by the outbreak are in the southern part of the country––areas controlled by a group called Al-Shabaab. Al-Shabaab is a radical Islamist militia that arose as a response to American covert operations in the country, as well as the US backed invasion of Somalia by Ethiopian forces in 2006.
Donald Trump made headlines when he announced his plan to force Mexico to pay for his big, beautiful wall on the southern border by threatening to cut off remittances, which pump billions of dollars into the Mexican economy every year.
There are a number of problems with Trump��s plan — not least of which that we don’t need his wall to begin with — but the whole idea of using remittances as a bargaining chip in his quest to stop illegal immigration may very well be self-defeating. As the White House was quick to point out, cutting off remittances would have serious ramifications on the Mexican economy, which could in turn drive even more people to flee to the United States.
By implication, does that mean we should spend more taxpayer dollars on foreign aid to give people less of an incentive to come? Not exactly. But whether we want to help poor countries for its own sake or to prevent people from flocking to our borders, remittances are a bigger, better, and smarter way to do it than foreign aid.
First of all, remittances are huge. Americans send more money abroad in remittance payments than any other country on Earth — nearly four times more than every federal foreign aid program combined. Each year, the United States federal government spends approximately $35 billion in economic aid to over 140 countries around the world, directed primarily to underdeveloped regions. By comparison, residents of the United States send an estimated $123 billion in remittances to friends and family overseas.
The nearly $25 billion sent by US residents to Mexico accounts for 2.5 percent of the country’s GDP, bringing in more money than the oil industry. Millions of low-income families in Mexico depend on the inflow of remittances in order to make ends meet, and cutting off that flow could cause many to uproot and head north to rejoin family members in the United States — hardly the goal of border security advocates. If our presidential candidates really want to stem the flow of illegal immigration, they should focus on facilitating remittances, not threatening to shut them off.
Young Voices Director Fred Roeder was published by Wirtschaftswoche.de writing about how to foster growth and prosperity in third world countries. The op-ed was co-authored by Youri Chassin from Montreal Economic Institute and refers to a study published by Montreal Economic Institute that shows the negative impact of foreign aid on the development prospects of third world countries.
Wirtschaftswoche is the largest German economics and business weekly and reaches about 0.9 Million readers per week.
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