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close this bookEssays on Food, Hunger, Nutrition, Primary Health Care and Development (AVIVA, 480 p.)
close this folder12. Foreign Aid and its Role in Maintaining the Exploitation of the Agricultural Sector: Evidence from a Case Study in Africa
View the document(introduction...)
View the documentEvidence of the exploitation: A preamble and five exhibits
View the documentSources, uses, and sectoral distribution of foreign aid: A preamble and four exhibits
View the documentPutting it all together: A final balance sheet
View the documentPostscript
View the documentReferences

Sources, uses, and sectoral distribution of foreign aid: A preamble and four exhibits

Preamble

For a number of reasons, quite a few Western countries and bilateral or multilateral agencies have been willing to finance a variety of development projects in Cameroon. These reasons range from the government’s consistent pro-Western stands in international affairs to its quite long-lasting overall civilian political stability; from the country’s undoubtedly great development potential to its credibility with lenders due to past performance; from its recent oil finds to its varied and overall benign climatic conditions. Finally, Cameroon is attractive because of its staunch pro-capitalist outlook in viewing its own future internal development. However, the country faces quite a few problems in managing to absorb all the foreign aid efficiently and clearly lags behind in that task (15, pp. 48, 49). I he bottlenecks that explain this are related among other factors, to shortages of trained manpower, serious limitations in infrastructure (especially roads), and a slow-paced bureaucracy that seems to have particular problems in completing the necessary pre-project technical dossiers.

In the last few years, the transnational private sector has also started to move aggressively into the Cameroonian economy, probably in part for the same set of reasons given above, not to mention the good prospects for middle- and long-term profits and the government’s open encouragement and benign treatment of foreign investment. Transnational banks have been the first to make the move, and their presence makes it possible to finance the start-up operations of other corporations.

Exhibit 2.1

Investments in the fourth five-year development plan at the end of its fourth year totalled $3,325 billion. The total amount invested in the primary sector was $342 million; from this latter sum, $197 million was invested in agricultural projects and $145 million in other rural projects (livestock, forestry, integrated rural development) and in fisheries projects.3

3 All figures are in 1980 dollars.

The importance of foreign aid in the financing of the plan is demonstrated in Table 4, which shows the investments actually made at the end of the Fourth Plan’s fourth year (6, p. 53). As can be seen, at the end of its fourth year, foreign sources (loans and grants) finally financed 42 percent of the plan overall. 50 percent of its rural development projects, and 54 percent of its agricultural development projects. (These figures are even greater if one considers the percentage of private funds that came from foreign sources.)

Table 4

Cameroon's Fourth Five-Year Development Plan (1976-1981): Percentage of investments made at the end of the fourth year, by source

Investment Source

% of Total Investment in the Plan Overall Contributed by Source

% of Total Investment in the Primary Sector Overall Contributed by Source

% of Total Investment in Agriculture Alone Contributed by Source

% of All Investments Made in the Plan by Source Going to:

Primary Sector

Agriculture

Internally generated public funds

Overall

32

43

40

13.8

7.3

Government budget

(16)

(13.5)

(12)

8.6

4.3

Other public fundsa

(16)

(29.5)

(28)

19

10.3

External funds


Overall

42

50

54

12

7.5

Grantsb

(2)

(5)

(2)

20

4.3

Loans

(40)

(45)

(52)

12

7.7

Private funds

26 (56% of it foreign)

7 (43% of it foreign)

6 (29% of it foreign)

2.7

1.5

Total

100 ($3.325 billion)

100 ($342 million)

100 ($197 million)

10

6

a Extrabudgetary sources, regional and local governments (mainly municipalities), specialized boards (e.g. the National Produce Marketing Board that has cash-crops export monopoly, the Forestry and Fisheries Board, the Livestock Board and the Soci Nationale d'Investissements), and other parastatal enterprises.

b Sources include, among others, the European Development Fund (an EEC outlet), the French Aid and Cooperation Fund, the United Nations, the United States Agency for International Development, and Canadian Aid. The UNDP projected spending $21 million (0.4% of the total Fourth Plan financing) during the 5 years, with 17% of that amount to be spent in the rural economy (15. p. 87). USAID projected spending $8 million in 1980 alone, with 63% of that amount going to agriculture, rural development, and nutrition projects (15, p. 93).

It is interesting to note the relatively more important role of all external funds in the financing of the primary sector, especially agriculture, compared with their role in financing the plan overall (50 and 54 percent, compared with 42 percent). On the other hand, the majority of external funds ($1.4 billion) still go to the secondary ($694 million) and tertiary ($502 million) sectors of the economy, with the primary sector getting only 12 percent ($ 170 million) of the total amount.

Exhibit 2.2

The total amount of long-term, low-interest foreign loans invested in the Fourth Plan at the end of its fourth year was $1.3 billion. The total amount invested in the primary sector was $153 million; from this latter sum, $102 million was invested in agricultural projects and $51 million in other primary sector projects (6, p. 53).

The total amount of foreign grants invested in the same period was $82 million. The amount going to the primary sector was $16 million; from this latter sum, $3.6 million was invested in agricultural projects (6, p. 53). The breakdown of the investments of foreign loans and grants is presented in Table 5.

The World Bank and the International Development Agency accounted for almost half of the loam going to the primary and to the agricultural sectors, although both institutions contributed only 12 percent to the plan’s overall loans. Ninety-five percent of all International Development Agency loans went to agriculture as opposed to only 19 percent of World Bank loans. Forty-one percent of all European Economic Community loans went to the primary sector, all to agriculture. French aid provided one-fourth of the agricultural loans overall, while only 15 percent of its loans went to the agricultural sector. The majority of other foreign aid sources, representing almost two-thirds of the foreign loans, were invested in sectors outside the primary sector.

Although the sums Involved were substantially smaller, one can see that French grants, representing 15 percent of all grants, were almost the only grant source invested in agricultural projects (98 percent), while only 12 percent of French grants overall went to this sector. Conversely, European Economic Community grants (41 percent of all grants) did not go to agricultural projects per se, but financed some integrated rural development projects (19 percent of its grants’ contribution). Both French and European Economic Community grants were below the average for all foreign grants in their overall contribution to the primary sector (15 percent and 19 percent, respectively, as opposed to 20 percent).

As of the end of the fourth year of the Fourth Plan, there was still $536 million in outstanding and unutilized foreign loan funds available for investment. These funds were being carried over to the last year of the current plan and also to the Fifth Plan which was scheduled to begin in November 1981. Of these funds, 36 percent are earmarked for the primary sector, probably reflecting what was already pointed out in Exhibit 1 of the preceding section: namely, that the primary sector has clearly lagged behind the other sectors of the economy in the investments it has actually received compared with what was originally planned (6, p. 55).

Table 5

Cameroon's Fourth Five-Year Development Plan (1976-1981): Investments of loans and grants in the plan at the end of the fourth year, by source

Investment Source

Participation of Each Donor as % of Total Foreign Loans or Grants Financing the Plan Overall

Participation of Each Donor as % of Total Foreign Loans or Grants Financing the Primary Sector

Participation of Each Donor as % of Total Foreign Loans or Grants Financing Agriculture Alone

% of All Investments in the Plan by Each Donor Going to:

Primary Sector

Agriculture

Loans

World Bank

10

30

25

34

19

Intl. Development Agency (IDA)

2

16

24

98

95

BEIa

3

9

14

41

41

French bilateral aid

23

26

25

22

15

Other multilateral and bilateral aidb

62

19

12

3.5

1.5

Total foreign loans

100 ($1.3 billion)

100 ($153 million)

100 ($102 million)

12

8

Grants

FACc

35

27

98

15

12

FEDa

41

39

0

19

0

Otherd

24

34

2

29

0.5

Total foreign grants

100 ($82 million)

100 ($16 million)

100 ($3.6 million)

20

4

a European Investment Bank and European Development Fund, both EEC aid outlets.

b Arab Development Bank; German, British, American, Canadian, and Arab countries' aid, among others.

c French Aid and Cooperation Fund.

d UNDP, USAID, Canadian aid, etc.

Exhibit 2.3

If one looks into some of the foreign assistance data accumulated from the last 20 years, interesting tendencies can be found.

From 1960 to 1975, the overall aid given by the European Economic Community to Cameroon amounted to $204 million (grants and loans); 13 percent of that amount went to the rural economy. In the first four years of the Fourth Plan, the equivalent figures were $69 million and 30 percent (15, p. 79; 6, p. 53). It is noteworthy at this point that over 50 percent of the worldwide agricultural assistance that the European Economic Community gives goes to cash-crop projects as opposed to food-crop projects (16).

The total external assistance to Cameroon from 1960 to 1975 amounted to $1.25 billion, 44 percent of which came from Prance (17). From 1975 to 1980, external assistance increased to $1.4 billion and only 23 percent came from France (6, p. 53),

Exhibit 2.4

The public debt in Cameroon as of 1980-1981 was $1.5 billion, up from $585 million in 1976-1977 (27 percent average increase per year). The cost of servicing that debt was $77 million in 1978-1979. The ratio of debt service to export revenues was 5 percent in 1976-1977 and around 7 percent in 1980-1981 (29 percent average increase per year) (6, pp. 5; 6). It is important to note that agricultural exports determine this ratio.