Aid as necessary for African countries as trade, Bill Gates

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“There’s no tradeoff where if you take less foreign aid you get more trade, those two things exist absolutely separately. Trade terms for Africa are actually in almost every case extremely favorable,” Co-Chair of the Bill and Melinda Gates Foundation, Bill Gates stated during a conference call with African journalists. The call revolved around the 2018 Annual Letter by the two Co-Chairs of the foundation which focused on their response on 10 tough questions they received over the years from nonprofit partners, government leaders and the general public.
Speaking on a question regarding why the Foundation doesn’t focus on building capacities of trade instead of focusing on aid, Gates stated that for the United States African Growth and Opportunity Act gives Africa the lowest tariffs for trade.
“The key is to raise up the health and education and infrastructure and the quality of governments in Africa so that there’s more output, high quality output. And, yes, over time growing the economies of the African countries, including through trade, growing the private sector, will be key to them achieving middle income status and being self-sufficient. But the foreign aid is helpful to that because the key thing is, you’ve got to get the health and nutrition and education up to a very high level to drive the economic growth at full speed,” he told Capital.
Gates further stated that “Of course, Ethiopia has a plan where they’re growing the infrastructure. They’re improving the health. They’re improving the farming output. And that over a 20-year period will move Ethiopia up to a kind of middle income status. And then probably the foreign aid will go and focus on countries that are not as far along.”
He underlined that when looking at malaria bed nets or vaccines for pneumonia or diarrhea or certain kinds of expertise, like the partnership the Foundation has had in Ethiopia with the Agricultural Transformation Agency, the benefits there have been strong. “And, of course, in agriculture that becomes private sector and over time, as the livestock is more productive, as the seeds are more productive, that does result in trade. So in agriculture it is a direct connection to improving trade results. In the case of health, there’s no direct financial payback, but it’s those healthy kids going to school that will be key to the future economic growth,” Gates said.
Speaking on the issue of unemployment among the youth on the continent, Gates stated that there are appropriately expectations by those youth, that the government will provide the stability, the food, the education and economic opportunity; it’s a big enough population bulge that that won’t be easy to do.
“Of course, this challenge was faced in the past by China and India and many Asian countries that managed both in agriculture and manufacturing and services to have good enough health of the population, and good enough education that they, both the domestic and the export market, were able to create that employment. Usually what happens is you raise the productivity in the agricultural sector and create value-added jobs in agriculture. You also have migration into the cities. So then in the cities you have to create in services and manufacturing quite a bit of new jobs.”
“There’s a partnership between Ethiopia and UNIDO that’s fairly unique in terms of looking at bringing factories, including a number of Chinese and other factories. And, of course, there’s been a lot of work to build the infrastructure, like the rail and road connections through Djibouti. So as the country gets the increased electricity and improved infrastructure, there should be some opportunity for Ethiopia in particular to follow a Vietnamese-like model. But a ton of things need to work very well for that to happen in terms of the education quality, and the infrastructure quality, and the predictability of the government policies,” he said.