So my gut has always told me that throwing money at a problem never solves anything. I look at all the aid money that has been thrown around Africa, Central America, actually anywhere…. ever. Was there ever a measurable positive result that could be tracked back to money alone? No.

So today I read this article, from Speigel Online International and I have even more to talk about. The three part article breaks down what the flaws and problems are with the current aid model and actually gives examples of models that have led to improvement.The truth is… there is plenty of money in Africa. In 2006 Africa received $26 Billion dollars in aid money from Europe alone….. 26 BILLION. The Washington Post reported in December of 2006 that President Bush (and ain’t he a brain trust) plans to triple US Aid to Africa to a projected $9 billion by 2010 As a point of comparison the GDP for Sudan in 2005 was 27,542,190,000 . So what do you think? Did you get $26 billion worth of improvement in Africa from the money Europe spent this calendar year?

There are lots of big brains out there that don’t think aid is the answer… as a matter of fact as early as 20 years ago Lord Peter Baur (former professor at the London School of Economics and adviser to Margaret Thatcher) was blasting aid as part of the problem and not part of the solution. Today lots of big brains like: Dr. Donald Kaberuka, President of the African Development Bank; James Shikwati, founder and director of the Inter Region Economic Network; Iqbal Z. Quadir, founder of GrameenPhone in Bangladesh; Edward Green, Director of the AIDS Prevention Research Project; Michael Fairbanks, Co-founder of OTF Group and the SEVEN FUND, and William Easterly, Professor of Economics at New York University, joint with Africa House all agreed that money alone is not the answer as part of their essays for The John Templeton Foundation. In 2002 The Gaurdian reported that both Sam Nujoma and Robert Mugabe told Tony Blair what they thought of “help” from Britain. Yet both of these countries and the rest of Africa, continue to receive foreign aid.

The solution lies in the hands of the people. Governments, African and foreign, have been mucking it up for decades. Insanity prevails as we all continue to follow the same model and expect different results. Who understands Africa better than Africans? Innovative, effective solutions can only come from those who truly understand the problems, and their core causes. Uganda’s AIDs plan is a prime example. A locally developed solution the resulted in a decrease in infection rates that had been seen no where else on the continent, despite all the money and condoms. And when did the program stop seeing it’s stellar results? When Bush decided to withhold US funds unless abstinence was the core message (did I mention what a brain trust he is?) Nothing like a little western arrogance to derail a perfectly good program.

Remittance flows to, and from within Africa are upwards of $40 billion… compare that to the$26 billion Europe is sending annually. According to the IFAD:

East African countries heavily depend on these flows, with Somalia standing out as particularly remittance dependent. For the entire region, these transfers are 13 per cent of per capita income and on a country-by-country average represent 4 per cent of GDP and 4 per cent of exports.

What kind of impact is this African-earned money having? Business Daily Africa reported that remittances are such a big part of the Kenyan economy that:

The investment forum dubbed Kenya Open for Business to be held at Kennsaw State University in Atlanta, Georgia, will address how best to engage the Diaspora in the country’s investment opportunities, capital markets and financial services.The potential is vast. With little or no formal efforts to attract their funds, Kenyans working abroad sent a combined Sh70 billion home last year, up from Sh32.8 billion the year before. This near doubling in funds sent home saw them top the foreign earnings of the country’s entire tourism industry by a full 25 per cent.

Now that is a measurable sign of success… and where did it come from? Africa and Africans.

Now, imagine with me, an Africa in which the Western World… INVESTS. An Africa where improvement is expected, where people and companies go to EARN money. Sigh. Is it a fantasy? God I hope not.

Take for example… Nigeria. Nigeria has the second largest economy in Africa. Why? This article from IM Diversity states:

Over the past six years in Nigeria, for instance, the government has pursued a policy of trade liberalization — making the operating environment for businesses less rigid and more friendly to foreign investors; and privatization — allowing private ownership of previously government-owned operations. As a result, many opportunities for global business operators have been created in Nigeria — the second largest economy in the region after South Africa.

And Ngozi Okonjo-Iweala told TED attendees what it took to make that happen.

(if you see code click here)

African’s making a choice to fix the problem themselves… and look at the results. A strong and thriving Nigeria. This scenario can be replayed across the continent for the benefit of all Africans and every smart investor that decides to do their research and look for the opportunities that are right in front of them.Publications like Money Week and the Motley Fool are encouraging investors to look at Africa in a new light. IBM has dollar signs its eyes. It will happen if African’s can take control of their finances and their economies not just at the governmental level, but on the ground… in the countryside, streets, towns, villages and cities all over Africa. At home and in the Diaspora that is where the REAL aid is coming from. And that is how lasting change will come about.