Aid, Predation and State Capture : The Role of Development Aid in Fuelling Corruption and Undermining Governance: The Case of Ethiopia

This article exclusively focuses on theme-based (sector-based) development aid to show the captured nature of foreign aid in Ethiopia and its use of something other than development: penetrate households at the individual level and control them. The paper establishes that, by creating opportunities to the highly organized groups and elites, donor aid has led to a legacy of corruption, maladministration, cruelty, brutality, money laundering and the establishment of a ruthless oligarchy in Ethiopia. I show that the type of corruption which has transpired in Ethiopia is the strongest and highest form of corruption known as State Capture. The work also shows how, when it comes to Ethiopia, donor aid has poisoned the wells with deep corruption and, by implication, the unholy alliance between donor aid and corruption and donor aid and tyranny. The paper documents how various powerful ethnic, social, personal, regional, political and economic groups in Ethiopia are able to extract rents and use it for their own political survival and hegemony. The paper also goes further to show that misusing and abusing of foreign aid by the TPLF/EPRDF is a learned behavior it acquired when it was a guerrilla force. This case study shows that development aid has been overwhelmingly captured by the ruling elites in Ethiopia and consequently, those who are able to capture the foreign aid resources using them as tools of control and repression. In addition to foreign aid being used to finance repression, it has exacerbated the extent and level of the income gaps between the haves and the have-nots while at the same time increasing the vulnerabilities of the poor. Such a scenario and the increased level of rent-seeing that one finds in the country indicates that foreign aid has undermined governance in the country. By exploring the heavy handed use of development aid by the ruling party and the culpability of donors and aid agencies, the paper provides analytical support behind aid and corruption, aid and extraction of rents and the type of corruption that one finds in the country. The paper concludes development aid has been a curse and both Ethiopia and its people would have been better off without foreign aid than with it