Dead Aid: Why Aid is not Working and How There is a Better Way for Africa
By: Dambisa Moyo
New York: Farrar, Straus and Giroux
Africa has been the recipient of vast amounts of official development assistance (ODA) over the years, and over the past 60 years, Africa has received over one trillion USD in development related aid (Moyo, 2009). This massive influx of development assistance has not proven to be the answer to Africa’s stagnating growth. In Dead Aid, Dambisa Moyo attempts to tackle the troubling question of why the majority of sub-Saharan counties floundered in a seemingly never-ending cycle of corruption, disease, poverty, and aid-dependancy. In the opinoin of Moyo, the reason for such dire circumstances among African counrties is directly due to all the aid that they have received, creating what she views as an economy of aid-dependancy. Moyo defends her claim by citing growth figures which date back thrity years and demonstrates that the most aid-dependent countries have exibited an average annual growth of minus 0.2 per cent. The author views the receipt of concessional loans and grants as having similar effects in Africa as the possession of valuable natural resources: “it’s a kind of curse because it encourages corruption and conflict, while at the same time discouraging free enterprise.” In the authors view, the answer to Africa’s stagnation is the radical proposal to halt the follow of concessional loans and grants. Moyo offers four alternative sources of funding for African economies, none of which has the same deleterious side effects as aid. These alternatives include: accessing the international bond markets, encourage the chinese policy of large-scale direct investment in infrastructure, press for genuine free trade in agricultural products, and the encouragement of financial intermediation, more specifically, fostering the spread of microfinance institutions.
Dambisa Moyo’s book, although not the first to address the issues concerning foreign aid, is considered to be instrumental in the debate against such frivilious expenditures. In her book, Moyo discusses various complex issues, but her resolution to such concerns may be seen as too simplistic by some. Moyo is certainly correct that good government is all-important, but she’s on very uncertain footing when she claims that it will: “naturally emerge in the absence of the glut of aid.” Aid may lead to bad government, but commodity-dependent economies seem to manage to get more than their fair share of bad and corrupt government either with or without it. Moyo also neglects to mention that there is also some evidence for some success in African aid in other areas, especially in health, where there have been successful efforts at vaccination campaigns (lowering child mortality) and ending or curtailing diseases like smallpox, Guinea worm, and riverblindness. This raises hope that aid could register further successes in health. As touched upon by Moyo, the aid system has never been able to resolve the terrible tradeoff between supporting a bad government and helping the citizenry, and today the situation is not any different. Donating nations have certainly been involved in internationally supervised elections in formerly wartorn societies like Liberia and Democratic Republic of the Congo. Donors also applied pressure to Kenya to conform to democratic principles after the long-time autocrat Daniel Arap Moi left office, and again in 2007-2008 when there was a seriously flawed election; however, other flawed elections happened with little donor complaint (such as Nigeria in 2007), or there were forceful complaints by donors that have been ineffective (Zimbabwe 2008). Conversely, some democratic transitions in Africa were based on indigenous mass movements that forced autocrats to hold fair elections, with little donor involvement, such as Zambia, Ghana, and Benin.
A further criticizm that may be directed towards Moyo is the accusation that her book, and recommendations, can be viewed as neoliberalistic, but it is important to appreciate the fastidiousness of Moyo’s argument and how it can be used as a baseline and refined. Moyo’s recipe for success in Africa is seen as an ideologically right (economically conservitive) minded perspective, and one that views privatization of public goods as a necessary part of a florishing economy. Moyo’s point is well taken when she states that governments should not be given perpetual non-emergency aid, and that better structures both exist internationally, and can be created locally for Africans to help themselves via private finanace and investment. However, in the current global economic recession that has been directly related to the free reign of capitalistic ideologies, Moyo’s opinion to open African markets to the world may not be seen as the best solution. As Africa turned towards markets and globalization since the turn of the millennium, the continent experienced the highest growth rates in its history, yet some would argue that this growth is artificially high and could not be sustained in the long term. Although, as cited by Dollar, David and Kraay, historical evidence suggests that such wealth creation and growth does reach the poorest; growth of the poorest and the richest parts of the population tends on average to be the same.
Moyo has been unlucky in her timing with Dead Aid. Her recommendations for privatization, international financing, and free markets for Africa have come at a point in time when international capital and goods markets are in deep crisis, and considering that the Great Depression was responsible for encouraging many of the paternalistic ideologies that would ruin African deveoplment economics for the next half century, her recommendations might not be put to use. As well, In the brief interval between writing and publication, the book’s argument has been overtaken by events. The opportunity for African governments to raise money on international markets has evaporated even more rapidly than it opened around four years ago. The global financial crisis has drastically reduced investor appetites for risk: for example, the government of Kenya had planned to raise $500m through an international bond issue, but that is now out of the question due to the current world financial circumstances. Also, African societies face problems depper than their dependance on aid; divided by ethnic loyalties, they are too large to be nations, yet with only tiny economies, they lack the scale to be effective states. As a result of such circumstances the vitlal public goods of security and accountability cannot adequately be provided, and in their absence the valuable natural assets that many countries possess become libialities instead of opportunities for prosperity.
Dambisa Moyo demonstrates tremendous courage in advocating an anti-paternalistic, commercial model for Africa despite the current recetion present in the world. Her current stance directly negates the popular assumptions and strategies of alleviating poverty in African Countries, which would leave her in a position of disapproval among politicians, movie stars, and some academics. The time has come to undertake a new strategy of development in the African region, one that believes in the ability of the African people to help themselves, rather than one which views Africans’ as helpless and dependent on our handouts. Dead Aid purposes recommendations that need to be undertaken, and although at times simplistic, the reality is that our actions thus far have not amounted to a tangible and overarching difference in the continent. Moyo’s book, Dead Aid, considers multiple opportuntities for the deveopment of a continent that has tremendous potential, and in doing so, utilizes the socialogical immagination to come up with a solution, that if tweeked, could provide the sustainable growth that Africa needs.