Eliminating Foreign Aid to African Nations: Dambisa Moyo’s “Dead Aid”

After reading Dambisa Moyo’s Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, I’m left with the feeling that all of her arguments have been said before. She even quotes many development economists including Paul Collier and William Easterly (both of whom I’ve read books of) and their one problems with aid in Africa.

The thing that makes Dead Aid stand out, and many have already said this, is that it’s written by an African woman who is rejecting International Aid. Many people in aid-giving countries might argue that aid is doing more harm than good, but it seemed commonly assumed that recipients in African nations would never think it was a bad thing. Moyo does exactly that. She provides a history of aid going back to World War II and provides some stark truths:

“More than US$ 2 trillionof foreign aid has been transferred from rich countries to poor over the past fifty years – Africa the biggest recipient, by far. Yet regardless of the motivation for Aid – giving – economic, political or moral – aid has failed to deliver the promise of sustainable economic growth and poverty reduction.”

The only fault I see when people take this angle of Moyo is that she never really lived in poverty. Both of her parents were educated in the West, and she herself has a Masters from Harvard and a Ph.D. from Oxford. But, still, she does have very intimate knowledge with the problems facing many African nations and her dedication to the betterment of the continent comes through.

Now, Moyo’s argument against aid is specifically targeted at money that is directly transferred to foreign governments. This does not include humanitarian aid and disaster relief, which on multiple occasions she mentions is necessary in responding to a crisis like a famine, flood, or earthquake. Instead it is these large cash infusions that the rich countries, through the World Bank and IMF, loan or outright give to the governments of poor and developing nations. These loans are meant to build infrastructure, boost the economy, and help alleviate poverty. Usually they end up lining the pockets of those in charge:

“In the course of his disastrous reign, Zaire’s President Mobutu Sese Seko is estimated to have stolen a sum equivalent to the entire external debt of his country: US$ 5 billion.”

What I found refreshing about Dead Aid was that Moyo doesn’t simply argue against aid but she provides what she believes are solutions to the problem, most of which revolve around creating incentives to reform. Corrupt regimes have no incentive to change because they know that no matter what they do, another aid payment is around the corner because their people are poor. Also, they know that without poverty, there will be no more aid payment. That means the incentive aid creates is: Stay corrupt and keep people poor!

Moyo’s incentives would be to remove aid and let countries fend for themselves on the international capital markets. This has happened already in a few countries like Botswana, Kenya, and Ghana. This would require countries to have more transparency and it would create accountability, as a country who defaults on a bond won’t exactly have another large cash infusion coming around the corner.

She then argues that money from the rich countries should be used as Foreign Direct Investment rather than be given directly to the governments. This would involve the construction of infrastructure as well as business investment by rich nations in poor countries. These are the sort of things that create jobs and boost economies, and they could have an actual effect on alleviating poverty.

And then she’s a major advocate for microloans, which are small loans given directly to individuals or collectives to help build capacity. Microloans have been quite successful in many places already, so this seems to be a bit of a “no duh” moment.

Overall, I would say that Moyo has some great points, and there is no arguing that aid in the form of direct transfers has done nothing to alleviate poverty or stamp out corruption. The problem is that with celebrities like Bono out there saying we need to increase aid, the idea of cutting off aid to foreign countries would be political suicide for rich politicians. It’s a great idea, and I’d fully support it, but it’s doubtful to happen.

Still, I’d recommend the book as a great introduction to International Aid in a very readable fashion. There’s a reason it’s a New York Times Best Seller.

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One thought on “Eliminating Foreign Aid to African Nations: Dambisa Moyo’s “Dead Aid”

  1. John, I agree. Moyo’s book is a great read for those who want an introduction to anti-aid arguments. But for those of us who have already read these arguments in their original form (Collier and Easterly), the book can be a annoyingly repetitive. As are Moyo’s prescriptions, which sound more like regurgitations of World Bank policy than original thought. I was excited to read a book about aid written by an African woman, but was left disappointed.

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