The Failure of African Aid
Western aid to Africa has made desperately poor countries poorer, retarded their economic growth, and entrenched despotic regimes, argues the Zambian-born economist Dambisa Moyo. In her new book Dead Aid (Farrar, Straus, and Giroux), Moyo, an Oxford Ph.D. who has worked at Goldman Sachs and consulted for the World Bank, takes on the "pop culture of aid" promoted by Bono, Bob Geldof, and other celebrity activists. The book instead offers marketbased solutions for Africa. Senior Editor Michael C. Moynihan spoke with Moyo by phone in May.
Q: Africa has received approximately $1 trillion in development aid in the last 50 years, yet most of its recipients are worse off than before.
A: Let's remember what the original goal of aid was. It was supposed to increase growth and reduce poverty. On those two metrics alone, it definitely hasn't worked. We can argue that the goalposts have moved over the years. People now argue that aid is supposed to save lives with HIV drugs and so on. But fundamentally, aid isn't contributing to job creation or growth in Africa. If anything, it is actually impeding growth and economic development by promoting corruption, civil wars, the growth of bureaucracy—all while encouraging inflation and huge debt burdens.
Q: To clarify, you are specifically criticizing government-to-government aid.
A: Yes. I'm not talking about humanitarian or emergency aid, nor am I talking about nongovernmental organizations or charitable aid. That is not the premise of my book, which is only about government-to-government aid flows. But let's not delude ourselves. These other types of aid are not going to make Africa grow by 10 percent a year or meaningfully reduce poverty. My critics aren't addressing the fundamental problem of job creation in Africa but rather providing band-aid solutions.
Q: You mention some moderate success stories in Africa, like Ghana and Botswana. What are they doing right?
A: The most obvious answer is that these countries are not dependent on aid. South Africa and Botswana, in particular, do not rely on aid as much as the rest of the African continent does. But even the newcomers like Ghana who are showing positive signs of economic growth and reduction in poverty, those countries are making meaningful strides toward a more private-sector-oriented development agenda. For example, Ghana issued a bond in the capital market, which is one of the recommendations that I outline in the book.
Q: Some of your critics argue that if aid is eliminated, the market alternatives suggested in Dead Aid aren't realistic in addressing the problems of poverty in Africa.
A: It's completely realistic. We have seen it in places like South Africa and Botswana and in other places around the world, like India, China, and Russia. It basically boils down to "no taxation without representation." It's a very simple concept. If African governments didn't have to rely on a tax base which isn't African—aid funded by the American and European taxpayer—then Africans could hold their governments accountable. African governments would then shift their attitudes toward courting the African populace. Right now, they spend the vast amount of time courting and catering to donors because they are the ones that determine whether they live or die.
Q: Are there African leaders who are sympathetic to the thesis of Dead Aid?
A: Rwandan President Kagame is very much against a long-term aid model. Like me, he thinks it won't deliver growth. Many people think that this is a continuation of the liberation struggle. Many believe that African countries have been decolonized, but they are not yet independent. We might not be de jure colonies, but we are de facto colonies because of our heavy reliance on the European taxpayer.