Dead Aid in Africa

A long interview from Guernica with African development expert Dambisa Moyo, who has seen the foreign aid machine from positions at the World Bank and Goldman Sachs, and thinks the best thing for Africa is to cut it off. From the introduction, summing up Moyo's message:

Despite a deluge of aid between the years of 1970 and 1998, poverty on the continent skyrocketed from 11 percent of the population to 66 percent, which means over six hundred million Africans are now impoverished…..Dambisa Moyo is a unique voice in the debate over African aid. In a conversation dominated by white, male westerners—and most conspicuously by celebrities such as Bono or Bob Geldoff—Moyo is a black, African woman….Moyo earned her master's from Harvard and a Ph.D. in Economics at Oxford. She's worked as a consultant to the World Bank, and for the past eight years was the sub-Saharan economic expert for Goldman Sachs. It was at Goldman Sachs that Moyo began work on her book, Dead Aid: Why Aid is Not Working and How There is A Better Way for Africa, just a few weeks ago…..

Systematic western aid, Moyo argues in Dead Aid, has essentially turned Africa into one giant welfare state. The unending stream of money has created a situation where governments aren't accountable to their citizens: since they don't depend on tax revenue, leaders don't think they owe their people anything—and the people don't expect anything from their leaders. Moreover, says Moyo, since the money flows virtually no matter what, tyrants like Robert Mugabe of Zimbabwe (three hundred million dollars in foreign aid was sent to Mugabe in 2006 alone, says Moyo) often pilfer it and buy foreign goods, or stow it in foreign bank accounts where it does nothing to help the country. Furthermore, aid stamps out entrepreneurship. Moyo offers the example of an African mosquito net maker. When aid arrives in the form of a hundred thousand mosquito nets, the net-maker is out of business, and one hundred and sixty people (employees and dependents) are now aid-dependent. This, she says, is not a sustainable model.

Some bon mots from Moyo herself:

I think it's quite bizarre frankly, and slightly laughable, when I hear people say "Oh, the book is controversial." My view is that it's hardly controversial; it's very obvious…I think we all know that aid is not working. That's why in the book I draw on literature from organizations like the World Bank. It's somewhat bizarre that all this evidence is out there [that aid doesn't work], but somehow we just continue to push for more. Let's take the capitalistic system for a second. It's quote, unquote, not working now. We have centuries of evidence that it generates wealth and delivers jobs, and yet here we are after one bad year and we're ready to throw the baby out with the bathwater. So I find it quite worrying that we can look at aid—after sixty years and one trillion dollars that haven't worked in Africa—and we still don't question the system….

…..I went to Kenya for the first time and visited the largest slum in Africa. It's got about 1.2 million people living in it, and it's been there since 1918. Frankly, it's a perfect representation of the aid model. The UN for Habitat is right next door, yet this slum is spiraling out of control. It's got no clean running water; it's got nothing. It's a direct example where they could have gone in and shown that aid works, but the slum is still there….In my experience—growing up in Africa and being an academic who went back to the continent and whose family still lives there—I have seen no evidence that aid is delivering a foundation that could ensure long-term sustainable growth and alleviate poverty…..

I think the whole aid model is couched in pity. I don't want to cast aspersions as to where that pity comes from. But I do think it's based on pity because based on logic and evidence, it is very clear that aid does not work. And yet if you speak to some of the biggest supporters of aid, whether they are academics or policy makers or celebrities, their whole rationale for giving more aid to Africa is not couched in logic or evidence; it's based largely on emotion and pity….

….having an open-ended commitment for long-term development and long-term aid is not acceptable. In sixty years, we've had over one trillion dollars in aid go to Africa. It needs to stop. So if somebody comes to me and says, "Listen, we think that your five-year program is a bit aggressive, why don't we make it ten years?" I'm up for a debate on that. What I don't want is for people to say "Oh, her book is so controversial," and then they put it aside and continue to perpetuate a long-term, open-ended cycle of aid. I don't want to raise my children on a continent that continues to spiral downward…..

There is an incentive structure for the donors, and African countries know this. They know that the World Bank can only survive if it's spending money. So when the conditionalities are not met, the aid continues to flow anyway….The World Bank discouraged Ghana from going to the capital markets to raise money because it wanted to keep the aid flowing. We've seen situations where, in order to keep the system going, the World Bank has lent to countries just so they could pay off old debts. A friend of mine had a great quote: "Africa is to the development industry what Mars is to NASA." NASA spends billions on a MARS project, but they don't really think we're going there. Same with aid. Billions are spent, but no one really thinks it's going to develop Africa. It's kind of a scam.

Read the whole thing. Moyo is getting some good public play for a conversation that needed to happen.

From 2005 at Reason, Christopher Preble and Marian Tupy on how Western protectionism hurts African farmers.

And see how agricultural subsidies mess up lives from Mali to the good ol' U.S. of A in this informative Reason.tv video report.