A quarterly magazine of urban affairs, published by the Manhattan Institute, edited by Brian C. Anderson.
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Thanks But No Thanks
African economist Dambisa Moyo calls for a halt to Western aid.
10 April 2009
Dead Aid : Why Aid Is Not Working and How There Is a Better Way for Africa, by Dambisa Moyo (Farrar, Straus and Giroux, 208 pp., $24)
The countries in the world receiving the most foreign aid, largely in sub-Saharan Africa, happen to be the poorestand getting poorer by the year. Is it because they arent getting enough aid? Or is aid part of the problem? Those supporting the first argument include the World Bank, nongovernmental organizations (NGOs), academic stars like Columbia economist Jeffrey Sachs, and rock stars like Bono. The counterargumentthat Africa is poor at least in part because of aidis an unpopular minority view among academics, the media, and politicians. But it isnt new: in the 1970s the British economist Peter Bauer, after making careful investigations in Kenya, demonstrated that international aid there had corrupted and destroyed institutions and replaced entrepreneurship with beggary and dependence. Bauer became a pariah in the academic community, though Margaret Thatcher eventually made him a Lord (which did not help his reputation or his cause).
Since Bauers pioneering work, isolated voicessuch as economist William Easterly, who had firsthand experience on the groundhave emerged from time to time, making the same counterintuitive argument: aid doesnt help. While her predecessors in arguing against aid have been Europeans and Americans, Dambisa Moyo is African by origin. Shes traveled from her native Zambia, however, to Harvard, Oxford, the World Bank, and Goldman Sachs. Africa has become a source of talent for the developed world: the Souths lack of opportunities causes a brain drain, part of povertys vicious circle. Moyos new book, Dead Aid, would not be so compelling if she were only an African woman recycling her predecessors mantras. But she brings to the subject a compelling and easy to understand style, along with personal commitment and moral outrage. And she upholds her argument with striking examples.
Moyos views will not surprise readers familiar with the issue. When aid is easily available, she asks, why become an entrepreneur? Lobbying in Washington or Paris is more rewarding for an African entrepreneur than investing in his own country. Moreover, as Moyo shows, aid can destroy the continents few indigenous companies. The distribution of free anti-mosquito nets by aid programs, for instance, puts local manufacturers of nets out of business.
Moyo proposes classic free-market solutions. The U.S. and E.U. should stop subsidizing their farmers, enabling Africa to export more of its primary products. Slum residents should receive legal title to their homes. African nations should foster the institutions of microfinance. All of this would spur real African growth, she believes. How feasible are Moyos arguments? What if, she asks, African countries received a phone call telling them that in five years, the aid tap would be shut off permanently? But such shock therapy will never happen, as Moyo should know better than anyone from her experience working at the World Bank. U.S., European, or Japanese aid bureaucracies and charities will not put themselves out of business. These well-meaning angels, more focused on intentions than results, do not want to lose their financial, and even more important their moral, raison dêtre. The Wests deepest motivation in helping Africa is the feel-good impulse: we want to alleviate our bad conscience. Moyo calls it glamorous aid.
While Western aid undoubtedly funnels money to corrupt African leaders and destroys local entrepreneurship, it cannot demonstrably be proven that halting aid will lead to African prosperity. African poverty is not only the consequence of aid dependency. Moyo fails to acknowledge the role played by the artificial geography of African states. The borders inherited from colonialism have doomed most sub-Saharan nations to tribal warfare. All African countries since independence have been disrupted by civil wars. The so-called intangibility principle of bordersin which the UN and the Organization of African States have repeatedly agreed not to modify the borders created by colonization, fearing that doing so would only create more conflictsdoes more to condemn many African countries to poverty than misguided aid.
Beyond Moyos glossing over politics and the role of the state in any development strategy, she also makes too broad an indictment of bad aid without drawing important distinctions. Its true that so-called aid to development is usually counterproductive. But Africans also suffer from scourges like AIDS and malaria, which can be eradicated only with global support. To mock Bonos good intentions is one thing, but its mistaken to place Bono in the same category with the Bill and Melinda Gates Foundation, which does effective work fighting malaria. And it could be argued that containing malaria is a more efficient economic goal than even the micro-credit that Moyo advocates.
Moyo mentions only fleetingly some good news from Africa. Thirteen countries on the continent (François Bourguignon, the World Banks one-time chief economist, calls them the G-13) are growing, if less rapidly since the current crisis, not thanks to aid but in spite of it. This growth can be explained by better local strategies such as monetary stability, export-oriented development, African emigrants remittance of their Western earnings back to their original communities, and Chinese investment. China does not share the Wests bad conscience toward Africa. It does not feel inclined to help Africa, only to do business with it as it does business anywhere else in the world. In turn, Africans, Moyo observes, take a positive view of Chinese involvement.
Moyo also does not demonstrate how an absence of aid would improve the fate of the very poorest African countries. Dysfunctional states will remain hostile to development with or without aid; but without aid, epidemics will rage untreated. Opening developed countries markets to African agriculture would be useful, but not sufficient to raise Africa out of poverty. What Africa needs, beyond legitimate governments, is an industrial phase comparable with what has taken place in Asia. Achieving that industrial take-off will not be easy for such a latecomer to the global market. Here again, China could help, as it is already investing in local industry, which Westerners have never done. So while Dambisa Moyo makes some persuasive and important arguments about the pitfalls of aid, her provocative book obscures some of the complexities of the issue.
Guy Sorman, a City Journal contributing editor, is the author of numerous books, including the forthcoming Economics Does Not Lie.