Friday, March 06, 2009

Dead Aid? Dambisa Moyo’s Argument Against Western Aid to Africa

NY Times
Financial Times
All Africa

Dambisa Moyo has been called the “Anti-Bono” because of her somewhat controversial view that all Western donors should stop sending financial aid to Africa. On the subject of Bono, the famous leader of the rock group U2 who has championed the cause of Africa, she thinks that Africans should be perturbed that a Western rock star is the leading voice for African issues. She jokes that it would be like the United States allowing a British pop star lecture it on how to solve the housing crisis. But Moyo’s arguments are far more serious than her joking lets on.

In her recently released book entitled Dead Aid, Moyo argues that within five years all aid to Africa should stop. She says that Western aid, which is essentially free money with very limited strings attached, has promoted a culture of dependency in Africa that stifles entrepreneurship. The aid crowds outs private industries that will give rise to self-sufficient economic growth in Africa. She also feels that African governments are not accountable to their own citizens, but are accountable to the Western governments that provide the aid. The aid process is also inefficient, she claims, and encourages corruption at the top, and that many poor citizens do not even see the money from western governments. The only way to stop this vicious cycle is to stop all Western aid – and she views the current financial crisis as a great opportunity for Africa to start weaning itself from foreign aid.

In the place of Western Aid, Moyo believes that African countries should continue to develop its trading partners. She also thinks that African countries should explore the possibilities of issuing bonds in foreign markets, particularly China, a country with large foreign reserves. The last component of Moyo’s argument is micro-financing. She says that if people from Western countries still feel like they want to help out Africa than they can issue mico-loans directly to African entrepreneurs.

Her argument has not fallen on deaf ears. For instance, the country of Rwanda has begun to implement her arguments in their economic plans. According to the Principle Private Secretary to President Paul Kagame, Dr. David Himbara seeks to phase out Western aid. He states that Rwanda used to rely 100% on foreign aid, but in the last four year that number is only 44%. Dr Himbara says that it all begins with the mindset of the country. If they believe that they can function without relying on aid, then the country can begin to embrace new methods for financing economic growth.

Moyo is not without her critics, and she does acknowledge some of the positive things that Western aid has brought African, including increased focus on transparency. However, she believes that organizations such as the World Bank have not adequately phased out aid. Moyo says that during her parents generation there was a feeling of “yes we can” in Africa, but that as Western aid has increased her generation is of the “no we can’t” sentiment. That’s exactly what she’d like to change, and stopping aid and increasing self-reliance is the key to achieving such change.

1) Can’t there be a combination of aid and self-dependency or are they as mutually exclusive as Moyo would argue?
2) Another component of Moyo’s argument is that Africa should rely on foreign-direct investment. The current credit crisis has severely limited the willingness of Westerners to send their capital to Africa. Will this hamper her plans?


Anonymous said...

I do agree that there has been a huge misappropriation of AID mmoney by State Governments.I however do not prescribe to the fact that The Aid money has not been helpful in any meaningful way to in particular Africans. What we must not miss site of is that Aid requires a stringent administrative machinery that ensures delivery to the need. I thin rather than opposing Aid in toto we should be talking about how effectively we can build a delivery infrastructure

gladys99 said...

Moyo has thought through her submission but the suggestion that aid money be discontinued would ruin the lives of many. I would submit that Stephen Covey's comment that if you give a man fish they will always come for more but if you give them a fishing rod they will endevour to fish for themselves would be appropriate in these circumstances. What we need is poverty alleviation through the manner Yunus has tackled the Bangldesh poverty The people must participate in a meaningful and challenging way and not just to open hands receive and consume. They should be engaged in self development