Dead Aid: How Aid Hurts Africa

While Dave was watching television and posting on a news story, I was reading a book by an African woman entitled Dead Aid: Why Aid Is Not Working And How There Is A Better Way For Africa. I haven’t finished the entire book and thus wasn’t planning on posting on this topic quite yet but Dave’s post and the ensuing comments prompted me to share some of what I’ve learned so far.

As I alluded to earlier this book was written by an African so it can’t be disregarded as a white, western, racist view of the continent’s problems. The author, Dambisa Moyo, was raised in Zambia and only after graduating from college did she leave for the United States where she worked for 2 years at the World Bank, completed a masters at Harvard, and then travelled to England to earn a PhD in Economics at Oxford. I’m not saying that her African heritage and first class education make her right, but I am saying that she can’t be dismissed too quickly by the “good intentions makes all things right” crowd.

There are so many interesting and provocative paragraphs in this book that it will difficult to limit my quotations. But here’s the thesis of the first part of the book as laid out in the introduction.

Deep in every liberal sensibility is a profound sense that in a world of moral uncertainty one idea is sacred, one belief cannot be compormised: the rich should help the poor and the form of the help should be aid.

But has more than US $1 trillion in development assistance over the last several decades made African people better off? No. In fact, across the globe the recipients of this aid are worse off; much worse off. Aid has helped make the poor poorer, and the growth slower. Yet aid remains a centerpiece of today’s development policy and one of the biggest ideas of our time.

The notion that aid can alleviate systemic poverty, and has done so is a myth. Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased. Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world.

Moyo’s point is that aid actually leads to poverty. Now it is important to point out that there are different kinds of aid and she is not addressing all types in this book. There is emergency aid in response to a natural calamity such as the 2004 tsunami, charity-based aid, and systemic aid which is transferred from government to government or through the World Bank. Moyo says that while emergency and charitable aid are not without their own problems, her book is specifically addressing the “billions transferred each year directly to poor countries’ governments.”

Chapter 2 of the book gives a history of foreign aid that I found interesting. The concept of international government aid traces its roots to a meeting that took place in July 1944 in Bretton Woods, New Hampshire. As WWII was nearing an end representatives from 44 countries met to discuss a global system for financial and monetary management. One key idea that the participants agreed on was the need to rebuild Europe after the war was over.

Then in 1947 U.S. Secretary of the State George Marshall proposed the radical idea of America giving Europe $20 billion ($100 billion in today’s terms) to revive their economy. At the end of the five years and with Europe well on the way to recovery, attention turned to Africa. If aid had helped Europe, then why couldn’t it do the same for other places?

But aid was soon co-opted as a political tool by both the U.S. and the Soviet Union with both governments giving large amounts of money to countries that would align with them in the Cold War. Aid wasn’t dispersed to countries with good leadership or good economic plans but as a bribe to turn the world either “capitalist or communist.”

Since then each decade has produced a different aid emphasis but what they all share in common is that none of them worked. Moyo refers to our current decade as “the rise of glamour aid” where the advocates are not African but cultural pop stars playing upon “western liberal guilt-tripped morality.”

Moyo again…

So there we have it: sixty years, over US $1 trillion dollars of African aid, and not much good to show for it. Were aid simply innocuous – just not doing what it claimed it would do – this book would not have been written. The problem is that aid is not benign – it’s malignant. No longer part of the potential solution, it’s part of the problem – in fact aid is the problem.

The book gives many reasons why aid doesn’t accomplish its objective of giving people an economic future some of which are too technical for this post. But here are two that I found interesting.

First, aid encourages graft and corruption. With so much money flowing into a country people will do anything and everything they can to get a piece of the action. She provides numerous examples.

Second, aid discourages business and investment. For example, she imagines a mosquito net maker who manufactures 500 nets a week. He employs 10 people who each support large families. The demand for the nets is great so they want to invest their money into expanding their business. Now enter a Hollywood do-gooder who rallies both individuals and governments to donate 100,000 mosquito nets at a cost of $1 million. When the nets are distributed, everyone feels good.

But what happened to our mosquito net maker? Well he’s out of a job and so are his 10 employees. Not only that but all the investors who contributed to expanding the business have lost their money.

Moyo concludes that “In nearly all cases, short-term aid evaluations give the erroneous impression of aid’s success. But short-term evaluations are scarcely relevant when trying to tackle Africa’s long-term problems.”

Part 2 of the book explains Moyo’s solution to Africa’s economic crisis. The problem is that I just started that section. Remember I told you at the beginning of this post that I hadn’t finished the book. Maybe I’ll post on the second half when I’ve finished it or maybe you will be motivated to read it on your own.

At the risk of over clarifying: my point in this post is to share an interesting and provocative book that I’ve been reading. I’m not saying that the author is correct nor am I saying that Christians should stop partnering with African churches and ministries. In fact members of The Crossing should know that as a church we are very engaged in many such partnerships.

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