Social Innovations
Just Say “No”
Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa by Dambisa Moyo
Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa
Dambisa Moyo
188 pages, Farrar, Straus, and Giroux, 2009
As the global financial crisis unfolds, those least responsible—our world’s poor—will be most affected. Many have called upon President Obama to uphold his campaign commitment to double foreign assistance. But Dambisa Moyo’s book, Dead Aid, challenges us to think again. Although we can all agree that ending poverty is an urgent necessity, there appears to be increasing disagreement about the best way to achieve that goal.
Born and raised in Lusaka, Zambia, Moyo has spent the past eight years at Goldman Sachs as head of economic research and strategy for sub-Saharan Africa, and before that as a consultant at the World Bank. With a PhD in economics from Oxford University and a master’s degree from Harvard University’s John F. Kennedy School of Government, she is more than qualified to tackle this subject.
In Dead Aid, Moyo comes out with guns blazing against the aid industry—calling it not just ineffective, but “malignant.” Despite more than $1 trillion in development aid given to Africa in the past 50 years, she argues that aid has failed to deliver sustainable economic growth and poverty reduction—and has actually made the continent worse off . To remedy this, Moyo presents a road map for Africa to wean itself of aid over the next five years and offers a menu of alternative means of financing development.
Moyo opens her case by writing, “Between 1970 and 1998, when aid flows to Africa were at their peak, poverty in Africa rose from 11 percent to a staggering 66 percent.” Today, Africa is the only continent where life expectancy is less than age 60. Sub-Saharan Africa remains the poorest region in the world, where literacy, health, and other social indicators have plummeted since the 1970s.
Pulling us through a quick history of aid, Moyo covers the many ways its intent and structure have been influenced by world events. She systematically challenges assumptions about the efficacy of the Marshall Plan, International Development Association graduates, and “conditionalities” that require adherence to prescribed economic policies. “By thwarting accountability mechanisms, encouraging rent-seeking behavior, siphoning away talent, and removing pressures reform inefficient policies and institutions,” aid guarantees that social capital remains weak and countries poor. And Moyo’s list of aid’s sins goes on—including the crowding out of domestic exports and raising the stakes for conflict.
So what does Moyo propose we do? In her own version of shock therapy, she asks, “What if, one by one, African countries each received a phone call, telling them that in exactly five years the aid taps would be shut off —permanently?” The shock would force them to create a new economic plan that phases in alternative financing mechanisms as aid is phased out, she argues. These new financing mechanisms should include increased trade (particularly among African nations and with emerging markets like China, India, and Brazil), foreign direct investment, entrance into international capital markets, and increased domestic savings through remittances and microfinance. The end goal is to phase reliance on aid down to 5 percent or less within five years.
Sound impossible? Moyo doesn’t think so. Implementing this plan will be “dead easy,” she claims, but will require political will. This political will, Moyo argues, must be rallied by Western activists, for they are the only ones with the ability and the incentive to drive change. “It is, after all, their money being poured down the drain.” She is not the first to call for a move away from aid dependency—although she may be the fiercest.
Moyo has only proven correlation, not causation, and although we can’t be sure how her prescriptions would hold up in the face of a global recession, she challenges us to think before we act. Moyo expands the boundaries of the development conversation—one that has become both more vibrant and more nuanced in recent months. Those of us rethinking aid can all agree that the time has come for deeper and more direct involvement of Africans in setting their own development course. As the African proverb goes: “The best time to plant a tree is twenty years ago. The second-best time is now.” Let us not waste any more time. Africa’s moment, and our moment, is now.
Q&A with KoAnn Skrzyniarz of Sustainable Brands.
Critics of Obamacare have taken away attention from important aspects of the act such as its focus on keeping people healthy.
The misalignment between the expansive goal of “health” and a cramped
Entrepreneurs are setting up shop in the nation's urban food deserts.
Two books argue that entrepreneurs and technology are transforming the global economy.
Merck for Mothers—a 10-year, $500 million initiative—aims to improve the odds for vulnerable women around the globe.
A riveting memoir by Egyptian revolutionary—and Google marketing executive—Wael Ghonim.
COMMENTS
BY Richard S. Gregory
ON August 6, 2009 03:25 PM
I am not an expert on Africa, but it is hard to argue with the success of the middle income countries over the last 30 years and in my humble view these sucess stories were considerably abetted by capital inflows from official sources, e.g. aid. In the 1980’s when the private sources of funds, then the banks, were all running for the exits, it was only the official lenders that kept funds flowing in, e.g. 3/4 of the new money to Latin America was from official sources. We cannot on the one hand laud the American experience of government investiment in education (Land grant and state universidies, state funded primary and secondary education) and infrastructure (water and roads), and on the other hand expect these to be financed by private sources elsewhere. To be sure, capital inflows/aid, are only as effective as the local political and economic environment and ideally supports good practices. That is the challenge.
BY Carl Hammerdorfer
ON August 6, 2009 03:31 PM
I love the discussion that Moyo has provoked, not to mention the cat-fights on Huffington Post.
But, rather than shut off the money entirely, I’d like to see some of it used to promote business and entrepreneurship. Specifically, let’s educate entrepreneurs and let’s make it viable for venture capital to flow into new businesses.
This is from my modest proposal that we shut down the World Bank and use that money for VC: Let’s face it-what a poor country needs is no different from what a poor state or county in the US needs. Economic development, entrepreneurship, new companies, products… real jobs for God’s sake! Not unproductive jobs working for a foreign NGO, but jobs where people make stuff….and sell it.
Read more here if you like: http://africaunchained.blogspot.com/
BY Jean Maier
ON August 6, 2009 07:10 PM
My sense is that Moto has been overly impressed with western neoliberal economics - taught at all the ivy leagues. But I would be critical of this. Official aide has often failed because of the policy strings attached - like the “Washington Consensus” started in the eighties. By the end of the nineties, public finance was overshadowed by large amounts of private project finance and other investments - without strings attached other than profits for multinational banks.
If we think that those emerging tiger countries are a success, we should consider the labor conditions, human rights conditions, and especially the environmental damage done in these countries. “An ounce of prevention is worth a pound of cure”. We will all be paying a high price for these in the near future. The medium of exchange is just that. The real and only bottomline is the biological-environmental bottomline. Unfortunately, conventional economists don’t measure these very well.
BY rkennair
ON August 6, 2009 09:13 PM
As someone who works in the developing world (Uganda), who has seen some of the ineptitude of NGOs, and who is trying to foster community-level entrepreneurial projects, I have used “The Lords of Poverty” as my ‘what not to do’ guide. It seems, I will be adding another book to that list - this one.
There are a few big issues I have seen in my 6.5 years of experience in Uganda. (1) Education is sorely lacking - which is not surprising as the Millennium Development Goals of the UNDP only have up to grade 6 universal education for all children as a ‘goal’.
(2) Change and Development Success are not in the best interests of either the governments of sub-Saharan Africa (most are virtual dictatorships paying lip-service to democracy) or the INGOs. If the governments were truly focused on change, they would provide universal secondary education - but that would give the popuplation the education they needed to act (i.e. vote knowledgeably) on the wrongs they see in their countries, and the current governments would tumble. If INGOs were successful, they would be putting themselves out of work except in disaster/relief situations, so it’s in their best interests to ensure that development is constantly required in some form.
(3) Many countries are hugely supported by outside nations. It is easy to list the countries that get masses of support from wealthier nations for preferred status, and it’s not in the wealthy countries best interest to lose that status (point in fact: Sudan and the Darfur issue, China buys the vast majority of Sudan’s oil, and has thwarted all attempts of the UN Security Council to act, the US currently supports numerous virtual dictators because of the oil of their respective countries).
(4) Even when INGOs support entrepreneurial projects, they are not well thought out. In Uganda, thousands of young women get training in tailoring each year - but there are no jobs after training, they are not taught life skills or small business skills, and few get grants for equipment to set up shop for themselves. I have seen programs teach people to make crafts for the tourist market - yet that market is over-capacity for product, but on a decline for tourists. The quality of the goods made is NOT good enough to mass market overseas aside from the ‘sympathy market’. I have even seen programs emphasize ‘found art’ - and the craftspeople were trying to sell mobiles made out of tampon applicators.
(5) Too much emphasis is placed on academics as opposed to vocational training. If 2% of the sub-Saharan population get into university, and only 2% of university graduates get jobs within 6 months - there’s something wrong. Meanwhile, outside contractors from everywhere else around the globe are getting the plum contracting jobs, and taking the IMF and World Bank funds OUT of the developing country, and back to their home country. The contractors rarely hire locals outside of basic labour as they do not have the vocational training needed to successfully undertake the higher level tasks - so these contractors are bringing in workers at at least 20 times the rate that a skilled local would work for.
For true development where it’s needed most (on the community level), a strategy has to be found to ensure that the communities can be self-sufficient, and operational independent of NGOs, INGOs, and indeed, their own governments in some cases.
BY Brian Gondo
ON August 7, 2009 12:35 AM
I think it’s naive for Moyo to think that implementing her solution to Sub-Saharan Africa’s economin crisis wold be “dead easy”. Firstly African countries are not going to receive that phone call telling them that in 5 years (or whatever other timeframe) the aid taps will be shut because for reasons already indicated by @rkennair.
Secondly, there is an absolute lack of political will to effect change by incumbent governements. The chaotic status quo serves a lot of the entrenched elites.
The real change in Africa is being effected bottom up rather than top down. The governing elites, academics, policy wonks, international donors et. al will not brng about this change. Change is being effected by the unco-ordinated masses of entreprenerial Africans who have realised that their destiny is in their own hands and not that of the government or external players. Donors and external actors are part of the problem.
Whilst most of western media is obsessed with visits by high profile westerners, war, hunger, etc in Africa. Those clued in realise that there are enormous opportunities and changes taking place in Africa. A few examples, the rise of Nollywood in Nigeria creating by output the third largest movie industry in the world, without government support or aid.
BY Mike Thompson
ON August 7, 2009 01:11 AM
Moyo is right and wrong in her book. Right about the role of aid in perhaps fostering dependence (although its disengenous to say 66 per cent poverty is directly caused by aid) but wrong about the solution. If we stop ALL aid to Africa its possible Africans will take charge of their destiny but it will come with a lot of “dead” people for sure. Is the global community ready for this horrible scenario?
BY Henk J.Th. van Stokkom
ON August 7, 2009 02:17 AM
Why the book of Moyo attracts so much attention is still puzzling me.
Robert Calderisi wrote in 2006 > ‘The Trouble with Africa - why foreign aid isn’t working’.
As a column writer I know that solutions are easy. In a column and a book. ....
Working directly with grassroot organisations in microfinance, health & education in rural areas of western Ethiopia and Kenya I know that there is a world of difference between ideas and implementation. A lot has been written on solutions for Africa (as if it is one country..) and many nowadays call themselves social entrepreneurs etcetera.
To write a book with solutions isn’t that complicated if you had the right (sponsored) education in a western country.
But to do something and get results with it is not as easy.
It is fine to have the discussion on the table again, but Moyo is definitely getting too much attention given the good books that already have been written on the subject.
What I like about Calderisi’s book is that he does not blame the Aid Industry alone.
He also mentions politically incorrect items as family values, fatalism and more.
There is nothing wrong with Aid. Without Aid there would be no financial system anymore…..
There is a lot wrong with governance in quite some countries on the continent of Africa. And a lot of Aid is ‘lost’ because of these wrong governance structures.
But given we seem to prefer to listen to writers descending from African countries we should also listen to businessmen from African countries. Mo Ibrahim said:
Nothing, simply nothing, is more important for Africa than good governance. (October 2008)
Obama recently said the same: http://www.reuters.com/article/topNews/idUSTRE56711G20090711?feedType=RSS&feedName=topNews
So maybe aid should also ( ! ) be looking at better and more ways to improve the quality of governance…...
BY Henk J.Th. van Stokkom
ON August 7, 2009 02:20 AM
p.s. on her book I also wrote a (very short) column here > http://vanstokkom.blogspot.com/2009/03/dead-aid.html
BY rkennair
ON August 7, 2009 10:46 AM
I agree that Calderisi has a very good book (it’s actually one of the few that I keep on the ‘re-read’ list). Unfortunately, when the global community cannot agree on what good governance is - yet try to make it a condition of donation - it’s destined to fail. In 2005/6 when Musoveni in Uganda had parts of the constitution overthrown so that he could remain in power, the European Union and member countries yanked funding—- but because Musoveni is a “friend of the US” going back years, that funding was replaced by another source. It did not have an impact. Look at the Africa Union itself. In the Zimbabwe elections (and in the earlier Kenya elections), they pressed for ‘power sharing’ as opposed to addressing the possibility/likelihood that there was massive voting irregularities. It’s an ‘old boys club’ in many of the countries, one that likely won’t change in my life-time.
I agree that there’s nothing wrong with aid - if it is done right. I stated that development agencies have a vested interest in keeping their own jobs. Hancock in “Lords of Poverty” uses the example of a person getting a 2-year contract, being gung-ho for the first six months and then realizing that, as it takes time to find a new development job, focusing the next 1.5 years on getting the new contract - or ensuring that their current project sounds glorious, but to be effective ‘must be extended’.
Anecdotally, in the summer of 2006, I was invited to a weekend workshop by an INGO that sends out people for such 2-year contracts. At the VERY FIRST meeting, they stated “while our projects are technically for 2 years, we expect everyone to pull it out to 3 years”. I reviewed the project plan and goals for the one they were asking me to consider, and I was floored. It was actually a project that could have had base implementation with local follow-up established and a local mentoring system put in place within 6 months. This organization gets $29 Million in taxpayer money on top of their donations.
The aid and development groups must also look at who they are hiring. Are they hiring specialists in the field, or some university graduate who is looking for their first job and is wide-eyed with theories on how to change the world. Last year, I sat down with a group of 6 newly arrived individuals with a major ‘volunteer’ group. Not one of them had the training for the jobs they were attached to - it was a ‘learning experience’ for them. Is it not a total disservice both to the groups that you are claiming to help, and to the tax-payers and donors whose money you are using?
I’ve held the belief that aid and development groups must be held more accountable for many years, and must hold their local partners more accountable. I believe that in as much as possible, these groups must operate on business models while in the field, not simply in their marketing in the ‘west’. A recent (within the past month) experience wholly validated it. As a group, we are attempting to foster entrepreneurial and self-sufficiency projects. Groups in areas that had 11 months (and funding) to prepare that were from areas in Uganda that has had a lot of aid dollars flowing in for 20+ years - failed to meet commitments miserably - yet kept asking for more money and time. However, in areas where there were few aid dollars in that same period, we were approached by groups who had no notice (and no funding from us) with samples - and delivered the product within 5 days. I see a definite link in this scenario between development funds and initiative.
BY Raj Jani
ON August 7, 2009 11:49 AM
I can see a lot of time and effort is wasted in writing critique of Moyo’s viewpoint. Instead we must focus on solutions as has also been hinted by her to provide sustainable livelihoods to people of Africa.
Working for many years in the sphere of micro-enterprises and poverty alleviation, I know for sure how important it is to have grant-in-aid to at least experiment with innovative mechanisms. Of course aid must be embedded with sound economic logic to make it work.
One such innovative thought I am presenting here for changing the course of discussions. In my opinion youth has the power to change the course of history and with appropriate steering they can work wonders for correcting economic woes of their countries. I agree with rkennair that Vocational education is the key to development. If we carefully see around, there are these new age-occupations that catch the attention of youth in a big way viz. music, dance, drama, sports, cultural tourism et al. These and many other vocations for instance manufacturing and delivery of packaged foods (heritage based ethnic foods), multimedia like animation and digitization of folk-art forms etc. are an integral part of creative and cultural industries, the contribution and share of which is increasing steadily in national GDP both for developed and developing countries alike, as they create mass jobs.
These can be promoted in a big way in Africa as the continent is ideally placed as a treasure-trove of tribal heritage and culture. The time has come to stop complaining and start looking about what is available and what’s not. Heritage based customs and traditions come handy in this regard, based on which these new age livelihood occupations can be supported by provisioning of liberal bouts of innovative financing viz. venture capital, micro-enterprise incubators, livelihood finance, micro-credit and the like. In addition mentoring support along with massive capacity building is required which needs attention of bilateral and multilateral donors in addition to corporate biggies.
Finally promotion of sustainable livelihoods based on creative and cultural industries need strong advocacy support and major marketing push, which can set the course of a new developmental paradigm. I believe this can certainly provide a new thought process to look at the ways and means of development aid.
BY Pedro Rosado
ON August 9, 2009 04:28 PM
The way out of poverty is to let it grow from within while extending its reach worldwide. You have to have a socially cohesive society and a strong government that is willing to harness the ebbs and flows of capitalism and act responsibily to protect each individual in their country. Each African country has to develop a short and long term plan which which will help it develop in stages and have flagship companies, locally or nationally owned, set aside trusts that are sustainable and which will provide funding for education and economic development. There must be corporation among African states to help each other create intra-state commerce and fosture/nurture ways in which that is a competative advantage in which each could share for the better of its continent. Innovation will be key to its success in the long term, but it will not be a matter of getting out of poverty but incrementally raising the quality of life that each human deserves. It is the only way—not of catching up—to manage this crisis of poverty in Africa.