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May 11, 2009

Just as with current aid policies, Dambisa Moyo's own solutions to Africa's problems would only work if Africa were better governed, argues Richard D. North: Dead Aid - Dambisa Moyo

Posted by Richard D. North

Dead Aid: Why aid is not working and how there is another way for Africa
by Dambisa Moyo
Pp. 188. London: Allen Lane, 2009
Paperback, 14.99

This is an attractive recipe for a book on African development. It comes from a clever and presumably successful banker, so that's good. What's more, she's a young, black, female member of the African diaspora and good-looking with it. She briskly proposes a market-orientated alternative to the aid she says has done little or nothing - perhaps worse - for her continent.

Let's start with her much-vaunted demolition job.

Aid has become a cultural commodity
she declares, and we right-wingers warm to her excoriation of the way a US$1 trillion dollars' worth of development assistance to Africa has been squandered:
Aid has helped make the poor poorer, and growth slower.
She insists that the picture is not all bad. A surge in demand for Africa's commodities has brought income to some. The reviled Washington Consensus and structural adjustment have patchily produced a "positive policy dividend". In some countries - she names Kenya - HIV prevalence has fallen. And
of forty-eight sub-Saharan African countries, over 50 per cent hold regular democratic elections that can be deemed free and fair.
She says that in Angola, Ghana, Senegal, Tanzania, Uganda, "and, yes, even Nigeria" there is an improved investment climate.

But Ms Moyo insists aid seldom helped and often hindered these slivers of hope.

I fear she overdoes it. Her post-war history of aid is not bad and nods nicely at the late, great Peter Bauer and the very living Paul Collier. In his book, The Bottom Billion [reviewed here], the latter politely hinted that he wasn't fond of the glamorous uselessness of some of the modern show biz and mass support for misconceived ideas about development.

Ms Moyo writes, correctly enough, about the fashions in government aid-giving in the late 20th century and notes - compellingly - that one of the smaller reasons aid failed is that its donors didn't really care whether it succeeded or not. She doesn't stress, but I would, that aid is something which politicians feel the need to be seen to give. They and their voters pitch the level and targets of giving so as to optimise donor satisfaction pretty much irrespective of the likelihood of its being useful. It is to the credit of intelligent donors - ministries or NGOs - when they can also sometimes make good happen.

Ms Moyo instead reasonably enough stresses the vested interest of the quite large aid industry. She lists pretty well the various ways in which it is hard to make unearned-income work well in developing countries - it is inflationary, and distorts markets and so on. And rightly she is tough on its corrupting influence.

However, I think Ms Moyo is rather weak on the modern aid scene. I suspect that sometimes and in some places, well-targeted aid can make a difference. She implies as much when she notes that Chinese involvement in Africa has a dimension which is aid-like, and is at least bringing infrastructure. And I am mildly hopeful that outsiders can sometimes help good government and civil society and maybe provide health and education assistance.

And so to the positive proposals in the book.

Dambisa Moyo rehearses many of the usual things about trade being preferable to aid. She notes that remittances from the diaspora are important. She is more obviously original when she says that African government could raise huge sums of money in the bond market. Just technically, I have no idea whether she is right on this last. Anyway she has a mountain to climb in making such a bold assertion work. And that's to leave aside for the moment the gloomy pieces in the Financial Times which say that capital is fleeing Africa in search ("Do not leave Africa in a scramble", FT, 17 March 2009):

of the safety of rich-country sovereign bonds.
The first problem is that her scheme would work brilliantly if only Africa were a nicer place. If Africa's leaders weren't running patrimonial kleptocracies, its leaders would indeed prefer proper capitalism, and would work to banish corruption not least so as to get a sound credit rating and access to the world's capital markets. But if all that decency were to happen, aid would work better too. As it is, Africa's countries are what they are and nothing stands much chance of working until they change.

Of course there are chickens and eggs here. I naturally hope that Ms Moyo's book - including its bond proposal - is part of the inspiration for serious transformation. But it will, as Ms Moyo stresses, have to be an African aspiration.

Though part of Ms Moyo's argument is that the West patronises Africa, she says it may be that Western governments should make the first move. They could announce a run-down in aid in the hope of forcing Africa's leaders into her preferred model of government. Ms Moyo accepts that this isn't likely to happen: the aid industry in the West is no more likely to vote for its own extinction than Africa's current leadership is likely to volunteer to end its muddled tyranny.

Far too briskly and as though knowing it's a non-starter, Ms Moyo argues that Western citizens should gang together to wrench the drip-feed of aid from Africa's arm. She says we know how to do it: 60,000 letter-writers persuaded Congress to pass the Africa Growth and Opportunity Act - which made it easier for some sub-Saharan countries to make and sell goods to the US.

Maybe Western activism will achieve Ms Moyo's aims, but I can't imagine it. The kind of nice people who put aid on the political map would be scared stiff that pulling the plug would produce pain long before it produced reform. I think it's more likely - and still a long-shot - that Ms Moyo's African contemporaries, and their children, will produce a social and political revolution in Africa. This book will have done excellent work if it produces the sort of moral and economic literacy which spurs that generational shift.

Richard D. North is the author of Rich is Beautiful: A Very Personal Defence of Mass Affluence and Scrap the BBC!: Ten Years to Set Broadcasters Free.

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Hello! I thought you might like to know that I've interviewed Dambisa and one of her critics: a young African student attending college in Canada. You can hear it HERE:

Posted by: Dave Lucas at May 12, 2009 01:39 PM
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