Money for Nothing?

It’s anyone’s guess whether Dead Aid, the title of Dambisa Moyo’s new book, will become as famous a phrase as “Live Aid,” the 1985 rock music extravaganza that raised money for famine-stricken Ethiopia.

Thanks to a spring flood of publicity, however, Moyo’s catchy, unabashedly derivative title is now part of the economic lexicon, and her thesis that aid has done more harm than good for Africa is woven into the ongoing economic dialogue about how to help the third world. I didn’t appreciate just how woven until I read a newspaper comment by the head of American Friends of Kenya, a small nonprofit organization based in Connecticut with which I am traveling to Kenya this summer. “None of the stuff we do is aid,” the AFK leader was quoted as saying. “We are not an aid-providing organization. We are an infrastructure-building organization.” It seems that aid, like charity before it, has become a bad word.

Moyo is not the first to argue that aid to Africa has inadvertently caused economic stagnation, endemic corruption, and even civil wars. But she is the first black African economist, albeit with all the proper Western credentials (a PhD in economics from Oxford, and a master’s from Harvard’s John F. Kennedy School of Government), to make this case so pointedly. So she has made the media rounds, everywhere from Fox News to The Colbert Report.

Whether or not the holders of heavy purse strings will buy into her proposal to cut off all aid to Africa for its “generic economic plight” within five to ten years is quite another matter. Because, in Moyo’s view, half measures won’t do. Only when Africa’s corrupt regimes are taken off the aid dole will the indigenous political and economic reforms necessary for peace and stability take place. Moyo even outlines a plan. Born and raised in Lusaka, Zambia, Moyo spent eight years at Goldman Sachs and was a consultant at the World Bank. Her parents also studied and worked in the West, but they moved back to Zambia, while Moyo didn’t. Not surprisingly, her prescription for change is market-driven, and it is her bad luck, along with so many others’, that it was written before last fall’s market collapse. But the global recession doesn’t necessarily negate her analysis or proposals, which are directed equally at African and Western leaders.

Moyo urges Africans to find ways to gain access to international bond markets, if necessary by pooling risks and resources. She encourages more Chinese-style direct investment in major infrastructure projects. She wants the United States, the European Union, and Japan to ditch their heavy domestic agricultural subsidies so that African farmers can compete—a hard sell for politicians in the United States and elsewhere whose constituents’ livelihoods are linked to food production. She also backs microfinance development loans, in the Grameen Bank mold pioneered by Nobel Prize-winning economist Muhammad Yunus. Here, at least, most everyone will agree with her.

Dead Aid is a slim volume that reads at its liveliest like a manifesto, at its dullest like a numbers-laden corporate position paper. Its spirit recalls “The Emperor’s New Clothes,” with Moyo as the wise child who sees the naked truth about aid, while Bono and Hollywood activists lead the still cheering crowd. It can be shallow reading, particularly with regard to history, and the cursory way Moyo deals with deadly serious issues such as HIV/AIDS (a handful of brief references) and the massacres in Darfur (one sentence) is off-putting. Still, Dead Aid is worth reading, and frequently makes a great deal of sense. “The Chinese Are Our Friends” is the somewhat startling title of an important chapter.

China has made direct large-scale investments in Africa, lured by natural resources, by cheap labor, and, Moyo admits, by lax work-safety standards. The Chinese presence in Africa is hardly altruistic, she writes, and the investment is still relatively small. But Moyo argues that it has paid off for both parties.

Other developing nations, such as India, are also investing in Africa, while the West, Moyo writes, is largely stuck on the old model of government aid. During the past fifty years, Moyo notes, rich nations such as the United States have together sent more than $1 trillion in development-type aid to the African continent, yet the average African is considerably worse off than before. Lingering colonial interests, natural disasters, cold-war manipulation, and corporate exploitation have all been blamed, but Moyo rejects all these as the prime cause. The big culprit, she claims, is the corruption and dependency fostered by direct foreign aid. She doesn’t advocate cutting off emergency aid for disasters, or argue for an end to targeted public-health initiatives. The problem, she writes, is that too many African nations are in a perpetual state of disaster precisely because they have come to rely on foreign aid as their major, permanent source of revenue. When aid goes through governments, as most of it does, leaders dole it out to family, friends, and allies, to civil servants then indebted to them for jobs, and to the military and police who ensure their continued hold on power. Little filters down to the poor, who pay the highest price when politicians war over control. Corrupt and wily politicians have good reason to keep the poor down, because starving faces make the case for more aid.

Moyo acknowledges that “doing business in Africa is a nightmare,” but argues that cutting off aid can only help, by forcing nations to make themselves attractive to private investment. This money, like aid, can be stolen or frittered away. But when that happens, the investor goes away. Not so with regard to government aid. Most donor nations and organizations attach conditions to aid, but lack the means to enforce the conditions when they aren’t met, as is often the case. Even when evidence clearly indicates that aid is being misused or simply isn’t working, donors lack the will to stop because their own ideologies, reputations, or jobs might go away with it. How else, Moyo asks, to explain the $300 million doled out by international donors in 2006 to unrepentant despot Robert Mugabe in Zimbabwe?

A major problem with Dead Aid, one Moyo acknowledges, is that Africa is a continent of more than fifty nations with disparate histories, cultures, religions, and economies. One economic plan doesn’t fit all. Of course, Moyo would have attracted a smaller readership if she had focused on just one nation. Sarah Palin was supposed to have made a fool of herself by referring to Africa as a country, not a continent, yet all too many people outside of Africa make the same mistake. Still, the troubles of one nation inevitably spill over into another, and Moyo deserves credit for advocating more economic cooperation among Africa’s nations, including joint bond issues, as a means of lifting everyone up.

“Africa’s time is now,” Moyo writes. She is a worthy, albeit not very eloquent, voice in the development debate, and the best response to Dead Aid would be to bring more African voices to the fore. Better yet, Moyo might encourage similarly talented Africans, who, unlike her, stayed home or returned home, to speak louder, while urging more of us in the West to listen.

Published in the 2009-08-14 issue: 

Bethe Dufresne, a frequent contributor, is a freelance writer living in Old Mystic, Connecticut.

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