Dead Aid
BY DAMBISA MOYO ALLAN LANE, £14.99
Leo Chamberlain asks if the western aid project has had a disastrous effect on Africa
ambisa Moyo is a Zambian black African who holds a Harvard Masters degree and an Oxford Doctorate and has worked for the World Bank and for Goldman Sachs. She has the knowledge and clarity of mind to write with a compelling frankness and urgency that commands attention. She was invited to Rwanda to talk with the president and his advisers; her book has been favourably reviewed; she had a friendly interview on Newsnight.
Her case is essentially simple: $1 trillion of aid has not worked. In fact it is making things worse. She traces the history. It is hindering domestic development and feeds corruption on a grand scale. It should be ended.
Although the vast continent has countries in very different stages of development, this much is true of them all, and in those countries where development is promising, it is so because of a relatively uncorrupt government and the growth of an economy which attracts rational investment. Here there are signs of hope: market-based policies and the growth of functioning stock markets and bond markets have led to sharp improvements where this has happened. But aid has been a hindrance and it should be stopped.
This does not mean nothing should be done. She points to five ways in which Africa can and should be helped now and after the aid tap is turned off. Governments should issue bonds to attract investors. These provide a discipline in themselves: governments will only be able to renege once.
Infrastructure investment should be undertaken for a return, as the Chinese are doing increasingly in Africa. Trade should be free: the West should stop protecting its farmers with trade barriers.
Micro-financial institutions should be encouraged, depending on the trust and knowledge that exist in communities, and which are a considerable success in parts of Asia. Dr Moyo instances the success of the Grameen Bank in Bangladesh. Emigrant workers should have easier means of sending remittances home to their families; such money is put to good use. In fact, our governments, while aid continues, would do better to pay the money over to each African rather than to their governments, if that were possible. It could also be implied that debt forgiveness is removing the one lever we have to control corrupt governments.
This is not a book about humanitarian aid in famine or after a tsunami; Dr Moyo hardly discusses these issues. There is an implication that the message of a book published years ago, Small is Beautiful, is still relevant, and it could be implied that aid to trusted recipients for disaster relief, or to prime the pump (an apt metaphor, given the importance of simple pumps and clean water supplies) as carried out by Cafod is still legitimate, though it should be for limited periods with an end in sight.
Moyo herself in a recent article in the Financial Times suggests that the Bill & Melinda Gates Foundation could in one fell swoop clean up a vast slum in Nairobi.
It is the monster spending of governments and the bureaucracies it spawns which is the problem. Aid bureaucracies themselves have an interest in perpetuating the system, and so have the fading pop stars who find ways to renew their prominence.
As Dr Moyo writes: “The Dead Aid proposal is dead easy to implement. What it needs, and what is lacking, is political will. Political incentives are stacked against making the call.” She suggests that mass public opinion and indeed anger about the waste of money must be mobilised, and could be mobilised, though it will be difficult. People have been motivated to march for mistaken objects.
Right now, two months after the book’s publication, it would be a start for the organisers of Comic Relief to review the targets for the generosity of the British people.
Is she right? Experts are cautious. Professor Paul Collier, who taught her, suggested in his review in the Independent that aid should continue but that its conditionality be strengthened; he admits that might be a tall order. It is all too easy to divert funds. He also notes that the timing is awful: now amid financial disaster the banks will lend no one money, and Africa is at the back of the queue. But he adds that there are still excellent opportunities for investment in Africa and perhaps that could be a new way for the aid agencies to operate. The Chinese have greatly increased their African investments.
There is something monstrous about food surplus in the West while Africans starve. Before Britain joined what was then called the Common Market we had a relatively small and incomparably more efficient Ministry of Agriculture than today, which opposed our entry. The reason was that our policy at the time provided for food imports at world price, and subsidies to farmers at home to cover the difference in costs. By all accounts it worked well, and our food cost less. Now that the cost of the Common Agricultural Policy has become so excessive that change is being forced, I wonder if that kind of model could ever again be brought in to support universal fair trade.
While there are African politicians like Mobutu and Mugabe raping the wealth of their countries, it is hard to hear rational voices like Dr Moyo’s.
Her parents also graduated abroad and went back to work devotedly for Zambia. She had expected to do so herself. She did not; she could have had a highly paid job at home, but within a creaking and failing bureaucracy. So she stayed abroad. This book is the product of her continuing reflections on what should be done. I just hope it has the profound influence it deserves.
I am glad the Pope is taking further advice before committing himself in the planned social encyclical and I hope someone in the Vatican sends for Dr Moyo.