Dead Aid is a fascinating read about the perils of foreign aid in Africa. I was attracted to this book because it claimed to be a no-nonsense approach to the development of Africa, written by an African economist. I was not disappointed.
For Moyo, foreign aid has simply failed to contribute to the development of Africa; rather, she suggests, it actually has a detrimental effect and inhibits African economic growth. Moyo begins with and discredits these arguments posited for the economic failures of Africa:
1. Bad luck. A country's wealth depends on geographical environment and topography such as coastal or non-coastal, resource-rich or resource-scarce.
3. Africans. Their cultural, mental, and physical differences prevent them from embracing development without foreign guidance.
4. Tribal groupings and ethno-linguistic make-up. The arbitrary drawing of country lines unites formally rivaling groups under the same flag, resulting in civil wars and ethnocentric biases.
5. Absence of strong institutions.
Moyo presents an interesting comparison between foreign aid to Africa and the Marshall Plan. For those unfamiliar with the Marshall Plan (officially named the European Recovery Program), it was an aid program designed by the United States to rebuild war-torn European nations after World War II.
Approx. % of nations' GDP: 2.5% to 3 %
Time Limit: Finite. Ended after 5 years.
Context: Rebuilding established infrastructures.
Target: Specific. Physical infrastructure.
Approx. % of nations' GDP: 15.00%
Time Limit: Infinite. Has been occurring for 50+ years.
Context: Building and creating new infrastructures.
Target: Broad. Permeates every aspect of the economy (e.g. healthcare, military, education, etc.).
One cannot have a discussion on foreign aid in Africa without mentioning corruption. A sad and dismal truth, corrupt African leaders are as much to blame for the continent's economic conditions as any other factor. But Moyo makes an interesting point. Aid enables corruption by giving money to leaders who are well known to be corrupt. Also, she suggests, vast sums of aid not only foster corruption, they breed it.
So why do donors give aid to knowingly corrupt governments?
1. A pressure to lend. Afterall, aid organizations are an industry. Thousands of peoples' jobs are dependent on giving aid to foreign countries.
2. Giving is sexy. The success of these organizations is both contingent upon and measured by the amount of aid donated.
3. Use it or lose it. Money not donated results in decreased funds, which ultimately harms the donor organization.
...And then there's the Chinese.
The Chinese have a growing presence in Africa and are rapidly investing in the infrastructure, seeking to fast track development. They are an emerging foreign power and eagerly tapping into the resources of Africa's mineral-rich nations. The billions of dollars offered by the Chinese do not come with the strict regulations and conditionalities of Western aid, making it more appealing to African governments. Moyo contends that China's expanding population and lack of resources leave an open door for African nations, and African nations needn't hesitate in taking advantage of such an opportunity.
"The Chinese are our friends," Moyo says. And this may be the one point on which me and Moyo disagree.
At first glance is seems like a win-win situation. The Chinese get much needed resources and African nations get a much needed infrastructure that will allow it to utilize its advantageous geographical position in accessing European and American markets. To me, however, this appears to be nothing other than economic neo-colonialism. The Chinese seem friendly--they were not one of the colonial giants that initially partitioned Africa. However, "rather than conquer Africa through the barrel of a gun, [they] are using the muscle of money." According to Moyo, "the Chinese state-owned Industrial and Commercial Bank bought a 20 percent stake in Standard Bank, Africa's largest indigenous bank in 2007." By no means am I an economist, but this (along with owning controlling shares in several mining companies) sure does sound like the beginnings of exploitation to me. Not to mention the possible undercutting of local merchants with the possible flooding of markets with Chinese goods...
Just to be clear, I'm not against Chinese investment in Africa, but I am a bit skeptical of the Chinese agenda.
Moyo concludes with interesting discourse on micro-financing, the power of remittances, and the ultimate strategy to encourage economic growth in Africa. I hope it works.
Moyo, Dambisa. Dead Aid: Why Aid Makes Things Worse and How There is Another Way for Africa. New York: Penguin Books, 2009.