Dambisa Moyo on the problems of aid dependency
Oct 14th, 2009 by Williee Chonguica
about Dambisa Moyo
| Dambisa Moyo was born and raised in Zambia, Southern Africa. She completed a PhD in Economics at Oxford University and holds a Masters from Harvard University. She completed a Bachelors degree in Chemistry and MBA in Finance at the American University in Washington D.C..
She worked at Goldman Sachs for 8 years in the debt capital markets, hedge fund coverage and in global macroeconomics teams. Previously she worked at the World Bank in Washington D.C.. Dambisa is a member of the Boards of Lundin Petroleum and SAB Miller. Dambisa is a Patron for Absolute Return for Kids (ARK), a hedge fund supported children’s charity. She serves on the Boards of the Lundin for Africa Foundation and Room to Read, an educational charity. |
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Dambisa argues for more innovative ways for Africa to finance development including trade with China, accessing the capital markets, and microfinance. Dambisa has also been offered a contract for another book, entitled How the West Was Lost, scheduled for publication with Penguin and Farrar, Straus & Giroux in 2010. This book examines the policy errors made in the US and other Western economies which culminated in the 2008 financial crisis. And discusses why financial and economic experts missed the signs of the credit crunch. It also explores the policy decisions that have placed the emerging world- China, Russia and the Middle East, in pole position to become the dominant economic players in the 21st century. |
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source: Dambisa Moyo’s website <http://www.dambisamoyo.com/author.html>
about Dead Aid
Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa
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In the past fifty years, more than $1 trillion in development-related aid has been transferred from rich countries to Africa. Has this assistance improved the lives of Africans? No. In fact, across the continent, the recipients of this aid are not better off as a result of it, but worse—much worse. In Dead Aid, Dambisa Moyo describes the state of postwar development policy in Africa today and unflinchingly confronts one of the greatest myths of our time: that billions of dollars in aid sent from wealthy countries to developing African nations has helped to reduce poverty and increase growth. In fact, poverty levels continue to escalate and growth rates have steadily declined—and millions continue to suffer. Provocatively drawing a sharp contrast between African countries that have |
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rejected the aid route and prospered and others that have become aid-dependent and seen poverty increase, Moyo illuminates the way in which overreliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the “need” for more aid.
Debunking the current model of international aid promoted by both Hollywood celebrities and policy makers, Moyo offers a bold new road map for financing development of the world’s poorest countries that guarantees economic growth and a significant decline in poverty—without reliance on foreign aid or aid-related assistance.
Dead Aid is an unsettling yet optimistic work, a powerful challenge to the assumptions and arguments that support a profoundly misguided development policy in Africa. And it is a clarion call to a new, more hopeful vision of how to address the desperate poverty that plagues millions.
source: Dambisa Moyo’s website <http://www.dambisamoyo.com/deadaid.html>
commentary
I grew interested in the debate around Dambisa Moyo’s book, because I had very strong opinions against relief development aid in Southern Africa in particular. It was refreshing to see an influential African speak out against aid, when surrounded by governments that will go through any means necessary to secure further aid inputs into the countries. But just as the cliché goes, give a man a fish and he will eat for a day, teach him to fish and he will eat for his lifetime, this is something that relief aid specifically doesn’t address. Other development in infrastructure and industry is less patronizing however at the end of the day; they don’t give the local the necessary tools to develop without the constant need for development intervention.
What I particularly identified with Moyo’s opinion was her critique of governments’ attitudes and practices in the development processes of developing countries. There are underlying deals that foster uneven development in almost every single development transaction in Southern Africa. And it is high time that government officials be held accountable for the active role they play in the uneven development of their countries. They are elected into to office (technically) under the premise that they are there to pursue the best interest of their constituents however this is rarely the case.
From my understanding Moyo advocates that we take the power out of their hands, by voicing that we don’t want them to keep lining their pockets with resources that are meant for the development of the nation, by whining off development aid altogether. However her proposed alternative is one that won’t necessarily change the order of things. I suppose it will be an improvement because the power will be redistributed through academics, experts, in other qualified elites, instead of dubious government officials. But it still relies on the neoliberal notions of the trickle down economy; which has to date to prove its effectiveness.
As pointed out in the comment above, FDI is what is hoped will be promoted in contemporary African political agendas, however I feel that this too has a set of destructive consequences at are being over-looked too lightly. FDI equal if not greater capabilities to undermine domestic economies unless managed under strongly regulated economies, something that unfortunately is not the case for many nations in the Global South.
I am currently reading the book Dead Aid and hope to comment again once I am done with it, maybe with a new/improved perspective.
6 Responses to “Dambisa Moyo on the problems of aid dependency”
One of the central ideas that Moyo focuses on is FDI (Foreign Direct Investment). She emphasizes the immense potential for investment and the worries fielded by so many Western analysts who are concerned about China’s human rights record and the potential geopolitical impacts of an increased Chinese presence in Africa.
http://www.guardian.co.uk/commentisfree/2009/nov/02/aid-trade-rwanda-china-west
This article in the Guardian raises this issue from another African perspective, Paul Kagame (President of Rwanda). Kagame takes a similar stance to Moyo, arguing that it is less important to Africa’s development who gets involved, rather that they do and cease the aid flow which undermines investments and domestic economies.
https://www.youtube.com/watch?v=WClqi4Yr3Ys&feature=PlayList&p=18B608484B45150C&index=1
This video is a debate between Stephen Lewis (a Canadian diplomat) and Dambisa Moyo. Stephen Lewis argues against the notion that Aid does more harm than good, which is what Dambisa Moyo promotes in her book, Dead Aid. Stephen Lewis admits that Aid has been problematic in the past, whether used as a coercive tool from multinationals or served to feed corrupt hands. However, Moyo fails to acknowledge the huge impact that aid has had in Africa. In the video Lewis makes a case against many of Moyo’s arguments. He concludes that, given the state of the world economy and the instability of capitalism, rather than eliminating aid completely we should focus on making it more effective. This means getting it to the people who need it most. I think Lewis makes a good argument, but he misses the fact that aid reinforces a “donor-receiver” relationship between the West and Africa. Although I can’t help but wonder if Moyo’s solutions would dissolve this relationship, since FDI’s still make Africa dependent on investors from the West.
The way Moyo talks about aid has this static and homogeneous sense to it. She definitely sees aid in the form of governmental, bilateral or multilateral, and ignores the transformations inter-governmental aid had undergone since WWII. The video Amanda posted, on the contrary, addresses the heterogeneous, multi-scalar and dynamic nature of aid. It does take forms other than just between governments and corrupt officials and unroll on scales other than the national.
One thing the Lawson book emphasizes is the importance to situate one’s knowledge within cultural, social, historical, political and economic contexts. Without the “dead aid” of all those neoliberal policy prescriptions and conditionality coerced by Washington Consensus, there would be no”trade” in the contemporary forms. It’s easy for Moyo to talk about private sector trade now that those barriers to FDI are removed and regulations trashed or rewritten thanks to the governments in the North. I think she really need to rethink about the central issues on trade like capital distribution, differential accesses to the market, evidence/validity of the “trickle down effect”, government-corporate partnership, or to use Michael Moore’s term, love affair, etc etc.
Briefly on China. I agree with Lewis in Amanda’s video that China did not become Africa’s new colonial master for Africa has never been truly free in the history anyway. China may be exercising a different form of imperialism, one that resembles its western, or American if you like, counterpart in many aspects but without cover-ups like rhetoric of freedom and democracy and applications of fiscal pressure and conditioned “dead aid”. What’s wrong with accepting this imperial resource control strategy? I mean, the US surely has done it for decades now through a combination of public and private sectors and no western government seemed to have a problem with it.
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There seems to me that there is a contradiction in Moyo’s vision of aid for Africa. In the video she says that currently many governments in Africa are unable to provide for the basic needs of their citizens. It is mostly foreigners who pay and run health care, education and other regular government services. She says we need to find a way for the governments to become responsible to their citizens and start providing these services on their own because one day foreign governments will no longer be able to provide them. Her solution for breaking the cycle of aid dependency, however, is FDI.
Without aid, I would expect to see many countries turning to FDI to invest in health care and an education system. This keeps the power and control in the hands of the investors, and keeps the government from taking responsibility. As Amanda says above, FDI is likely to only continue the “donor-receiver” relationship. FDI seems like just a new way of doing aid that bypasses the corrupt governments but still is unlikely to reach those who are most in need.
With regard to the debate surrounding FDI, I think there are certainly some valid criticisms to be made with regard to the way that it has worked in the past – in particular with regard to the so called “development” of resource based industries. However I think criticism on the basis of the relationship between investors and the investment kind of misses the point a little bit.
Moyo sees FDI as a key component of creating strong investment climates in developing countries. As a banker (and one with a background in investment) her focus is on investment as the key to creating growth. I have to say that to a great extent I would agree. FDI, as opposed to simply domestic investment helps to create pathways and links with other economies and introduces funds and access to resources that may not be accessible in a country.
Timing is of course the key, and this is where regulation has to play a role. Moyo highlights the fact that without a stable political climate, African nations will have great difficulty in bringing in investment due to their poor ratings (her chapter on this makes great reading on this as it is a frustratingly complicated process – and one that without question undermines the ability of developing countries to progress). So it seems that there has to be some sort of strong domestic financial market before FDI really makes sense.
In a lot of ways I see similarities with some of the criticisms made of the Grameen Bank in terms of its inability to address the problem of the ‘missing middle’. What is important for these economies is investments not loans – both in terms of the sums of capital involved and the credit terms. There has to be long term involvement that builds trust and is focused on creating these business links – if these aren’t built on a business basis (ie. not on a charity or resource exploitation basis) then we remain in a system of hierarchical relationships.