Sunday, June 14, 2009

Dambisa Moyo's 'Dead Aid': A Book Review

Dambisa Moyo’s new book Dead Aid has sent ripples across the globe, particularly for those in the billion- dollar aid industry for whom this provocative book ought to make required reading. Dambisa argues that development aid to Africa ‘is no longer part of the potential solution but, its part of the problem-in fact aid is the problem’.
Dambisa Moyo is a London-based Zambian economist with degrees from Harvard and Oxford Universities with stints at the World Bank and Goldman Sachs.
Dambisa shows that over a 60 year period , US$ 1 trillion in development aid has been sunk into African countries with nothing to show for it in the recipient countries. Dead Aid maintains that aid money goes down the drain of corruption and props up despotic African regimes which are more concerned about appeasing paying donors rather than the disenfranchised populations they lead. Dambisa argues that development aid leads to market distortions, perpetuates an aid dependency syndrome in Africa and that enterprise, innovation and entrepreneurship suffer as a result when all African leaders have to do is’ wait to bank cheques’. Dambisa’s argument that aid is counter- productive is hardly original and William Easterly in earlier, more illustrious endeavors, White Man’s Burden and The Elusive Quest for Growth and Paul Collier’s The Bottom Billion make even more compelling cases.
Even World Bank staffers have penned books around the subject such as Phyllis Pomerantz’s Aid Effectiveness in Africa but Dambisa takes it a notch higher
’ The notion that aid can alleviate systemic poverty, and has done so is a myth. Millions in Africa are poorer today because of aid; misery and poverty have not ended but increased. Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster’
Even African heads of states such as Presidents Yoweri Museveni of Uganda, Abdoulaye Wade of Senegal and Paul Kagame of Rwanda are publicly making the case that trade not aid is a better hope for lifting millions out of poverty and deprivation in Africa and the rest of developing world. Although trade is the new buzz word among African leaders clearly foreign aid is still needed and its critics will be the first to acknowledge this much. The point being made is that aid should be more effectively targeted and it should not be seen as the panacea for bringing countries out of chronic poverty.
Dambisa’s call for the end of foreign aid altogether, which she calls for in the next five years, sounds at best hugely radical. In the place of western aid, she calls for African countries to cultivate fiscal discipline by raising finance through international bonds or international commercial lenders which in the current climate of the global credit crunch is an proposal dead- on-arrival .
Foreign aid may not have worked in Africa but to dismiss it outright would be to belittle the value of the Marshall Plan or US aid to Europe after the Second World War which transformed Europe or the case of American support to South Korea which is an emerging global economic power house. Clearly the debate ought not to be whether aid can be helpful but rather how it can be made much more effective and much more smartly targeted than it has in the past.
Indeed more innovative approaches to giving aid are gaining currency at a micro level and western entrepreneurs interested in improving Africa’s lot are thinking up some creative approaches. Aid is no longer purely humanitarian but has a tinge of business interest. For example computer companies which want to make contributions to development causes increase sales through declaring that US$ 5 will go to African charity from every lap top sale rather than make outright donations.
A Uganda entrepreneur in Denmark through his initiative creates a forum for European humanitarian capitalists to lend money to deserving Ugandan businesses with friendly interest loans.
The days of conditions-free money seem to be in the fog of the season’s end.In summing, Dead Aid ‘s diagnosis on aid merits attention, the prescriptions offered, less so. African poverty is a multi-faceted animal with structural, cultural, institutional, attitudinal and even historical

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