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Disscussing the merits of aid

Questions of heart and mind

by Helmut Danner
Dambisa Moyo’s book Dead Aid caused unprecedented media hoopla in the rich world. Time Magazine declared her “one of the one hundred most influential people in the world”. The book even became a New York Times bestseller in early April. In Africa, reactions were much less excited. A provisional assessment of reviews, newspaper articles and website entries shows that many Africans consider entrepreneurship key to solving the continent’s problems of poverty. There is, however, no short cut to that goal, as Moyo would have us believe. [ By Helmut Danner ]

Briefly summed up, Dambisa Moyo’s main message is that aid leads to a culture of corruption and dependency, and therefore causes poverty. She proposes private-sector credit as a better alternative, arguing that, if governments depend on capital markets, they cannot engage in self-serving kleptocracy.

A brief look at Moyo’s website (www.dambisamoyo.com) gives a first hint of where her audience is. In late October, there were some 160 entries in the category “news”, with eight referring to Moyo’s own contributions and 12 entries relating to African authors who do not necessarily live in Africa. The remaining 140 or so reactions to Dead Aid were of Northern origin.

This is, of course, only a rough picture. But it does make one wonder what impact Moyo’s book has in the continent she is concerned with. She does not seem to have gained much attention there, and certainly less than in Europe and North America.

True, Kofi Annan, the former UN secretary-general, said he felt inspired by Moyo. And Rwandan President Paul Kagama also subscribed to her message: “Dead Aid has given us an accurate evaluation of the aid culture today.” Ending all aid within five years may be an aggressive proposal, he argued, but stressed that the discussion about “when to end aid and how best to end it” was important.

Moyo is not the only African intellectual to argue that aid will not end poverty. Many are tired of the pity of rich nations. What matters, they say, is entrepreneurship and job creation (see interview with Andrew Mwenda, page 452). Magatte Wade, a Senegalese business woman, however, claims that Dead Aid does not provide any credible solutions because the book does not adequately focus on African entrepreneurship and its constraints.

Indeed, the stance of many aid critics in Africa is much more nuanced than Moyo’s. According to Innocent Madawo, who lives in Toronto, the rich world should not only have a heart for the poor, but also a mind for the poor. Africa’s potential is ignored she says, and “what it needs more than aid is capacity building”. Capacity building, however, is a hot topic in donor circles.

Another Zimbabwean, Tinashe Murapata, finds Moyo’s “China is our friend” message irritating. After all, trade with and investments from China have upsides as well as downsides.

Many Africans argue that their economies suffer from bad and inadequate political leadership, and they blame major donor institutions of turning a blind eye to examples of destructive governance. Okello Oculi, for instance, blames institutions like World Bank of keeping “themselves in employment by making Africa’s debts boom, while sustaining rulers in power who do not care for aid reaching their oppressed people”.

Nonetheless, as Daniel Bradlow from South Africa states, it is foolhardy to make categorical judgements about aid. Each programme and project needs to be checked for its specific merit. He points out that countries like Taiwan and Botswana have made good use of aid. Bradlow advises African governments to read Moyo’s book as an encouragement to analyse aid offers carefully and to make the best of such opportunities. This message, however, is obviously quite different from the one Moyo spelled out herself.

The intervention of an entrepreneur

In East Africa, Nairobi’s sister papers The Nation and The East African have so far published four articles on Dead Aid. Their most important witness in the matter was Mo Ibrahim, the entrepreneur/philanthropist of Sudanese/British background who made a fortune in African mobile telephony and whose foundation is now promoting good governance in Africa.

From his personal experience, Ibrahim rejects Moyo’s proposal that African leaders could easily raise money by issuing bonds. Debt markets are not open to the African countries, he warns, the cost of government bonds is materially higher than funding from the World Bank and others, and most financial institutions are not interested in investing in sub-Saharan Africa because they do not understand the continent. Mo Ibrahim’s cautioning remarks are all the more relevant at a time in which the global financial crisis has pretty much dried up global financial markets all together.

In Ibrahim’s view, good governance is the key to African success, and the matter can only be promoted in a holistic fashion involving governments, civil society, the private sector and donors. Ibrahim also made his case in an essay in London’s Financial Times in summer, taking part in the European rather than African debate on aid.

Contributors to The Nation and The East African are torn between praise and condemnation for Moyo. In The Nation, Rasna Warah first stressed that “aid has not, does not, and will never help Africa” in one article, only to argue in another that Moyo had not taken the debate far enough due to her “unflinching faith in free markets as the ultimate solution, and her silence on social and historical injustices”.

I have myself contributed a critique of Moyo to The East African. I was surprised that the editor deleted my argument against basing so much hope on China as Moyo does. On the other hand, I was pleased to find authors of this media group since picking up cases I made for considering human affairs not only in the light of economics, and not falling for the somewhat bizarre argument that African governments would stop acting in a predominantly self-serving fashion if only aid was phased out.

Nonetheless, debate on Moyo remains surprisingly mute in Kenya. Bookshops in Nairobi display piles of copies of Dead Aid. Apparently, the title is selling well, but the readers are staying silent. Kenya is a country known for serious governance problems as well as for vibrant public debate. It seems that Kenyans do not link examples of ill-performing institutions to aid.

Matters are different in Zambia. There was an excellent review by Cho in the Zambian Economist (6 March 2009). It expressed pride in a Zambian gaining international attention, but nonetheless concluded that “the Dead Aid proposal falls far short in many areas”. Four such areas were listed explicitly:
– the general lack of clear analytical rigour,
– the problematical assessment of aid as a homogenous, aggregate entity,
– a plethora of inconsistent arguments, and
– the proposal of ineffective solutions.

Cho referred to Zambia, Uganda, Kenya and Tanzania to show that an improvement of economic performance is possible - if not because of aid, at least in the presence of aid. The challenge is how to make aid smarter, better und ultimately beneficial to the poor.

In Zambia, readers’ reactions were vivid. Cho`s review triggered at least 56 comments, which seriously discussed development issues and were overwhelmingly critical of Moyo. A report on a debate with Moyo in Canada by the Lusaka Times (14 June 2009) stimulated fifty comments.

All summed up, Moyo finds quite a bit of common ground in Africa when she stresses the importance of private sector growth and poor business environments in most countries. It is evident that aid has not solved this problem, and, in some instances, is indeed part of the problem. Her view that aid is THE problem, however, is certainly not widely shared.