Dead Aid

Dead Aid (2009) by Dambiso Moyo is a thought provoking book that has caused a fair degree of controversy. In the book Dr Moyo says that aid to Africa has not only failed, but that it has actually made Africa worse off. The first claim is very strongly demonstrated, the second is less substantially argued, but is put forth sufficiently well that the argument cannot be written off. The book goes one step further than The Trouble with Africa in advocating radical change to policy toward Africa.

Moyo has a very impressive CV. She was born in Zambia and grew up their. Her parents were some of the first graduates of the University of Lukasa. They went overseas to further their education but returned to Zambia. Moyo was educated at Harvard and has a PhD from Oxford. She then worked at Goldman Sachs and then the World Bank. She is ideally placed to have extremely well informed views on Africa and she is also able to speak courageously against the pop stars and others who currently dominate the debate on Africa but whose policies have had such a poor record.

The book is split into two parts, the first is about the rise of aid and its effects and the second is Moyo’s view of what should be done and what is changing in Africa. The first part starts by pointing out that Africa is the great failure in the modern world. While the rest of the world is clearly on the way to greatly increased wealth and well being Africa has become worse off in both absolute and relative terms over the past 30-40 years. Moyo goes on to describe the history of post WWII aid. Moyo outlines how aid started being aid to Europe that was short term and aimed at getting money in to restart the war shattered European economies. This worked. Then in the 1960s aid became directed toward the developing world in order to increase development and to secure influence in the post colonial Cold War world. Instead of using aid as a short term bridge to repair institutions and countries it was re-badged as a way to start development. Here it has failed. Dismally. Moyo goes on to suggest that aid actually hindered growth. Moyo suggests that this was the case because those in government were so corrupt that government was seen as the way to make money and that as that money came mostly from aid rather than tax the governments lost interest in trying to make local industry better. Moyo also points out that Africa’s exports of agricultural goods were not allowed into the developed world because of the developed world’s tariffs.

In Part II Moyo puts forward her prescription of what can be done and what is happening and what will happen. She posits a hypothetical country called Dongo and puts forward how it is now and what can be done. She suggests that governments in Africa should go to the bond market rather than aid donors. She suggests that this will force them to become more transparent and to actually try to get a return on the money they can get. She also describes what China is doing in Africa as beneficial. As Moyo sees it China is investing in Africa like a business. China wants the raw materials and produce that Africa is or can produce. Instead of giving aid without wanting anything from it the Chinese are building roads and other infrastructure in Africa to help themselves. Moyo also wants Africa to trade more with itself, she says that Africa has huge internal barriers to trade, with up to 30% tariffs between countries that should be removed to kick start Africa. She writes about how micro credit is taking off in Africa and improving the situation. She is also very positive about remittances that are helping Africa develop. She mentions Hernando De Soto also with his point about how good title for land and easy business registration is vital for unlocking the capital that Africa already has that is locked up because of a lack of trust and institutions.

Moyo is really quite positive about the situation. She sees micro credit and better regulation starting to appear in Africa and aid declining which is actually improving the situation. It is very interesting to see such a positive take on China’s African involvement as opposed to the usual negative Western view of the situation.

The book is thoughtful, well written and impressively short. Indeed it is one of the few books that I’ve read in years that could actually have been longer.  There are some things such as the treatment of AIDs, whether direct short term food aid should be maintained, whether groups like MSF should continue to work and if there is going to be aid how it could be better used that are either not discussed or about which little is written. But the book is a short, sharp almost pamphlet like book that is very well worth reading.

4/5

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4 responses to “Dead Aid

  1. (without having read the book, only the various reviews of it)
    How will going to the bond market work if governments as institutions (rather than personalities) are so thin on the ground in Africa? Surely it’s too easy for a ruler to go to the bond market with promises of transparency and good returns, get the money and then abscond without bothering to create a return for investors?

  2. They can do that once with the bond market.

    Where as with aid they have been doing it for 40 years.

    Moyo’s point is that it will force African governments to do things that will improve their economy. Bonds also have a good record, many countries have successfully used them to develop, indeed perhaps almost all compared to aid which has failed almost everywhere.

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