Dambisa Moyo Discussing Development in Africa
Dambisa Moyo is an economist and New York Times best-selling author of Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa, published in 2009.
Moyo’s second book entitled How the West Was Lost: Fifty Years of Economic Folly - And the Stark Choices that Lie Ahead is scheduled for publication in August 2010.
Moyo was born and raised in Lusaka, Zambia. She holds a Doctorate in Economics from Oxford University. In 1997, Moyo earned a Master of Public Administration (MPA) in International Development from Harvard University’s Kennedy School of Government. She also earned a Master of Business Administration (MBA) in Finance and Bachelor of Science (BS) in Chemistry from American University in Washington D.C. She worked for the World Bank as a Consultant and at Goldman Sachs where she worked in the debt capital markets and as an economist in the global macroeconomics team. Moyo's thoughts about ending aid to Africa are featured as part Big Think's "Dangerous Ideas" blog.
Question: What precipitated Africa's development problems?
Dambisa Moyo: There are numerous factors that have contributed to Africa’s economic development issues. I have decided specifically to focus on one of those which is basically policy. However, in the book I do talk about things like the historical context, issues of geography—the historical context in the sense of colonialism, for example, and how that all may have to some extent contributed to the economic malaise that we see now across the continent. However, the main issue that I am tackling in my work is that of aid, which is an active policy, where we as the international and global community have designed a specific policy towards supporting the economic development in Africa. So rather than things like geography and history, which are ostensibly outside the room of our abilities we’re really focused on very specific issue of aid to Africa and how that has been a negative factor in ensuring a long term economic growth.
Question: What is the current perception of aid to Africa?
Dambisa Moyo: I suppose in the context of my work I think that there is this unstated view or unstated fact that aid to Africa has not worked. By that, I should clarify that there are essentially three types of aid. There’s humanitarian or emergency aid, which goes to actually assist during times of, say, a tsunami or if there’s an emergency like an earthquake or flood. Then, there’s also NGO or charitable aid, which is a very small amount of money that people send to African countries to support pretty much clear and defined projects such as providing a scholarship for girl to go to school. There was two types of aid that I’ve just mentioned are... they can certainly help in terms of immediate band aid solutions, but they will not contribute to long term economic development in the sense that it will not help to get Africa to grow at sort of 10% or more per year, which would actually meaningfully which is poverty across the continent. So those two types have a very different from the third type of aid, which is what I critic in the book, which is the large billion-dollar programs of aid that go from governments to governments and also international institutions such as The World Bank to Africa. And those... that’s type of aid that I’m talking about.
Question: What's the history of aid in Africa?
Dambisa Moyo: The history of aid in Africa or in the development discourse has its roots and actually began in Earnest at the Bretton Wood in the 1940s, and essentially really took hold after the Marshall Plan, which was between 1945 and 1950. There’s a five-year program it was $13 billion which in today’s terms is about a $100 billion and really the idea was that the newly emerging African countries that were coming out of independence had no money to finance economic development. So, the idea is very simple: That savings leads to investment which would lead to growth.
The problem is that because this when new economies there was not necessarily any savings in this economies and so the idea was that you put aid instead of the savings. And aid should lead to investment and therefore lead to growth. What we have seen actually is that has not been the case. The issue of aid delivering growth and reducing poverty has not actually happened in reality. If anything we’ve seen growth rates go down across Africa, and poverty levels rise very dramatically while at the same time aid has consistently risen over time in Africa.
I should add here one of the fundamental problems with the aid model is that we’ve tried many different interventions. So in the 1960s aid was very focused on infrastructure. That didn’t work so the decision was to move towards aid for poverty. That didn’t really work in alleviating poverty. Went to 1980s were we focused on aid infrastructure adjustment as stabilization. That also did not deliver the growth that we would like to see. We went to 1990s, which is focusing on aid for democracy and governance issues. Again, that did not work efficiently. So, we’ve ended up in the 2000s were they seemed to be a focus on what I called “Glamour Aid” so the role of celebrities championing aid causes rather than there being a real economic policy.
Question: Why is aid bad for Africa?
Dambisa Moyo: There are many, many reasons why aid to Africa does not work—the government-to-government aid that I’m referring to. The most obvious one that many people be very familiar with is the idea that this money going in to Africa is ostensibly free in the sense that there is no constraints on how governments on the ground use the money. And so, it’s very easily corrupted. And, in fact, we’ve got a long history across the continent of a lot of the money that has gone into Africa being stolen and diverted for non-productive uses. So, corruption is an obvious one.
However, there are many, many other reasons why giving or sending billion-dollar packages in the form of U.S. dollars, for example, into small economies is very harmful. For example, you can see why having that kind of money flying into a country makes the government less inclined to raise money through other sources of capital because they have this steady flow of permanent income—what they perceive as permanent income coming in—the government develops what I would call a lazy muscle and this can breed dependency, which means that the governments are not focused on actually building up other sources of capital such as the private sector which is important for growth. Things like inflation. Things like Dutch disease where basically the domestic or the poor countries export sector gets killed off because there is so much money coming in which makes the local currency very strong versus other currencies outside and that actually makes people not interested in buying the food from the poor country.
Those types of things are also very well documented in the literature, but perhaps if I could pick one thing that is particularly problematic with having large flows of money going into a poor country it would be that all this aid actually disenfranchises Africans. Africans on the ground cannot hold their governments accountable in the most effective way. Why? Because African governments, because of the nature of the system, spend an enormous amount of time courting and talking to donors about the aid programs. Whereas, if they behave—as I’ve we talked before—if the governments behave badly there’s no recourse to that bad behavior from the ground. As we know from historical instance, the donors themselves tend to be quite lenient on bad governments and they allow them to stay in power. So, the fact that Africans are disenfranchised means that Africans cannot ensure that their governments deliver on social services and public goods like you would see in any other country around the world. In particular, it’s no surprise that things like education, healthcare, infrastructure and even security are now being provided to Africa from outsiders. And that just leaves the situation where the African governments have a questionable role. What exactly is the role for African governments when they are not responsible for those things?
Question: Does aid necessarily impose political and ethical strictures?
Dambisa Moyo: Going back to my point about accountability, the whole policy structure, the cultural structure, the cultural fabric of a society that depends on outsiders to finance it is actually then designed and guided by the outsiders' view of what they want to see. So, the example that you’ve given of the former President Bush's policy to provide HIV drugs to Africa only under the program of abstinence—not drugs, but HIV support by the abstinence—is a very good example of how it is that it matters less what the Africans think about their own society because the donors, because they give the money, have a higher charge on what’s going to be done with that money.
"Aid disenfranchises Africans...[they] cannot hold their governments accountable," says author Dambisa Moyo.
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