Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa

By: Moyo, Dambisa. 2010New York: Farrar, Straus and Giroux, 208 pp. ISBN-13 :978-0374532123

The relationship between foreign aid and the development of the aid receiving countries has been a controversial debated motion among scholars of economics, politics, and development. Pro-aid experts believe that for the low-income countries with skyrocketing rates of poverty and inequality, distressing education and health care system together with different types of endemic diseases such as Malaria, HIV and Ebola; aid from the developed countries is the key to bring them out of such deteriorated conditions through creating sustainable economic growth. Whereas, anti-aid experts have been emphasizing that foreign aid is not only infective in low-income countries but it also pumps laziness to the vines of institutions of aid receiving countries.  Among others, Dambisa Moyo is one of those economists and public figures who oppose the flow of foreign aid to the less-developed countries in its current way. She received her doctorate in economics from St. Antony’s College, Oxford, and has previously worked for the World Bank and Goldman Sachs. In respect to how foreign aid has failed to bring prosperity in low-income countries, she has written a book titled “Dead Aid: Why Aid is not Working and How There is a Better Way for Africa ”, which was published in 2009.

The book consists of two main parts, the world of aid and the world without aid. In the first part of the book, she explains in detail the history of aid and how foreign aid is not able to sustain long-term economic growth in Africa through perpetuating corruption at the governmental level, rising inflation, worsening the social capital and reducing the needed domestic investments. She further explains how all these in return propell the cycle of aid-dependency in the continent. Furthermore, she argues that the same aid-based development policy that has been productive for other regions of the world is not necessarily productive in Africa.

In the second part of the book, therefore, she has provides a comprehensive alternative development policy solution for the African continent. She believes that by adopting the suggestion of Dead Aid, the African continent shall be able to overcome the current devastating vicious cycle of social issues such as poverty, inequality, and endemic health problems. 

Firstly, she puts an immense emphasis on the role of microfinance institutions in alleviating social issues in general and poverty, in particular through channeling funds from those who are in surplus to the most unbanked population in both rural and urban areas of African countries. This will provide an opportunity for those less fortunate to have access to financial capital which enables them to stand on their own feet, expand their business, generate employment opportunities and ultimately push the economy of the country toward the positive path.

Secondly, she admires trade as growth and development strategy in Africa rather than government to government aid. This is because she believes that trade will bring economic prosperity and growth in the continent in two ways; 1) by increasing the amount of actual goods and services that a country sells abroad; 2)  by driving up the productivity of the workforce. Additionally, she argues on the removal of trade restrictions and barriers, which will provide a platform for the Continent to engage with the rest of world easily.   

Thirdly, she praises FDI over aid as the engine of growth in the African continent.  In this regard, she favors China for the aggressive investment throughout the continent by stating “They’ve got what we want, and we’ve got what they need”- the bracketed title basically stands for Fuel/oil which Africa has it and china needs, and quality capital that is actually investment made by China, jobs for its people and that elusive growth which African wants and China is providing.

Finally, in addition to the above points, for the purpose of raising capital rather than relying on aid, she encourages the African governments to engage in international capital markets through issuing government bonds and other securities. Moreover, Dr. Moyo urges the advanced economies to limit their aid pouring into the African continent within the time limit framework, for example, for 5 to 10 years. This will incentivize the government administrators and policymakers in Africa to search for new economic sources – mostly through other policy initiatives – to manage the countries in hard-times rather than relying infinitely upon foreign aid. 

In fact, Dr. Moyo is not the only one who criticized the flow of foreign aid from industrialized countries to low-income nations. Prior to her, William Easterly has published two books namely; The Elusive Quest for Growth and The White Man’s Burden. In both of his books, he argues that aid corrupts and undermines the local institutions as well as prevent the local people from searching the innovative solutions for their economic and social struggles. Likewise, Dr. Moyo has reached to a similar conclusion. Practically, both Dr. Moyo and Professor Easterly challenge professor Jeffrey Sachs who supports the policy of foreign aid and who stated in his book titled “ The End of Poverty” that poor countries are poor due to many reasons such as being landlocked, hot, and infertile, and so on. Therefore, they require foreign aid to be poured and to be invested in those vulnerable areas in order to make them productive. This will consequently, raise the aggregate income of the poor nations and grant economic growth. 

Indeed, the main thesis of the book is clearly stated by Dr.Moyo that prolonged foreign aid, particularly government to government aid, from the industrialized world to the African continent, could not only sustain economic growth in the region but has contributed to today’s dire economic condition of Africa. She has proposed different strategies for growth and development in Africa such as attracting FDI, establishing microfinance institutions, easy remittance transfer, engaging in international security markets. These recommendations for reviving the economy of the region are well-formed and pragmatic. However, some of the shortcomings of the books, from my perspective are; first, the book does not discuss the humanitarian aid from the advanced nations to the continent, which definitely have had assisted the governments in Africa to fight some of the endemic health and social issues. Secondly, the political structure throughout the countries in Africa undoubtedly has had its role in why today African continent lags behind other parts of the world in terms of economic, political, and social development. This has not been discussed in detail by the book. On the other hand, the book has discussed and appreciated the investments that have been forwarded by Chinese government in different sectors in Africa, but it has not examined the impact of flow-of-China-made goods and services on local markets and businesses.

Measuring by the yardstick of the what Dr.Moyo has discussed in the first part of the book; one can also argue that the foreign aid strategy since 2001 in the context of Afghanistan has been a failed strategy which could not sustain a reasonable economic and development prosperity in the country. This was mainly due to the two reason; 1) widespread corruption in public administration of Afghanistan’s previous governments; and 2) lack of effective monitoring process by the world community. Furthermore, of course, other factors such as political, regional and social have had it is own portion in the pie. Overall, although the book was published in 2009; still it is analysis are relevant to most of the aid receiving developing countries around the world.

Reviewed by Ahmad Jawed Zahidogli: Master of Public Policy at KDI School of Public Policy and Management. Previously at Central Bank of Afghanistan.

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