Aid to Africa – The Vicious Circle & Trap

Posted on March 5, 2011 by

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One of World’s Most Influential People

Critical of “Aid” to Africa,

A Vicious Circle and Trap

Dr. Dambisa Moyo, Ph. D.

By:  Amenseph J P Wks

In the past sixty years more than $1 trillion in development- related aid has been transferred from rich countries and private donors to Africa with very poor results.  In the 1970’s about 10% of the African population was poor, but now over seventy percent of the population lives on a dollar a day. And things are getting worse. The undeniable question still stands: Has this assistance improved the lives of Africans?  NO! In fact, across the continent, the recipients of this aid are not better off as a result of it, but worse—much worse. Poverty levels continue to escalate and growth rates have steadily declined—and millions continue to suffer.

Such aid only disenfranchises Africans. Too many Africans have no voice and cannot hold their governments accountable. In the U.S.A. if you are not satisfied with the way leadership is dealing with a problem or an issue, whether it is health care, educational security, or infrastructure you vote them out of office. In Africa it means nothing, where some leadership holds positions for some 30 years or more, propped up by the aid model and going nowhere. When they don’t deliver anything society only becomes worse, leaving them trapped in a vicious circle with nothing but the “need” for more aid.

These are among the positions taken by Ms. Dambisa Moyo, a woman endorsed by Time Magazine as one of the 100 most influential persons in the world. Born and raised in Zambia, Southern Africa, she has completed a PhD in Economics at Oxford University and holds a Masters from Harvard University. She holds a Bachelors degree in Chemistry and an MBA in Finance from the American University in Washington D.C.  She has worked at Goldman Sachs for 8 years in the debt capital markets, hedge fund coverage and in global macroeconomics teams. Previously she worked at the World Bank in Washington D.C. And the list goes on.

As an economist and author of “Dead Aid,” a New York Times best seller, Dambisa argues for more innovative ways for Africa to finance development including trade with China, accessing the capital markets, and microfinance. With 60% of the African population being under the age of 24 and desperately wanting job opportunities and opportunities to become entrepreneurs. Aid and hand outs will not produce and sustain the long term growth and poverty reduction the continent needs. There must be a combination of trade, direct investment, capital markets, micro finance, savings, and remittances, things that will spur economic growth and will also reduce poverty. According to her, these are things that have worked in China, India, Brazil, and Russia. The real focus should be on job creation and not in aid.

We can take a definitive approach to making a change and contributing to the cause even as presented by Dambisa Moyo, by making investments in entrepreneurship and enterprises that provide for self-reliance and prosperous interdependence; creating and implementing self determination and worth. We must increase the position of economic empowerment for ourselves (Africans) with finite and direct actions for productivity.

Is aid condescending, or portraying pity?  No, but it also has not created jobs for Africans. Ms. Moyo argues that prevailing aid policies become a blindfold that allows Africa’s provisions and material resources to be continuously wholesaled to the world because they are based on negative assumptions in regards to African people, overly focusing on war, poverty, sickness, government mismanagement, corruption…

Ms. Moyo holds that as long as this approach prevails, with its visual presentations of Africa’s most challenging situations at the forefront, no one will want to invest in a place that is characterized with those types of pictures and vulnerability.

Emergency Aid and NGO/Charitable Aid are of vital importance and have met many great needs, she says, but they create no substantive jobs for Africans. And the bulk of what is known as bi-lateral aid (government to government, organization to organization, and infusions from agencies such as World Bank) goes directly from donor countries or agencies into African government coffers, offering no long term solutions for the economic development problems Africans face.

Additionally, Dambisa is critical of celebrity-driven charity events, such as the 1985 Live Aid Concert which raised over $80 million but produced no significant changes. Such events, and the prevailing aid policies, have served to allow too many African governments and leaders to abdicate their responsibilities. We need to hear from these government leaders as to what their plans are for their respective African nations, rather than from celebrities. If African leaders had to respond to Africans regarding public goods like schools, roads and health care then we would see a lot of African leaders out of office. Those responsibilities are undermined when those leaders don’t need to rely on African taxpayers for funding, but can rely on the donors who are all too happy to give funds in the name of support (disguised control). Under the present aid model they (the African Leaders) too often have little or no incentive to provide jobs and create wealth for African people, and we end up with the systems of discord that we have.

Ms. Moyo holds that it is insultingly irresponsible for people to look at what has happened to Africa in the past sixty years and not question the fundamental model of economic development. No results. Not just in Africa but globally; for there is no country that has actually emerged from economic poverty under this model anywhere on earth. Yet that agenda continues to be pushed.

Dambisa has been getting a lot of flak from people asking, “How can she recommend that Africans go to the bond markets where no one will buy African bonds?” Unfortunately, that is a western concept, while countries like China have been investing in Africa and with a better attitude in relation to the risk of such involvement, as well as countries of the Middle East. This reality serves to underline and emphasize the need for innovation, because by focusing only on the North American and European markets and interests, you only get the door for investments slammed in your face due to the prevailing aid-driven, sympathy-driven, charity-driven attitudes and policies toward Africa. Additionally, innovative and responsible government would first and foremost look at the ways it could raise its monies locally as well as within the global financial markets.

“Dead Aid” is an unsettling yet optimistic work, a powerful challenge to the assumptions and arguments that support a profoundly misguided development policy in Africa. It provocatively draws a sharp contrast between African countries that have rejected the aid route and prospered and others that have become aid-dependent and seen poverty increase.  It serves as a clarion call for a new, more hopeful vision of how to address the need for creating a new path for economic growth, sustainability, and entrepreneurship.

(Dambisa has been offered a contract for another book, entitled How the West Was Lost, scheduled for publication with Penguin and Farrar, Straus & Giroux in 2010; an examination of the policy errors made in the US and other Western economies which culminated in the 2008 financial crisis; why financial and economic experts missed the signs of the credit crunch; and explores the policy decisions that have placed the emerging world — China, Russia and the Middle East — in pole position to become the dominant economic players in the 21st century.)

Additional post and info:

Dambisa Moyo is interviewed on BNN discussing some of the themes in her latest book “How The West Was Lost” in relation to current events (Feb 25, 2011).

More on Dambisa Moyo Can be found at www.Dambisamoyo.com

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