Geldof’s Live Aid vs. Moyo’s Dead Aid

Ajani Husbands — Wed, 07 Oct 2009 14:51:42 +0000

Geldof’s Live Aid vs Moyo’s Dead Aid
by Ajani Husbands

The book’s introduction explains one of the most valid reasons to take Dambisa Moyo seriously: “the simple fact that ‘Dead Aid’ is the work of an African black woman is the least of the reasons why you should read it. But it is a good reason nonetheless.” The truth is, discussions on development and foreign aid are most often headed by ivory tower elites diametrically opposite of Moyo’s demographic or their odd couple counterpart the liberal musician and/or actor. While these dynamics are slowly changing with time, you often need a push from an outsider to kickstart something new. And that’s what Dambisa Moyo’s bold strategy is, something new.

Shouldn’t the development community pause at the fact that the leading faces of development in Africa are musicians and actors? Their involvement is not out of malice, but simply being good-willed does not mean you have the best answers. To be blunt, when a British rock star outranks the rural farmer in terms of deciding what that farmer needs, it’s time to go back to the drawing board. Dambisa Moyo erases the drawing board completely and starts fresh.

Moyo’s thesis is simple. Instead of relying on foreign aid to develop the world’s most impoverished continent, break out and try different tactics. After all, as she points out, not only is there no proven positive correlation between foreign aid and development, there is usually a negative one (the most aid-dependent countries’ growth rates have shrunk an average of 0.2 percent since 1940). Of all the statistics she quotes in the book, the most important one to note is $300 billion worth of aid has flowed into Africa from developed countries since 1970. That’s an average of $7.5 billion each year, and an average of roughly $150 million per African country per year over the past 39 years. To borrow Moyo’s succinct, yet effective, phrasing, “aid is not working.”

Her strategy is nuanced, though, in a way that many critics miss. Moyo doesn’t advocate for completely cutting off all forms of outside dollars. Instead, she focuses specifically on government to government transfers in the form of loans, usually from the IMF and World Bank, but also from foreign governments. This point is critical, because it demonstrates that Moyo is not an idealist; she’s a realist. Foreign aid, the type she critiques, has largely failed because it does not trickle down to the people who need it most. Instead, it either lines the pockets of corrupt officials, is lost in a sea of inefficiency, or promotes lackluster behavior on the part of African policymakers.

Moyo goes a step further to outline various alternatives to foreign aid that could solve Africa’s woes in the long run. The alternatives are impressive: government issued bonds on the international market, microcredit loans, regional government bonds, increasing regional trade by reducing inter-continent tariffs, steps to increase remittances, and promoting individual savings. These are all viable solutions, which she discusses in great detail. While Moyo admits that the strategy for each African country will obviously be different, she creates a “typical African country” named the Republic of Dongo, which makes for a perfect test case for any economist or analyst willing to experiment with these new strategies. Most importantly, her suggestions leave room to quibble over the details while steadfastly adhering to the main point: there are alternative, better solutions to aid.

Perhaps the controversy comes into play with her statement that Africa does not need multi-party democracy, “but in fact a decisive benevolent dictator to push through the reforms required to get the economy moving.” Here we engage in a battle of theory versus on-the-ground reality, and Moyo wins. The fictitious mosquito net producer that Moyo references throughout her book is less concerned about the right to vote than if he will have the resources to feed his family. Anyone who has travelled the world (or even travelled their own country) will know that a person’s desire for political engagement only comes about after basic needs have been met. When you have whole sectors of society who are bereft of these basic needs, politics are a spurious luxury.

To really understand her argument, you have to focus on the qualifier “benevolent” and the goal of a moving economy. Simply because a president shuns elections as a “tool of the West to undermine sovereignty,” as many rulers have done, it does not fit him in the criteria Moyo sets forth. A benevolent dictator, as Moyo defines, would have to ensure property rights, functioning institutions, growth-promoting economic policies, and an investment climate that buttressed growth. What this also means is that the dictator focuses on getting the country out of poverty utilizing long-term strategies, while allowing his/her people enough freedom to take advantage of these opportunities. Microcredit loans cannot exist if private enterprise is shut down. “The middle class needs a government that will let it get ahead,” as Moyo emphasizes.

Without stating it, Moyo is in fact making an argument for the seedlings of democracy. The problem, though, is that democracy is a buzzword, one which many in the development field believe means a focus on elections. To the contrary, democracy is a long-term process, the beginnings of which must begin with ensuring that the mosquito net producer and the rural farmer have the tools they need to succeed without being dependent on handouts.

From the entire book, there is but one area with which I disagree: China. Moyo asserts that China is a unique opportunity for Africa that must be taken advantage of. This is where a bit of idealism comes into play. While China’s involvement in Africa certainly contrasts that of other countries, it is by no means an angel. The 2005 protests in Zambia against the Chinese-owned copper mines demonstrate this clearly. At best, China is the “devil you don’t know” scenario. At the same time, theoretically, Moyo’s benevolent dictator would be able to take advantage of the opportunity and set the terms for China’s engagement more than they would with other countries. Promoting an environment where African countries can actually take advantage of China, which is what Moyo’s book describes, is a concept I wholeheartedly agree with.

In the end, Moyo has filled an important gap in development discussion. She has challenged the status quo of “more aid is better” and she has brought African intellectuals back into the forefront of the discussion. Both accomplishments are of untold value and equal necessity. While Geldoff and other celebrities certainly hold a place in raising global awareness, it is clear they should simply be warming up the stage for forward-thinking individuals such as Dambisa Moyo.

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Geldof’s Live Aid vs. Moyo’s Dead Aid