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Jake Whitney: Dambisa Moyo and whether Western aid helps or hurts Africa

March 26, 2009

Jake Whitney

Take the poorest region in the world, where 70 percent of the people live in poverty, 25 million have HIV/AIDS, a child dies every 30 seconds from Malaria, more than half the countries are run by non-democratic regimes, which has had eleven civil wars and two instances of genocide in the past 15 years, and you help it by….making it poorer??

The debate over how best to help Africa pull itself out of the debilitating poverty, corruption and disease it has been mired in for decades has been dominated — in recent years, anyway — by white, middle-aged male Westerners. Most of us are familiar with Bono’s courting of world leaders in drawing attention to the crisis, Bob Geldof’s Live Aid benefit concerts, and Bill Gates’ efforts — through The Bill and Melinda Gates Foundation — to eradicate malaria, which kills more Africans every year than AIDS.

Celebrities like these have occupied center stage in the debate, and their argument has been simple and loud: send more aid! Commendable, to be sure, and commonsensical on the face of it: Africans have scraps; we have a cornucopia — let’s help them.

But is it working?

A new voice has boomed across the stage and it’s embodied by someone who is not white, male, middle-aged, from the West, or even a celebrity (yet). Dambisa Moyo is a thirty-something Zambian-born economist who was educated at Harvard and Oxford, and who has held stints for the World Bank and Goldman Sachs. Her first book, Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, released on March 3, is attracting notice for its starkly contrarian plea not to increase aid, but to stop it.

Moyo’s argument goes like this. Systematic aid increases corruption, destroys accountability and inhibits entrepreneurship. It fosters laziness in governments and citizens, encourages “reckless consumption” instead of investment in the domestic infrastructure, and foments conflict — even civil wars — because warring factions are intoxicated by the prospect of gaining access to all that free cash. In addition to killing the aid program — she suggests a five-year fade out — Moyo would prescribe free-market policies such as delving into the capital markets, creative finance such as micro-finance, and attracting new direct investors, such as China.

I interviewed Moyo for this magazine (the interview will appear at www.guernicamag.com in the April 1st edition), and over the course of three conversations, she was invariably polite, articulate, passionate, and accommodating (so accommodating, in fact, that when I mistakenly phoned an hour early and caught her in a meeting, she apologized profusely because she couldn’t speak at that very moment: “Is it okay if we speak in an hour? Are you sure? I’m sorry, I hate to do this…”).

Moyo repeatedly told me that her book should not be viewed as controversial – in fact, she said, most Africans agree that her proposals are just common sense. She calls it “somewhat bizarre” that in light of the strong evidence that aid doesn’t work, many in the West continue to push for more.

But is her solution tenable?

In Dead Aid, Moyo has a chapter titled “The Chinese Are Our Friends,” in which she holds up China — which invested $900 million in 2004 alone — as a sought-after business partner, while the “Western liberal consensus” is scolded for believing “(often in the most paternalistic way) it is their responsibility to look after Africa.” But China’s investment in the continent comes at a price. The Chinese, for example, have undercut other investors because they can offer more attractive deals since they don’t worry about human rights or environmental factors. And as we’ve seen in Sudan, their oil lust causes them to support governments that slaughter their own people. Is this really what she wants?

“In the very narrow prism of economic development, I think it is better for the Chinese to be in Africa,” she says, though she acknowledges it’s not an altruistic presence: “China’s goal is to develop China and to raise the living standards of the Chinese people; fortunately, there are benefits for Africa.” She admits that the Chinese are “not perfect,” but she asserts that it should be up to Africans, not the West, to keep them in line. Ultimately, “Are Africans getting jobs and improving their lives because of the Chinese presence? Overall, the answer is yes.”

If there was a tense moment in our conversations, it was during our discussion of China. In Dead Aid, Moyo says China is out to conquer Africa with money instead of arms. I asked her that if this were true, would it really be better for Africa to have China’s money controlling it instead of the West’s?

Moyo: “…Some of the worst despots across Africa have been under the ostensible reign of Western interests. Mugabe, for example, and [Former President] Mobuto Sese Seko of Zaire, or Idi Amin; the continent is riddled with these people in historical lore. The Chinese have created jobs; they’ve built roads. The West has failed to do that in 60 years in Africa.”

Me: “But they’ve also helped prop up a regime in Sudan that’s engaged in genocide.”

Moyo (as if there were periods after the first three words): “As I said, it’s not perfect. However, we shouldn’t be pointing fingers after the list of despots I just mentioned…”

To Moyo, the jobs outweigh the abuses.

Another of Moyo’s controversial assertions is that the West’s attempts to use aid to cultivate democracy have been misguided. That is because democracy should not viewed as a prerequisite for a good economy. Instead, the opposite is true: a good economy must set the stage for democracy, and there needs to be a middle class before you can even think about having a genuine, liberal democracy. “When the people are impoverished and the governments are relying on aid, the middle class does not exist. And there is no one to hold the government accountable.”

That accountability comes, she says, only when the people are paying taxes. When governments don’t rely on taxes for revenue, leaders don’t feel they owe their people anything, and the people don’t expect anything from their leaders. This opens the door to corruption. And despite ostensible “conditionalities” on aid, in reality the money flows with virtually no strings attached, so corrupt leaders eschew much-needed infrastructure projects and instead partake in reckless consumption, or what Moyo dubs “negative corruption” — stealing the money and giving it to their wives for shopping sprees in London, or stashing it in foreign bank accounts where it does nothing to help the country.

But is cutting off aid to corrupt leaders really going to make them less corrupt?

No, Moyo says, but it will destroy their governments. She offered Robert Mugabe, president of Zimbabwe, as an example. If aid to a despot like Mugabe were cut, he’d have to rely on taxes for revenue. If he pilfered the taxes as he did aid, the people would get fed up and stop paying them. With no money to support the army or a civil service, his government would collapse. Yes, it was possible, she acknowledges, that a tyrant like Mugabe would fight to the end, perhaps borrow money from a friendly dictator or some such, and that mass bloodshed could be the price. But, she points out, Mugabe was sent $300 million in aid in 2006 alone. “Where is he going to get $300 million? Aid organizations are the main reason he’s still in power.”

To Moyo, if there is a controversial thread in her book, it is her discussion of why aid continues to flow despite the mounds of evidence that show it’s actually detrimental. During our initial conversation, she told me the story of an American who said to her, “‘If you ever see something that doesn’t look logical, just follow the money.’” She then added, “The fact that we’re seeing such a ridiculous system in place, it’s important to follow the money and see who’s benefiting.”

Who was she referring to? I asked in a follow-up email. At first she demurred, saying that she didn’t want to stir up controversy, so perhaps we could just omit those comments. I persisted. She replied by mentioning an “aid industry” composed of 500,000 people, mainly in the West, and she pointed me to a section in Dead Aid where she asserts that if aid stopped flowing the budgets of the aid industry would be cut and all those Westerners would lose jobs. In our final conversation, she elaborated:

“The World Bank can only survive if it’s spending money…We’ve reached a very low-level equilibrium where it’s not clear whose interest it is in to develop Africa…It’s not in the interest of those in the aid industry to develop Africa because then there’d be no more industry and 500,000 people would lose their jobs. The only people whose interest it is in is Africans, but they have no voice.”

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