Dead Aid
Dead Aid by Dambisa Moyo is both a valuable book and an infuriating one. The book is essentially a polemic against aid to Africa. It argues that aid not only does no good, but it actively undermines development.
In many cases, this is true. And Moyo is certainly right in advocating alternative methods for financing development in Africa. These ideas are discussed in the second half of the book, and summarized as “trade, FDI [foreign direct investment], the capital markets, remittances, micro-finance and savings.”
But in the first and most controversial half of the book, where she makes her case against aid, Moyo steamrollers not only nuances but some basic points, some of which she even acknowledges in passing before brushing them aside.
1.The West hasn’t really given a lot of aid: 0.22% of donors’ GDP in 1997. Moyo notes that Western countries have given a trillion dollars to Africa over the course of fifty years. This sounds like a lot, but if you divide a trillion by fifty years and by fifty countries and by, say, ten donor countries, you get $40 million per year from each donor country to each country in Africa. Not much. That’s why the prospect of poor countries defaulting on their loans doesn’t seem likely to create a worldwide financial crisis, as she suggests.
2. The West sucked enormous resources out of Africa, and owes something in return. Slavery was the basis of the great (and continuing) fortunes of some American families, and resource extraction still enriches foreign companies and countries.
3. A lot of the aid given to poor countries has already been repaid. Moyo lumps together grants and low-interest loans, but there’s a difference. She disparages loan forgiveness, but in many cases countries have already repaid their original loan several times over. In some cases, as she says, poor countries are paying more to service their debts to donor countries than they’re getting in new aid. “Forgiveness” is like the forgiveness of a loan shark who lets you off the hook only after you’ve paid $1,000 on a $100 loan.
4. A lot of the aid was paid to businesses in the donor countries. The US government buys surplus corn and dumps it on the market in Haiti. The US farmer gets rich and the Haitian peasant is driven off the land and into the slums. Or the money is paid to a US contractor to build a dam or a fancy conference center that the poor country must then pay to maintain.
5. A lot of this aid wasn’t even meant to help development. As Moyo quotes President Kagame of Rwanda, “The primary reason [that there is little to show for the more than US$300 billion of aid that has gone to Africa since 1970] is that in the context of post-Second World War geopolitical and strategic rivalries and economic interests, much of this aid was spent on creating and sustaining client regimes of one type of another, with minimal regard to developmental outcomes on our continent.” This is why aid continued to flow to Mobutu even though it was well known that he was stealing it: he was our guy. In fact, we installed him. And that’s why it’s disingenuous of Moyo to call it “amazing” that aid continues when it’s not helping the people.
6.If you believe the author of Confessions of an Economic Hit Man, aid to poor countries was expressly designed not to be repaid. A permanent debt gives rich countries permanent leverage over poor countries, and according to John Perkins, leaders have actually been assassinated for refusing it.
7. Eliminating “unfettered” aid doesn’t have to mean abolishing all aid. It’s true, of course, that aid without accountability is destructive—but that’s not an argument for the abolition of aid, just for better control mechanisms. The World Bank, where she worked, has notoriously been more concerned about getting money out the door than tracking what was done with it.
8. Moyo is talking about governmental aid, not humanitarian or charity-based aid. Those kinds of aid have their problems, too, God knows (see Lords of Poverty and The Road to Hell) but they include some promising initiatives, like microfinance and person-to-person lending of the kind done by Kiva. But one can easily forget that that’s not her subject, especially when she disparages Bono and others who have raised money for emergencies.
In my review of 
