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If You Want to Help Africa, Don't Send Money

Posted: 07/10/2012 8:49 am

Listening to CBC Radio's "The Current" a while back, I was enraptured by host Anna Maria Tremonti's interview with Zambian-born economist, Dambisa Moyo.

Maybe it's a reflection on my ignorance, but I'd never before heard of Moyo, an Oxford and Harvard educated economist, a World Bank consultant, a member of the board of Barclay's Bank, and who, in 2009, was one of Time magazine's 100 most influential people in the world.

Anna Maria Tremonti is arguably the most knowledgeable radio interviewer around, and she challenged Moyo throughout about Moyo's newest book -- Winner Take All, which delves into how China is scouring the world for all the minerals and natural resources it can.

This Chinese acquisitiveness and investments in developed countries tends to worry some people, but Moyo persuasively argues that China is ahead of the game in anticipating shortages, and is concerned about the growing demands of its middle class and how to provide for 1.3 billion people.

For what it's worth, I think she's right. China's future hinges on the status quo in the world. It doesn't want wars or crises that will cut off its supplies. Looming troubles at home argue against foreign adventuring.

But it's Moyo's first book -- Dead Aid -- that really caught my attention. In it she argues that foreign aid has not helped Africa, but has crippled it, has made the continent dependent on outside help, and (whether she says this or not I don't know) has resulted in support for dictators and tyrants.

She sounds a lot like free market economist Peter Bauer, who has long decried foreign aid as inhibiting self-development in Africa. African leaders like Rwanda's President Paul Kagame have praised Moyo's "accurate evaluation of the aid culture today," and Senegal's President Abdoulaye Wade echoes her concerns about aid.

Criticism of her thesis has mostly come from two sources -- those who receive foreign aid, and those who distribute foreign aid. Both have vested interest in prolonging the aid culture. From considerable journalistic work in African countries, it's long been my experience that foreign aid does more damage than good.

In no particular order, I recall being in a remote area of Eritrea when it was at war with Ethiopia (around 1988). In one village where Oxfam was developing a much-needed water supply, a local headman was grumbling that a road was being built from the community to Kenya.

On the surface this should have been a help, but his complaint was that a road would result in a "brain drain," with bright young people who were needed in the village flocking to the city.
That sort of things was endemic.

I recall journalist Bill Stevenson, who worked in East Africa, telling of a large bakery being set up in Dar es Salaam with aid money that would service the whole city. Unmentioned was that the large bakery complex would put out of work the hundreds of small bakeries throughout the city, thus advancing poverty instead of curbing it.

During the Ethiopian famine, aid flowing into the country meant that the Marxist regime could concentrate on acquiring weapons for their civil war, and not worry about feeding the starving populace.

As it was, in the Eritrean war for independence against Ethiopia, Eritrea, with no military aid, was dependent on capturing Ethiopian weapons, tanks and artillery (i.e. Soviet) to use against their enemy.

In captured Ethiopian divisional headquarters, I found sacks of wheat marked as "gift from the Canadian people" diverted to army kitchens and being sold on the black market. When confronted with this "evidence," govenrment and aid people insisted abuses were rare and small.
In the Angolan civil war, Canadian aid was supposedly being funnelled to a shoe factory in a small place called Ucua, which rebel leader Jonas Savimbi insisted was in the hands of his UNITA movement. The aid was phony. Savimbi also had evidence of aid trucks and Red Cross vehicles carrying soldiers of the Marxist regime which had seized control via a coup.

When Isaias Afwerki's Eritrean fighters won Eritrea's freedom -- and before Eritrea succumbed to becoming just another African tyranny -- Afwerki addressed an African Union conference honoring Eritrea as the latest independent country.

Afwerki launched into a tirade against corruption and how Africa's leaders used aid money to buy expensive cars and take trips to Europe, preferring to blame colonialism for their country's plight. He also attacked foreign aid programs, and put strict limits on aid to his country.

A problem with aid agencies is that they hire locally and pay higher wages than the local rate. Bright, ambitious people are attracted to these agencies instead of jobs, and the country suffers from their loss.

What strikes me as unusual, is that Dambisa Moyo is a Zambian, and cannot persuade herself to accept nonsense that is popular and conventional but wrong. In this she is somewhat like Somali-born Ayaan Hirsi Ali, who escaped to Europe to avoid an arranged marriage, and saw with her own eyes that Islamic teaching about the decadence, corruption, misery and wickedness of infidels was wrong -- that Europeans were content, productive, flourishing in ways that Islam couldn't begin to match.

She wrote of this in articles and books -- and was marked for assassination by Muslim extremists. To this day she requires a permanent body guard.

Moyo is African, and I doubt she's Muslim, and is too honest to avoid the truth. Anyway she's ahead of the curve in her assessments -- and is backed by economic reality.

In brief, she proposes that developing countries plan their own futures and not depend on foreign aid -- that excessive aid fosters dependency, inhibits enterpise, leads to corruption, and too often results in tyrannical governments and massive poverty.

Who can argue with Moyo's thesis that Africa has not flourished as many hoped and expected when colonial powers surrendered to African independence from the mid-1950s to the early 1960s?

I've mentioned a few examples, and left what has happened in the Congo for another time -- a story without hope or an happy ending.

 
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09:22 AM on 07/11/2012
My comment is about Eritrea. Eritrea is becoming the face saving country in Africa despite the negative connotations for not obeying orders from the western countries at the helm of it USA. Eritrea closed USAID and is dealing carefully with the so called humanitarian assistance and NGO’s.
Their main goal as it has been during their struggle for independence is “Self Reliance” Now; they are able to build hospitals, clinics, schools, water reservoirs, dams, roads and many crucial infrastructures from the scratch. Although they are open to receive any assistance, they wanted it to be with their own way. Means they do not want to wait handcuffed for coming assistance. All what they accept is carefully studied and well designed.
Eritrea soon will be a grate example for those who are still waiting assistance to come to their doors. Rely on self and work hard is what it require to live with dignity.
09:11 AM on 07/11/2012
My comment is about Eritrea. It is right that foreign aid is the main enemy for Africa. Eritrea being so careful of receiving any aid, it was able to work hard to build water reservoir, dams, roads, hospitals and schools that shows rely on self first but also accept assistance in a way that is designed to uplift the standard of living of the citizens. Regardless of the neontendos about Eritrea and its government it is doing the best of the best for its citizens. I hope more countries in Africa learn from it.
09:01 AM on 07/11/2012
Money only ends up in the wrong hands . These people cannot be blamed for grabbing all they can , it's just human nature . They see the apparent weath of Western nations and think if they are going to send money why can't I have as much as they will give me.

The amount of money being sent to impoverished areas by developed nations is largely unaccounted for and ends up in the bank accounts, out of the country , in the hands of those in power.

Far better to establish schools , hospitals and transporation facilities employing and paying locals to do the work but to control absolutely the purse strings to guarantee proper use of the funds . Providing machinery and teachng people how to use them to produce goods for sale int their own markets will raise up the whole population . At the same time , a system would have to be put in place to guarantee equitable distribution of the benfits of the system.

Seems to establishing co-op businesses such as the Mondragon one in Spain would be the answer.
06:24 AM on 07/11/2012
I'm just getting familiar with the fact we need to change our approach to offering aid around the world from reading "Capitalism at the Crossroads" by Stuart Hart. Those in need are also the largest market at the "bottom of the period". However the rules to helping them are different than standard economics explain. Companies must get embedded and turn them into local producers and not just consumers. This removes the reliance on aid and creates new markets.
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09:40 PM on 07/10/2012
There are so many wrong assertions in this article I don't know where to begin. It's an assault to any properly thinking brain. Here are my quick comments:
- Governance matters (it's how the aid money is used: donor organizations have always known what type of Government they were donating to - somehow chose to often donate to corrupt dictatorships bc they were not communists or were friendly to Western companies, etc.)
- The money that goes into Africa as aid represents PEANUTS compared to the money that flows out of Africa as natural resources acquired through corrupt means (check the mineral used to make the chips in your smartphone)
- Also the way the aid is dispensed in some cases needs to be checked (efficiency of donor organizations, hiring practices, involving locals, accepting that they may require different methods, etc...)
I believe that aid alone won't develop Africa; the continent needs investments and is ready. Many investors are already on the ground because of the many opportunities.
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04:10 PM on 07/10/2012
"Criticism of her thesis has mostly come from two sources -- those who receive foreign aid, and those who distribute foreign aid. Both have vested interest in prolonging the aid culture"

This is untrue. Moyo's work has been roundly rejected by many economists for her apparent over simplification and lack of economic understanding. She's a product of Goldman Sachs, so it should come as no surprise that her advice is to stop taking aid and instead borrow money on the international markets.
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10:12 AM on 07/10/2012
Not sure why he felt the need to pull Islam into this.
09:42 PM on 07/10/2012
Another mark of ignorance.
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duggyg
Situation normal.....
10:09 AM on 07/10/2012
One of Africa's biggest challenges is getting some control over debilitating disease. Many of these, such as malaria, bilharzia, sleeping sickness, cause sufferers to become lethargic, and often end in killing the sufferer. HIV is a huge decimator of productive adults. There are many other diseases which in many parts of Africa are as present as medical and educational facilities are absent. As well, large families, with insufficient resources, especiallyj food, adds to what is in many cases, a miserable existence. Cultural factors, such as it being the woman's role to carry the load, till the fields, and raise the children, means women are less in a position to acquire an education. It has been shown, one of the keys to raising local conditions is the education of women. Instead, many are pregnant at a young age and are caught up in their assigned, Job-like role.

One of the best strategies in Africa, is to encourage and direct, the status and education of women, so that they may become teachers, and health workers, business practitioners, be in control of their reproductive hamstrings, and thus raise African well being village by village. Creating a method of small scale funded schools throughout the impoverished areas in Africa.
Instead of a gratuitous flow of cash, the provision of small inventive articles, such as simple wood saving stoves, cell phones, solar power, construction of simple healthy toilets, is tremendously helpful.
09:06 AM on 07/10/2012
Phase out aid and replace with development programs partnered by donors and locals on a fifty-fifty basis. If local wealthy and middle classes do not want to pay taxes to develop their countries, then let them suffer the chaos and civil war which will one day engulf them.