- Paperback: 188 pages
- Publisher: Douglas & McIntyre Ltd; Reprint edition (May 30, 2010)
- Language: English
- ISBN-10: 1553655427
- ISBN-13: 978-1553655428
- Product Dimensions: 5.5 x 0.5 x 8.2 inches
- Shipping Weight: 1 pounds
- Average Customer Review: 193 customer reviews
- Amazon Best Sellers Rank: #1,520,729 in Books (See Top 100 in Books)
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Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa Reprint Edition
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From Publishers Weekly
In this important analysis of the past fifty years of international (largely American) aid to Africa, economist and former World Bank consultant Moyo, a native of Zambia, prescribes a tough dose of medicine: stopping the tide of money that, however well-intentioned, only promotes corruption in government and dependence in citizens. With a global perspective and on-the-ground details, Moyo reveals that aid is often diverted to the coffers of cruel despotisms, and occasionally conflicts outright with the interests of citizens-free mosquito nets, for instance, killing the market for the native who sells them. In its place, Moyo advocates a smarter, though admittedly more difficult, policy of investment that has already worked to grow the economies of poor countries like Argentina and Brazil. Moyo writes with a general audience in mind, and doesn't hesitate to slow down and explain the intricacies of, say, the bond market. This is a brief, accessible look at the goals and reasons behind anti-aid advocates, with a hopeful outlook and a respectful attitude for the well-being and good faith of all involved.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
From School Library Journal
Economist Moyo (former head, Economic Research and Strategy for Sub-Saharan Africa, Goldman Sachs) makes a startling assertion: charitable aid to African nations is not just ineffective—it is worse than no aid. Moyo, who was born and raised in Zambia, joins a small but growing number of observers (including microfinance expert Muhammad Yunnus) who argue that charity from Western nations cripples African governments by fostering dependency and corruption without requiring positive change. Deriding efforts to increase giving by foreign celebrities like U2 singer Bono as out of touch with the real needs of African countries, Moyo instead proposes solutions like new bond markets, microfinancing, and revised property laws. Moyo also singles out commercial investment from the Chinese (rather than general aid) and holds it up as an example for other nations to follow in the future. Whether one agrees or disagrees with Moyo's argument for such capitalist intervention in Africa, this straightforward and readable work should provide some food for thought.—April Younglove, Linfield Coll. Lib., Portland, OR
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved.
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Moyo notes that the "prospect of seizing power and gaining access to unlimited aid wealth is irresistible."(59) To buttress her argument, she refers to Grossman (1992) who contends that the underlying purpose of rebellion is the capture of the state for financial advantage, and that aid makes such conflict more likely. In the past fifty years, Moyo observes, over US$1trillion in development-related aid has been transferred from the rich countries of the West to Africa. Yet, aid has helped make the poor poorer; economic growth slower.
According to Moyo, the notion that foreign aid can alleviate systemic poverty, and has done so in Africa is tantamount to a myth. Millions in Africa, she notes, are poorer today on account of aid dependency. Indeed, aid has been and continues to be, an unmitigated political and economic and humanitarian disaster for Africa. Aid is not benign--it is malignant. In short, aid is not part of the solution; it is the problem. And here is how.
Aid breeds corruption in Africa. If the world has one picture of the African continent, it is one of corrupt statesmen. With very few exceptions, African leaders have crowned themselves in gold, seized land, handed over state businesses to relatives and friends, diverted billions of aid-money to foreign bank accounts, and generally treated their countries like giant personalized cash dispensers. According to Transparency International, Mobutu Sese Seko of erstwhile Zaire is estimated to have looted the State to the tune of US$5billion.
Roughly the same amount was stolen from Nigeria by President Sani Abacha and placed in Swiss private banks. The list of corrupt practices in Africa is endless. However, the point about corruption in Africa is not that it exists; the point is that foreign aid is one of its greatest aides. Aid creates a vicious cycle of dependency in Africa; a cycle that chokes off desperately needed investment, instills a culture of kleptomania, and facilitates rampant and systematic corruption, all with deleterious consequences for economic growth. It is this cycle, Moyo posits, that "perpetuates underdevelopment, and guarantees economic failure in the poorest aid-dependent countries" (49).
Aid creates a fertile ground for rent-seeking, that is, the use of governmental authority to take and make money without trade or production of wealth. Because foreign aid is fungible--easily stolen, redirected and extracted-- it facilitates corruption. At a very basic level, an example of this is where a government official with access to aid money set aside for public welfare takes the money for his own personal use. Examples are legion in Africa. Foreign aid programs, which tend to lack accountability, and check and balances, act as substitutes for tax revenues.
The tax receipts that aid releases are then diverted to unproductive and often wasteful purposes rather than the productive public expenditure (education, health infrastructure, etc) for which they were ostensibly intended. Moyo points out that in "Uganda, for example, aid-fueled corruption in the 1990s was thought to be so rampant that only 20 cents of every US$1 of government spending on education reached the targeted local primary school."(53)
Strangely enough, Larry Diamond (2004) observes, Western aid agencies, notably the International Monetary Fund and the World Bank, continue to give aid to African states, with notorious authoritarian and corrupt governments. His list includes Cameroon, Egypt, Zimbabwe, Gabon, Angola, Eritrea, Guinea and Mauritania. Africa is the region that receives the largest amount of foreign aid, receiving more per capita in official development assistance than any other region of the world.
Yet her social infrastructure is in a state of utter decrepitude! Moyo notes that any large influx of money into an economy, however robust, has the potential to create serious problems. With the relentless flow of unmitigated, substantial aid money to Africa, these problems are magnified, especially in economies that are, by their very nature, poorly managed, weak and susceptible to outside influence, over which domestic policymakers have little or no control.
Moyo contends that increases in foreign aid are correlated with declining domestic savings rates. As she puts it, "As foreign aid comes in, domestic savings decline; that is, investment falls."(61) She further observes that with all the tempting aid monies on offer, which are notoriously fungible, the relatively few people who have access to it, spend it on consumer goods instead of saving the cash. As savings decline, local banks have less money to lend for domestic investment.
Worse still, foreign aid has an equally damaging crowding-out effect: although aid is meant to encourage private investment by providing loan guarantees, subsidizing investment risks and supporting co-financing arrangements with private investors, in practice it discourages the inflow of such high-quality foreign monies. Moyo points out that empirical research has shown that higher aid-induced consumption leads to an environment where much more money is chasing fewer goods."(61) This almost invariably leads to price rises--inflation.
Over and above, aid chokes off the export sector. This phenomenon is known as the Dutch disease, as its effects were first observed when natural gas revenues flooded the Netherlands in the 1960s, devastating the Dutch export sector and increasing unemployment. Moyo argues that aid inflows have adverse effects on overall competitiveness, export sector (usually in the form of decline in the share of those in the manufacturing sector and ultimately growth).
In the oddest turn of events, the fact that aid reduces competitiveness, and thus the trading sector's ability to generate foreign-exchange earnings, makes countries even more dependent on aid, leaving them exposed to all the negative consequences of aid-dependency. In countries with weak financial systems, additional foreign resources do not translate into growth of stronger financially dependent industries.
So if foreign aid harbors such adverse effects for African economies why are donors bent on doling it out? And why aren't recipients sagacious enough to put an end to the lethal cycle of aid? Moyo's Dead Aid model provides solid answers to these intriguing questions. She notes that "Africa is addicted to aid. For the past sixty years, she says, Africa has been fed aid. Like any addict, Africa needs and depends on its regular fix, finding it hard, if not impossible to contemplate existence in an aid-less world."(75) Her book provides an antidote, a road map for riding Africa of aid dependency.
Arguing that the aid program in Africa has not worked precisely because it was never conceived with the intention of promoting the economic development of Africa, she proposes alternatives to foreign aid. She notes that like the challenges faced by someone addicted to drugs, the withdrawal is bound to be painful. Nonetheless, if implemented in the most efficient way, the solutions offered in Dead Aid will help to dramatically reduce Africa's reliance on aid money.
Moyo cites Botswana as an example of an economic success story in Africa. Botswana began with a high ratio of aid to GDP but used the aid wisely to provide important public goods that helped support good policies and sound governance and laid the foundation for robust economic growth for the country.
She says this stratagem can be replicated all over Africa. Her alternatives to aid, predicated on transparency and accountability, would provide the life-blood through which Africa's social capital and economies will grow. Her Dead Aid strategy leaves room for modest amounts of aid to be part of Africa's development financing strategy. Systematic aid will be a component of her Dead Aid Model, but only insofar as its presence decreases as other financing alternatives take hold. The ultimate goal, as far as Moyo is concerned, is an aid-free Africa.
In a nutshell, Dead Aid proposes radical solutions to the pressing economic problems of our time. It offers a new model for financing development in Africa's poorest countries, one that offers economic growth, promises to significantly reduce endemic poverty, and most importantly, does not rely on aid. Though Moyo is not the first economic pundit to take Western aid donors to task, never has the case against aid been made with such rigor and conviction. She does not pull her punches.
"In a perfect world," she writes, "what poor countries at the lowest rungs of economic development need is not a multi-party democracy, but in fact a decisive benevolent dictator to push through the reforms required to get the economy moving."(xi) Her most radical proposal comes in the form of a rhetorical question: "What if," she asks, "one by one, African countries each received a phone call...telling them that in exactly five years the aid taps would be shut off permanently?"(xi)
As always, a thoroughly researched book with an air of authority that could only come from an African talking about affairs related to... Africa.
Dambisa argues that in studying the data it becomes obvious that aid, especially without an end date , does not improve any economy and never will .
In fact it has the opposite effect by promoting corruption, a lack of accountability and political wars by those jostling to be the atop of the funnel for free money.
She argues that a better way is for African governments to pursue funding from the Capital markets, drop inefficient trade barriers between each other in the continent, stimulate intra trade as the West and Europe are not our friends, see China for the friend it is and develop infrastructure.
These all require obtaining credit ratings, fiscal discipline, attempts at good governance etc. When you squander aid money, more will come next year. When you squander money obtained from issuing bonds and world investors, good luck getting more for another decade. This is the essence of this book.
You can feel how close to her heart writing this book is because , while currently a little outdated, she has noted that for too long the debate around how to fix the problems in Africa has been dominated by white Non-african males.
Time well invested...
BY K'OYOO NICK, TANZANIA DAILY NEWS, 26 OCTOBER 2013
DEAD AID a book authored by Zambian Economist Dambisa Moyo, is remarkable in many ways, least of all which is in the way it debunks the aid myth.That an African woman intellectual is the author makes it even more remarkable because it completely shatters the aid myth from a perspective that truly reminds one that the leadership of Africa has been a let-down , and that it is almost always been men in the driving seat feeding on and off the myth that aid is.
Last week, readers may recall news report in the regions media that the US had donated forensics equipment worth Ksh12m to the Kenya Police. Ksh12 is equivalent to Tsh216m or (us$141,176) at current exchange rates.
Coming so soon after the terrorist attack at the Westgate Mall at Nairobi's Westland's' suburb, this "donation" from the US friends of Kenya got national newspapers coverage and probably had people stop work for hours on end to receive and entertain the guests.
Looked at against the revelations that Kenya's Auditor General had come to the conclusion that over Ksh 300b (US$3b) could not be accounted for in the year 2011-2012 financial year, this donation, no matter how well intentioned was a true insult to not only the people of Kenya but Africa at large.
If Kenya as the Auditor General says can afford to run with an unaccounted for amount of US$3b in one financial year, the question is, why 50 years after independence and many years after it was established that the country requires a forensics laboratory, it still does not have one?
As author Dambisa Moyo opines, Aid has become a multi-billion dollar industry that benefits a small cabal of the recipient and the giver. Aid has become part of the entertainment industry. 'Why is it that Africa, alone among the continents of the world, seems to be locked into a cycle of dysfunction?
Why is it that out of all the continents, Africa seems to be unable to get its foot on the economic ladder? Are African people universally incapable? Are its leaders genetically more venal, more ruthless, more corrupt? What is it about Africa that holds it back? The answer has its roots in Aid."
Dambisa's thought -provoking ideas are backed by very simple facts on the ground and the very acts like the forensic equipment donation, which cements the idea that Africans are unable to plan, are corrupt to the core and still need the western operatives. Hand-up to get forensic equipment which we need but won't plan for and buy! It is a sad reminder of how aid has made Africa dependent and not independent.
It is important to note that Dambisa references are drawn from experiences have grown up in one of Africa's poorest countries, Zambia, but can easily be replaced by Tanzania, Kenya, Uganda, Senegal, Congo DRC, Sierra Leone , Liberia or Nigeria.
Indeed, not long ago, while addressing residents of Mtwara President Jakaya Kikwete in reply to criticism that he travelled abroad too many times said the aid he gets from those trips would possibly be taken by Kenyans if he did not travel to pursue them!
The head of state was speaking from a culture of aid which has made aid a competitive industry for African governments that year in year out trot to the capitals of developed countries with begging bowls for as little as us$141,000 worth of forensic equipment aid. It is not only an embarrassment, but also a travesty to what we all know as the wealth that Africa holds in her bowels.
Why is the aid industry thriving when we all know dependency is no solution to the development challenges? To understand this we must go back to where the aid rain began to beat us. It goes back to the post-second world war period and the need to do a Marshall Africa plan.
This combined with the West and East divide led us to where we are today. Of course circumstances such as lack of education & awareness too made their contribution.
Today, African policy makers need to steer the conversation away from aid to trade. However, to make that happen we must "decolonise the mind" as Kenyan author Ngugi Wa Thiongo would say. Such references to African countries competing for "rare aid" belong to yesterday. We know the world does not owe us a living.
Africa today needs leaders who recognise that trade between one another holds the greatest promise of sustainable development and this does not happen under circumstances where Tanzania believes itself to be the darling of United States because two sitting US Presidents have visited the country nor any other African country for that matter. Why receive mosquito nets in Aid when nets can be manufactured in Arusha, Lusaka or Kampala?
African countries need to plug the huge revenue holes in their expenditure and leaders are the worst in this extravagance. In East Africa today, the Presidents motorcade could be anything from 17 to 45 top of the range luxury cars in countries where the populace lives on less than 1 US dollar a day. Yet the leaders convince themselves they are working day in and out to eliminate poverty. Their retirement benefits are lifelong insurance covers.
Under Kenya's new constitution, the fight over the national cake has moved from Nairobi to the counties and it isn't about service delivery it's all about cars and salaries. If you add this to the amount of money being lost in theft and corruption, one has the answer to Africa's development challenge.
All this anguish against ICC should be turned into energy against ourselves and our leaders for turning Africa into beggar nations and using our resources to fuel their hunger for power and personal aggrandisement.
Aid fuels internecine wars and results in dependency. "What if World Bank and IMF called each country in Africa and said aid would stop in 5 years excepting emergency such as famine and disaster relief ?Would African/s die in their millions?
Unborn African children will still be repaying Aid borrowed by us in 50 years to come. The time has come for us to look inwards and put a stop to the Aid gravy train has come.