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June 26, 2009

Dead Aid is Dead Wrong
Posted by Michael Cohen

Matt Yglesias has a good post up on the dangerous anti-aid arguments being made by Dambisa Moyo. In particular, he highlights one of Moyo's many dubious assertions about foreign assistance and the HIV/AIDS crisis in sub-Saharan Africa:

I’m not going to sit here and say the fact that 2 million Africans are on HIV drugs is a bad thing. Of course that’s a good thing. But whose responsibility is it to provide those HIV drugs? American society does not operate by sitting around and waiting for handouts. Why should we as Africans?

As Matt points out, back here in the real world, "obviously the reason Africans find themselves needing to rely on handouts is that the continent is so full of poor people." Moyo's rhetorical arguments sound good, but like much of her book they are built on the shakiest of foundations; and her divorced from reality discussion of humanitarian assistance is an excellent example.  As Moyo must know, most African countries simply lack the capacity, infrastructure and resources to do what she is suggesting

In her book, Moyo cites Botswana as a test case for how rejecting foreign assistance can lead to greener pastures for African countries. She claims the country's economic success is a result of pursuing "market economy options" and weaning itself off foreign aid. But as I argued a few weeks ago in World Politics Review Moyo's argument tends to ignore some fairly crucial evidence:

Only a few years ago, Botswana was so ravaged by HIV-AIDS that it's president spoke of possible national "extinction." Ultimately, outside assistance from the United States, the United Nations, the Gates Foundation and the drug company Merck helped save Botswana from this fate. The Botswana aid came in the form of money and, more importantly, technical assistance, which can often be more effective than resource flows in producing positive development outcomes. Yet, in Moyo's formulation there is only one type of aid -- money, usually bilateral in origin -- and it's bad. Moyo argues that African countries -- not the West -- should be tackling the AIDS crisis, but ignores the fact that her best example of a successful African economy (Botswana) was unable to do just that.

Moyo certainly has a point that foreign aid has not lived up to its promise and that it often enable bad practices as opposed to doing actual good for poor communities. But the solution is not to get rid of foreign aid - as she argues - but to dole it out more effectively. Africa needs better aid, conditioned on good-governance practices, greater transparency and more aid accountability, and it needs better coordination between private and public donors. These are measures that are already occurring, both on a bilateral and a multilateral basis.

Of course, that's a harder argument to make and one that likely won't sell as many books.


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Aid is not and really can not be an approach to development. As the German journalist Thilo Thielke observes, aid is a planned economy without a plan.

The implied idea is that USAID or some other such agency can plan the economic development of many distant climes.

But in the end, the fundamental problem with aid as Africa policy is that it is irrelevant.

Aid is less than 1% of African GDP. Even if aid was quintupled, it would still not mobilise Africa towards development.

What I have personally never understood about aid is, if you're willing to give the money away, why don't you invest it? And make sure you get a return?

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