Killing Off “Dead Aid”

The book Dead Aid is totally hot right now.

Now, I realize this statement isn’t actually true, and that most people have no idea what I’m talking about.  While Dead Aid may have cracked twenty-ninth on the New York Times bestseller list, and its author Dambisa Moyo was labeled one of 2009’s most important figures, it would probably be an overstatement to say the book has taken the world by storm.  From my vantage point within the development community, though, it might as well have.  Dead Aid has caused loads of hand-wringing among development experts, given anti-aid pundits cause for celebration, and even prompted an angry response from Bono.  And, as you might have guessed, it is the subject of this post (and, I should note, about a zillion others on other blogs about development… but what’s the harm in one more?)

Moyo’s book starts with a bold hypothetical scenario.  What if, she asks, every African government received a phone call from its current donors, announcing that the pipelines of foreign aid would be shut off in the next five years?  Apparently everything in Africa would be better!  Her argument is, basically, that foreign aid has not just failed to fix Africa’s problems—practically everyone acknowledges that—but that aid is the problem, and that without it, conflict, corruption, and poverty would abate and gradually disappear.

There is plenty of room for nitpicking individual elements of Dead Aid. For example, Moyo validly points out that foreign aid short-circuits the usual relationship between states and citizens, since aid-dependent states are ultimately more beholden to donors than taxpayers.  It’s not clear to me, though, how Moyo’s panacea-of-choice, private investment, would fix that: is it better to be beholden to Goldman Sach’s than the IMF?  Her celebration of the wonders of international finance runs into a classic chicken-and-egg problem: no foreigner wants to invest in Africa, she points out, because most countries in Africa lack a functioning government and have decaying infrastructure.  How does she propose to fix them?  Foreign investment!  I could go on.  There is a cheap shot to be made against the book’s fatuous celebration of “benevolent dictatorship” as the ideal form of government for ramming through development programs (well, duh, but dictatorship is rarely benevolent), and the rest of the book is rife with factual errors.

My biggest criticism, though, stems from the very statistic at the heart of Dead Aid: that one trillion dollars has been given to sub-Saharan Africa in foreign aid since World War II, and yet Africa is still poor.  Without question, $1,000,000,000,000 is a lot of money: with that many dollars, you could bail out America’s banks, finance two wars in the Middle East, or (not) reform the U.S. health care system.  Still, relative to the size of Sub-Saharan Africa’s GDP, one trillion dollars over the course of a half-century is not that much: in fact, however poor we think sub-Saharan Africa is, it’s 700 million inhabitants produce more than a trillion dollars in output per year.  To put aid flows in perspective, the U.S. has given more aid to South Korea alone since World War II than to all of Sub-Saharan Africa combined.

It is difficult to find accurate numbers on yearly aid, but for the sake of argument, I’ll use Moyo’s.  Aid, she states, comes to a “staggering” $20 per capita per year in Africa—but that’s only about 2% of income.  Personal savings and foreign investment are, by comparison, much more significant components of the economy.  My own impression, from my time in Uganda, is that the reach of foreign aid is really quite limited.  While Kampala—Uganda’s capital city—is crawling with non-profits and aid organizations, in the countryside, most people have never been touched by a development project.  When compared to the reach of coca-cola, the catholic church, or telecommunications corporations, aid-finance development programs seem localized, scattered, and scarce.

While criticisms of how aid has been used may very well be valid, aid is, in truth, only a small part of the equation in Africa.  The urgency of Africa’s problems inevitably prompts the search for simple, actionable solutions, which requires a clear scapegoat.  Capitalism, corruption, AIDS, the IMF, tribalism, climate, colonialism, and foreign aid—all of these have, at one time or another, been considered the single root of Africa’s problems.  The reality, of course, is that all probably play a part.  To blame foreign aid for all of a continent’s woes is to miss entirely this complexity.

What then is—and should be—the role of foreign aid?  I am inclined to agree with Oxford economics Paul Collier that while aid may not have solved many problems, the situation in Africa would probably be far worse without it.  It is no coincidence that in the ’80s and ’90s, as foreign aid dropped by a third, Africa slid backward on a whole host of development indicators and experienced negative growth.  Whether or not aid has brought development, in the last decade, it has certainly delivered food aid, anti-retrovirals, and mosquito nets–and there is value to saving lives, whether or not it has come with industrialization and development.

Aid has not delivered prosperity to Africa, but as Jeffrey Sachs points out, “It is no surprise that there is so little to show for the aid of Africa, because there has in fact been so little aid to Africa.”  It should be a shock to no one that the .2% of GDP we transfer to developing nations per year is not sufficient to create development in a continent that has so many economic, ecological, and historical factors stacked against it.  While I think we should be cautious about the power of aid—and skeptical that it can achieve much without a radical reconfiguring of the global economy and a drastic reconsideration of how it is delivered—I don’t think we can blame aid for Africa’s problems when we have never, seriously, tried it.

One thought on “Killing Off “Dead Aid”

  1. Interesting rebuttal to Dead Aid. Seems like the point is that we haven’t even really tried foreign aid to Africa at a scale where we could even anticipate positive results. \
    Can’t wait to read the book.

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