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(TIMES) Moyo’s dead aid sparks debate

Moyo’s dead aid sparks debate
By Austin Kaluba in London

FROM musicians to film stars, there seem to be a new scramble for Africa. This time it is not to grab regions and renaming them but to offer aid and solutions afflicting Africa, the most insulted continent.

The ‘benefactors’ range from musicians like Sir Bob Geldof who jumpstarted his plummeting career by helping to organise the much-publicised We Are The World concert in the 80s to Madonna, who has been exhibiting her ‘humanitarian’ concerns by adopting children from Malawi. Africa is not short of aid givers.

The new crop of aid givers in form of celebrities has just joined Western countries, which have been giving aid to Africa for many years. The million Pound question is does this aid work? Our own academic, Zambian-born Dambisa Moyo feels strongly that it does not.

Dr Moyo argues in her book Dead Aid that recipients of aid would be much better economically if they were left to sort out their economic woes using homegrown solutions.

The book has sparked heated debate receiving praises and dismissals in equal measure. Kofi Annan has praised ‘Dead Aid’ as a “compelling case for a new approach to Africa”.

A global economic strategist at the investment bank Goldman Sachs in London, Dr Moyo formerly worked as a consultant at the World Bank in Washington DC. She grew up in Lusaka, Zambia, and studied economics at Harvard University and then (for a doctorate) at Oxford.

Dr Moyo, who was talking to a large audience at the just ended Oxford Literary festival argued hotly that aid had not merely failed to work but has worsened Africa’s problems. Is she right?

This writer interviewed the academician after her controversial presentation on how useless aid has been in solving economic problems in Africa. The articulate, petite and glamorous academic has been featured on several programmes in Europe and Africa to discuss her argument on aid.

The assertion has also aroused heated debate in Western papers and academic circles. If her conclusion was made by a person with humble education, it could have been dismissed as not holding any water but Dr Moyo cannot be dismissed as a charlatan considering her education.

The first stage in her argument is that aid is easy money which one can compare to winning a lottery. If governments had to rely upon private financial markets, they would become accountable to lenders, and if they had to rely upon taxation, they would become accountable to voters.

She had likened aid to oil, arguing that it only helps in enabling powerful elites to embezzle public revenues. She catalogues evidence, both statistical and anecdotal.
But the gist of Dr Moyo’s argument is for governments, which depend on aid to find better alternative. Governments could find money for development through financial markets, both international and domestic.

Considering the number of projects and organisations depending on aid in Zambia and many countries in sub-sahara Africa, it is difficult to outrightly agree or disagree with Moyo’s stance.

Zambia, which Dr Moyo cites in her book, is heavily dependent on aid since she got independence in 1964. The fact that the country is still impoverished can be attributed to countless problems.

According to the Overseas Development Institute report of 2000 compiled in collaboration with Nordic African Institute Uppsala, Zambia is a heavily aid-dependent country.

The report while stating that Zambia depends on aid shares the same conclusion with Dr Moyo’s that the country remains impoverished despite this massive external assistance.

It further states that Zambians have found themselves living in conditions of abject poverty despite foreign aid growing from a small trickle to a virtual flood.

In the 90s the major donor countries to Zambia were the United Kingdom
(37 per cent of total EU aid), Sweden (eight per cent), Denmark (nine per cent), Finland (three per cent), Germany (seven per cent) and the Netherlands (10 per cent).

These countries together with the European Union which contributed (11 per cent) have a long history of co-operating with Zambia. Together these bilateral donors, including the Commission, covered 86 per cent of total EU aid. Their share of total aid to Zambia was 35 per cent.

Since independence, aid flows to Zambia have been increasing. During the 1960s the annual average inflow was US$19m and in the 1990s it had grown to US$907m.

Most of the aid has been from European donors, although towards the end of the 1990s, European aid stagnated. The slack was, however, largely compensated for by aid coming in from multilateral sources.

The sector composition of aid has undergone significant changes. In the 1970s, aid was directed to the productive sectors (agriculture, trade and tourism) and in the form of import/balance of payments support. In the 1990s aid was redirected to the social sectors and to debt reduction strategies.

In the 1960s foreign aid provided Zambia with technical assistance and contributed towards various capital investment projects in the country. Today, foreign aid has also expanded to become a strong political player in the country.

The issue which this report deals with is whether the policy and practice of European donors, or more specifically, members of the European Union (EU), is attuned to the fact that poverty reduction is the most pressing human issue in Zambia today. For the most of the 1990s a staggering 65-70 per cent of the population has been living on or below the poverty line.

Things have not changed 19 years after the report was published. Given the political and economic role of foreign aid in Zambia it is highly relevant to ask how well the aid from the donor communities is used.

Basing on this report one would ask several question on how most important European donors reflect the pressing issue of poverty reduction in Zambia or any other African country that is dependent on Aid.

Is poverty reduction a major objective for European aid? If so, how is this reflected in their respective aid programmes? Has European aid contributed to poverty reduction in Zambia?

With Zambia and many African and Third World countries depending on aid sometimes from their former colonial masters, Dr Moyo is partially right to state that poverty reduction is far from being the major objective for aid.

Would Britain for example want to see Zambia, its former colony improves economically and weans herself from dependence on its one time colonial master?

On the other hand, would Zambia or any other African country dependent on aid be better off economically if they chose not to cling to aid?

Commenting on Dr Moyo’s stance on aid, the former chief economist for Department for International Development Adrian Wood, has argued that there should be a ceiling to aid as a proportion of the budget.
“The consensus academic view, to the extent there is one, is probably that large aid inflows, like large oil revenues, tend to reduce government accountability to citizens,” he argues.

However, Mr Wood adds that cutting aid may not be the best response. ‘‘My preferred alternative is to strengthen its potential for ‘governance conditionality’: aid agencies should insist on both transparent budgeting and free and fair elections.

“That said, I have to admit that Moyo has a good retort. She shows how feeble aid agencies have been: when occasionally one gets tough, others compensate.’’

Within aid agencies, performance is judged predominantly by short-term criteria such as how much aid is disbursed, rather than longer-term effects on accountability. Based on past behaviour, a government could assume that the aid would keep flowing more or less regardless of what it did.

However, even admitting the severe limits of donor ability to improve governance, Mr Wood doubts that many of Africa’s problems can be attributed to aid.

‘‘It is, in my view, something of a sideshow. Because it lends itself to a simple morality story of guilt and reparation, it receives more attention than is warranted. Paradoxically, despite her radically different argument, Moyo has ended up with the same punchline as the conventional, politically correct diagnosis: Africa’s problems are the consequences of our transgressions.’’

“By the same token, I think that Moyo’s message is over-optimistic. She implies that, were aid cut, African governments would respond by turning to other sources of finance that would make them more accountable. I think this exaggerates the opportunity for alternative finance and underestimates the difficulties African societies face,” Mr Wood further points out.

A review of Dead Aid in the Economist while agreeing with Dr Moyo also noted the book’s shortcomings. “Dead Aid does not move the debate along much. Yes, she has joined the chorus of disapproval - and that in itself might surprise a few diehards who think that Africans should just be grateful for the aid and shut up.

But her arguments are scarcely original and her plodding prose makes her the least stylish of the critics. Moreover, she overstates her case, almost to the point of caricature.”

But the Guardian was not this kind in assessing Dead Aid. Madeleine Bunting condemned Dr Moyo for generalisations. “One suspects that behind this book is a remarkable woman with an impressive career and very little time for learning how to write a good book.

“The result is an erratic, breathless sweep through aid history and current policy options for Africa, sprinkled with the odd statistic. There are so many generalisations skidding over decades of history, such frequent pre-emptory glib conclusions, that it is likely to leave you dizzy with silent protest.”

The review further noted that despite being poorly argued, Dead Aid would boost Moyo’s profile. ‘There are many who will want to promote her views, only too eager to cut aid budgets as pressure builds on government spending.

The danger is that she will end up on the wrong side of the argument. The battle is to press for more effective aid, not cut it altogether. Her proposal to phase out aid in five years is disastrously irresponsible”

Matthew Rees writing in The Wall Street Journal noted.

“It is too bad that Ms Moyo did not stop now and then to draw directly on her personal experience — not only on her work as an investment banker but on her early life in Zambia. (Her mother is chairperson of a Zambian bank; her father runs an anticorruption organisation.) First-person accounts might have made her argument even more vivid. Even so, it is vivid enough.”

Maybe Dr Moyo went too far by stating that Africa does not need aid considering the evidence to the contrary. Her argument should be how effective is this aid in bringing development.

Despite the book being rather simplistic like Chinua Achebe’s book with an ambitious title The Trouble With Nigeria, Dead Aid succeeds in questioning the seemingly well meaning benefactors who claim to know the panacea to Africa’s economic malaise.

This casual approach to Africa’s problems has been extended to celebrities with inductees who include one Sir Bob Geldof-nicknamed Mr Africa and bubble gum musician Madonna who thinks she has solutions to the continent’s problem despite failing to rescue her marriage.

An objective analysis of the book came out in The Spectator with Michela Wrong writing “One can challenge this book’s thesis, however, and still hail it as marking a turning point. In the past, Africans might privately wax cynical about western aid policy, but they were content to leave the public debate to be waged by Irish pop stars, American celebrities and paunchy white men in suits.

“Television producers and conference organisers routinely scratched their heads trying to find opinionated Africans ready to argue the issues. Moyo belongs to an emerging generation of articulate, self-confident and angry Africans who are now doing just that. Not before time.”

Those who want to understand part of Africa’s economic problems will have a better alternative between people like the U2 band leader Bono or Oxford/Havard educated Moyo.

Labels: DAMBISA MOYO, DONORS, NEOCOLONIALISM, NEOLIBERALISM

posted by MrK @ 4:26 PM