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Why Aid Is To Blame For Africa's Dire Economic Straits
'Everybody knows it doesn't work'
Despite receiving more than $1 trillion from the west over the last half century, Africa remains in dire economic straits. Dambisa Moyo thinks aid is to blame and should stop now. She talks to Aida Edemariam
The Guardian
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*snip*Rising oil prices in the 1970s meant that international banks were awash with money, lax with their policies, and lending at low interest rates; many African countries borrowed large sums to pay off existing debts - until 1979, when another oil crisis prompted banks to raise their interest rates, and those debts could no longer be serviced. In Africa, 11 countries defaulted. When their finances were restructured by the IMF - they were lent money to pay off what they owed - they simply sank deeper into debt. The 80s also saw aggressive trade liberalisation and privatisation: the IMF and the World Bank lent large amounts of cash on the condition that free-market policies were adopted - policies that often led to the destruction of local industries that could not compete. By the end of the 80s debt servicing meant a net reverse flow of money, from poor countries to rich. This could not continue, and campaigns for debt relief soon followed - but they were accompanied, Moyo notes drily, with campaigns, such as Live8, to send large amounts of new aid, "and thus the prospect of fresh debt, all over again".
More than $1 trillion has been sent to Africa over the last 50 years. And what has it all achieved? She wants to know. "Between 1970 and 1998, when aid flows to Africa were at their peak, poverty in Africa rose from 11% to a staggering 66%" - roughly 600 million of Africa's billion people are now trapped in poverty. She would admit that aid has done some good on a local level, however her conclusion is uncompromising: "Aid has been, and continues to be, an unmitigated political, economic and humanitarian disaster for most parts of the developing world" - and Africa in particular, which is "shearing off. The rest of the world is going one direction, on one growth trajectory, and Africa is going completely in the opposite direction. And yet we sit around and discuss sending another $50bn dollars of aid? I mean, come on."
Why is Africa different? Wisely, perhaps, she doesn't get entangled in generalities about colonial guilt, and refers only in one short paragraph to "the largely unspoken and insidious view that the problem with Africa is Africans - that culturally, mentally and physically Africans are innately different. That, somehow, deeply embedded in their psyche is an inability to embrace development and improve their own lot in life without guidance and help." Her argument is that, for whatever reason, the problem is "pity. We don't feel sorry for the Chinese. The Chinese have 30 million people who live like us, if you will. Western standards, but a billion people living in dire poverty. Do you think anybody feels sorry for the Chinese? No. What about Indians? India has a huge proportion of poverty-stricken [people] - does anybody feel sorry for them?"
And the pity, in her reading, has been devastating. It has meant a blind eye being turned to corruption - aid being like striking oil, or finding diamonds, in its potential to tempt. It has meant a kind of continent-wide addiction (with, as the policy director of Christian Aid pointed out in a letter to the Independent, the concomitant "loss of self-control, ability to think forward, the confidence to act for oneself and believe in oneself"). And it's not just the developing countries that become dependent: around 500,000 people, Moyo estimates, depend on disbursing aid for their livelihoods. It is self-perpetuating: multilaterals have to keep lending in order for debts to be serviced. It nurtures, she argues, civil war: it becomes worth fighting over resources. Over the past 50 years 40 million Africans have died in war - equal to the population of South Africa.
Increasingly, over the last decade, the stick that accompanies the aid carrot has been a demand for "good governance". What is meant is transparent institutions, rule of law, lack of corruption; in practice, this is often equated with multi-party elections. But, as she quite scornfully points out, "the western mindset erroneously equates a political system of multi-party democracy with high-quality institutions . . . the two are not synonymous." Many African countries have dutifully held elections - but that hasn't made them any more liberal, or improved the quality of their civil institutions.
Like many of us who grew up in Africa (in my case, Ethiopia, where, she claims, 97% of the government budget is attributed to foreign aid), she saw the aid economy in action - the flash 4x4s, the high salaries, the foreign workers living cushioned lives on nice exchange rates. "In addition it was clear how little say not only the citizens have, but the governments have. You hardly ever saw participation from domestic policymakers in designing and discussing what was, essentially, our future - Africa's future. I mean, there are so many classic examples of people's lives essentially being shaped and designed by policy that's not domestically constructed." She cites the donor who refused to give any aid unless an entirely new town be built in Zambia, despite the government's protests that they would be left holding the baby, as indeed happened; or George Bush's requirement that two-thirds of the $15bn he was giving to fight Aids had to go to pro-abstinence programmes, and none could go to any establishment that provided abortions.
Hello Bono? Hello Geldof?...
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