Dead Aid is Dead Wrong

Schneidman: Helping Africa Save Itself

Witney W. Schneidman, former U.S. Deputy Assistant Secretary Of State For African Affairs In The Clinton Administration, and friend to ONE, published this important article about aid in the July 13, 2009, issue of Newsweek.

The beginning of his article is below, the full piece is on the Newsweek site. If you have questions, Schneidman will be available to answer some comments on this post.

Newsweek–Helping Africa Save Itself
Witney W. Schneidman

In DEAD AID, Dambisa Moyo, a Zambian-born economist, lays out a brash argument: that the more than $1 trillion in foreign assistance given to Africa over the past 50 years is the root cause of the continent’s enduring poverty, widespread corruption, civil wars, and isolation from the global economy. Following this logic to its conclusion, Moyo argues that the best way donors could help Africa today would be to phone officials there and tell them all aid will be cut off within five years. Given recent calls by Bono, the economist Jeffrey Sachs, and others to increase aid, Moyo’s thesis is controversial, to put it mildly. And it’s also misleading in several key ways. But it’s worth taking seriously, for it’s already caused a huge sensation in the donor community and among Africans frustrated by the slow pace of development-and eager for ways to speed the process.

There is no question that outsiders have been complicit, wittingly and otherwise, in compounding Africa’s problems over the years, especially during the Cold War. But aid is not always as harmful as Moyo claims. True, in some cases-like U.S. support for Zaire’s Mobutu Sese Seko-it has abetted bad governance, and in others it has fed conflict. But this is overly simplistic. Take Angola, Mozambique, and Somalia. It was outside military assistance, not foreign aid per se, that helped fuel the long-running civil wars in the first two. And to say that the conflict in Somalia is primarily a competition for control of large-scale food aid-as Moyo does-is a selective, if not facile, reading of the complex dynamics driving the chaos there….”

Read the full piece here.

Aid Debate Recap

On Monday, we noted that the Munk debates program would feature a discussion about foreign aid and we encouraged those who watched to post their thoughts and reactions. ONE’s Policy Advisory Board member Paul Collier, along with Stephen Lewis, Dambisa Moyo, and Hernando de Soto talked for almost two hours about the opportunities and challenges of foreign aid. The purpose of the Munk debates is to “enliven and elevate public discussion of the political, social, and cultural issues shaping the course of the world’s events and Canada’s future.” This goal was certainly accomplished – the debate participants engaged in a lively discussion about their thoughts on how and why foreign aid has affected Africa and what are the best ways to reduce reliance on donors to finance programs. Exchanges like this are helpful to educate people about foreign aid and the array of perspectives about it.

While there was disagreement between the two ‘sides’, represented by Moyo and de Soto, arguing that aid does more harm than good, and Lewis and Collier, arguing the opposing view, there was common ground. The debate participants agreed that African countries cannot continue to rely on foreign aid to the extent they are now, that strong leadership and good governance are critical to transitioning from aid dependence, and that aid has had mixed results over the past 60 years. There was also agreement on the importance of the private sector in economic growth, through investment and job creation.

The audience voted before and after the debate on whether foreign aid does more harm than good. The outcome? The majority of people do not believe that aid does more harm than good. This means that both before and after the debate, the majority of the audience believes that aid does more good than harm. Before the debate, 61% of the audience voted ‘against’ the principle that aid does more harm than good, compared to 59% of the audience who voted after the debate. The opposing side, who believe aid does more harm than good, had 39% of the votes before the debate and 41% afterwards.

What do you think? Watch the webcast and let us know.

-Lisa Fleisher

Steve Radelet: We’re asking the wrong question

On the Financial Times blog, Steve Radelet offers a response to the question “Is aid working?” Radelet takes to task Dambisa Moyo’s “extreme views” by suggesting the more important question is “Under what circumstances does aid work, and what can be done to make it more effective?”

Excerpts below, full post can be found here

Ms. Moyo argues that “Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased.” But this storyline is at least a decade out of date. Since 1996 – twelve years now – economic growth across sub-Saharan Africa has averaged 2.3 per person per year. And it is not just due to oil. There are 18 strongly performing countries, none of them oil exporters, that together have achieved per capita growth averaging 3.1 per cent, meaning that average incomes have increased nearly 50 percent in twelve years. Most of these 18 countries are now democracies, including Mozambique, Tanzania, Ghana, Lesotho, Namibia, Mali, South Africa and others, and the majority are measurably improving governance. Across Africa literacy rates are up, infant mortality rates are down, and 34m more children are in school since 2000. And according to analyses by the World Bank, poverty rates (at $1.25/day poverty line) peaked at 59 per cent in 1996 and dropped to 51 per cent by 2005, a remarkable drop in nine years. Poverty in Africa has been falling, not rising.

What happened? The turnaround is primarily due to stronger leadership in Africa, much better economic policies, lower debt burdens, new cell phone and internet technologies, and an emerging and vibrant business class. What about aid? Aid has been neither panacea nor demon. Much has been wasted on sordid dictators, projects that didn’t fit local needs, and bureaucracies that ensure only a fraction of funding gets to those that need it. But much has helped support success.

-Chris Scott

Mo Ibrahim: Good governance will bolster African aid

In the Financial Times, Mo Ibrahim argues that while investment and good governance will ultimately solve Africa’s problems, “effective aid has an important role to play in the quest for sustainable economic growth and poverty reduction.” Ibrahim offers this assessment in light of the recent debate about aid in the wake of Dambisa Moyo’s book Dead Aid. Ibrahim argues for a “holistic approach to development in Africa that is centred on good governance.”

Excerpts below, full piece here

The critical argument should not be about aid or no aid – no one can question the necessity of pure humanitarian aid as long as it satisfies basic good governance criteria. The argument should be about where to focus aid to achieve the best returns for donor taxpayers and aid recipients. I propose two areas to focus aid: the hardware of Africa, infrastructure and regional integration; and human software, in the form of education and health.

The reality is that most African countries are sub-scale and fundamentally unable to compete in a global market. If economies the size of the UK, Germany and France find regional integration necessary to ensure growth, then 53 un-integrated African states have a competitive disadvantage. This fragmentation is evident in Africa’s transportation infrastructure, geared towards trade outside rather than within the continent. Africa needs to integrate its economies and open their borders to each other. Development aid can help these efforts and facilitate intra-African trade. This capital investment cannot succeed without investment in education and health.

Finally, while debate on development aid is of great importance, more of this energy should be spent on climate justice. Africans have emitted the least carbon per capita but will have to face the greatest consequences of its emission. A worthier use of the time of these great African and other economists is to devise a solution that allows the continent to meet the adaptation and mitigation costs of climate change.

-Chris Scott

Sachs: Moyo’s Confused Attack on Aid for Africa

Economist Jeff Sachs has issued a substantive response on the Huffington Post to Dambisa Moyo’s recent attempt to undermine his concerns with the lack of facts and policy rigor in Moyo’s book Dead Aid. For those following this debate, it’s worth reading the exchange.

Some excerpts are below, and you can read his full article here. The original critique Jeff wrote is here.

-Josh Lozman

Ms. Dambisa Moyo’s recent Huffington Post article exposes the confusions that underlie her slashing attacks on aid. Most importantly, she seems to believe that sub-Saharan Africa was economically prosperous and then was pushed into poverty by aid. She makes the following statement: “No surprise, then, that Africa is on the whole worse off today than it was 40 years ago. For example in the 1970′s less than 10 percent of Africa’s population lived in dire poverty — today over 70 percent of sub-Saharan Africa lives on less than US$2 a day.”

Let’s parse that statement for a moment. World Bank researchers Shaohua Chen and Martin Ravallion prepare the benchmark under-$2-a-day historical headcount data going back to 1981. According to their figures, headcount poverty under $2 a day was 74 percent of the population in sub-Saharan Africa in 1981 and 73 percent in 2005. Other prominent estimates that go back to 1950 or 1970 also contradict Moyo’s statement, by showing high and persistent poverty. All of the macroeconomic time series by Maddison, Summers and Heston, and others tell the same story: the majority of Africa’s population started out impoverished at the time of national independence in the 1960s and 1970s, and a majority remains impoverished till today….

Moyo now campaigns against the kinds of aid that can keep millions of African children from dying or being maimed for a lifetime through the consequences of serious episodes of disease. She advocates cutting the aid that has allowed more than 2 million Africans access to life-saving AIDS treatment, since governments are involved. Almost unimaginably, she opposes the distribution of anti-malaria bed nets for Africa’s hundreds of millions of young people on the alleged grounds that it has put bed net producers in Africa out of business. In her own words:

“Finally, with respect to Mr. Sachs’ remark that I would see nothing wrong with denying US$10 in aid to an African child for an anti-malarial bed net — even labeling me as cruel; I say, if working towards a sustainable solution where Africans can make their own anti-malaria bed-nets (thereby creating jobs for Africans and a real chance for continents economic prospects) rather than encouraging all and sundry to dump malaria nets across the continent (which incidentally, put Africans out of business), then I am guilty as charged. Don’t forget that the over 60 percent of Africans that are under the age of 24 need jobs not sympathy.”

The confusion underlying this remark is staggering. There are hundreds of millions of Africans at risk of a killer disease, around two hundred million cases of the disease, and around 1 million preventable deaths per year, yet Moyo is opposed to urgent help if nets are not produced in Africa. She seems both unmoved by the massive suffering and unaware that Africa has gone from producing exactly zero long-lasting insecticidal nets (LLINs) a few years ago to several million per year now, with thousands of jobs in the local industry, as a result of the demand for nets created by aid for malaria control.

She takes no note of the fact that global aid for malaria control is also training tens of thousands and soon hundred of thousands of rural Africans as community health workers; and seems to be unaware that unchecked malaria has long devastated Africa’s economy while malaria control is finally emptying the hospitals, putting mothers and fathers back to work and children back to school, and contributing to the boost in Africa’s productivity and economic growth of recent years. She says that if her position against aid for LLINs is deemed to be cruel, then yes, she is “guilty as charged.”

Moyo has proposed cutting off bilateral and multilateral aid. African leaders – like President Ellen Johnson Sirleaf of Liberia, Dr. Awa Coll-Seck of Roll Back Malaria, and Ministers Charity Ngilu and Beth Mugo of Kenya – have fought for Africa’s poor and have used aid to save lives and help economies to prosper. These leaders disagree with Moyo’s drastic proposal to cut off aid. They recommend more aid that is fully accountable and properly targeted to meet urgent needs.

Jeffrey Sachs: Aid Ironies

Jeffrey Sachs wrote a strong op-ed in the Huffington Post on Sunday outlining the flaws he sees in many anti-aid critics arguments and highlighting the many benefits of effective aid. I pulled out some excerpts below, but recommend reading the full piece.

The debate about foreign aid has become farcical. The big opponents of aid today are Dambisa Moyo, an African-born economist who reportedly received scholarships so that she could go to Harvard and Oxford but sees nothing wrong with denying $10 in aid to an African child for an anti-malaria bed net. Her colleague in opposing aid, Bill Easterly, received large-scale government support from the National Science Foundation for his own graduate training…

I certainly don’t begrudge any of them the help that they got. Far from it. I believe in this kind of help. And I’d find Moyo’s views cruel and mistaken even she did not get the scholarships that have been reported (Easterly mentioned his receipt of NSF support in the same book in which he denounces aid). I begrudge them trying to pull up the ladder for those still left behind. Before peddling their simplistic concoction of free markets and self-help, they and we should think about the realities of life, in which all of us need help at some time or other and in countless ways, and even more importantly we should think about the life-and-death consequences for impoverished people who are denied that help…

Americans are predisposed to like the anti-aid message. They believe that the poor have only themselves (or perhaps their governments) to blame. They overestimate the actual aid from the US by around thirty times, so they imagine that vast sums are flowing to Africa that are then squandered. Many believe, typically in private, that by saving African children we would be creating a population explosion, so better to let the kids die now rather than grow up hungry. (I’m asked about this constantly, usually in whispers, after lectures). They don’t understand the most basic point of worldwide experience: when children survive rather than die in large numbers, households choose to have many fewer children, in fact more than compensating for the decline in child mortality. Africa’s high child mortality is ironically a core reason why Africa’s population is continuing to soar rather than stabilize as in other parts of the world.

Of course, most Americans know little about the many crucially successful aid efforts, because Moyo, Easterly, and others lump all kinds of programs – the good and the bad – into one big undifferentiated mass, rather than helping people to understand what is working and how it can be expanded, and what is not working, and should therefore be cut back. Nor do Americans hear that many poor countries graduate from the need for aid over time, precisely because aid programs help to spur economic growth and successfully prepare countries to tackle future priorities. US aid to India for increased food production in the 1960s paved the way for India’s growth takeoff afterwards. There are countless other examples in which countries have benefited from aid and then graduated, including Korea, Malaysia, Taiwan, Israel, and others. Egypt is on that path today, and Rwanda, Tanzania, Ghana, and others will be as well if both donors and recipients carry forward with a sensible assistance strategies…

Edith Jibunoh: “Let Africans say when they’ve had enough aid”

The Financial Times published a letter from ONE’s Senior Manager for African Outreach, Edith Jibunoh.

Let Africans say when they’ve had enough aid
Published: May 13 2009 03:00 | Last updated: May 13 2009 03:00
From Ms Edith Jibunoh.

Sir, Rwanda is an example of a country where focused government leadership has delivered striking successes against poverty, disease and illiteracy (“Africa has to find its own way to prosperity”, Paul Kagame, May 8). But this leadership has been backed by sizeable injections of donor cash.

In just one example, malaria cases and deaths have been cut by two-thirds nationwide, thanks in large part to the effective distribution of millions of bed nets provided by the Global Fund to Combat Aids, TB and Malaria.

Given this success, President Kagame’s endorsement of calls for a rapid shut-off of most overseas assistance appears puzzling. He does, however, raise two crucial issues: when to finally turn off the aid taps, and how best to support the African entrepreneurial flair that will ultimately drive the continent’s growth.

Put simply, the scope of aid should be determined by developing countries – governments and citizens. It is they who should define at what point its goals have been achieved and when it should be ended. Until then, it should be carefully monitored, and reduced or expanded based on evidence, not ideology. All aid programmes should have a built in exit strategy.

As for supporting African dynamism, last week’s Investing in Africa’s Emerging Markets conference at London’s Chatham House was a perfect showcase for why canny investors should bet on Africa. Speakers from across the continent described the dizzying growth and investment successes of the past decade, and the alchemy being created by Africa’s young entrepreneurs.

They also acknowledged that, in Africa as elsewhere, a healthy, educated workforce is essential to underpin economic growth. This is where “smart aid” comes in – aid that is well managed, that is driven by local priorities and which supports African citizens to hold their governments accountable for the delivery of results.

Edith Jibunoh,
Senior Manager,
Africa Outreach,
One,
Abuja, Nigeria