Banned Aid

Author Dambisa Moyo

Publisher Farrar, Straus & Giroux

Year 2009

Pages 208 pp.

ISBN 9780374139568

Price $24.00

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Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. By Dambisa Moyo. Farrar, Straus & Giroux, 2009, 208 pp. $24.00.

If you live in the affluent West, no public policy issue is more likely to produce conflicts in your conscience than foreign aid. The humane impulse, fueled by unceasing televised images of famine and pestilence in the developing world, is to favor giving more aid. But a contrasting narrative has the opposite effect: Emperor Jean-Bédel Bokassa of the Central African Republic used Western aid to buy a gold-plated bed, and Zaire's dictator, Mobutu Sese Seko, spent it on personal jaunts on the Concorde. Such scandals inevitably lead many to conclude that most aid is wasted or, worse still, that it alone is responsible for corruption.

These debates have largely been the province of Western intellectuals and economists, with Africans in the developing world being passive objects in the exercise -- just as the 1980s debate over the United States' Japan fixation, and the consequent Japan bashing, occurred among Americans while the Japanese themselves stood by silently. Yet now the African silence has been broken by Dambisa Moyo, a young Zambian-born economist with impeccable credentials. Educated at Harvard and Oxford and employed by Goldman Sachs and the World Bank, Moyo has written an impassioned attack on aid that has won praise from leaders as diverse as former UN Secretary-General Kofi Annan and Rwandan President Paul Kagame.

Moyo's sense of outrage derives partly from her distress over how rock stars, such as Bono, have dominated the public discussion of aid and development in recent years, to the exclusion of Africans with experience and expertise. "Scarcely does one see Africa's (elected) officials or those African policymakers charged with a country's development portfolio offer an opinion on what should be done," she writes, "or what might actually work to save the continent from its regression. . . . One disastrous consequence of this has been that honest, critical and serious dialogue and debate on the merits and demerits of aid have atrophied." She also distances herself from academic proponents of aid, virtually disowning her former Harvard professor Jeffrey Sachs, whose technocratic advocacy of aid and moralistic denunciations of aid skeptics cut no ice with her. Instead, she dedicates her book to a prominent and prescient early critic of aid, the development economist Peter Bauer.

Moyo's analysis begins with the frustrating fact that in economic terms, Africa has actually regressed, rather than progressed, since shedding colonial rule several decades ago. She notes that the special factors customarily cited to account for this tragic situation -- geography, history, social cleavages, and civil wars -- are not as compelling as they appear. Indeed, there are many places where these constraints have been overcome. Moyo is less convincing, however, when she tries to argue that aid itself has been the crucial factor holding Africa back, and she verges on deliberate provocation when she proposes terminating all aid within five years -- a proposal that is both impractical (given existing long-term commitments) and unhelpful (since an abrupt withdrawal of aid would leave chaos in its wake).

Moyo's indictment of aid, however, is serious business, going beyond Africa to draw on cross-sectional studies and anecdotes from across the globe. Before buying her indictment, however, it is necessary to explore why the hopes of donors have so often been dashed.

THE CHARITY TRAP

Foreign aid rests on two principles: that it should be given as a moral duty and that it should yield beneficial results. Duty can be seen as an obligation independent of its consequences, but in practice, few are likely to continue giving if their charity has little positive effect. Beginning in the years after World War II, those who wanted the rich nations to give development aid to poorer ones had to address the challenges of building domestic support for greater aid flows and ensuring that the aid would be put to good use. But their unceasing efforts to produce higher flows of aid have led aid advocates to propose the use of tactics that have ironically undermined aid's efficacy, virtually guaranteeing the kind of failures that understandably trigger Moyo's outrage.

At the outset, aid was principally driven by a common sense of humanity that cut across national boundaries -- what might be called cosmopolitan altruism. Aid proponents in the 1940s and 1950s, such as Gunnar Myrdal and Paul Rosenstein-Rodan, were liberals who felt that the principle of progressive taxation -- redistribution within nations -- ought to be extended across international borders. This led to proposals such as those to set an aid target of one percent of each donor nation's GNP, playing off the Christian principle of tithing (giving ten percent of one's income to the church) or the Muslim duty of zakat (which mandates donating 2.5 percent of one's earnings to the needy).

How was the one percent figure arrived at? According to Sir Arthur Lewis, the first Nobel laureate in economics for development economics, the British Labour Party leader Hugh Gaitskell had asked him in the early 1950s what figure they should adopt as the United Kingdom's annual aid obligation and Lewis had settled on one percent of GNP as a target because he had a student working on French colonies in Africa, where French expenditures seemed to add up to one percent of GNP. Such a target, of course, implied a proportional, rather than a progressive, obligation, but it had a nice ring to it.