Saturday, 6 November 2010

Togo - Moyo's theory on the failure of Aid to Africa

Not specifically related to Togo, but rather a text that deals with Africa as a whole continent, I was told about Dambisa Moyo's book Dead Aid by a Kenyan economist I met at a writer's day here in London back in July.  I've been itching for an excuse to read this book, so I'm using Togo as my platform for the issue of Aid, which is one that practically every African nation has been affected by. 

The culture of giving Aid

I must admit, I was pretty sceptical at first, when I understood that Moyo's main argument was to stop all Aid payments to Africa and throw African nations into the maelstrom of a capitalistic, market-based economy.  I guess, culturally, as a Westerner, I've never really questioned the logic behind aid to Africa - it's always just seemed to be the 'right thing' to do.  Especially being Irish, with all of the charity work that Irish aid agencies have got involved in, through (I believe) a genuine desire to improve the lives of people who are worse off than ourselves - the culture of aid-giving is something I was brought up and never thought to question, before I read Moyo's book. 

In some ways it's reassuring to think, no matter how much I have distilled the leftist political beliefs I developed in my teenage years, that I am still open to learning something new about the world, to looking at things from a different angle and questioning things that I would never have thought to question before.

African economists

Perhaps one of the most attractive things about this book is that it was written by an African woman from Zambia.  The debates about African economics and the future of the continent have been so dominated by the theories of white politicians, white economists and white celebs, it's refreshing to read something by a black economist and I genuinely believe that Africa's 'problems' will only ever be solved by African people.  The West and white Europeans have dominated African history for far too long! 

Having said that, I don't think Moyo's arguments are inherently African.  She is Oxford-university educated and, perhaps, her views are merely a product of her education.  Her arguments have evolved from a very Western way of thinking and I'm a little bit weary of the idea that she might be used by (Western) free-market economists, to pursue sinister right-wing solutions to the situation Africa finds itself in today.  I guess what I'm saying is that it would be much harder for a white, Western economist to put forward the solutions that Moyo does - in our very liberal way, we might accept her right to do this, as a leading African economist and a black woman, whereas her arguments should be analysed for what they are, without reference to the colour of her skin. 

Statistics

Moyo's book is peppered with statistics, most of them incredibly alarming and the bottom line is that despite the estimated $300 billion that has been given to African nations since the 1970's, the reality of life in Africa is that it has gone from bad to worse during that period and levels of poverty in most countries is much higher than it was 40 years ago!  Moyo believes that, not only has aid to Africa not worked, it's made things much worse.  There is definitely a lot of logic in the argument that Africa has become aid-dependent and the whole continent is like one big welfare state.  I also share Moyo's belief that aid has discouraged entrepreneurship and stifled economic growth, led to an increase in despotism and made little difference to the lives of the average African. 

Different types of Aid

Moyo divides aid into three categories:

Charity aid - ie. non-governmental donations from ordinary people - the type of aid most of us will be familiar with.

Disaster relief - eg. charitable donations given to Haiti or South East Asia, after the tsunami. 

Systematic aid - ie. direct cash transfers from a Western government to one or more African governments.

Moyo's main focus is systematic aid and I was really surprised to learn that this makes up the majority of aid that is given to African nations.  She does criticise the other two forms of aid as well and I was really upset to learn about the Bush administration's President's Emergency Plan for Aids Relief which pledged $15 billion to Aids/HIV relief over a five year period (2003-2008), but with the proviso that at least 1/3 of this went to organisations that promoted 'abstinence' and that none of this went to clinics that advised women on abortion.  It's absolutely outrageous that aid could be qualified in this way and I can't believe the blatant moral colonialism of the PEPFAR programme! 

Also, the whole Haiti thing makes me feel incredibly uncomfortable - I read a book about eight years ago that opened my eyes to the desperate situation that Haiti is in, so I've been very aware of the issues Haiti is faced with and the lack of interest or concern that the West had shown about Haiti prior to the horrible earthquake earlier this year.  All of a sudden, concern about Haiti became very fashionable and I know people mean well, but this sudden concern really bugged me and seemed incredibly superficial.  Almost a year later and the world has moved on and the challenges that Haiti faces are more serious than ever. 

The origins of Aid

Moyo gives a very concise overview of the origins of Aid in a Europe devastated by the Second World War.  She talks about the significance of the Marshall Aid programme and how instrumental it was in ensuring that European nations got on their feet again and rebuilt their shattered economies.  Moyo makes some pertinent comparisons between the Marshall Aid programme and current Aid to Africa, namely that the Marshall Aid programme was timebound (5 years) and had a very tangible purpose (restructuring), whereas Aid to Africa has had no timeframe and been confused in its purpose.  She also highlights the fact that most government to government aid in the 70's and 80's was in the form of loans, with interest rates so that, by the 90's debt repayments ended up dwarfing grants in aid from the West.  Ironically, we now have the absurd situation where vast sums of money are flowing south to north and from the poorest nations to the richest ones. 

Live Aid and the work of Western celebrities

Moyo's book is called Dead Aid for a very important reason and, although she acknowledges the well-meaning involvement of Western popstars and celebrities in African affairs, she slates their contribution as ignorant and damaging.  Of course, she's incredibly aware of the fact that Africa has an image problem which can only ever scare away potential investors and she feels that the interference of Western celebs in the Aid debate only highlights the unattractiveness of Africa as a place to invest money and reinforces the negative perceptions westerners have, which over-simplifies the economic reality faced by the continent.  She also believes that they don't really know what they're talking about and I share her concerns that people in the West are more willing to listen to someone like Bob Geldof or Bono, than listen to the opinions of African economist like Moyo. 

Again, I grew up in the 80's and remember the Live Aid concerts and all the charity-work in relation to the famine in Ethiopia.  Ireland in the 80's was hardly the richest country in the world and, I guess, it felt strangely reassuring to know that there were people out there that were worse off than yourself.  Often the poorest people in western societies are the ones who will give most and, rather than be cynical about it, I would like to think that there was a genuine empathy in Ireland during the 1980's, where people understood that we were suffering as a nation, but that there was still enough money around to ensure that others weren't going to starve to death, especially at Christmas time!  It's no coincidence that both Geldof and Bono are Irish and I think there's something deep in our mentality that makes us feel strongly about aid-giving, especially famine relief.  I'm sure there are direct parallels to the Great Famine that wiped out 2 million Irish people in the 1840's and sent another 2 million overseas in search of a better life. 

Democracy and economic growth

There is no doubt that stable democracies are more likely to experience economic growth and Moyo also deals with Africa's colonial past, the Berlin conference that randomly threw competing tribes into European-style nations and how decades of ethnic rivalry, civil wars and (in the extreme case of Rwanda) genocide have only made things much worse.  When most African nations were gaining independence in the 1960's, Nigeria, with its rich oil deposits, was heralded as a future African success story.  Whilst Nigeria is still in a strong position economically, its history is one that is typical of the failures of African nationhood - in many ways, civil war or inter-tribal wrangling is one of the biggest obstacles that an African nation faces. 

Quite controversially (from a Western perspective) Moyo states that democracy isn't always the best thing for an African nation and that democracy, especially in nations that have precarious ethnic divisions, can slow down economic growth and led to a lack of clear decision making.  I think I understand what she means and, unlike some of her critics, I don't believe she was espousing benign dictatorship as a political model, but that she recognised the need for stronger political leadership in African nations.  Moyo also believes that a functioning democracy is an ideal partner for economic growth, as politicians will be held accountable to the public who vote them into office.  The reality for a lot of African nations, of course, is far removed from the democratic 'ideal' that exists in the West. 

Western dependency on aid-giving

Moyo also points out that an estimated 500 million Western jobs are tied up in the aid 'industry', including the very existence of institutions like the World Bank.  There is a strong argument that the West has become dependent on the idea of giving aid to Africa and I guess it's undeniable that anyone who works for the World Bank, or even an aid-giving charity, will automatically refute Moyo's arguments, because it's in their best interests to do so.  Whilst I was reading her arguments around this, I had some even more sinister thoughts that Western governments are somehow using aid to get rid of excess cash from our taxes, to keep a low baseline of earnings in western countries and maintain the rich/poor divide that keeps the whole capitalist wheel spinning in perpetuity.  I'm weary of right-wing arguments on the subject, but you do have to wonder, during this time of austerity and cutbacks to important social services, especially here in the UK, why the development aid budget has been so strongly protected by our current government. 

Moyo's proposals for African economic growth

Importantly, Moyo's book isn't just about the failure of aid in Africa.  She has also come up with a plan to stimulate economic growth in African nations, which is divided into four main strands:

1. International bonds  I'm not an economist, but I did manage to get my head around the concept of International bonds and how a country can raise capital against its very existence.  Moyo promotes the raising of international bonds as a good alternative to Aid, as it is time-bound and has conditions that are meant to ensure that the capital is used wisely.  Moyo's argument is that when aid is given again and again to African nations, with no end in sight, then it's more likely to be spent foolishly by the nation's elite (eg on shopping trips to Paris!), as they have no real motivation to invest in the country's infrastructure, or improve the conditions of their poorer compatriots.  Moyo's critics have said that she is overly-optimistic in putting this forward as a solution to Africa's economic woes and, indeed, since her book was published last year, the international bonds market seems to have fallen through somewhat and the global economy is even more mistrustful of Africa's ability to fulfill its commitment to such bonds.  Only three African nations have ever issued bonds - South Africa, Ghana and Gabon. 

2. Direct investment.  I agree with Moyo that direct investment is a win-win situation for African nations and the nations that choose to invest in Africa.  With around 1 billion people, Africa has a large chunk of the world's population and (potentially) the world's consumers.  Geographically, Africa is at the centre of the world, much closer to European markets than countries in Asia or the Americas, but Africa lacks the infrastructure that is necessary to compete in a global economy.  Rapid transport, hi-speed internet and an educated workforce are the things that will drag the African economy into the 21st century global market. 

Moyo gives an interesting analysis of China's ongoing investment in African infrastructure and I think she's right to be optimistic about Chinese interests in the African economy and how this can have a much more positive impact on the lives of African people, than 40 years of Western aid-giving has had.  I think it's quite easy for people in the West to turn their noses up at Chinese investment (in Africa and elsewhere) and fall back on our practised mantras of Chinese self-interest and lack of commitment to human rights, but the reality is that whilst the 21st century global economy is being driven forward by countries like China and India, Europe and the West is in danger of being left far behind.  Moyo points out that any investment in Africa over the past ten years has reaped impressive returns and I share her optimism that the African economy isn't doomed to an endless cycle of corruption and economic stagnation.  The future for Africa could be very bright indeed!

3. Free trade - I touched on this before, when I was blogging about Lesotho, but what Africa needs much more than billions of dollars in handouts is the chance to sell its products in western markets on an equal footing with local producers.  I'm a great believer in European unity, but economic measures such as the Common Agricultural Policy are crippling Africa's future which, like it or not, will have an effect on Europe's political and economic stability.  It's hard to understand the world we live in, where an average European cow is subsidised to the tune of $2.50 per day, whereas most Africans live on less than a dollar a day!  Which are more important, cows or people? 

In fairness, she also apportions part of the blame on African countries themselves, that are perpetuating outdated colonial bureaucracy around import and export duties and trade between African nations.  In a bid to make a quick buck, African governments are shooting themselves in the foot.  Moyo quotes an interesting statistic to illustrate this, in that it's cheaper to ship a car from Japan to Abidjan, Cote D'Ivoire ($1500), than from Abidjan to Addis Ababa, Ethiopia ($5000).  African nations need a common market just as much as European nations do. 

4.  Microfinancing - One of the most interesting of Moyo's solutions is the growing industry of microfinancing.  Again, not being an economist, I'm still trying to get my head around this, but I guess it's a bit like a credit union.  Rather than rely on world-famous banks, who are nervous about investing in small African businesses and don't wish to deal with small sums of money, which is less profitable to a big corporation, Moyo suggests the development of microfinancing corporations, that raise money from donors in the west, or even from Western governments, then lend this locally, enabling African entrepreneurs to get a foot on the ladder of industry.  It's an interesting concept and Moyo cites several examples from around the world, notably the Grameen Bank in Bangladesh and points to the success of this type of financing.

Ironically, one of the outcomes of reading Moyo's book is that I've started seriously looking into the idea of financing an entrepreneur, in Africa or somewhere else.  There is an online microfinancing website called Kiva.org that, despite criticisms about the interest the local microbanks charge, does seem to work surprisingly well.  The idea is that someone in the west can lend $25 to a small community bank in the developing world, they will lend this to a local entrepreneur who will (hopefully) pay this back and then you can get your money back or, as most people will do, reinvest in another entreprise.  I think it's important not to be naive about initiatives like Kiva.org and I still have reservations about how this money is used and whether or not the 'real' person at the other end is being exploited.  Still, it's better to be an optimist than a cynic! 

The impact of Dead Aid

Love it or hate it, I think Moyo's book is an important one and one that you should read, if you're interested in aid-giving and the future of Africa.  I'm going to remain optimistic and share Moyo's view that things can and will change for Africa.  Whilst her suggestion of cutting off all aid to Africa within 5 years might be a bit extreme, I think she has verbalised concerns that a lot of people in the west have been too distracted to take seriously.  She has also convinced me that this endless flow of aid to Africa isn't going to solve Africa's problems and I hope that other African economists and community leaders can take some inspiration from Moyo's words and find a solution that will make the world a better place for the majority of Africa's 1 billion-strong population. 

Image credits:

The photo of the Dead Aid bookcover was taken by me - I read the Penguin edition published in 2010 (Dead Aid was originally published in 2009 by Allen Lane)

The image of the Live Aid ticket is by flickuser Chim Chim, a.k.a. Mark Couvillion, who is a web designer and photographer from Austin, Texas.  You can see more of Mark's photos at http://www.flickr.com/people/chimchim/

The image of the Chinese man in Ghana was taken by flickruser oneVillage Initiative which is all about Holistic ICT for Ecoliving - you can find out more at their website

Thanks to Chim Chim and oneVillage Initiative for sharing their images with the world using the Creative Commons license. 
Post a Comment