Monday, February 16, 2009

An African economist says aid "feeds corruption"

The Australian Broadcasting Corporation featured an African economist turned author who is very critical of international aid. Dambisa Moyo has written the book 'Dead Aid', in it she says that aid to Africa does not work but only feeds corruption and hurts innovation within African economies.

The book surveys the last 60 years of aid and Moyo attempts to point out failures. When Moyo was interviewed by the ABC, host Mark Colvin tried to draw a parralel to Europe.

MARK COLVIN: You say for the last 60 years that makes me think of say the Marshall Plan, which essentially reconstructed Europe; is aid itself a bad thing?

DAMBISA MOYO: From my perspective aid has not worked. Sixty years ago the architects of the aid model were essentially coming out of the Marshall Plan and there was this general euphoria that this type of large capital intervention could work. And in particular, could deliver long-term economic growth and reduce poverty.

And on those two metrics is basically how I'm judging aid in the past 60 years; has it increased growth? Has it reduced poverty? And on those two measures the answers are resoundingly no.

MARK COLVIN: So why would it have worked in Europe and not in say Africa?

DAMBISA MOYO: Europe was being reconstructed, it wasn't being constructed and in that sense there was already some semblance of infrastructure both political and economic infrastructure that was just simply being rebuilt. It had worked previously and all that interventionists were trying to do was rebuild and restructure a system that was already built, which is very different from the system or the situation in Africa.

The second thing, which I think is perhaps more important is that the Marshall Plan was short and sharp, it was five years, it was about $13 billion, in dollars at that time which is about equivalent to $100 billion now. It was very directed and targeted and it was finite.

I mean, if you compare that to the aid that goes to Africa now, essentially the money that goes to Africa's an open-ended commitment. There is no plan to reduce aid or to actively from the policy-makers perspective to try and wean these countries off of aid into a different, better model.

MARK COLVIN: All right; but is it possible to move abruptly from aid to no aid without at the very least a transition period of people having severe hardship and even starvation?

DAMBISA MOYO: First of all hardship and starvation is pretty much par for the course in Africa; I think we've seen enough pictures of that. It's not clear to me, in fact I argue in the book that most average people in Africa do not even see these aid revenues and so for us to worry as an international community to be concerned and to worry that Africans may suffer because the aid is cut off to me seems foolhardy.

I believe that most Africans would actually potentially see an improvement in their lives because they would start to be able to have their government's held accountable.

I don't think we should have another 60 years of aid. In my book I recommend sort of a five-year phasing out period. Ultimately, as an African I would like to see my continent participate on the world stage as an equal partner, not a drag on society.

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