Dead Aid by Dambisa Moyo

4 minutes read

It has been close to six months since my arrival in Sierra Leone. So far, the experience has been a very interesting, albeit at times a challenging one. However, over the course of my dealings and interactions with the different international NGOs and government departments in the country, what has struck me is the huge reliance on aid, particularly grants, that is reflected in almost all the major development work and projects being undertaken in the country. Although it can be argued that a post conflict economy like Sierra Leone requires all the help and assistance that it can get from the international community, particularly after the devastation to the economy that the Ebola crisis of 2014 bought to this region of West Africa, one often wonders on the merits of this seemingly endless supply of aid, and on how effective it has really been to improve the various socio-economic indicators in the country. I was particularly interested in finding out whether the astronomical amount of grants meted out to the country,and in a more broader picture, to the greater Sub-Saharan Africa region, has really helped out the country, or whether it has resulted in denting the growth engine in the country. Dead Aid by Dambisa Moyo is one such book that forcefully argues on the latter perspective, i.e. not only has unfettered aid not accomplished any of the large scale benefits that it claims to be addressing, but rather, it has been outrightly responsible for the condition that Africa finds itself in.

Moyo tracks the historical origins of the concept of development aid to Africa, and how it stemmed from the West’s inference of extending the success that the Marshall Plan had in revitalising the economy of Post-World War Europe to using aid for improving the fortunes of Africa. However, there is a very important observation that Moyo makes: although it is true that the Marshall Plan was immensely successful, its success was due to the following factors. Firstly, the Marshall Plan had a specific goal in mind: revitalising the infrastructure and industries in post-war Europe. Secondly, the Marshall Plan was meted for a fixed duration. Thirdly, the plan was not intended on building the societal and nation-wide structures necessary for any country to become economically independent. Rather, the plan was intended on revitalising on the societal structures that already existed in Europe, but those that had been heavily damaged during the Great War.

If we contrast the specific guidelines and conditions under which the Marshall Plan operated to the stated goals that grant aid has for Africa, the differences between the two approaches are apparent. For one, aid and grants to Africa are often given under the assumption that an injection of cashflow can jump start the institution building and civic infrastructure necessary for development to take root in any country. For another, aid meted out to Africa is often in the form of grants, meaning that the receiving nations are under no obligation to pay them back. Even in the instances when this aid is in the form of loans, the terms of these loans are much lower than the market rates, and no accountability measures are meted out to countries that default on their payments. Moreover, the aid programs are often not tied to any substantial key performance indicators, instead often relying on very broad based aims that are in practice difficult to measure empirically.

Moyo goes one step further, arguing that not only has aid been unsuccessful in its aims, it has been the biggest contributor in stagnating the growth of African countries. The idea of unfettered aid has made corrupt governments complacent, and, with the governments being dependent on aid to finance their budgets rather than looking towards taxation as the major source of funding, the governments do not have much of an inclination in being accountable towards their constituencies. Also, Moyo argues that the spate of civil wars that African countries have witnessed have been primarily led due to a desire by competing factions to capture a larger share of the financial pie.

Instead of the traditional forms of aid that the World Bank and other development organizations offer, Moyo recommends a multi-tiered approach that would help African countries to kickstart their economies. Stating the examples of the Asian tigers and of African countries such as Botswana and South Africa that did not rely on an endless supply of grants, Moya recommends the following steps to be taken by African countries.

  1. Initiating micro-finance projects in their countries for including women and cottage industries to start their own businesses in the country.

  2. Issuing government bonds in the international bond market, thereby raising money for the governments through the capital markets. Not only does Moya believe that this would make the governments more accountable since they would have to pay back international investors on their investment, it would also help in encouraging international investors to invest in more riskier and long term projects in the country.

  3. Attracting foreign direct investment, especially from countries like China who are heavily investing in infrastructure projects in the province.

  4. Incentivising the local population to convert their non-cash investments into cash investments via the help of different investment instruments.

Although some of Moya’s suggestions are not without their share of criticisms, Dead Aid is an interesting read, particularly for people who have witnessed first-hand how widespread the delivery of aid and grants can be in post conflict countries in Africa. Moya’s suggestions are interesting, and they certainly kickstart an important conversation in how exactly real development can be initiated in Africa, a development that is led and owned by the local population in these countries rather than being handed down by some seemingly benevolent economists, policy makers and consultants sitting thousands of miles away.

Leave a Comment