Foreign aid not helping Africa – economist


Foreign aid to Africa has perpetuated the cycle of poverty and dependency, fostered corruption and hindered economic growth, says Zambia-born economist, Dr. Dambisa Moyo, who Time magazine last month named one of the world’s 100 most influential people.

Dr. Moyo claims that financial assistance (as opposed to aid for emergency relief and non-governmental organizations) has also fuelled inflation, encouraged African governments to amass massive debt burden they cannot finance, stymied the export sector and stifled entrepreneurship.

The 40-year-old Moyo was in Toronto last week to, among other things, deliver the Donner Canadian Foundation’s spring lecture at the Glenn Gould Theatre. Established in 1950, the foundation focuses on specific program interests, including research policy.

Though she studied and works in the United States, Moyo said Africa remains very close to her heart and she’s challenged the continent’s leaders to step forward and articulate their plan for poverty reduction and growth instead of just laying back and depending on aid to support their economies.

“There has been evidence that the aid system has worked in places like the Green Evolution in India and South Korea and with the Marshall Plan,” she said. “But let’s remember that those types of interventions were short, sharp and finite. The fundamental problem with the aid system in Africa is that it is an open-ended commitment. No African government actually thinks that the aid money is going to end and that creates a system where they don’t have to go out and find alternative and better ways of financing economic development.

“It’s critically important that African governments take the lead on issues of reducing poverty and spurring growth. In far too many instances, they are not taking the charge in this debate…The large billions of dollars that go to Africa are actually allowing governments to abdicate their responsibilities.”

Moyo suggested that the inability of African leaders to devise innovative ways for their countries to finance development has opened the door for the celebrity culture to become the de facto faces of Africa.

“This celebrity culture is a red herring to the issue of how we are going to get Africa to grow and meaningfully reduce poverty,” said Moyo, who completed a PhD in Economics from Oxford University and holds a Masters from Harvard University and an MBA and Bachelors in Chemistry from the American University in Washington, D.C. “I don’t agree with those who say I am anti-Bono. I actually like his music. I just don’t like him designing economic policy for Africa.

“I think that the fundamental message of the celebrities of pushing more aid to Africa is the wrong one. What I find problematic about the celebrity culture is that here they have an amazing platform and a genuinely captive audience internationally and they choose to use that platform in a negative light. So, every time you turn on the television or you go to a U-2 concert, the whole public relations around the ‘Aid to Africa’ campaign is negative. All that comes out from them is what I call ‘The Four Horsemen of African Apocalypse’ which are disease, war, corruption and poverty. Yes, these are important aspects of the lives of many people on the African continent, but it’s not helping us by focusing on the negatives, particularly when there are so many positive things happening across the continent.

“I think many African leaders have taken a backseat because they are receiving aid and they can’t be bothered to stand up and say, ‘Please Mr. Bono, you are wrong and we actually have a different view’. They have allowed a vacuum to emerge and therefore anyone can step in. It’s tantamount to President Obama not saying anything about the housing crisis and actually allowing Mick Jagger or somebody like Madonna to start talking about the financial crisis and offering policy solutions. Americans and Canadians will never tolerate that so why should Africans feel that this is OK and, in fact, why should global citizens think it’s OK for the face of Africa to be the celebrities.”

Moyo, whose parents were among the University of Zambia’s first graduating class in 1970, worked at the World Bank in Washington and with Goldman Sachs in the debt capital markets, hedge fund coverage and in global macro-economics teams.

She’s the author of Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, which was released this spring. In the controversial book, Moyo dedicates a chapter to China’s flourishing relationship with Africa. Since 2006, the China-African Development Fund has invested $400 million in Africa.

“What they (the Chinese) have done is to come to Africa with a very different approach from the Western approach of pity and sympathy,” she said. “They have come to Africa to do business and that’s a good thing for us. They are providing infrastructure where the West has failed to do so in the past 60 years. They are providing job opportunities where we need them desperately. This is not to say the Chinese should come in carte blanche and they are all wonderful. Of course, they are not.

“There are still things like labour and environmental laws that we need to hold them to task. But that is the responsibility of our governments. In very much the same way that the American government will take money from the Chinese, we should also be taking money because we need it to invest and create jobs on the continent. Rather than berate the Chinese and have them leave our continent, leave us jobless and dependent on the aid cycle, give them a chance. They are giving us an opportunity to actually, meaningfully, create a destiny for ourselves.”

Moyo has been offered a contract for a second book, How the West Was Lost, that’s scheduled to be released next year. This publication examines the policy errors made in Canada and other Western economies which culminated in the current financial crisis. It also explores the policy decisions that have placed China, Russia and the Middle East in pole position to become the dominant economic players in the 21st century.

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