In a post last month ("An African Economist on Western Aid to Africa"), we mentioned the Zambian-born economist and author Dambisa Moyo, and posted an excerpt from the interview with her in the Financial Times. Today's New York Times Magazine features an interview with Moyo as well ("Questions for Dambisa Moyo -- The Anti-Bono"). From the interview:
Q: As a native of Zambia with advanced degrees in public policy and economics from Harvard and Oxford, you are about to publish an attack on Western aid to Africa and its recent glamorization by celebrities. ‘‘Dead Aid,’’ as your book is called, is particularly hard on rock stars. Have you met Bono?
I have, yes, at the World Economic Forum in Davos, Switzerland, last year. It was at a party to raise money for Africans, and there were no Africans in the room, except for me.
[...]
You argue in your book that Western aid to Africa has not only perpetuated poverty but also worsened it, and you are perhaps the first African to request in book form that all development aid be halted within five years.
Think about it this way — China has 1.3 billion people, only 300 million of whom live like us, if you will, with Western living standards. There are a billion Chinese who are living in substandard conditions. Do you know anybody who feels sorry for China? Nobody.
Maybe that’s because they have so much money that we here in the U.S. are begging the Chinese for loans.
Forty years ago, China was poorer than many African countries. Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid.
The photo above, of Ms. Mayo, accompanied Deborah Solomon's interview.
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There was another piece, a bit more substantial, in The Guardian recently about her thesis.
excerpts:
"She makes it clear at the outset what kind of aid she means. She does not mean humanitarian or emergency aid, mobilised in response to calamities; she does not mean charity-based aid, given to specific organisations and people on the ground, in order to achieve specific things ... What she means is "systemic aid", the vast sums regularly transferred from government to government, or via institutions such as the World Bank."
"Between 1970 and 1998, when aid flows to Africa were at their peak, poverty in Africa rose from 11% to a staggering 66%" - roughly 600 million of Africa's billion people are now trapped in poverty."
Thanks for the link, J.K. The main point she makes in the NYT and the FT is that it's better if African countries get funding they need from the bond market, because the discipline of the bond market would lead to better governance, whereas international aid donors are more likely to send good money after bad. Moyo worked in emerging market debt at Goldman Sachs, so she has some experience with this.
Nevertheless, this raises a question which I haven't seen asked of Moyo: How would the current credit crisis/debt deflation affect African governments' attempts to access the global bond market?
Well she says aid should be turned off over 5 years, not cold turkey. In Iraq, once the threat of American withdrawal became real, they started getting their act together. Likewise, if African countries are told to have their houses in order by 20xx in order to enter the bond markets, they'd have the time and incentive to straighten things out before then, or else.
It will be interesting to see what the world looks like in five years. It's possible that emerging market countries with reputations for good governance and macroeconomic policies (e.g., Chile) might get better rates from the bond market than some richer first world countries with unsustainable fiscal policies.
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