“Dead Aid: Why Aid Makes Things Worse and How There Is Another Way for Africa” by Dambisa Moyo

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Table of Contents

Introduction
Main Arguments Presented in the Book
Critical Review
Conclusion
Reference List

Introduction

This paper is a critical review of a book authored by Moyo (2010), titled “Dead Aid: Why Aid Makes Things Worse and How There Is another Way for Africa.” The book mainly talks about why financial assistance from western nations has failed to help Africa. Of critical note is the author’s assertion that international aid agencies should stop sending money to Africa because it discourages its people from developing home-grown solutions to their economic and social problems. At the core of the author’s arguments is the presumption that aid in Africa has relegated the continent’s inhabitants to “beggars” as opposed to problem-solvers.

The aid model highlighted above stems from the general western belief that the rich should always help the poor (Hermanrud & de Soysa 2017; Asongu & Odhiambo 2019). However, as Moyo (2010) suggests, aid has only helped to make the poor poorer by disempowering their social and political structures. In light of this observation, some researchers support Moyo’s (2010) views by saying that aid has been a source of humanitarian, economic and social conflict not only in Africa but other developing nations as well (Derpanopoulos et al. 2016; Handlin 2015). Overall, Moyo (2010) characterises aid as a disease, which “pretends” to be the cure for Africa’s economic problems.

In this critical review, Moyo’s (2010) work will be reviewed in the context of how it compares to existing theories of developmental economics and the works of other researchers who have also explored the same topic. This paper is classified into three main subsections. The first one is a succinct review of the author’s main arguments and is aimed at having a broader understanding of the key arguments presented in the book. The second part of the paper interrogates the author’s views of aid in Africa within the context of existing economic models of development and Africa’s current social and economic dynamics. The last part of the paper provides a summary of the review.

Main Arguments Presented in the Book

Moyo (2010) starts by saying that the debate about Africa and its economic problems should be conducted by people who come from the continent and not outsiders. She further digresses from this point of view by questioning why many sub-Saharan countries seem to be stuck in a cycle of corruption, disease and poverty, despite receiving more than $300 billion dollars in aid since the 1970s (Moyo 2010). O’Hare et al. (2014) also question why Africa’s economic growth has not been transformational despite receiving millions of dollars over the years. In response to this subject, Moyo (2010) posits that aid has fostered high levels of corruption on the continent and made it difficult to achieve significant levels of economic development.

There are many examples of the extent that corruption has affected the economic growth of African countries. For example, in the Democratic Republic of Congo (former Zaire), one president (Mobutu Seseseko) is estimated to have stolen $5 billion from the country’s budget (Moyo 2010). This figure is similar to the country’s total external debt (Moyo 2010). Such examples add credence to the arguments made by Moyo (2010) because they provide verifiable and public information about the role of aid in abating financial plunder in African nations. Besides the misuse of public resources, Moyo (2010) further extends her arguments to the ineffective use of foreign aid by African countries in the past decade. Notably, she uses the example of Africa’s 2003 foreign aid receipts, which show that 50% of the aid sent to the continent was expended out of it (Moyo 2010). This statistic means that about half of all the aid sent to the continent did not serve its main purpose – to help Africans.

Moyo (2010) says that the disbursement of aid has also undermined the growth of domestic savings and investments in Africa because it encourages people to fight for control of the “free money.” To support her point, the author gives the example of an African-based company, which manufacturers mosquito nets but was run out of business because of the free nets provided by donor aid agencies (Moyo 2010). Moyo’s (2010) arguments about the negative effects of aid in Africa are supported by statistics, which show a slowdown of Africa’s economic growth index as aid disbursements increased. In support of this statement, Moyo (2010) claims that most countries, which have consistently received aid, have posted an average economic growth rate of -0.2%. She further claims that Africa’s poverty rate increased from 11% to 66% when aid disbursement was at its peak during the 1970s and 1980s (Moyo 2010).

Although Moyo (2010) acknowledges that the correlation between aid and underdevelopment is debatable, there is a negative relationship between aid and poverty because of the link between concessional (non-emergency loans) and underdevelopment. The association between poverty and underdevelopment is also similar to the “curse of natural resources” paradox reported in Africa. It suggests that countries that have abundant natural resources are likely to suffer from conflict and corruption (Reynolds & Winters 2016). This paradox has also been linked to the plenty paradox, which suggests that countries that have abundant natural resources, such as oil and gas, tend to suffer from poor economic governance, low levels of democratic growth and poor developmental outcomes (Ansari 2017).

The “curse of natural resource” paradigm has been linked with the resource-based view of economic development, which associates the economic development of nations with their resource capabilities (Lakemann 2018). Referring to the natural resource curse of African countries, critics of the resource-based view argue that the anomaly only happens to certain countries, which have specific “enabling conditions,” such as social fragmentation. Based on the above assertions, the arguments presented by Moyo (2010) fit within a larger body of literature that has explained poor developmental outcomes in Africa through the paradox of plenty paradigm (Plagemann 2015).

Critical Review

Although the arguments presented by Moyo (2010) are succinct, it is important to contextualise her views within the wider body of literature that has explored the effects of aid in Africa. Most of these pieces of literature stem from studies in developmental economics. They have not only examined how to improve the economic conditions in Africa but also enhance the welfare of its people (Vos & Sánchez 2014; Kwemo 2017; Adeyemi 2017; Albiman 2016; Park 2014). For example, the international dependence theory, which has been supported by researchers such as Dang and Pheng (2014), supports the above view because it gives credence to the argument that economic stagnation in Africa has not been caused by the continent’s internal dynamics, but rather by the actions of external agents of economic development. Stated differently, proponents of the theory posit that the obstacles to economic development in Africa are primarily external in nature (Dang & Pheng 2014).

The similarities between the international dependence theory and Moyo’s (2010) arguments stem from the latter’s observation that there is an aid-dependent culture in Africa where people who are more successful than others feel obligated to help those who are less fortunate, regardless of how such an action would affect their economic wellbeing. The international dependence theory affirms the same view because it presupposes that many African countries are dependent on developed and wealthy nations, which are keen to maintain their dominance on the global stage (Dang & Pheng 2014).

I agree with Moyo’s (2010) arguments that the effect of aid in Africa is the same as natural resources because they are both perceived as “easy money,” which attracts minimal accountability. The disbursement of aid to African governments (directly) has further worsened the case for the development of African nations because aid has become a source of conflict, as it encourages people to wrestle for control of the resource. This reason could explain why many African governments are suffering from conflict.

I also agree with the author’s view that the aid-based development model, which has been pursued by western-based development agencies, will not develop Africa because it is unsustainable. South Africa and Botswana are good examples of countries on the continent that have overcome the “aid curse” and are mostly reliant on their internal resources to finance development projects. These countries demonstrate that it is possible to wean African countries from the mindset of aid support by encouraging self-reliance. I also concur with the view that if western-based aid agencies were to stop sending money to Africa, the continent would improve its economic growth by encouraging innovation and creating local solutions to domestic problems.

This view supersedes those proposed by proponents of aid who propagate the belief that the rate of poverty in Africa will increase if aid is withdrawn (Moyo 2010). I believe that such an outcome is unlikely because most of the aid sent to Africa does not reach those intended. In addition, many African governments have been hit hard by the worst crises in human history and would possibly not be further negatively affected by a withdrawal of aid. Lastly, the conflicts which have been reported in Africa and that have been fuelled by the aid development model will decline if this incentive is withdrawn. This view means that the continent will finally have an opportunity to think clearly about how to better its future by looking for internal solutions.

I also have the same opinion with Moyo (2010), when she proposed that the best way to help Africa shun the aid mentality is to gradually withdraw financial support until such a time when governments are able to adopt home-grown solutions. According to Park (2014), the aid given to Africa should decline by about 14% annually. This view aligns with those of other researchers who suggest that the most promising solution to lift millions of people from poverty is to embrace entrepreneurship and other market-based economic solutions (Adeyemi 2017; Albiman 2016; Ennis 2018). This assertion stems from historical facts, which suggest that the free movement of capital and economic liberation have helped to transform societies and economies by making them more prosperous (Adeyemi 2017; Albiman 2016). Such has been the case of China, Japan and many Asian countries because they have transformed their economies by adopting market-based solutions to solving domestic economic issues (de Medeiros Carvalho 2015; Raheem 2017; Bailard 2016). If it has worked for China, it could also work for Africa, and I believe the continent is ready for such a transformation.

Overall, the findings presented by Moyo (2010) are refreshing because she understands the continent’s economic issues and has gathered effective professional and academic skills to analyse them. Indeed, having accumulated vast experiences in global economic issues from the World Bank, Moyo’s (2010) findings are trustworthy. Although the book is not the first one that castigates western aid in Africa, it is presented with rigour and conviction from the passion that the author manifests when making her arguments.

I like the fact that unlike other books or documents, which have criticised the aid model in Africa and failed to provide solutions, Moyo (2010) goes a step further and suggests workable market-based recommendations for uplifting the economic conditions of the continent’s inhabitants. Here, she presents four solutions. The first one is accessing the global bond market, which has been experiencing falling yields and using its proceeds to finance its operations (Moyo 2010). Secondly, the author suggests that the continent should embrace the Chinese model of development, which is premised on promoting and financing large infrastructural developments in Africa through loans that have to be repaid over a specific period (Moyo 2010). In line with this recommendation, it is important to point out that China has invested millions of dollars in successful infrastructure developments in Africa (Fam 2017). The current trend of foreign direct investments in Africa shows a significant increase in China’s financial support to the continent because the investments were only $20 million in the mid-seventies (Moyo 2010).

The third alternative proposed by Moyo (2010) as a solution to Africa’s financial problems is the pursuit of financial intermediation. This strategy is implementable by facilitating foreign remittances to Africa and empowering impoverished communities through financial support, such as giving squatters title deeds for the land they live on so that they can use them as collateral to gain access to financial markets. The last recommendation proposed by the author is pursuing genuine free trade agreements of agricultural products in developed nations, such as the US and Japan (Moyo 2010). She argues that the goal of pursuing this strategy is to allow African farmers to export their agricultural produce to wealthy countries. However, this proposal is premised on the withdrawal of subsidies provided to farmers in developed markets. I disagree with this suggestion because it is wrong to undermine the progress made by farmers in one part of the world to improve the welfare of traders in another region. Informally, this principle could be likened to “robbing Peter to pay Paul.” I foresee that western countries will not accept such a proposal.

Conclusion

Based on the information contained in this book review, Mayo’s (2010) work suggest that international aid agencies should stop sending money to Africa because it discourages its people from developing home-grown solutions to their economic and social problems. At the core of the author’s arguments is the presumption that aid in Africa has relegated the continent’s inhabitants to “beggars” as opposed to problem-solvers. In this regard, the arguments presented by Moyo (2010) suggest that aid has failed to help Africa achieve its economic goals, and it is time that the continent thinks of better ways of solving its problems. In line with this view, the author encourages international organisations to think of better ways of supporting the continent. Her suggestions are premised on the adoption of market-based development models.

Although Moyo’s (2010) book is not the first one to castigate western aid in Africa, it is presented with rigour and conviction from the passion that the author manifests when making her arguments. I support the author’s views on the role of aid in Africa and the direction she takes in providing solutions (thinking of homegrown remedies). However, there is a need to rethink the modalities of implementing her recommendations. For example, it is wrong to help one group of farmers at the expense of another.

Nonetheless, it is important to point out that Moyo’s (2010) book is one of the most informative pieces of literature that educate people about aid in Africa and why decades of financial assistance to the continent have done more harm than good. The book has the potential to be a classic piece of literature and a useful document to international aid agencies, which want to have a positive impact on the continent by avoiding past strategies that have failed to yield desired results. As an African, Moyo (2010) analyses the continent’s problems from a personal view, thereby improving the credibility of her proposed arguments. In other words, we could assume that the views presented in the book are credible because they emerge from an insider’s view of a continent poorly understood by many.

Reference List

Adeyemi, S 2017, Africa doesn’t need charity, it needs good leadership, Web.

Albiman, MM 2016, What is the impact of foreign aid on economic growth? Time series analysis with new evidence from Tanzania. Business Economy Journal, vol. 7, no. 1, pp. 237-255.

Ansari, K 2017, ‘Book review: Edward Shizha and Lamine Diallo, Africa in the age of globalisation: perceptions, misperceptions and realities’, Insight on Africa, vol. 9, no. 1, pp. 83-87.

Asongu, SA & Odhiambo, NM 2019, ‘Governance, CO2 emissions and inclusive human development in sub-Saharan Africa’, Energy Exploration & Exploitation, vol. 7, no. 2, pp. 1-10.

Bailard, CS 2016, ‘China in Africa: an analysis of the effect of Chinese media expansion on African public opinion’, The International Journal of Press/Politics, vol. 21, no. 4, pp. 446-471.

Dang, G & Pheng, LS 2014, Infrastructure investments in developing economies: the case of Vietnam, Springer, New York.

de Medeiros Carvalho, P 2015, ‘China’s and Japan’s foreign aid policies vis-à-vis lusophone Africa’, Africa Spectrum, vol. 50, no. 3, pp. 49-79.

Derpanopoulos, G, Frantz, E, Geddes, B & Wright, J 2016, ‘Are coups good for democracy’, Research & Politics, vol. 18, no. 1, pp. 1-10.

Ennis, CA 2018, ‘Reading entrepreneurial power in small Gulf states: Qatar and the UAE’, International Journal, vol. 73, no. 4, pp. 573-595.

Fam, S 2017, ‘China came, China built, China left? The Sarawakian experience with Chinese dam building’, Journal of Current Chinese Affairs, vol. 46, no. 3, pp. 119-158.

Handlin, S 2015, ‘NGOs, International donors, and the post-material disjuncture in Latin America’, Journal of Politics in Latin America, vol. 7, no. 2, pp. 43-70.

Hermanrud, K & de Soysa, I 2017, ‘Lazy thinking, lazy giving? Examining the effects of Norwegian aid on forests in developing countries’, International Area Studies Review, vol. 20, no. 1, pp. 19-41.

Kwemo, A 2017, Making Africa great again: reducing aid dependency, Web.

Lakemann, T 2018, ‘Book review: Africa through an economic lens’, Africa Spectrum, vol. 53, no. 2, pp. 139-141.

Moyo, D 2010, Why aid makes things worse and how there is another way for Africa Penguin Books, London.

O’Hare, B, Makuta, I, Bar-Zeev, N, Chiwaula, L & Cobham, A 2014, ‘The effect of illicit financial flows on time to reach the fourth Millennium Development Goal in Sub-Saharan Africa: a quantitative analysis’, Journal of the Royal Society of Medicine, vol. 107, no. 4, pp. 148-156.

Park, SJ 2014, ‘Book review: medicine, mobility, and power in global Africa: transnational health and healing’, Africa Spectrum, vol. 49, no. 2, pp. 120-122.

Plagemann, J 2015, ‘Book review: Africa rising? BRICS – diversifying dependency’, Africa Spectrum, vol. 50, no. 1, pp. 115-118.

Raheem, ID 2017, ‘More finance or better finance in Feldstein–horioka puzzle: evidence from SSA countries’, Global Business Review, vol. 18, no. 1, pp. 132-143.

Reynolds, EM & Winters, MS 2016, ‘Foreign aid funnel? A placebo-based assessment of aid flows to non-permanent United Nations Security Council members’, Research & Politics, vol. 6, no. 5, pp. 112-132.

Vos, R & Sánchez, MV 2014, Financing human development in Africa, Asia and the Middle East, A&C Black, New York, NY.

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