I hate economics. Financial stats and graphs put me asleep, and economic theory is about as interesting as watching ants crawling down the street.
But, I realize that kudos in the world of politics, development and current affairs comes via a sound economic grounding.
So, I’ve been crawling my way through The End of Poverty, which I will review when I finish it. (Probably in 10 years.) In sum, author Jeffrey Sachs advocates a large financial investment and unwavering political will to end the scourge of poverty in the developing world. Lofty ideals indeed. Sachs sets out a comprehensive plan (which puts me to sleep) but enlivens critics to vehemently support or oppose his views in an equally dull manner.
Diametrically opposed to this view is Dambisa Moyo. A Zambian economist, who’s been through Oxford and Harvard, this girl knows her numbers. I found her, unbelievably, via Oprah’s Most Powerful list.
‘Dead Aid: Why Aid is Not Working and How There is Another Way for Africa’ is a slim book, written clearly and concisely. It’s economic and heavy, though not dull. (ok, I thought it was a little dull!)
Her basic treatise is that 60 years of aid simply hasn’t worked and we should try something else. She advocates making charity history. More than $1 trillion (that’s $1,000,000,000,000) in aid has been poured into Africa and we haven’t see a whole lot of success from that investment.
She argues that aid causes corruption and conflict, while slowing economic growth, discouraging free enterprise, undermining investment and domestic savings. See urges us to look at South Africa or Botswana; neither accepts foreign government aid (although there are many NGOs working there) and they are growing economically.
Indeed, Nelson Mandela’s wife recently agreed that aid has been bad for Africa , and several other African leaders agree (most notably, Rwanda’s Paul Kagame).
Just thirty years ago, Malawi, Burundi and Burkina Faso were economically ahead of China on a per capita basis, she notes. “No economic ideology other than one rooted in the movement of capital and competition has succeeded in getting the greatest numbers of people out of poverty in the fastest time.”
Unsurprisingly, Moyo has been strongly criticized for her suggestion that we turn off the tap of aid into Africa. Bono’s organization One has been particularly vociferous in its opposition, while Kofi Annan describes Moyo as “hard, perhaps too hard, on the role of aid”.
She highlights the positive story: that 50% of Africa’s population is young, that microfinance projects (such as Kiva) have been successful and that given the right circumstances, entrepreneurs will rise and the economic engine will start chugging again.
She reminds us that the function of aid is not to make us feel better about ourselves but to promtote development and it simply hasn’t done that. Some argue that we should increase governance conditionality, monitoring and evalutaion of how money is spent.
Aid is easy money and easy money is easy to waste. If African governments had to rely upon taxation, they would be more accountable to voters. She claims that Mugabe has lead Zimbabwe for as long as he has because he’s been propped up by foreign aid. Limitless aid fosters dependency, encourages corruption and perpetuates poverty.
Since Bono and Bob Geldof took an interest, aid has very much been in vogue. There has been little mainstream debate of it’s inherent value. Moyo quotes a fellow aid critic bemoaning his limited influence: “my voice cannot compete with an electric guitar”.
I left “Dead Aid”, as Historian Niall Ferguson did, “wanting a lot more Moyo, and a lot less Bono".
This is worth reading (albeit with a strong coffee).