Dead Aid?

One of the reasons that this piece interested me is that I was there (at TED conference in Arusha, in June 2007) when Bono and Andrew Mwenda went mano-a-mano. The author exaggerate the notion that Bono's used profane language. He simply strongly argued his case against Mwenda's misrepresentation. When Mwenda went on stage, he trashed the idea of aid and challenged the audience to name one country - just one - that has benefited from foreign aid. Bono, in the audience, raised his hand and said "my country, Ireland". And explained how the European Union assisted Ireland to transform its economy from that making potato chips to making computer chips. Then, Mwenda said "alright, alright, may be there is only Ireland, and that it is". Bono stood up again and said "Germany". And explained how the Marshall Plan (which was a foreign aid program), transformed Germany's economy. Then Mwenda got confused.

Anyway, the article below, which reviews a book by Dambisa Moyo, can be a source of a good debate on the role of aid in our countries. I have not read the book myself but I have questions about the thesis (that aid is a source of Africa's problem, and the way to cure our problems is to stop aid). Anyway, enjoy the article! January


Daily Mail, UK 10/03/2009

NOT SUCH COMIC RELIEF?

By Christopher Hart.

Red Nose Day is one of the high spots of the TV year, with our best-loved stars raising millions for charity. But a provocative new book by a black academic argues the billions Africa receives in aid are the very reason it’s trapped in poverty.

WE ARE accustomed to bizarre outbursts and posturings from multimillionaire celebrities, especially when they spot a chance to portray themselves as concerned philanthropists with almost painfully big hearts.

Their favourite method is to drop in for a few hours at some televised charity event — Comic Relief, Live8 and Live Earth.

Perhaps the best-known, and certainly the loudest among them, is U2’s Bono. His efforts have won him an honorary British knighthood, no fewer than three Nobel Prize nominations and the adulation of Tony Blair. Yet one of Bono’s most significant outbursts — rude, heckling and laden with expletives — took place away from the world’s TV cameras at a small conference it Tanzania recently.

Bono had been enraged by a Ugandan writer called Andrew Mwenda, who was presenting a powerful case that international aid, far from helping lift Africa out of poverty, might in fact be the very cause of its troubles.

Even the suggestion that this might be the case sent ‘ Saint’ Bono into a foul-mouthed rant, accusing Mwenda of being a comedian rather than a seriby ous contributor to political debate.

For his own sake, then, one can only hope that the pop star never comes face to face with the author of an incendiary new book. Called Dead Aid, its very title is a bitter mockery of that great institution and celebrity bandwagon, Live Aid.

But what it contains — particularly at a time when people are generously giving time, money and enthusiasm to this week’s Comic Relief fundraising events — is even more provocative. It argues that for 50 years the West has been giving aid to Africa — and in so doing has ruined the continent it professes to help. The author of Dead Aid is no lightweight courting controversy for its own sake. She is a highly qualified economist. More importantly, she is herself African — and what she has to say is as unsettling as it is important.

After years of listening to Western ‘experts’ such as Bono, Bob Geldof or Angelina Jolie pontificating about what Africa needs, here is a refreshing voice from Africa itself.

Dambisa Moyo was born in Zambia, where her family still live. She has a doctorate in economics from Oxford, a masters from Harvard, and for several years worked for the World Bank in Washington DC.

She is now head of research and strategy for sub-Saharan Africa at a leading investment bank. But here, you feel, is one banker who is still worth listening to, not least as she has witnessed the way her home country has become blighted by poverty. At independence in 1964, Zambia was a fresh, optimistic young nation, eager to embrace the future. Its GDP was around a quarter of the UK’s.

Today it is one-26th, and the country is mired in corruption, poverty and disease. So what went wrong?

One by one, Moyo examines the usual lame excuses for African backwardness, and dispatches them with ruthless efficiency. Africa has a harsh, intractable climate, with huge natural barriers such as jungle and desert? Well, so does Brazil, or Australia.

Many African countries are landlocked, always an obstacle to economic growth? That hasn’t done Switzerland or Austria much harm.

African countries are too ethnically and tribally diverse? So is India, and its economy is booming.

Africa lacks democracy? So China, Thailand and Indonesia, Asian tiger economies.

As for any lingering mutterings about Africans simply not being up to it, or inherently lazy, she doesn’t even consider them. She herself is eloquent proof of the idiocy of such Victorianera racism. No, the problem can be summed up in one short word — aid.

Aid isn’t Africa’s cure, she believes. It’s the disease.

Let’s be clear, though, Moyo is scrupulously fair about distinguishing between three different types of aid. There is emergency relief for famine, which many of us support through donations or charitable fundraisers, which is not only well-meaning but absolutely necessary at times of international crisis.

Then there is the everyday work of the charities themselves, about which she appears neutral, although she quotes one cutting comment from a senior economist: ‘ They know it’s c**p, but it sells the T-shirts.’

This year, it is Stella McCartney’s Comic Relief T-shirts — featuring images of The Beatles and of Morecambe and Wise — that have become the must-have accessory of those who like to wear their conscience on their sleeve.

DESPITE the cynics, it is worth remembering that since its creation in the mid-Eighties, Comic Relief has generated £600 million — roughly two-thirds of which has gone to fund charities working on the ground in Africa (the other third goes towards charities in the UK).

That is an awesome achievement that has made a genuine difference towards alleviating suffering on a local scale in some of the most deprived nations on Earth. No one should belittle that work.

But charities are ‘small beer’ compared to what Moyo perceives to be Africa’s real problem: the billions of pounds’ worth of aid poured into the continent by Western governments.

Consider the figures. In the past 50 years, the West has pumped around £ 35 trillion into Africa. But far from improving the lives of ordinary Africans, the result of stateadministered charity on such a colossal scale has, argues Moyo, been ‘an unmitigated political, economic and humanitarian disaster’.

The effects are easy to see, yet always ignored. Over the past 30 years, the economies of the most aiddependent countries have shrunk by 0.2 per cent per annum.

Yes, in the UK we have been in recession for six months or so now, but countries like Malawi and Burkina Faso have been in recession for three decades. How is this disaster related to thoughtless Western aid? Directly. And Moyo cites a brilliant example of how the whole concept is flawed.

Imagine there’s an African mosquito-net maker who manufactures 500 nets a week. He employs ten people, and this being Africa, each of those employees supports as many as 15 relatives on his modest but steady salary. Some 150 people therefore depend on this thriving little cottage industry, producing a much-needed, low-cost commodity for local people.

Then, Moyo writes: ‘Enter vociferous Hollywood movie star who rallies the masses and goads Western governments to collect and send 100,000 mosquito nets to the afflicted region, at a cost of a million dollars. The nets arrive and a “good” deed is done.’

The result? The local business promptly goes bust. Why buy one when they’re handing them out for free? Ten more people are unemployed, and 150 people are without means of support.

Like all such aid hand-outs, it’s an idiotically short-sighted way to treat a complex problem.

And that’s not all. In a year or so, those nets will have sustained wear and tear, and will need either mending or replacing. But the local net-maker is no longer around.

So now those previously independent and self-sufficient Africans have to go begging the West for more aid. Intervention has actually destroyed a small part of Africa’s economy, as well as its spirit of enterprise. Thus aid reduces its recipients to beggary in two easy moves.

Yet despite this ongoing disaster, we still have the celebrity harangues, the self-applauding rock concerts, ‘making poverty history’ from the comfort of your private jet.

At some point in the Eighties, as Dambisa Moyo observes, ‘Public discourse became a public disco’, reaching its eventual nadir, perhaps, with Madonna addressing her audience at Live Earth as ‘motherf***** s’ and declaring: ‘If you wanna save the planet, jump up and down!’

Moyo is blisteringly critical about the ‘Western, liberal, guilt-tripped morality’ that lies behind these jamborees, about the tax-avoiding Bono lecturing us all on poverty and advising world leaders at summits, and Blair’s craven admiration for him.

Ordinary Africans do not, on the whole, have much admiration for Western pop culture at its noisiest and most foul-mouthed.

So what do they make of the bizarre spectacle of some ill-qualified Western pop star moralising with such supreme arrogance on ‘what Africa really needs’? Africans themselves have ideas about what they really need, if only someone would listen. But as one such African comments: ‘My voice can’t compete with an electric guitar.’

Another effect of aid, well known in the West and yet consistently and shamefully ignored, is that it props up the most thuggish and kleptomaniac of Africa’s leaders.

That parade of grotesques who have filled our TV screens almost since independence, it seems — Idi Amin in Uganda, Mobutu in Zaire, Mengistu in Ethiopia, the ‘ Emperor’ Bokassa in the Central African Republic — were always the greatest beneficiaries.

Bokassa spent a third of his country’s annual income on his own preposterous ‘coronation.’ The genocidal Mengistu benefited hugely, it is said, from the proceeds of Live Aid.

TODAY we have Mr Robert Mugabe’s wife Grace, 40 years his junior, going on £ 75,000-a-time shopping trips to Europe or the Far East, while her people starve, inflation runs at 230 million per cent, and Zimbabwe’s Central Bank issues $100 trillion banknotes.

Such tales echo Mobutu’s reign of terror in Zaire. He once asked the West for a reduction of his country’s colossal debt. The West, feeling guilty, promptly granted it.

Mobutu’s response? He hired Concorde to fly his daughter to her wedding on the Ivory Coast. In all, Mobutu may have looted £ 3.5billion from his country’s coffers. Nigeria’s President Sani Abacha stole about the same.

Even the World Bank itself reckons that 85 per cent of aid never gets to where it’s meant to. ‘When the World Bank thinks its financing an electric power station,’ says one jaundiced commentator whom Moyo quotes, ‘it’s really financing a brothel.’

So the aid industry causes poverty, corruption and war. Yet it continues. Why? Could aid just be something the West indulge in to buy itself an easy conscience — regardless of what effect it has on Africa?

Whatever the case, we should turn the taps off immediately, says Moyo.

Would this mean the end to the building of new roads, schools, hospitals? No. They’re mainly built by investment, not aid.

Would it be the end to many a kleptomaniac despot? Most certainly. But would millions would die of hunger within weeks? Of course not.

The aid we send doesn’t reach them anyway. Life for them would in the short term be no different, but in the longer term immeasurably better.

What makes Dead Aid so powerful is that it’s a double-barrelled shotgun of a book. With the first barrel, Moyo demolishes all the most cherished myths about aid being a good thing. But with the second, crucially, she goes on to explain what the West could be doing instead.

We all share the well-meaning belief that ‘the rich should help the poor, and the form of this help should be aid’. The first part of this is plain morality. But the second part, as she so forcefully demonstrates, is false — lethally false.

We shouldn’t be giving aid to Africa. That’s not what Africa wants. We should be trading with it, and idle chatter of ‘economic imperialism’ be damned. She has no time for such Left-liberal pieties. Of course we should be using Africa’s vast pool of cheap labour to make our clothes, assemble our cars, grow our foodstuffs. In fact, one country already is — it’s called China.

China is building roads in Ethiopia, pipelines in Sudan, railways in Nigeria. It’s buying iron ore and platinum from South Africa, timber from Gabon and Cameroon, oil from Angola and Equatorial Guinea. China is pouring vast sums of capital investment into the continent, enriching both itself and Africa in the process.

Dambisa Moyo is not much bothered by Western concerns that China does nothing to further democracy in Africa. An villager with six children doesn’t lose sleep over not having the vote, she loses sleep over what she will feed her children tomorrow.

Address poverty first, says Moyo, and democracy later.

The greatest example for Africa today, she believes, could be the Grameen Bank, which means, ‘The Bank Of The Village’, in Bangladesh. Moyo hopes that, in time, the nations of Africa can develop such a bank for themselves. For it is an extraordinary and heart-warming success story.

It was devised by Muhammad Yunus, who quite rightly won the Nobel Peace Prize in 2006 for his efforts. Yunus’s inspiration was to ask: ‘Where lies the wealth of the typical Bangladeshi village?’

A village may not have money, goods or assets. Yet it is a wonderfully tightknit, loyal little community, where nobody locks their doors at night, nobody steals, everyone knows each other. This is a tremendous kind of wealth — but how to translate it into money for these impoverished, decent, hard-working people?

YUNUS realised you could lend money to such a community and be sure of getting it back if you worked according to a plan — a plan with the simplicity of genius. You lend not to an individual but to a group, but only one member at a time. So you might lend one woman £20 (and an amazing 97 per cent of the Grameen Bank’s customers are women. That’s enough for her to buy a new sewing machine, and so start a thriving little tailoring business.

A year later, she repays the amount, with interest. At which point, the original £20 is passed on to the next person in the group.

But if she doesn’t repay the loan — and here Yunus saw how to turn the village’s ‘social capital’, its trustworthiness and deep-rooted sense of community, into economic value — then the next person in the group, quite possibly her next-door neighbour, her sister or cousin, doesn’t get it either.

The result? This humbly named Bank Of The Village now has 2.3 million customers, and a portfolio worth a colossal £170 million— in one of the poorest countries on Earth.

There is something deeply moving about it, especially when you learn that the reliability of the Grameen Bank’s customers has proved to be virtually 100 per cent.

No greater contrast between our own inept but limitlessly greedy banks and Bangladesh’s Bank Of The Village could be imagined.

The failed fat-cat Cityboy still awards himself a £500,000 bonus for his own incompetence, while these trustworthy women care for every single cent of their precious £20 loan.

More than that, though, it is a humbling example of the way that trade — not aid — can help Africa lift itself out of poverty. Certainly, there is still much that we can do to help Africa help itself. We should act, and fast. But pouring billions more in aid won’t change a thing.

Moyo concludes her book with a wise old African proverb. ‘The best time to plant a tree is 20 years ago. The second-best time is now.’

By all means give to Comic Relief when the fun gets under way this Friday. It is a worthwhile humanitarian cause that makes a real difference to people in desperate circumstances. But as for a long-term solution to Africa’s immense problems — that may require a new way of thinking.

DEAD AID by Dambisa Moyo(Allen Lane, £14.99). To order a copy (p&p free), call 0845 155 0720