Monday, July 19, 2010

dead aid

i just finished reading dead aid, by dambisa moyo, an economist from zambia. dead aid makes a startling and surprising fact: aid does not and has not helped african countries. quite on the contrary, it has pushed dozens of african countries deeper into poverty.

aid hurts. it breeds dependency. this is because, unlike the marshall plan, which is hailed as greatly helping to reconstruct war-torn europe after wwii, aid to africa is pervasive. there is no timeline cut off. there is very little oversight. unlike the marshall plan, it comprises a much more significant portion of gdp and encompasses not just infrastructure, but includes agriculture, the civil service, healthcare, education, etc.

aid entrenches corrupt dictatorships, impedes the development of a middle class (tax base), and removes the incentives for countries to seek development alternatives. as aid is given from western governments to african countries directly and is seen as a permanent, dependable revenue fix, it is seen as a guarantee, a safety net by some--not all--of africa's rulers. and when it comes down to it, most of government-to-government aid doesn't even reach the people it's meant to help--something like 15% does.

moyo stresses that to achieve economic growth like south africa and botswana, and to mean themselves off aid, african countries need to begin funding themselves, mainly through: 1.) foreign direct investment, 2.) trade, 3.) capital bond markets, 4.) savings, 5,) microfinance, and 6.) remittances. moreover, the discourse on african development should refocus to include the perspectives of africans, and not primarily on western donor interests.

most importantly, this must be done, as donor fatique and uncertainty of future aid commitments further imperils africa's development. while i see the merit in donating to transparent private aid organizations, and will continue to do so, there is much insight to be gleaned from reading dead aid. i'm no economist, but a must read for all those involved in aid work.

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