Dambisa Moyo, author of “Dead Aid,” spoke with Charlie Rose on the “Charlie Rose” show, which aired on Wednesday, March 25, 2009. In the interview she discusses her book “Dead Aid,” with conversation on international development and the critical role that microfinance can play for developing nations. Her discussions on postwar international development policy and its effect on her native Africa helps question the current model and effectiveness of government to government aid.
Dambisa Moyo completed her Doctorate of Economics at Oxford University following her experience at the World Bank and as a Zambian Economist at Goldman Sachs. Through her experience, Ms. Moyo concluded that billion dollar aid packages to Africa are neither an effective prescription for long-term economic development, nor will it place the country on equal economic footing in the global arena. The original purpose of aid was to deliver growth and to alleviate poverty. However, according to Ms. Moyo, she believes that these two metrics of aid (which originated during Bretton Woods and into the 1950s and 60s) do not work, especially in Africa. She further questions the role of African governments and points out that aid “disenfranchises Africans as the government need not be accountable to their own people, while catering and courting their donors.”
A key takeaway in the discussion is that the current model of aid forces the country of Africa to become financially dependent while not seeking its own initiative/solutions that could possibly better serve the country. “There is no mechanism, essentially for Africans to keep the system in check, to make sure social goods and public goods, like roads, healthcare, and schools are actually being delivered by the government, to the extent that the government can,” states Ms. Moyo. Ms. Moyo points to evidence that while aid packages to Africa in the past 60 years have now totaled to over USD 1 trillion, “the aid culture of dependency and bureaucracy does not help to foster a society of a private sector or entrepreneurial development.” She provides further evidence that in the 1970s roughly 10 percent of the population was living in dire poverty, with that figure now over 70 percent.
Ms. Moyo also further illustrates the case that while 60 percent of Africans are under the age of 24, (note: over 50 percent of the population in many African countries are under the age of 15) the economies of the region have not yet generated economic development through the provision of jobs. However, according to Dambisa Moyo, one African country has made an attempt to change their attitude and dependency on aid. Case in point, Ghana has made significant efforts to reduce their dependency on aid and are focused towards issuing bonds via the capital markets. Also, South Africa and Botswana have not relied on aid to the extent that the rest of the African countries have (budgeted at 70 to 80 percent).
Ms. Moyo hopes to see an end to (government to government) aid by the United States and World Bank. She also hopes that governments dependent on aid will philosophically or economically come to the conclusion that its effectiveness no longer applies. She continues to point out that even if government is going to apply aid towards issues of poverty, global health or other human factors, aid would still not work. She states that aid has not been applied in that manner over the past 60 years due to the fact that society is “driven by incentives”. “The root of aid (essentially free money with nominal charges) is where government takes the money and uses/diverges it for nonproductive uses; thus, introducing negative behaviors/incentives. which are precisely why we have a problem with this aid culture.”
So the question becomes, what would work? Outside of the capital markets, Ms. Moyo believes that borrowing from microfinance institutions is one such example for developing nations to improve in terms of self development, efficiency and sustainability.
By Zoran Stanisljevic
Additional Resources
The Charlie Rose Show, March 25, 2009: A conversation with Dambisa Moyo
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