What’s a well-intentioned Westerner to do? Aid breeds dependency, not growth, argues economist

Charity is good, rock stars Bono and Bob Geldof have long told us. They certainly brought foreign aid to the fore. But is throwing money at African countries a good idea? Does it actually help the people who live there, or does it just make Westerners feel better?

Economist and author Dambisa Moyo’s book Dead Aid: Why Aid Is Not Working And How There Is A Better Way For Africa (2009, filed in non-fiction) is a thoughtful analysis that considers the billions that Western states have handed over to African governments, and the little there is to show for the cash outlay.

Certainly much of the aid comes with strings attached. (Some Canadian aid is only awarded if it is then spent on Canadian-made products — products which might not be useful for Africans, for example; the products might also be more expensive than if purchased elsewhere. Who is the aid really helping if it’s structured to boost the Canadian economy?)

African debt, Moyo writes, is at insane levels. Whole swathes of the continent have been “helped” into destitution, with debtor payments ensuring that money can’t be spent on internal needs (such as infrastructure). Those countries receiving the most foreign aid, Moyo writes, have negative economic growth rates.

Further, millions are stolen by politicians (explaining some political violence, she suggests, as the rewards of power are an incalculable wealth). And given the rampant theft, the people have no trust in politicians. And trust is essential to building a successful society. (Democracy can come out of growth, Moyo suggests, but growth does not necessarily come out of democracy.)

The fear in the West is that cutting off aid will hurt the poor the most. In fact, Moyo argues, the destitute are not getting any help in the first place, so such fears are misplaced.

There’s no way to know what Africa would be like without its long history of foreign aid, the economist admits. But the countries are all so different, and the only thing they have in common is foreign aid…. When the taps are turned on – and the United States alone has sent more $1 trillion – aid breeds dependency, not growth.

Moyo sees Botswana, which has carefully arranged its economy to cease depending on aid, as one of the few countries which is digging itself out. (For those with mondo cash to spare, a Globe and Mail writer recently suggested that Kenya and Nigeria are expanding markets for internationally inclined capitalists.)

Trade is one of the most important ways we have to help grow the economies of less developed countries. Yet the West has placed all kinds of trade restrictions and barriers on food (and other organics, like cotton). And that includes Canada.

“In an uncertain world, Western countries (notably France and the U.S.) are fearful of relying on other nations for their food in the event of a global war. Moreover, elected Western politicians have remained keen to protect their agricultural markets, and win the backing of the powerful farming lobby. The net result is a protective world of trade restrictions and barriers thrown up around the West to keep African (and other developing regions’) produce out. Developed markets are essential for African growth.”

Canadian farm subsidies, then, are something that farmers here must think about – frankly and honestly.

Moyo looks at Asia’s economic success stories in an effort to find the road forward. Foreign direct investment – money pumped into already existing local business, partnering with local entrepreneurs – led to increasing exports. And that’s what Africa needs. Plus infrastructure (roads, for example). (Other recommendations from Moyo include African countries accessing international bond markets, and a trustworthy system entrenching legal title to homes and other property, to allow for equity, which would eventually lead to the possibility of loan guarantees for small businesses. Enterprise is essential for local economic development.)

Of course small town folk like us can’t invest in small African companies with our hoarded millions. But we can do small things (and many of us do). Yet even well-intentioned efforts to help can have negative consequences. Take mosquito netting. The little bloodsuckers are responsible for endless deaths and disease, and so Westerners send over mosquito netting, given out to African citizens for free. That means local companies selling nets go out of business, because how can a small businessperson compete with freebies from away?

For Moyo, the way forward is clear. For Westerners, it’s harder: Is it better to send netting anyway and hope to save lives, or disengage? And what about sending money and care packages? Used T-shirts and clothing sent over to Africa are, again, part of the local economy-busting problem, given Moyo’s analysis. Yet cash sent directly to families (from the African diaspora, for example), are spent according to local needs and are a good thing. And Moyo also favours microfinancing, where small amounts are loaned out to help people start their own businesses. (Since Moyo’s book has been written, critiques of microfinancing have abounded, although the horror stories seem to come from something that’s universal: some humans are greedy, and will distort anything to make a few extra bucks. Does that mean there should be no microfinancing at all?)

Moyo’s book tackles economics, but in an accessible way. And if offers some fascinating food for thought for those who seek a more equitable world. Africans need to get food on their breakfast tables, as well as gearing up their economies to move beyond worrying about food.

– Eleanor Brown, May 2, 2014

Advertisements

About BiblioLennLibrary

The Lennoxville Library, in Quebec's Eastern Townships, offers free memberships to all residents of Sherbrooke. We have a great selection of books in French and English, plus books on tape and CD, too! Check out our large-print section, our graphic novels... La Biblio Lennoxville se situe dans les Cantons-de-l'Est du Quebec. Les residents de Sherbrooke peuvent devenir membre gratuitement. Nous avons une grande selection de livres en francais et en anglais. Venez donc nous voir! Hours/Heures d'ouverture: Mardi-Tuesday, 10am to 5pm -- 10h a 17h Mercredi et Jeudi -Wednesday and Thursday, 10am to 6pm -- 10h a 18h Vendredi-Friday, 10am to 5pm -- 10h a 17h Samedi-Saturday, 11am to 4pm -- 11h a 16h Pour plus d'info, vous pouvez nous trouver au http://www.bibliolennoxvillelibrary.ca/ Click on the above to get to our website!
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s