Dead Aid Why Aid Is Not Working and How There Is a Better Way for Africa

Dambisa Moyo; Foreword by Niall Ferguson

Farrar, Straus and Giroux

0374532125

9780374532123

Trade Paperback

208 Pages

$14.00

CAD16.00

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In the past fifty years, more than $1 trillion in development-related aid has been transferred from rich countries to Africa. Has this assistance improved the lives of Africans? No. In fact, across the continent, the recipients of this aid are not better off as a result of it, but worse—much worse.

In Dead Aid, Dambisa Moyo describes the state of postwar development policy in Africa today and unflinchingly confronts one of the greatest myths of our time: that billions of dollars in aid sent from wealthy countries to developing African nations has helped to reduce poverty and increase growth. In fact, poverty levels continue to escalate and growth rates have steadily declined—and millions continue to suffer. Provocatively drawing a sharp contrast between African countries that have rejected the aid route and prospered and others that have become aid-dependent and seen poverty increase, Moyo illuminates the way in which overreliance on aid has trapped developing nations in a vicious circle of aid dependency, corruption, market distortion, and further poverty, leaving them with nothing but the “need” for more aid. Debunking the current model of international aid promoted by both Hollywood celebrities and policy makers, Moyo offers a bold new road map for financing development of the world’s poorest countries that guarantees economic growth and a significant decline in poverty—without reliance on foreign aid or aid-related assistance.

Dead Aid is an unsettling yet optimistic work, a powerful challenge to the assumptions and arguments that support a profoundly misguided development policy in Africa. And it is a clarion call to a new, more hopeful vision of how to address the desperate poverty that plagues millions.

REVIEWS

Praise for Dead Aid

"It is one of the great conundrums of the modern age: More than 300 million people living across the continent of Africa are still mired in poverty after decades of effort—by the World Bank, foreign governments and charitable organizations—to lift them out if it. While a few African countries have achieved notable rates of economic growth in recent years, per-capita income in Africa as a whole has inched up only slightly since 1960. In that year, the region's gross domestic product was about equal to that of East Asia. By 2005, East Asia's GDP was five times higher. The total aid package to Africa, over the past 50 years, exceeds $1 trillion. There is far too little to show for it. Dambisa Moyo, a native of Zambia and a former World Bank consultant, believes that it is time to end the charade—to stop proceeding as if foreign aid does the good that it is supposed to do. The problem, she says in Dead Aid, is not that foreign money is poorly spent (though much of it is) or that development programs are badly managed (though many of them are). No, the problem is more fundamental: Aid, she writes, is 'no longer part of the potential solution, it's part of the problem—in fact, aid is the problem.' In a tightly argued brief, Ms. Moyo spells out how attempts to help Africa actually hurt it. The aid money pouring into Africa, she says, underwrites brutal and corrupt regimes; it stifles investment; and it leads to higher rates of poverty—all of which, in turn, creates a demand for yet more aid. Africa, Ms. Moyo notes, seems hopelessly trapped in this spiral, and she wants to see it break free. Over the past 30 years, she says, the most aid-dependent countries in Africa have experienced economic contraction averaging 0.2% a year . . . Inevitably, Dead Aid will offend the pieties of the World Bank and the foreign-aid sectors of the U.S. government. But Ms. Moyo is not alone in asking tough questions about good intentions gone awry. Rwanda's president, Paul Kagame, has said of the $300 billion in aid given to Africa since the 1970s that 'there is little to show for it in terms of economic growth and human development.' Senegal's president, Abdoulaye Wade, has expressed similar sentiments . . . She closes her book with a fascinating question: What would happen if African countries were told that in five years all financial aid would end? She doesn't try to answer the question in any detail, other than to dismiss the notion that living conditions in Africa would grow worse. She points to Botswana and South Africa as examples of countries that have prospered precisely because they haven't allowed themselves to become heavily dependent on aid. Some of us remember Live Aid, the music festival held in 1985 to provide relief to Ethiopia. It was a noble effort and perhaps did some good, but Dead Aid reminds us that noble efforts are not enough—that 'help' can often do harm."—Matthew Rees, The Wall Street Journal
 

"In her new book challenging the efficacy of foreign aid, Zambian economist Dambisa Moyo writes that surely one would expect Western moralizers to adopt policies which help those in need rather than hinder them in the long run and keep them in a perilous state of economic despair . . . Dead Aid is a blockbuster. Not because its arguments are new. In fact, Ms. Moyo dedicates the volume to Peter Bauer, the late British economist who almost single-handedly challenged the foreign aid establishment decades ago. He wrote eloquently and often, setting the stage for Ms. Moyo. She also cites more recent critics, former World Bank economist William Easterly and Oxford economist Paul Collier. What makes the book particularly important is Ms. Moyo. Born in Zambia, a consultant to the World Bank and a specialist in sub-Saharan Africa for Goldman Sachs, Ms. Moyo makes an African case against so-called foreign assistance. She has the credibility to challenge glamour aid and how campaigning for more Western money paved [the way] for the army of moral campaigners—the pop stars, the movie stars, new philanthropists and even Pope John Paul II—to carve out niches for themselves . . . Ms. Moyo does more than criticize foreign aid. She highlights alternative sources of revenue for developing countries: private capital markets, foreign direct investment, trade, micro-enterprise lending, remittances and private savings. Governments still could squander the funds collected but likely could get away with doing so only once. Private actors learn more quickly than government donors, which until recently, at least, never found an oppressive, corrupt, statist regime they didn't want to continue subsidizing, irrespective of its past failures. The open aid spigot encourages the worst governmental irresponsibility. Thus, in Ms. Moyo's view, the starting point of helping Third World states is to stop pretending that the aid-based development model currently in place will generate sustained economic growth in the world's poorest countries. She suggests telling Third World states that the financial flow will end in five years. Other than temporary disaster relief, there will then be no more Western cash to underwrite African failure. Would Africans give up? No, she argues: Isn't it more likely that in a world freed of aid, economic life for the majority of Africans might actually improve, that corruption would fall, entrepreneurs would rise, and Africa's growth engine would start chugging? Give Africans a chance to make a better life, and they would grab it and go. Dead Aid is a wonderfully liberating book. One of the most depressing aspects of the whole aid fiasco is that donors, policymakers, governments, academicians, economists and development specialists know, in their hearts, that aid doesn't work, hasn't worked, and won't work, Ms. Moyo writes. They might not speak the truth, but she will."—Doug Bandow, The Washington Times 

"Ten years ago, it would have been hard to find anyone to question the wisdom and morality of the rich world giving billions of dollars in help to the poor world. A generation reared on Live Aid held these truths to be self-evident. Now, the intellectual trend is all the other way. A stream of economists, politicians and even disillusioned do-gooders have penned powerful critiques of every aspect of aid and the aid industry; men like Paul Collier, William Easterly and Robert Calderisi. Even the high priests of aid, pop stars such as Bono and Bob Geldolf, now preach a much more nuanced and complex gospel than they did in the 1980s. Yet the intellectual arguments about aid are still conducted largely within a small circle of Western white men. So it is good to welcome a new voice to the debate, and a black African woman too, Dambisa Moyo, a Zambian economist at Goldman Sachs. It is remarkable that so few voices have been raised in Africa, supposedly the main beneficiary of the world’s largesse, about how the aid money should be spent, or even whether it should be received at all . . . Ms. Moyo is right to argue that the rich world—and Africa—should now focus on other ways of helping poor countries. Ms Moyo shows how some countries, such as Ghana, have successfully tapped the bond markets for funds. She also has good discussions on the virtues of microfinance, venture capital and liberalising trade. By concentrating on these three, African governments might well raise more money on their own; some might even lessen their dependency on aid. Private investors will always require good governance to ensure that their dollars are not misused. This 'trumps all,' argues Ms. Moyo. She won’t find many Africans who disagree with that. But getting governments like Nigeria’s or Kenya’s actually to walk the talk has proved a much tougher proposition."—The Economist

“Dambisa Moyo is to aid what Ayaan Hirsi Ali is to Islam. Here is an African woman, articulate, smart, glamorous, delivering a message of brazen political incorrectness: cut aid to Africa. Aid, she argues, has not merely failed to work; it has compounded Africa’s problems. Moyo cannot be dismissed as a crank . . . She catalogues evidence, both statistical and anecdotal . . . The core of her argument is that there is a better alternative [and it deserves] to be taken seriously.”—Paul Collier, The Independent (UK)

“An incendiary new book . . . Here is a refreshing voice . . . 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.”—Christopher Hart, The Daily Mail (UK)

"Moyo is on firm ground criticizing decades of direct foreign assistance to African governments. It has often propped up corrupt elites, shielded leaders from the consequences of their incompetence and delayed reforms necessary for the development of markets. She is correct in emphasizing the decisive role of trade, direct foreign investment and local capital in development—sources of opportunity that dwarf aid flows in size and importance."—Charles Kochakian, New Haven Register

“[Moyo's] method for helping Africa's poor is nothing if not ambitious: to cut off all government aid to Africa within five years. By Moyo's own admission, the arguments against aid were well known before Dead Aid. The criticisms of the current aid model she presents are cribbed out of the work of pro-market economists like William Easterly and Peter Bauer before him, who for years have argued that aid policies hurt the very people they were supposed to help. Moyo claims that it is no accident that aid-dependent African countries have shown negative growth since the foreign aid taps opened . . . As an Oxford-trained economist and banking veteran, Moyo appreciates markets and catches the pitfalls of aid . . . As a native Zambian, she can empathize with poor Africans and understand the obstacles they face in a way that no white Western man can . . . Moyo has skin in the game, a reality that lends pragmatism to her approach and enables her to think critically about the current aid schemes . . . Moyo wants to conquer the dehumanizing poverty afflicting Africa, even though the hands-off solution would mean that she doesn't get to be the hero . . . That charity is definitionally supposed to be a matter of love would be obvious to Moyo, whose critical approach to aid is rooted in her awareness of her fellow Africans' wants and needs.”—Joseph Lawler, The American Spectator

“The wisdom contained here—if absorbed by African and global policymakers—will turn this chronically depressed continent into an inspiring miracle of dazzling economic growth.”—Steve Forbes, President and Chief Executive Officer of Forbes and Editor-in-Chief of Forbes magazine

"In her short but strident debut, Moyo takes up the argument that aid is often ineffective and can inhibit growth as if it were new, with eager urgency and passion, chiding the vast 'development community' from liberal humanitarians to subsidy-craving farmers and from development economists to international celebrities . . . [Dead Aid] is also spot-on in its analysis of aid's side effects and unintended consequences. The West's aid policies will continue to harm Africans, as Moyo convincingly argues, if they cling to the status quo."—Apoorva Shah, Policy Review

"Telephones ring on the desks of finance ministers across Africa with news of a pioneering aid initiative: The West plans to halt all low-interest lending and grants to the continent within five years. That scenario is anathema to the African aid lobby led by the likes of Bono and Bob Geldof. Yet it’s precisely what Africa needs, says Zambian economist Dambisa Moyo in her provocative book, Dead Aid . . . Moyo, who earned her doctorate at Oxford and has worked for the World Bank and Goldman Sachs Group Inc., focuses her criticisms on low-interest loans and grants from governments and multilateral lenders. Together, these make up more than 50 percent of the national budget in many African states . . . Moyo’s attacks on the corrupting nature of aid echo those of other recent critics, including former World Bank economist William Easterly, author of The White Man’s Burden. She takes the argument further, identifying aid as the main barrier to African development: It crowds out domestic savings and foreign investment, she says, and can hurt exports by driving up the value of local currencies, thus deepening dependence on aid . . . Moyo is making a valuable contribution to the debate on African development."—Karl Maier, Bloomberg News

"Moyo’s prescription for economic sustainability in Africa—which includes cutting off all aid within five years—might seem insane if the statistics weren’t so grim: despite one trillion dollars in western aid over the past sixty years, the economic lot of the average African has only gotten worse . . . Dambisa Moyo is a unique voice in the debate over African aid. In a conversation dominated by white, male westerners—and most conspicuously by celebrities such as Bono or Bob Geldof—Moyo is a black, African woman. Born in Zambia to a banker mother and a father who now runs an anti-corruption organization, Moyo earned her master’s from Harvard and a Ph.D. in Economics at Oxford. She’s worked as a consultant to the World Bank, and for the past eight years was the sub-Saharan economic expert for Goldman Sachs. It was at Goldman Sachs that Moyo began work on her book, Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, released just a few weeks ago. While a skeptic might view Moyo’s unique status as a renowned female African economist and her fiercely contrarian proposals as an all-too-perfect recipe for a best seller, it is hard to argue with her logic . . . Moyo doesn’t just lash out at a broken system. She offers solutions."—Jake Whitney, Guernica magazine

“Dambisa Moyo makes a compelling case for a new approach in Africa. Her message is that Africa’s time is now. It is time for Africans to assume full control over their economic and political destiny. Africans should grasp the many means and opportunities available to them for improving the quality of life. Dambisa is hard—perhaps too hard—on the role of aid. But her central point is indisputable. The determination of Africans, and genuine partnership between Africa and the rest of the world, is the basis for growth and development.”—Kofi Annan, former Secretary-General of the United Nations

"The $1 trillion in U.S. aid granted to African nations since the 1940s has hurt rather than helped nations struggling with corruption, poverty, and disease, according to Moyo, an economist born in Zambia. She laments the fact that too many African nations, despite enormous natural resources, have become dependent on aid as the generally low-rate, long term capital has become a 'cultural commodity,' with worldwide appeals now made by top celebrities. Moyo begins with a history of U.S. aid, including its use in the Cold War, and details frequent abuse as dictators have lined their pockets and aid agencies have actually hurt budding small businesses. Many African nations have shown declining economic growth as a result of dependence of aid. Moyo advocates the gradual reduction in aid over five to 10 years, and suggests that Africa follow the examples of Asia, accessing the international bond market and making large-scale investment in infrastructure, as well as pressing for free-trade policies on agricultural products. This is a passionate and controversial look at past and future aid to Africa."—Vanessa Bush, Booklist

"Economist Moyo (former head, Economic Research and Strategy for Sub-Saharan Africa, Goldman Sachs) makes a startling assertion: charitable aid to African nations is not just ineffective—it is worse than no aid. Moyo, who was born and raised in Zambia, joins a small but growing number of observers (including microfinance expert Muhammad Yunnus) who argue that charity from Western nations cripples African governments by fostering dependency and corruption without requiring positive change. Deriding efforts to increase giving by foreign celebrities like U2 singer Bono as out of touch with the real needs of African countries, Moyo instead proposes solutions like new bond markets, microfinancing, and revised property laws. Moyo also singles out commercial investment from the Chinese (rather than general aid) and holds it up as an example for other nations to follow in the future. Whether one agrees or disagrees with Moyo's argument for such capitalist intervention in Africa, this straightforward and readable work should provide some food for thought."—April Younglove, Library Journal

"In this important analysis of the past fifty years of international (largely American) aid to Africa, economist and former World Bank consultant Moyo, a native of Zambia, prescribes a tough dose of medicine: stopping the tide of money that, however well-intentioned, only promotes corruption in government and dependence in citizens. With a global perspective and on-the-ground details, Moyo reveals that aid is often diverted to the coffers of cruel despotisms, and occasionally conflicts outright with the interests of citizens—free mosquito nets, for instance, killing the market for the native who sells them. In its place, Moyo advocates a smarter, though admittedly more difficult, policy of investment that has already worked to grow the economies of poor countries like Argentina and Brazil. Moyo writes with a general audience in mind, and doesn't hesitate to slow down and explain the intricacies of, say, the bond market. This is a brief, accessible look at the goals and reasons behind anti-aid advocates, with a hopeful outlook and a respectful attitude for the well-being and good faith of all involved."—Publishers Weekly

Reviews from Goodreads

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BOOK EXCERPTS

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Introduction

 

We live in a culture of aid.

 

We live in a culture in which those who are better o. subscribe - both mentally and financially - to the notion that giving alms to the poor is the right thing to do. In the past fifty years, over US$1 trillion in development-related aid has been transferred from rich countries to Africa. In the past decade alone, on the back of Live 8, Make Poverty History, the Millennium Development Goals, the Millennium Challenge Account, the Africa Commission, and the 2005 G7 meeting (to name a few), millions of dollars each
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ABOUT THE AUTHOR

  • Dambisa Moyo; Foreword by Niall Ferguson

  • Dambisa Moyo worked at Goldman Sachs for eight years. Previously she worked for the World Bank as a consultant. Moyo completed a Ph.D. in economics at Oxford University and holds a master’s from Harvard University’s John F. Kennedy School of Government. She was born and raised in Lusaka, Zambia.

  • Dambisa Moyo © www.helenjonesphotography.co.uk
    Dambisa Moyo
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