Book Review: Dead Aid

24 Nov

I am finally reading Dambisa Moyo’s Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa after a several-month wait in the Toronto Public Library system. Moyo’s thesis got outsize attention a few months ago, so much so that in spite of the negative reviews from some, I figured it must have some good points. After all, the extraordinary waste of aid money is a fact, and not exactly a  new one. Hence my patience.

So, was the wait worth it? In a word, no. Moyo’s style of writing is not great, to the point where it has taken me three weeks to read and it’s only about 150 pages. Aside from the turgid prose, there are also many innate contradictions. The author makes the case that poor countries, particularly in Africa, should try and raise money through bond issues, rather than accepting soft loans from the World Bank. At the same time, she does, rather unabashedly, admit that many African countries defaulted on such investment money in the past and even refers to Argentina’s massive default in 2001 (a subject I cover in the final chapters of my book) on emerging-market bonds its government issued throughout the 90s.

She is also a big fan of investment from China: Now I am not an expert on the deals China has made in several African countries, and don’t think there is anything wrong with it building infrastructure in them. But from the little I do know, it seems pretty clear that China has gotten a very good deal on the commodities it is exploiting in those countries, to the detriment of their national populations. In other words, the resources of a nation have been dealt away for less than their value, while the people to whom such resources ultimately belong won’t see much if any improvement in their lives because — in part — of this. In many ways, the Chinese are simply replicating the what earlier colonial powers did in Africa throughout the 19th and 20th centuries. 

The real problem, though, is this: The issue we are dealing wtih here is not the lack of money flowing into these poor countries. Rather, it is their rampant misuse. The overseas development aid that goes to the Third World is handed over to recipient governments, not to the poor themselves for whom it is ostensibly intended. And these recipient governments, whether national, regional or urban, are the very entitites that have proven themselves chronically unwilling or incapable of dealing with the economic injustices that keep millions in poverty. They are, moveover, completely unaccountable to either them or to the people making the loans or grants to help alleviate poverty.

And while people like Bono and other aid activists want affluent countries to at least keep their promises of giving .7 per cent of their GDP to poor nations, (which practically none of them are) the problem is not the amounts of money. The problem is that it doesn’t get spent on improving the lives of the poor or anyone else, really. The problem is corruption, arrogance, poorly devised projects, infrastructure meant to boost the macro-economy yet end up displacing people and causing more poverty, as well as all kinds of regulations that make it extremely difficult to do things like build housing. In Mumbai, for example, the construction of apartment buildings by the National Slum Dwellers Federation required 75 different permits just to begin.

When you look at it this way, you can’t help but feel that national, regional and local governments really don’t care whether they alleviate poverty or not. So how will giving them greater access to funds help? The trickle-down theory doesn’t even work in rich nations, like the U.S., so how is it supposed to work in Nigeria?

Anyone looking for a good analysis of why “aid is not working” — and what does — should look at articles written by David Satterthwaite and Diana Mitlin in a journal called Environment and Urbanization. These offer informed reasoning on what happens to most aid money, as well as a description of a fairly new Urban Poor Fund that makes loans and grants directly to the organized poor for specific projects they have defined and designed themselves.

“Dead Aid” meanwhile is going back to the library today, leaving me with the distinct impression that it garnered the attention it did for reasons other than its arguments.

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