On Demand
Dead Aid
More than $1 Trillion in developmental aid has gone to Africa over the past 50 years. So, what kinds of benefits has all that money provided for people who live on the continent? Not much, says former World Bank consultant Dambisa Moyo in her book Dead Aid: Why Aid Is Not Working and How there Is a Better Way. You can read an excerpt from the book here.
Events:
Templeton Foundation presents Dambisa Moyo in conversation with William Easterly of NYU
Thursday, March 26, at 7:00 pm
New York University
Furman Hall, Room 216
245 Sullivan Street, at West 3rd Street
RSVP at bookforum@templeton.org or by calling 610-941-4050.
Dambisa Moyo will be speaking
Thursday, April 2, at 5:30 pm
Carnegie Council for Ethics in International Affairs
Merrill House
170 East 64th Street
More information and tickets here.
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The show has not aired but here is something to ponder: Israel receives, on average, more aid from the U.S. annually, than the entire continent of Africa and no one ever questions why aid is not working there? I agree that many problems persist on the African continent and changes need to be made but it seems like a double standard for mainstream media to constantly state that U.S. aid to Africa has not helped but to ignore continuing problems in other countries in the world that also receive billions/trillions in U.S. aid. There are areas of success throughout the African continent and I hope Dambisa Moyo mentions some of them along with some talk of the role of the changing leadership/economic theory in the World Bank and how it affects the type of aid provided to developing countries. I look forward to listening to your show later today.
Contrary to popular perception, the amount of aid per African per year is really very small, just $30 per sub-Saharan Arian in 2002 from the entire world. Of that modest amount, almost $5 was actually for consultants from the donor countries, more than $3 was for food aid and other emergency aid, another $4 went to servicing Africa's debts, and $5 was for debt relief operations. The rest, $12, went to Africa. Is it really a surprise that we do not see many traces of that aid on the ground? If we want to see the impact of aid, we had better offer enough to produce results.
Since the "money down the drain" argument is heard most frequently in the U.S., it is worth looking at the same calculations for US aid alone. In 2002, the US gave $3 per sub-Saharan African. Taking out the parts for US consultants, food and other emergency aid, administrative costs, and debt relief, the aid per African CAME TO THE GRAND TOTAL OF SIX CENTS.
If you spread a billion dollars widely enough, it won't do anyone any good. Does the guest appreciate that many programs fail because they do not apply enough approaches for sustained development within a given village for sustained development to actually occur? A water pump in one village, bed nets in another, a community cell phone in a third, and nitrogen-fixing trees in a fourth is too scatter-shod to kick any village out of the poverty trap -- and to end this policy of perpetual aid. This is a common mistake that aid agencies make, and I was wondering if he's made it too. (I'm curious to see if he uses the phrase "poverty trap" at all today. Though it's a basic concept to sustained development, I wonder if it's too microeconomic for the macroeconomic World Bank to even bother talking about. A lot of aid agencies don't understand it.)
Does the guest foresee highway/railway development between African nations (not just within), to cut transport costs -- in order to both promote local trade/specialization/division of labor and to allow diversification of exports beyond the high-value-per-weight items that foster militarism and corruption? (not to mention to break down language and tribal barriers)
Aren't private loans a big source of the problem, when they make loans that are for too much money, that the borrowers are bound to default on, thus triggering Draconian measures that serve multinationals, not the citizens of the nations she claims to help. How is what she's saying different from what's warned against in "Confessions of an Economic Hitman"?
Is it not true that the flow of wealth from Africa to industrialized nations dwarfs the foreign aid? Some credible authors think so.
The fact that foreign finds its way to the ruling elites and little is used for wothwhile purposes is the problem, not the existence of foreign. Is it not?
Can you ask her how she feels about aid to Israel. Does she believe it is disproportionate and ill spent?
what about corruption, seems to me that's africa's biggest trouble, not too much aid
Does Dambisa Moyo recommend that regular Americans put political pressure on our government to carry out these ideas? How? Or should we just make a $100 microloan and call it a day?
What does the guest think of the efforts of Bill Gates and Bono?
Also, how is Africa doing regarding energy? What direction Africa needs to go: Fossil Fuels, Nuclear, Wind or Solar?
I wonder if the guest has read Ha-Joon Chang's "Bad Samaritans" - in it Chang argues that Africa's problems are far more related to free market reforms forced on African countries by western donor nations than the Aid itself. Particularly in the area of protection of vital infant industries in the manufacturing sector, which have been the driver of growth in the west, many african countries have been denied the ability to protect and grow their own industries, instead being told to drop trade barriers and accept cheap imports, which reduce these nations to permanantly being poor agrarian economies.
She wants African countries to issue more aid. This is the opposite direction of debt relief. The point of debt relief is that the foreign aid equivalent of sub-prime mortgages were offered: it was known the interest rates were too high, based on wildly optimistic growth projections, in order to trigger Draconian measures that benefit multinationals, and take control out of the hands of the native gov't and keep income out of the hands of the native population.
We need to help create a decent irrigation systems and farms to grow food in the outer regions where the poverty is great, teach the fishermen to fish...stop throwing dollars at the problem.
I think that something that is unique about Africa's history of colonialism is that existing tribal areas were broken down and combined into colonies--these colonies exist as countries today, with tribes that have a long history of argument/warfare. I don't believe that this was the case with India.
Pardon me. I meant "She wants African countries to issue more DEBT."
Does your guest think that what Kwame Nkrumah, a "benevolent dictator", tried to do in Ghana in the 60's should be the template for Africa's success? Nkrumah was less concerned about Democracy than he was about Economic Empowerment, which was his main focus.
"Nobody brings up colonialism when didcussing India, they've moved on" !!?? Is today April 1st?
Is the fact that Britain actively de-industrialized India in the 18th and 19th Centuries totally forgotten? There's more, of course
An organization called TrickleUp gives a $100 grant to the poorest people in the world (mostly women) to start businesses that will sustain their families. Recipients are living on less than $1 a day and cannot *qualify* for microloans. It's amazing how much women can do to lift up themselves and, by extension, their communities with just $100. Check out trickleup.org if you're looking for a way to help someone help themselves. There are alternatives to pouring money into the coffers of corrupt governments.
She says Sachs disappoints her in treating Africa different from E. Europe, but Sachs talks a lot of needing to perform a differential diagnosis, and see up close what each country or village needs. Somehow she doesn't seem to have learned that lesson from him. She gives India as an example, but India is covered with train tracks from British imperialism. Also, 80% of it is tremendously poor. India doesn't have Africa's version of mosquitoes and malaria. It's surrounded by ocean and full of rivers.
She says Kiva is so great, but has she ven been to their site? It's tough to drop $100 in an hour because there are so few loan requests. Furthermore, the recipients are mostly East European. Of those in Africa, most are from Ghana or Kenya. The structure isn't there to support anyone outside of these relatively well-governed, ocean-bordered countries.
It seems all she can think about is the middle class, and has no clue about the remote agrarian class. And nothing she said addressed how to diversify exports or improve their ability to feed themselves. These weren't issues that needed addressing for E. Europe, and she seems to have trouble making the transition when talking about Africa.
Comment 14 from Kate: The reason India, after independance from the British, chose to use English as their official and governmental languauge was because they recognised that the over 500 languages in India wouldn't be able to promote nor support a viable and cohesive nation. Doesn't that fact alone tell you Kate, that there were plenty of 'tribes' in India?
Also, one of the ways that the British East India Company managed this vast nation was to second the various Rajas as 'governors' of their clans or 'tribes'.
Comment # 17 Daniel: I believe the 'Industrial Revolution' began in England in the last quarter of the 19th century. How do you mean that the British 'de-industrialised' India in 18th & 19th centuries? There was no industry there at that point - unless I missed something in my history class?
What was the name of the small over the internet loan agency referred to in the segment ?
Dambisa Moyo and others are right to question foreign aid. But their reasoning can lead to tragic conclusions, while 10 million die of hunger related causes every year.
There are serious problems with foreign aid. It often bolsters dictators and exploitative elites. Much of it is wasted on bureaucracy and outright theft.
And it is often wasted on American special interests. For example, up to $300 of our tax dollars are spent to ship each ton of American corn all the way to Eastern Africa. There, it is sold at a big loss. It competes with local farmers struggling to survive by selling their corn at $30 a ton.
WHAT’S WRONG WITH REJECTING AID
Commerce has an important role, but helping the 2 billion, 600 million who live on less than $2 a day is often seen as unprofitable. Further, businesses often see no incentive to help very poor people control their own resources.
Every day, 27,000 die of hunger related causes. That’s more than nine times the total murdered on 9/11, as horrible as that was.
AID DOES WORK - AND BETTER AID IS BADLY NEEDED
Many aid programs work - incredibly well. Microlending and other social entrepreneurship programs are already empowering millions of people to lift themselves form poverty. It costs as little as $10 a person. But hundreds of millions are still left out.
A COMPREHENSIVE SOLUTION
The End Poverty Campaign supports a comprehensive platform to help end extreme poverty: http://www.change.net/poverty/platform.htm
YOU CAN HELP END EXTREME POVERTY
For more info on our all-volunteer, citizen activist campaign, please call us at (212) 280-0333.
Thank you for your interest in this vital issue!
-The End Poverty Campaign volunteers
"Commerce has an important role, but helping the 2 billion, 600 million who live on less than $2 a day is often seen as unprofitable. Further, businesses often see no incentive to help very poor people control their own resources."
You assume that, somewhat condescendingly, that Africans should rely on foreign companies to invest. But if African governments reform and allow African businesses to thrive, the foreigners will follow.
"Many aid programs work - incredibly well."
That's simply not true. Aid doesn't create economic growth, and microlending can only be part of the solution. (by the way, ever look into how much interest they charge on a microloan? it's insane).
Charles from Jersey: "Contrary to popular perception, the amount of aid per African per year is really very small..." The AMOUNT of money spent on aid isn't what matters, it's how EFFECTIVE it is. No matter how much aid a rich country gives, there will always be people like consultants and bureaucrats to leech off of it. Aid is inherently unsustainable and inefficient. so it's not better aid, it's less aid that's needed.
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