Uganda is a perfect example of the type of aid-dependent country Moyo has in mind

The vast, and often complacent, global aid establishment has rarely been as panicked as they have since the publication of Dambisa Moyo’s debut book ‘Dead Aid’.

The Zambian ex-investment banker, educated at Oxford and Harvard, declares the US$300 billion of aid money that sub-Saharan Africa has received since 1970 as not only wasted, but as a key factor in the decline of relative living standards in many countries.

Moyo concludes that all direct government to government aid should be cut off in five years (emergency humanitarian and charity-based aid is spared).

For those that have spent years campaigning for increases in global aid the idea is anathema. It is made all the more galling that the suggestion has come from an African woman. How can an African, they ask, have the temerity to call for a decrease in aid?

Book: Dead Aid Author: Dambisa Moyo Publisher: Penguin Publishers Reviewer: Joe Powell

Indeed Bono’s campaign group ‘ONE’ became so worried about the impact of the book that they sent emails asking for prominent Africans who disagreed with Moyo to make themselves heard. However, while it is important that more Africans participate in development policy circles currently dominated by middle-aged white Western men (including, bizarrely, music stars), it would be insulting to judge Moyo’s book based on her background. What matters is the strength and practicality, or otherwise, of her arguments.

Uganda is a perfect example of the type of aid-dependent country Moyo has in mind. Official statistics show that almost 30% of the funding for the last national budget came directly from donors. Furthermore, Kampala swarms with international NGOs and the World Bank is funding major projects such as the new Bujagali Dam on the Nile. Under the Moyo plan, Uganda’s budget support would be phased out over the next five years and the ensuing shortfall would force the government to find viable alternatives.

The first of these is the international bond markets, in essence a way in which a country can raise capital by writing ‘IOU’ notes to lenders and repaying with interest over an agreed number of years. With a B+ credit rating Uganda could indeed access these markets but Moyo was clearly not writing with a global recession in mind. Banks have tightened their lending and increased their interest rates to such a level that proposals for Uganda to take out a Eurobond were quietly shelved before Christmas. Political scientists will also point to the previous debt crises in Africa and ask if it is wise that countries begin to saddle themselves with new debt, just as the old had been paid off or forgiven.

Moyo is also blasé when describing the unforgiving nature of the bond markets in the face of defaulting nations. A discussion of the social impact when a country runs out of money would have enhanced her analysis here.

Moyo’s unfortunate timing extends to her love affair with the apparently ‘all business’ attitude of China. However, the huge pressure placed on the South African government to deny the Dalai Lama a visa to attend a peace conference in April shows that China also has a political agenda on the continent. That is not to say that African governments should not welcome the investment China offers, but to signal caution at the dangers of over-reliance on one partner.

Her other prescriptions are generally mainstream, albeit necessary. Extending micro-finance services, encouraging entrepreneurs, boosting South-South trade and investing in infrastructure are all strategies employed by most competent African governments. She also buys into the developmental state model, arguing a ‘decisive benevolent dictator’ often trumps multi-party democracy.

More interestingly Moyo compares remittance money to aid, and shows that the former is far less likely to result in an increase in corruption. The implication is clear. When money comes from a hard-working family member abroad it is rarely wasted. When it comes from an anonymous international donor, though, the feeling of ownership is absent and the money more easily misappropriated by unscrupulous officials. To take this logic to its natural conclusion would be to ask whether citizens would be more rigorous in holding their governments to account if it was clear that it was their taxes that were being squandered rather than those of the West?

While Moyo’s contribution to the aid debate should be welcomed, ‘Dead Aid’ is a frustrating read. A slew of inappropriate generalisations, weak analytical rigour, erratic use of facts, and referencing that is as pot-holed as the roads she bemoans for holding back investment, are all examples of the sloppiness that runs throughout the book. As a neo-liberal free marketer we should also not be surprised that she glosses over the role of the state, although this is surely mistaken as we enter an era in which governments are taking over-whelming action to boost their economies. However, Moyo is right that the ‘culture of aid’ has never seen a country into middle-income status. For that, at least, and for provoking a much-needed debate, we should be thankful.

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