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Book Review: Dead Aid
Evita Fajiratur Rohmah
If aid is not working, should we try to make it work or eliminate it?
“Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world.” This startling statement comes out from Dambisa Moyo, an African woman who criticizes the Western aid programs in Africa. Since Africa’s problems have been discussed by many white men, Dead Aid delineates African matters from an African woman’s point of view. As a now Global Economist and Strategist at Goldman Sachs, Moyo continuously tries to break the notion that “the rich should help the poor, and the form of this help should be aid”. Moyo claims the idea that aid can alleviate poverty is a myth rather than righteousness. Although African macroeconomic conditions have risen (in terms of growth escalation, lessen inflation, and the fall of HIV prevalence), Moyo mentioned that Africa is the poorest region in the world with an average per capita income of $1 as well as the highest proportion of poor people in the world. Alongside this truth, life expectancy, literacy and the prevalence of infectious diseases such as malaria are not showing any significant positive changes.
Dead Aid opens the narrative with defining aid and its history. Aid originated from the second world war to post-war aid when the world needed to recover. There are actually two main types of aid: systematic aid – help that comes from bilateral and multilateral transfers and grants, and humanitarian and charity-based aid – help that comes in the form of material and logistic assistance to anyone or any country who needs help. But Moyo’s critique mainly concentrates on systematic aid. It is stated that the portion of systematic aid exceeds humanitarian and charity-based aid.
Moyo also touches upon the Marshall Plan – U.S. aid Program that helped the rebuilding plan of Western Europe post-second world war. Moyo presents an open question why Marshall Plan has been successful in Europe and why it could not do the same everywhere else especially in Africa. Hereinafter, Moyo portrays several factors to answer the question: the absence of good governance, endemic corruption, and debt.
Moyo enriches the discussion by making a reference to several studies in relation to the retarded development of Africa in terms of geographical, historical, cultural, tribal, and institutional compounded by the lack of transparent and credible public institutions. Moyo reflects the relation between aid and corruption as a malignant cycle. Aid facilitates corruption then decreases the local and foreign investment. Consequently, it reduces economic growth and creates fewer job opportunities which eventually increases poverty. Hereby, donors tend to give more aid and poverty becomes inevitable. Even though donors have conditionalities for aid, it merely gives a minor effect. Foreign aid has a lack of accountability and checks and balances, hence, aid becomes a tax revenue substitute. The tax receipts then turn to unproductive and extravagant purposes rather than beneficial public spending previously intended.
Instead of depending on aid for Africa’s development, Moyo offers several development alternatives such as strengthening the bond markets, supporting free trade, and investment in micro, small, and medium enterprises (MSMEs). Moyo believes that the issuance of bonds is beneficial to fund government expenditure. To acquire that, ratings from reputable international rating agencies along with persuading potential investors are required. Besides, local bond markets need to be developed to support the development and strengthen also stabilize the country to shocks. Moyo proposes that free trade ought to be the main focus instead of increasing the aid and that the West is responsible to lift barriers on Africa’s trade issues, as the main trade partner of Africa in Europe. However, the share of the region’s foreign trade has fallen to 26% from 90% in ten years from 1996. In Moyo’s perspective, Africa needs to sit with another partner who provides a fairer game and that it should be China – a country that has contributed a lot to Africa’s development, including human resources quality. From the road in Ethiopia, pipelines in Sudan, railways in Nigeria, and many more, China is heavily invested in developing countries’ infrastructure development. Moyo is also confident that small and medium enterprises could create a big influence on Africa’s economy. In order to encourage small and medium enterprises and fuel private sector growth, better access to finance and business environments are mandatory, which includes financial services inclusion.
However, if we examine critically, Moyo suggestion to phase out aid in five years could be a catastrophe: it would lead to the closure of thousands of schools and clinics across Africa, and an end to health improvement programs such as HIV, malaria, tuberculosis, along with emergency food supplies, on which millions of lives depend. Moreover, in the same period that she examines in the book, the life expectancy in sub-Saharan Africa improved, so do other indicators such as mortality rate, suicide rate, AIDS-related deaths, school enrollment, and so on which should also count as development indicators. To me, Moyo fails to represent development as a whole and merely chooses some indicators of development to support her hypotheses. And the deeper we define and evaluate ‘development’, the solutions and interventions become highly variable.
Dead Aid is a worth-to-read book that gives us a unique perspective on aid and development. Moyo’s solution is indeed thought-provoking, making us think that there is a need for change in regard to the current system. However, I could say that to some extent, I have a disagreement with Moyo’s opinion, especially in cutting aid for Africa. Instead of eliminating aid completely, we may apply good governance and aid agencies should insist on both transparent budgeting and fair elections.
Evita Fajiratur Rohmah earned her BA in Social Welfare Studies from the University of Indonesia. She is interested in researching mental health and gender studies.
This article is featured in JUSTIN Development Review (JDR) Vol. 01 Issue 03 — December 2021