Dead Aid: Why Moyo Says Aid Isn’t Working and How to Fix it

by Courtney Doll

In Dambisa Moyo’s book Dead Aid, she sets out to explain why the current system of foreign aid is not working for African countries.There are three types of aid: humanitarian or emergency aid, charity-based aid and systematic aid.

Credit: Kenyaforum.net

Credit: Kenyaforum.net

Humanitarian or emergency aid is relief that is mobilized and given out in response to catastrophes and natural disasters. Charitable aid is relief dispensed by charities to people in need on the ground. But the one Moyo is addressing is systematic aid, when relief payments are given directly to governments through government-to-government transfers or through the World Bank. Moyo says charity and emergency aid “are small beer when compared with the billions transferred each year directly to poor countries’ governments.”

Moyo describes four alternative sources of funding for African countries who need foreign aid. One of these alternatives is to tap into international bond markets and follow the leads of emerging Asian countries. She says African countries should take advantage of “the falling yields paid by sovereign borrowers over the past decade.” The second alternative is to encourage large-scale direct investment in infrastructure, much like the Chinese have. Third, Moyo suggests African countries continue to press for agricultural free trade, which would make them more money on primary exports. And fourth, she says they should “encourage financial intermediation.” This includes suggesting they should make it cheaper for emigrants to send money home, encourage microfinance institutions and give shanty town residents the legal titles to their homes.

Moyo speaks about this dead aid in a June 2013 TED talk. She explains how China is setting a great example for African countries looking for ways to find new investments. She notes how more countries are taking after the Chinese model, much like her second suggestion for alternative funding mentioned earlier. Economist George Ayittey gave a TED talk in 2007 where he argued Western aid hurts African countries. When asked his opinion on Moyo’s thoughts, this is what he had to say:

“If you want to help American farmers, you ask them what sort of help they need and whether such assistance is working. Why don’t Americans ask Africans what type of aid they need and whether the aid Americans have provided is working? So what is wrong with an African, Dambisa, telling Americans that the foreign aid they are providing isn’t working and it is “Dead Aid”?”

Ayittey gives a TED talk about the future of African countries

Moyo’s thoughts have caused a scuffle with American billionaire Bill Gates. Gates said books like Moyo’s are “promoting evil” and that Moyo didn’t know very much about aid. Moyo fought back, saying “I have been under the impression that Mr Gates and I want the same thing – for the livelihood of Africans to be meaningfully improved in a sustainable way. Thus, I have always thought there is significant scope for a mature debate about the efficacy and limitations of aid. To say that my book ‘promotes evil’ or to allude to my corrupt value system is both inappropriate and disrespectful.”

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