Dead Aid, written by African author Dambisa Moyo, is a clearly a labor of love that Moyo has entailed that details the state of aid in Africa and exactly why the system that is running that aid is failing African countries in need. Moyo explains the different types of aid (humanitarian/emergency aid, systematic aid, charity aid) and the reasoning behind each’s failures to provide the stability that they promise–but the one that Moyo hits the hardest is systematic aid.
Systematic aid occurs when payments for aid are passed directly from government to government or to governments through World Bank transfers. These payments are massive and dwarf the amount of aid given by charities or through humanitarian efforts. The primary concern with these payments is that through the direct transfer to governments, the money is at the disposal of whatever said governments see fit. The problem arises when corrupt governments do not use the systematic aid as aid and spend the money corruptly.
To challenge this, Moyo describes four alternative sources of funding for African economies that will feed directly to the areas where aid is needed. Her four alternative sources are:
1. Follow the lead of fast-rising emerging Asian countries and tap into international bond markets.
2. Encourage large-scale direct investment within infrastructures.
3. Press for agricultural free trade to maximize profits on primary exports.
4. Encourage financial intermediation.
This last alternative source would require making it cheaper for emigrants to send money to their families back home and promote microfinance institutions to give legal titles to homes for homeowners in poverty-stricken areas.
Moyo’s stress on the potential in Africa modeling itself after China in terms of investing is evident. The fact that China is investing so much into the African market in terms of industrialism and business-building emphasizes her opinions that she presents during her TED talks.
However, her opinions have not been well received by all, namely high-dollar Western charity holders such as Bill Gates. Gates scoffed at Moyo’s Dead Aid theories and accused her of not knowing about aid. Moyo responded to criticism by saying that Gates’ harsh words of accusing her work of, “promoting evil,” was disrespectful. On the contrary to Gates’ thoughts, economist and Activist George Ayittey suggested that “dead aid” was in fact a legitimate problem that should be addressed and that if aid is not aiding Africans, then Africans should say so.
Click on the image to watch Gates’ response to Moyo’s theories.