About three trillion dollars have been donated to Africa over the past sixty years. In the 1970’s, less that 10 percent of Africa’s population lived in extreme poverty, and today over 70 percent of sub-Saharan Africa live on less than US$2 a day: These statistics prove that Africa, is on the whole, worse off today than it was 40 years ago.
Dambisa Moyo, a Zambian economist, formerly of Goldman Sachs and the World Bank in Washington D.C, educated at Harvard and Oxford, argues that continuous financial aid to African governments, is not the best way to help Africa. Her description of the aid given to Africa in her book ‘Dead Aid’ has set off debates in political and economic forums across Africa and among donor countries.
According to Moyo, no country has meaningfully reduced poverty and stimulated significant and sustainable levels of economic growth by relying on aid. “If anything, history has shown us that by encouraging corruption, creating dependency, fueling inflation, creating debt burdens and disenfranchising Africans, an aid-based strategy hurts more that it helps,” Moyo is quoted.
In an interview with Deborah Solomon of the New York Times, Moyo was asked what she believed has held Africans back. Her reply was vivid: “I believe it’s largely aid. You get the corruption — historically, leaders have stolen the money without penalty — and you get the dependency, which kills entrepreneurship. You also disenfranchise African citizens, because the government is beholden to foreign donors and not accountable to its people.”
With financial aid readily available, African leaders, over the years, have proven to be irresponsible, unaccountable and indifferent. Moyo argues that it is futile to maintain the aid tradition. “We now have over 300 years of evidence of what works and what doesn’t, in increasing growth and alleviating poverty and suffering. For example, we know that countries that finance development and create jobs through trade and encouraging foreign and domestic investment thrive, and those who have relied on perpetual aid without any incentives have not grown.”
The difference between Africa and China
Forty years ago, Moyo states, China was poorer than many African countries. “Yes, they have money today, but where did that money come from? They built that, they worked very hard to create a situation where they are not dependent on aid,” she adds. Moyo argues for more innovative ways for Africa to finance development including trade with China, accessing the capital markets, micro financing, and job creation.
According to Moyo, such financial aid as the Marshall plan that was given to European countries after WW II played vital roles in economic reconstruction and construction. However, the main difference between that aid intervention and those plaguing Africa today is that the former was short, sharp and finite, whereas the aid intervention in Africa are open-ended commitments with no end in sight. “The problem with an open-ended system is, of course, that African governments have no incentive to look for other, better, ways of financing their development,” Moyo warns.
Experts and observers have agreed that something has to change about Africa’s dependency on financial aid, how it is remitted and utilized. Rather than give money to some African governments who over the years have shown themselves unaccountable, and having no incentives, perhaps financial aid may be more productive if donors provide infrastructure, amenities, and advancement through NGO’s, and African businesses, or give the money to these government with binding incentives.
Financial aid can be made into loans, readily available to African entrepreneurs, and businesses. Donors can create market and custom for African goods and services; create jobs, transform lives and help fight poverty.
Until financial aid to Africa is reformed, so its benefits can become tangible, and the people in need can benefit, Moyo has called for the donations to be closed to undependable African leaders. These governments, otherwise, will remain immature, corrupt, thoughtless and dependent.
While humanitarian aid is highly encouraged, Moyo’s arguments can be built upon and developed — after all the determination of Africans and genuine partnership between Africa and the rest of the world — as the basis for Africa’s growth and development.