Ahead of the publication of my book Dead Aid, an author friend of mine cautioned me about responding to opponents who found it necessary to color their criticism with personal attacks. This, he argued, is a tried and tested way of side-stepping the issues and providing a smoke screen when faced with a valid argument.
Jeffrey Sachs's latest posting is just the latest example of using this tactic to obfuscate the facts and avoid addressing the fundamental issues regarding aid's manifest failure to deliver on its promise of generating growth and alleviating poverty in Africa.
And though I am responding here in order to refute his arguments, as a fellow economist, I intend to rely on logic and evidence to make my argument and show Mr. Sachs the professional courtesy that he has failed to show to me.
Development is not that hard. We now have over 300 years of evidence of what works (and what doesn't) in increasing growth, 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.
We also know that there is no country -- anywhere in the world -- that has meaningfully reduced poverty and spurred 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 (to name a few), an aid-based strategy hurts more that it helps.
It is true that interventions such as the Marshall plan in Europe and the Green Revolution in India played vital roles in economic (re)construction. However, the key and (often ignored) difference between such aid interventions and those plaguing Africa today is that the former were short, sharp and finite, whereas the latter 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.
Mr Sachs knows this; how do I know? He taught me while I was studying at Harvard, during which he propounded the view that the path to long-term development would only be achieved through private sector involvement and free market solutions.
Perhaps what I had not gleaned at that time was that Mr. Sachs' development approach was made for countries such as Russia, Poland and Bolivia, whereas the aid- dependency approach, with no accompanying job creation, was reserved for Africa.
Mr. Sachs chooses to ignore that relying on aid at a time when the United States is facing 10 percent unemployment rate and Germany (another leading donor) could contract by as much as 6 percent, is a fool hardy strategy. The aid interventions that Mr. Sachs lauds as evidence of success are merely band aid solutions that do nothing to lift Africa out of the mire -- leaving the continent alive but half drowning, still unable to climb out on its own.
Yes an aid-funded scholarship will send a girl to school, but we ought not to delude ourselves that such largesse will make her country grow at the requisite growth rates to meaningfully put a dent in poverty. No surprise, then, that Africa is on the whole worse off today than it was 40 years ago. For example in the 1970's less that 10 percent of Africa's population lived in dire poverty -- today over 70 percent of sub-Saharan Africa lives on less than US$2 a day.
There is a more fundamental point -- what kind of African society are we building when virtually all public goods -- education, healthcare, infrastructure and even security -- are paid for by Western taxpayers? Under the all encompassing aid system too many places in Africa continue to flounder under inept, corrupt and despotic regimes, who spend their time courting and catering to the demands of the army of aid organizations.
Like everywhere else, Africans have the political leadership that we have paid for. Thanks to aid, a distressing number of African leaders care little about what their citizens want or need -- after all it's the reverse of the Boston tea-party -- no representation without taxation.
In conclusion let me respond to four of Mr. Sachs' specific points:
1) Regarding Rwanda: It is absolutely true that Rwanda depends on substantial amounts of foreign aid. The point is that President Paul Kagame is working tirelessly to wean his county off of aid dependency (which is precisely the approach to exiting aid that I have been arguing for). To focus on the point that Rwanda relies on aid is to miss the more interesting point: Here in a country where over 70 percent of the government budget is aid supported, the leadership is pushing for less, not more aid -- what is it Mr. Sachs that President Kagame sees that you do not see? Let's face it, the leadership could guilt-trip us all into giving it even more aid after the international community turned its back on the country at its time of need during the 1994 genocide, yet it does not.
2) Mr. Sachs claims that I, alongside the compassionate Bill Easterly, lump all kinds of [aid] programs in one undifferentiated mass. I would point Mr. Sachs to page 7 of my book which explicitly makes a delineation between different types of aid.
3) Regarding the "countless" examples in which countries have benefited from aid then graduated: Here I would point Mr. Sachs to page 37 of my book to a discussion of these countries; The difference again with these success stories is that they did not rely on aid to the degree and length that African countries do today. Moreover, they very quickly adopted the market-based, job-creating strategies outlined in my book, for which Mr. Sachs seems to have an apparent aversion, in favour of the status quo.
4) Finally, with respect to Mr. Sachs' remark that I would see nothing wrong with denying US$10 in aid to an African child for an anti-malarial bed net -- even labeling me as cruel; I say, if working towards a sustainable solution where Africans can make their own anti-malaria bed-nets (thereby creating jobs for Africans and a real chance for continents economic prospects) rather than encouraging all and sundry to dump malaria nets across the continent (which incidentally, put Africans out of business), then I am guilty as charged. Don't forget that the over 60 percent of Africans that are under the age of 24 need jobs not sympathy.
As a final plea, I urge Mr. Sachs to heed the words of his former boss, Mr. Kofi Annan when he says "The determination of Africans, and genuine partnership between Africa and the rest of the world, is the basis for growth and development."
Dambisa Moyo is the author of Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa (Farrar Straus & Giroux); www.dambisamoyo.com
Dead Aid: Why Aid is Not Working and How There is a Better Way for ...
Dambisa Moyo - Wikipedia, the free encyclopedia
Questions for Dambisa Moyo - The Anti-Bono - Interview - NYTimes.com
Africa does not want financial aid which gets stolen the day it is released, what they want is western technology and expertise to transform the huge natural resources into usable goods that can benefit the people directly. Technologies that could convert the sun’s energy into electricity that can help reduce cost of running business. Tractors, improved seeds, storage and irrigation facilities that can enable farmers to expand their farms, plant all year round and store during bumper season
What Africa needs vigorous and aggressive marketing of their economies through the sale of bonds . South Africa’s 10 year bond generated 1.5 billion dollars and was over subscribed six times. That is what Africa needs not peanuts that come in a form of “do what I think is best for you not what you think is best for yourself.” Bring the technology and expertise to Africa, open your markets to African goods, crack down on your crook multinational corporations, cancel all the illegitimate debts, repatriate all the stolen money to their original owners, stop supporting undemocratic and unelected leaders, stop using Africa as dumping ground for western goods and keep your little money and Africa will be a different continent within 10 to 20 years.
The reason why people are fighting you is because your proposals are unnecessarily radical. Why not adopt a more proportionate response? Why not say, "No aid to governments that don't hold free and fair elections?" Why not demand that governments allow media freedoms etc. That would solve accountability problems. Why demand such an extreme measure that is unnecessarily harsh?
I hope you are not suggesting that unless Africans have AID taken away they will not realise the impropriety of their affairs. This is not so. You are African and you realise this. If you were an African leader I fail to see what would prevent you from adopting your reforms even if AID continues to flow. You wrongly ascribe African corruption to AID. Look at Zimbabwe, they are begging for AID but are getting none. Has that changed the government. When was the last time Zimbabwe received government to government AID? Has that helped them? NO!
You cite Botswana and South Africa as examples of countries working without a reliance on AID. Good observation. Did they ask for an end to aid before they reformed their nations? NO! So why are you calling for it? They simply got on with prudent economic policies and the need for AID died a natural death. Why not follow the same course of action?
Dambisa advocates for a policy, which will empower individuals, by helping them with their entrepreneurial schemes via Micro financing and thus create jobs, build wealth and make people responsible for their actions. Minus a radial approach, Africa will continue to be dependent and will never become economically independent.
For your information, Zimbabwe continues to receive Aid.
Your criticisms of the book with regards to using Botswana and South Africa as examples, are laughable. When do you decide to change a bad policy? It is when it becomes apparent that it is failing or it has reached a dead end. Africa needs such radical ideas to help in it's development.
This message is contained in Mo Ibrahim’s piece to Financial Times of May 28th – “Good governance will bolster African aid”. Mo has convincingly argued that the critical question is not about getting aid or not. But it is the concern with poor governance of the majority of African governments. He counsels that – improved accountability and transparency of donors, private sector, and African governments – the economic aid flowing to Africa, would produce better results.
In other words, the goals Moyo is discussing – of reducing aid waste, corruption so as to generate sustainable economic growth - the ingredients you need are: democratic ideals of constitutionalism, rule of law, good governance, transparency and accountability. Thus, all Moyo has done is to dramatize what is already known.
The other is: - Moyo erroneously believes that – as soon as you discontinue government-to-government aid flow, the private sector would step in. On this Mo makes three important observations. First, debt markets are not open to African states needing capital. Secondly, he says that – “most Western financial institutions are not interested in investing in sub-Saharan Africa”. And thirdly, that one of the solutions Dambisa proposes, government bonds – “costs more than that of the World Bank or other institutional aid”.
“At the Monterrey Financing for Development Conference in 2002, world leaders pledged “to make concrete efforts towards the target of 0.7%” of their national income in international aid. In today’s dollars, that would amount to almost $200 billion each year.” - Sachs, 2006
The above did not happen as we all know. Thus I am not sure how one can say that Sachs approach has failed – if that is what is being said.
Dambisa says the Marshall Plan worked because it was “short, sharp and finite” – “sharp” as in large – adjusted for inflation it was $115.3 billion, about 5% of GDP. The “sharp” that Sachs wanted has not occurred.
They are both right – Dambisa and Sachs. Dambisa is right the development is the only long term solution. Sachs is right that you can’t develop while people are struggling to survive. If foreign investment can swoop in and raise up these people – all the better – but that’s is not happening any more than the .7% solution is. Why is Dambisa going to succeed any better than Sachs has?
Africa is poor because of CORRUPTION, not lack of AID. Corrupt African elite probably steal $200b of Africa's wealth and send it back to the West every year. 1 out of 4 Africans is a Nigerian, and $400b of that country's wealth is estimated to have been looted in the past 40 years.
If you want to help Africa, fight its corruption. Use $1 billion to fund an award for whistle-blowing against corrupt African leaders. THAT will go further than 200 billion of aid.
Utimately, Africa will have to be fixed by Africans. And the best hope is the African diaspora. It was the Indian diaspora that finally development to India and the Chinese diaspora (first the Taiwanese, then the US-based Chinese) are doing the same in China. Western jobs are up for grabs, Africans living in the West need to take their knowledge of the West and decide which services they can take from the Americans, British and French to Africa.
Mr. Sachs article throws some facts at us, however to the trained eye it is clear he is purposefully misinforming his readers or he simply did not complete his research. His intentions might be honorable, but his article doesn't indicate that.
It's like he saw you talking on t.v., didn't like what you were saying at that time and put together an article in 5 minutes and submitted it.
When you say you know how to build a house Mr. Sachs, please make sure it's a house that people can actually live in, and not the kind that comes in a Lego set.
He needs to do the honorable thing and apologize to his readers, Ms. Moyo's readers and to Ms. Moyo herself.
In my experience from going to several "Aid to Africa" forums, most educated Africans living in the USA actually dislike American liberals, its like the conflict between the missionaries who built African schools and the nationalists. I believe its a subconscious belief by American liberals that Africa needs to be preserved as a the last bastion of the primordial human existence, that creates this tension.
The stars at "Africa conferences" are illiterate African village entrepreneurs pumping water with makeshift windmills but not the African engineers and scientists , or billionairs who are trying to follow the Western approach to development (that horror! degrades Africa's environment).
Worse still, the conferences have no US-based Africans!
Ms Moyo talks about attending a Bono "africa" event at Davos and being the only African there.
That Africa needs American Investment NOT Aid is patently obvious but America's approach to Africa has already lost Africa to the Chinese, who approach the Africa as a continent who are where they were 30 years ago, and will be where they are today in 20 years time.
Dear Ms Moyo, please forget the West. the right does not care. The left wants a primordial Africa, I understand you want to highlight they are a nuisance but one shouldn't look a gift horse in the mouth.
My problem is not in the ideas in her book, but that she presents them under the sensational pretense that "Aid Doesn't Work." More people will read her book title that will actually read her book, and they will walk away thinking that charity is harmful, and only Ayn Rand can save Africans.
She should think about the consequences of her marketing strategy. The last thing we need are economists telling people "charity hurts Africans!" especially when that isn't even the real thesis of their book.
Humanitarian Aid - crisis/ disaster relief
NGO Aid - sponser a child for the price of a cup of coffee
...both of which she has no problem with...
and the type of aid I call WELFARE aid, that comes from loan sharking, banking cartels like the IMF, World Bank and USAID.
I think western nations could accomplish far more by dropping their tariffs on African produce than by all the "aid" they provide. I don't believe in conspiracy theories, but I agree that the "aid" has the effect of hobbling African development.
Ending tariffs for 10 - 15 years would be a great way to stimulate the economy as long as it accompanies the drop off of the type of aid Dambisa Moyo is against. This will properly incentivize the people, who are, from my experience, hard working and want to get ahead. Also it will take greed away from the corrupt leaders who use aid to enrich themselves at the expense of the people.
I was watching some of Ms. Moyo's videos and came to learn that it can take 2 years just to get a business license in Kenya - you have to go through dozens of agencies, bribe officials and then on top of that the government can and often does shut business down for no good reason.
I think you make strong arguments. And I applaud you taking the high road away from personal attacks.
While I might quibble over some of the details, your fundamental thesis that only the private sector can generate growth and that aid is inhibiting this in some ways is, I believe, accurate.
More importantly, I applaud you and encourage you to continue raising your voice in this debate. For far too long Africa's issues have been debated by non-Africans... .in itself a form a neo-colonialism. So not only are you correct in your fundamental economic thesis, your message coming from an African voice, and a strong African woman's voice at that, is extraordinarily helpful to the discussion.
Don't let the white celebrity economists get you down. I'm a white aid worker myself and I would far rather continue hearing your voice than their self-congratulatory drabble. Jeff Sachs needs to understand that massively expensive integrated rural development strategies like his Milennium Villages were proven unsustainable and an inherently flawed strategy in the 1970s. A slow, steady, sustainable, African approach is the only thing that will work in the long run.
Keep up the good work.
--aid to south korea after the war amounted to about $6 per person per year for about 7 years or about $850 million -- equivalent to $5 billion in today's dollars. more than the US spent on aid to ALL of africa in 2006 and you say s. korea did not rely on foreign aid?
--what degree are you talking about? we spend $10 billion A MONTH in Iraq. and less than $4bil for 900 million people in all of sub-Saharan Africa for the YEAR.
--you say you are an economist, yet the only vague reference to anything economic in your book deals with capital markets, investing in trade, free market, etc. hasn't your faith in laissez-faire yet been shaken after the tremendous unregulated mess we as a global economy find ourselves in today? do you have a single suggestion for an economic model any african country can use? numbers please give us some.
--you differentiate between aid on page 7. that's great. so you're saying some aid is good others bad? huh?
--you perpetuate the old argument of aid detractors for the past 60 years. let's face it, markets don't help the poorest of the poor because there is no incentive to help them.
--yes corruption hurts development. and it happens in only "aid dependent" societies. oh wait, enron, tyco, scooter libby, worldcom, ted stevens, tom delay, duke cunningham.
-- Aid to S. Koreas etc, etc..You're correct, BUT it was for a finite period of time. 7 years and then stop. Aid to Africa has been open-ended for the last 60+ years.
--Iraq-spending...OK, and? I don't get your point? A large portion of the Iraq spending is on US troops and interests.
--Reference for an African country to use?....Dr. Moyo specifically identifies Ghana, Botswana, and S.Africa as countries which have shifted away from Aid-dependant models. (Have you read the book?)
--Differentiate Aid..? Yes Govt to Govt Aid is BAD, Humanitarian and Charitable Aid is GOOD, whats so confusing about that?
--Markets don't help the poorest...OK, what does then? Certainly not Aid!
--Corruption ...Please the damage ENRON did to the US economy is child's play when compared to what Omar Bongo has done to Gabon.
Aid to south korea worked (by Martin Wolf, a real economist): http://blogs.ft.com/arena/2009/05/27/is-aid-working/
corruption: have you ever heard of Vietnam, Cambodia, Indonesia? These are countries that have been ranked worse than most African nations on the transparency index yet have thrived economically. the point is that it's awfully simple-minded and a bit racist to label African nations as backward and corrupt when that doesn't nearly affect economic development as issues like malaria.
a tad tired of listening to free market idealogues thinking capitalism can fix the world. look where we are now.
Aid to south korea worked (by Martin Wolf, a real economist): http://blogs.ft.com/arena/2009/05/27/is-aid-working/
corruption: have you ever heard of Vietnam, Cambodia, Indonesia? These are countries that have been ranked worse than most African nations on the transparency index yet have thrived economically. the point is that it's awfully simple-minded to label African nations as backward and corrupt when that doesn't nearly affect economic development as issues like malaria.
a tad tired of listening to free market idealogues thinking capitalism can fix the world. look where we are now.
Mr. Sack's comments are a mix of some truth and personal attack.
I read Dead Aid; I am an African; and I have seen development work close by. Dead Aid is dead right with respect to pointing out the problems of aid in Africa. Reading her book for me was as like reading what I felt all along. Unfortunately, I am not an economist , thus difficult for me to judge if the solutions she proposed would work.
Two decades ago Riddell in a book "Foreign Aid Reconsidered" concluded that there is no positive relationship between aid and development. The last 20 years have shown that aid is really not a priority for development; it actually has become damaging.
Mr. sacks stated that he “begrudges” Moyo and Easterly for “trying to pull up the ladder for those still left behind” implicitly implying that they wouldn’t have been educated and get the chance to talk at equal level with him has it not been for the aid (scholarship) they got. This is not fair and it is contemptuous. He ignored the fact that many years ago many African countries had better universities and paid the scholarships of thier own nationals. Now we can’t afford our food.
This all adds up to what Moyo has concluded. The relationship between Africa and the west is based on pity feeling and probably also on contempt. Therefore, one more reason for Arica to look to China, India and South America.
And perhaps doling out assistance is far more profitable for developed nations than opening their markets to Africa.
I have some hope that China's investments in Africa may provide the capital that nations can use to build infrastructure and educate their children. The Chinese don't usually attach "strings,' they seem to have a much more healthy and ultimately less patronizing business model. This can have a negative side, as in Sudan, but they aren't any more indifferent than the US or Europe.
And the good they do by undermining the dependence on the pittances offered by aid can be revolutionary.
A revived Africa has much to offer the world, especially via the examples of South Africa and Rwanda -- which have much to each others -- in the Balkans and Israel, for example --- about reconciliation.
Your voice and that of other thinkers such as Wangari Maathai is starting to have an impact, and the unpleasant reactions of the noblesse oblige crowd are entirely predictable.
Re: celebrities, I think your comment that the overwhelming (and insane in my opinion) attention given to their irrelevant and simplistic views takes up extremely important space that should be afforded to those working for real change (elected leaders and civil society) is Absolutely correct.
(as an aside, Mr Sachs and WarSkeptic: name-calling and an insistence on linking the Marshall Plan - five years of targeted aid to countries with an existing infrastructure to handle it, and the realities of the African aid model today - is at best showing your unwillingness to enter into debate, and at worst insulting the efforts of Paul Kagame and other leaders who are striving for a new vision for Africa.)
It's a strange person indeed who thinks that the "pity poor Africa" model of aid is the right way forward... My advice? Read Moyo - Read Easterly, examine the arguments and then make a decision.
How about Europe after WWII?
How about Israel?
On a strictly domestic level How about the United States and reconstruction after the civil war?
You argument is silly
As to the general notion of corruption and aid. Anytime money changes hands there will be people who try to steal from the pot. I'm not aware that aid money is stolen or wasted at a higher rate than say military spending. And obviously you've given no facts to support such a claim
Europe after WWII? The Marshall plan which benefitted much of Europe and Japan was a one off. Once given the investment push they needed, the Germans, Italians et al 'took off' and were quickly weaned off the American nipple.
Israel? We all know that place would fall apart if not for continued American backing.
The US post Civil war still had the cheap African labor to prop up invesments and the blooming Industrial Revolution which was a result of slavery left many with oodles of cash to invest.
If you REALLY want to know of the waste, corruption and subterfuge surrounding foreign aid, then I'd recommend 'Confessions of an Economic Hit Man' by John Perkins who outlines how aid agencies such as the IMF and the World Bank throw money at useless boondogles that serve only to assist foreign multinationals who then leave the impoverished population to pay back - with interest - thus leaving western investors with healthy paybacks and 'clear' consciences after having been seen to be assisting in the growth of the undeveloped world.
THAT is the racket.
Corruption is fomented by those who have the power to back it up with threats of sanctions and military intervention.....
Wasn't that the point of the Marshall Plan? That and stopping communism in its tracks? The nasty underpinnings notwithstanding, that bit of aid saved the world. With books like Dead Aid and Amity Schlaes' The Forgotten Man it seems that it is fashionable to show the failures of aid whether they are failures or not. There should be readjustment in aid, but right now, cutting it cold would be a nasty shock to the system.