Better Aid, Not 'Dead Aid,' for Africa

Dambisa Moyo's new book, "Dead Aid ," is a prime example of an old idea wrapped up in new packaging. As a Harvard-educated child of Africa (Zambia), with stints at Goldman Sachs and the World Bank, Moyo makes for an appealing messenger. However, the idea on which her book is based -- that foreign assistance for Africa hasn't worked -- is hardly an original one to most aid practitioners.

But instead of offering ideas to improve aid Moyo takes the opposite approach, asserting that aid is altogether bad for Africa and should be gradually replaced with foreign investment. Moyo's solutions may on the surface seem reasonable, but her argument is simplistic, and even dangerous.

Beyond Moyo's repetitive and lifeless prose lay a stunning number of undocumented and inaccurate assertions. She repeatedly claims that $1 trillion has been spent on African development aid, but cites no source for the figure. She claims that two-thirds of U.S. AIDS assistance to Africa goes to abstinence education, although the actual number is 7 percent. She refers to a World Bank study showing that 85 percent of aid flows "were used for purposes other than that for which they were initially intended," but provides no citation. And to support her argument that foreign aid increases the risk of conflict she uses a single dubious example -- Somalia -- from a source that she references but doesn't cite.

Meanwhile, Moyo's discussion of Botswana's economic miracle illustrates her rampant generalizations and mischaracterizations of aid. She claims the country's economic success is a result of pursuing "market economy options" and weaning itself off foreign assistance. But Botswana's success has not occurred in a vacuum. The country is one of the most homogenous in Africa, borders a stable economy and has a strong economic base for attracting foreign capital. In short, it has key attributes that other African economies simply don't share.

Indeed, Moyo often draws a direct line between aid and economic growth -- or lack thereof -- as if no other factor plays a role in African development. The notion that Bostwana's experience with foreign aid could be repeated today, as she argues, in places like Nigeria, Sudan or Rwanda is fanciful.

Perhaps Moyo's greatest sin is not differentiating between types of aid. Only a few years ago, Botswana was so ravaged by HIV-AIDS that it's president spoke of possible national "extinction." Ultimately, outside assistance from the United States, the United Nations, the Gates Foundation and the drug company Merck helped save Botswana from this fate. The Botswana aid came in the form of money and, more importantly, technical assistance, which can often be more effective than resource flows in producing positive development outcomes. Yet, in Moyo's formulation there is only one type of aid -- money, usually bilateral in origin -- and it's bad. Moyo argues that African countries -- not the West -- should be tackling the AIDS crisis, but ignores the fact that her best example of a successful African economy (Botswana) was unable to do just that.

Many in the development community share Moyo's goal of an aid-free Africa, but her solution -- having African countries enter the bond market and attract foreign investment -- rings hollow. In the wake of the global financial crisis, it's hard to imagine either African governments or their poorly developed economies being able to attract significant investment.

Most surprising is Moyo's support for more Chinese investment and involvement in African economies. Moyo is notably blasé about the Chinese development model -- the so-called Beijing Consensus -- that puts growth ahead of democracy, and even endorses the idea of a "decisive, benevolent dictator" like President Paul Kagame of Rwanda. Yet, at the same time, she says that Africa needs more accountable and transparent leaders, a stunning contradiction that she leaves unresolved.

The truth is, Africa does not need less aid or even more aid. It needs better aid, conditioned on good-governance practices, greater transparency and more aid accountability, and it needs better coordination between private and public donors. These are measures that are already occurring, both on a bilateral and a multilateral basis. The Millennium Challenge Corporation offers one hopeful example.

Moyo is right when she argues that too often, aid has flowed to state coffers, instead of to the people it is supposed to help. But the solution is not to cut off aid, but instead to focus foreign assistance away from state government, and instead toward civil society and non-state actors -- another phenomenon that is well underway. And to Moyo's credit she recognizes that perhaps the most pernicious impediment to African development are U.S. and European subsidies that block African agricultural exports.

Across the development spectrum, there is a raging debate over how aid can be delivered more effectively, to better reach poor Africans. In an era of fiscal belt-tightening, this debate is more crucial than ever. That Moyo wants to help her native continent is not in dispute. But the naïve solutions she advocates in "Dead Aid" would have the exact opposite effect, and risk emboldening those who argue for turning off the aid tap for reasons that have nothing to do with altruistic support for African countries.

Moyo would have been better off writing a book that gets to the heart of the problems facing the African continent, instead of offering a bogeyman (aid) and remedy (going cold turkey) that would only consign another generation of Africans to grinding hardship.