“The notion that aid can alleviate systemic poverty, and has done so, is a myth. Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased. Aid has been, and continues to be, an unmitigated economic, political, and humanitarian disaster in most parts of the developing world.” ~Dambisa Moyo
Live 8 concerts and pleas from celebrities like Bono, Bob Geldof, and Angelina Jolie have called attention to the dire situation in Sub-Saharan Africa. Bono and many other celebrities initiated the idea that to alleviate poverty in Africa we just need to give more money to the continent’s impoverished countries.
We should feed families, send children to school, and save people from malaria…It is just the moral thing to do given that we have so much and they have so little… Of course, these are very good intentions. But for millions in countries like Eritrea, Niger, and Malawi, foreign aid may be necessary to make ends meet.
However, a problem arises when it is portrayed as a solution that will “make poverty history.” We must keep in mind that aid is a temporary fix, not a long-term solution to systemic poverty.
Here’s something to digest: In the last 60 years, Sub-Saharan Africa has received over $1 trillion dollars in foreign aid. In fact, the G-8 doubled its aid to the region from $25 billion to $50 billion in 2005.
But, Sub-Saharan Africa has actually regressed in the fight against poverty.Indeed, the number of people living on under $2 a day has increased from 10 percent in the 1970s to 70 percent today.
As someone who lived in Nigeria for the first ten years of my life, I have been greatly saddened by this issue. I know there is so much potential on my native continent, yet it continues to be plagued by war, disease, and poverty. I know for sure that there is no easy solution to Africa’s problems. However, I believe that the current foreign aid strategy will not bring Africa out of poverty.
This topic is the subject of the Zambian Economist Dambisa Moyo’s Dead Aid: Why Aid is Not Working and How There’s a Better Way for Africa. In her book, Moyo argues that aid cannot only be detrimental to development efforts, but it can also be the culprit for underdevelopment in Africa.
She attacks the billions of dollars in yearly aid packages transferred from Western governments, the IMF, and the World Bank to African governments, arguing that such unaccountable funding encourages governments to be corrupt and lazy, creates an incentive for conflict, and kills the private sector, the engine of economic growth. To help relieve Africa of the detrimental effects of aid, Moyo proposes a phase out plan to eventually stop all aid to the continent.
“The future of Africa have to have a good education and good living means. Certainly, there may be no easy solution to Africa’s problems. But the current foreign aid strategy will not bring Africa out of poverty. “(Photo: iStockphoto/ Thinkstock)
Now, Moyo’s ideas are a bit extreme, but it is true that aid can foster corruption and make the government unaccountable to its citizens. However, it is not the reason for underdevelopment. Those reasons are very complex, and the conditions in Sub-Saharan Africa cannot be blamed on a single factor. Moyo, however, makes a solid point when she criticizes the persistence of the same aid policy towards Africa despite decades of glaring failure. If something is not working it only makes sense to try something else.
One of the biggest reasons for Africa’s failure to develop is bad governance. Africa’s corrupt politicians often squander aid funds on fancy cars and luxury homes or stash them in foreign bank accounts. Thus, the money often does not trickle down to the masses, and the cycle of poverty continues.
What I have never understood is why aid money is given to corrupt governments in the first place. Any country that has achieved any meaningful reduction in poverty has had a pro-growth government. For instance, the countries known as the Asian Tigers, such as South Korea and Taiwan, went from being impoverished to advanced economies largely due to good governance. Yes, they received a lot of aid from the United States, but they also used it to invest in infrastructure, education, and other key areas to attract foreign investment.
As a result, they eventually stopped receiving aid altogether. In this case, aid served as the impetus for growth, and not the entire growth strategy. On the other hand, foreign aid is the centerpiece of Africa’s growth strategy. It has been flowing in for decades with no end in sight. If a country does not have a pro-growth government to begin with, then no amount of aid can help it alleviate poverty because the purpose of aid is to assist countries in their development efforts.
Moyo makes another good point when she mentions that no place in history has ever brought an end to systemic poverty based on an aid strategy. Mechanisms like trade, encouraging investment, and promoting entrepreneurship have a proven record of alleviating poverty. Sub-Saharan Africa already has a vibrant culture of entrepreneurship, with shops springing up at every street corner.
WHERE DO WE GO FROM HERE?
The main problem is that these countries– with their poor infrastructure and weak political systems– are not conducive to business. Therefore, it is hard to start a business or expand an existing one.
Africans are not sitting around begging for handouts as they are often portrayed in the media. They want to earn a living like everyone else, but they just need more opportunities. It is time to start encouraging good governance and implementing proven market policies in Africa rather than simply throwing money at the problem.
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