DEAD AID: Why Aid Is Not Working for Africa. Author: Dambisa Moyo Reviewed By: Pen Marks

THIS is a book by an angry young African intellectual, who does not mince her words, offering some frightening advice such as; African nations need a benevolent dictator who has focus to lift up the social and economic standards of nations, elections in Africa are meaningless especially if held immediately after independence as they do not solve any problems. And finally: Cut off aid to Africa!

Moyo asks vexing questions. “Why is it that Africa alone among the continents of the world seems to be locked into a cycle of dysfunction? Why in a recent survey, did seven out of the top states ‘failed states’ hail from Africa?” She blames it all on aid. She argues that, “depending on aid undermines the ability of Africans, whatever their station, to determine their own best economic and political policies”.

Moyo’s view is that in economic terms, Africa has actually regressed, rather than progressed, since African countries attained independence.

Since the Second World War US$1 trillion has been transferred from richer countries to Africa. And what has aid achieved over the past 50 years? Since 1970, US$300bn has been poured into Africa. Yet, average incomes have either stagnated or fallen off. To Moyo, aid causes corruption and conflict, and it also inhibits social capital and foreign investment.

Aid is easy money that ends up in the pockets of dictators, she argues. She cites the case of Zaire’s (now DRC) Mobutu Sese Seko who after negotiating with President Reagan for a hold on his country’s US$5bn external debt repayments went ahead to hire a Concorde to transport his daughter to her wedding in Liberia. Elsewhere, it is cited that the late dictator of the Central African Republic Jean Bedel Bokassa diverted Aid money to purchasing a gold bed. Nigeria’s Sanni Abacha stashed more than US$ 600m in Swiss accounts.

Moyo advocates for private financial markets. She feels if governments relied upon financial markets they would be accountable to lenders, and if they had to rely on taxation they would be accountable to voters. Aid, she further argues, is like oil, enabling the elite to embezzle donor funding. Because of the easy money from aid, African leaders defend their prolonged stay in power.

Moyo advocates for Foreign Direct Investment (FDI) and she believes it will bring benefits. She believes Chinese direct investment and the resultant building of infrastructure such as roads and railways to extract minerals and foodstuffs have a mainly beneficial effect. She also sees huge scope for innovation in microfinance.

However, Moyo presents too many generalities. Sometimes her arguments are erratic. Her comparisons of Asian countries with Africa do not really hold water. She argues that Asian countries presented a strong, interventionist state that nurtured industry and an elite who invested in their own country. In Africa, elites have exported capital to western banks and pursued ruinous policies. Therefore, she proposes to phase out aid in five years. She doesn’t seem to have considered the effect of such a move. She thinks African leaders would then be prudent. If Aid was cut off, millions of Africans would slide into untold misery, closure of thousands of schools and the run down on HIV/AIDS efforts.

With the recent international financial crash it is unlikely that issuing bonds to raise capital would work. Instead of cutting aid altogether would it not be more prudent to press for more effective aid? She places democracy as of secondary importance. Her advocacy for a benevolent dictator does not augur well with democratic principles. Aid is not the main failure of African states. Aid is necessary but the aid providers should insist on establishing good credit ratings; insist on transparency and prudent management of the state, transparent budgeting and free and fair elections.

Born in Zambia and trained at Harvard and Oxford Universities, Dambisa Moyo has worked for the World Bank and more recently as a Global Economist and Strategist for the bankers Goldman Sachs. Her book is ideal for scholars and policy makers in Africa. She presents food for thought arguments which give any scholar or policy makers a moment to ponder the continent’s future. PF