Dambisa Moyo Discovers Key to Ending Poverty

March 25, 2009

Last month I blogged a New York Times interview with Dambisa Moyo, whom the paper aptly dubbed the “Anti-Bono.” A youngish woman who grew up in Zambia and holds degrees from Harvard and Oxford, she launches a frontal assault on foreign assistance in her new book, Dead Aid. For her, ODA is DOA. I worried in my post about her simplistic interview answers, which implied that aid has nothing to do with microfinance even though donors helped make it what it is today. I ended carefully:

I look forward to reading her book, where perhaps she recognizes these complexities.

Well, I did, and she doesn’t. (Her publicist sent us a copy, so we got the Anti-Bono pro bono.) The book is sporadically footnoted, selective in its use of facts, sloppy, simplistic, illogical, and stunningly naive.

I’ll show you what I mean in a moment. In the meantime, my characterization raises a question: why is anyone paying attention to this book? Well, I admired her pungency about rock stars:

Most Brits would be irritated if Michael Jackson started offering advice on how to resolve the credit crisis. Americans would be put out if Amy Winehouse went to tell them how to end the housing crisis. I don’t see why Africans shouldn’t be perturbed for the same reasons.

Touché. But in fairness, many activists propagating the idea that aid can save Africa know the world is not so simple—and that nuance doesn’t win in politics. And Moyo’s rhetoric is at least as simplistic. She has determined that aid is causing poverty: stop aid, and Africa will prosper. “We can put a man on the moon, so we can most certainly crack Africa’s financing puzzle, jump-start economic growth and drastically reduce poverty” (p. 139).

I have probably done more than anyone to challenge studies showing that aid “works” on average. (This, this, this, this, this.) I sympathize less with Jeff Sachs than with Bill Easterly—though I eschew the extremism that both represent. I am not writing to defend the proposition that aid can save Africa. I am writing…in the name of evidence and rigor in the processes by which our politicians shape development policy. Don’t laugh. That is what I do for a living.

Seriously, in the Wall Street Journal’s promotion of Moyo, we can see how intellectually irresponsible arguments play into ideological agendas. It would be a relief to know that aid is so useless we can dump it. But what if that kills kids?

Here, adjective by adjective, is how the book bugs me:

• Sporadically footnoted. Someone worked hard to determine that Spain has defaulted on its debts 13 times since 1500 and Brazil 7 times since 1820. Moyo’s book quotes such numbers without revealing sources.
• Selective in use of facts. Moyo hardly mentions how death rates among small children and babies have fallen in most of Africa since 1960—ditto for birth rates—thanks in no small part to aid.
• Sloppy. “Over the past twenty years aid to Africa has been on the decline ” (p. 74). On the contrary, aid to Africa recently set records. My colleagues Michael Clemens, Steven Radelet, and Rikhil Bhavnani “concede no long-term impact of aid on growth” (p. 46). Actually, they focus on short-term impact, leaving long-term for other studies.
• Simplistic. In Moyo’s world, the Western donors can do no right and China no wrong. She criticizes the West for doling out aid to secure access to oil and other commodities (p. 14), but welcomes China’s “new multi-pronged assault on Africa” born of the same motives (p. 104). She blames aid for propping up Mugabe in Zimbabwe—but omits that China provides much of it (p. 147).
• Illogical. The book’s thesis has two parts. First, “Aid has been…an unmitigated political, economic, and humanitarian disaster for most parts of the developing world” (p. xix). Second, replacing aid with government bond issues, trade, and microfinance will lift Africa out of poverty. As for the first, she seems to mistake absence of proof (that aid helps) for proof of absence—and to confuse failure to prove benefit with proof of harm. To attack aid, she submits these facts to a candid world: the Marshall Plan is a bad metaphor for aid to Africa; aid was secondary to Botswana’s success; conditionality didn’t work; evidence that aid works in countries with good policies is unconvincing; aid has fostered democracy, which is over-rated in countries where people are just trying to survive; aid projects can have unintended and harmful side-effects; aid fuels corruption; and aid can cause inflation and Dutch Disease. I agree with most of these points, as far as they go. But the claim that aid has fostered democracy is a stunner—good news that ironically contradicts her emphasis on how aid reduces the accountability of government to the governed. It also has little basis in evidence.

  None of this proves that aid is the bane of Africa. Some people are allergic to penicillin. Others get well without it. So we should ban penicillin? Aid may be more dangerous than penicillin, but the logic is the same.

  And while bond issues, microfinance, and trade can be good, Moyo offers no evidence that the first two systematically reduce poverty. Trade certainly can, but pointing that out is as helpful as saying sales are good for profits.

• Stunningly naive. Moyo recognizes that aid and state oil windfalls both are pools of money that governments can tap instead of taxing their own citizens, potentially reducing their accountability to the public. But aid, she says, is much worse: “With mounting pressure for greater transparency in the oil, gas and mining sectors…the days of blatant looting and corruption in these sectors are surely numbered” (p. 49). Those petrocrats will soon be gone from Angola and Nigeria, but a little sunlight will never disinfect aid flows of corruption!

  Moyo wants donors to call African governments to tell them aid is ending, forcing the governments to reform. “Is all this as easy as it sounds? One phone call, and it all slots into place? Why not? Development is not a mystery” (pp. 148–49). Development is a mystery. That’s why it’s so important to study it carefully.

I could multiply examples.

Moyo’s concerns are old and poorly argued, but I close constructively. For her concerns are also serious. She is passionate and authentic as she tries to tackle and explain big ideas. This is an early effort, and she can improve. Going forward, she must give up the search for easy answers.

(For a couple of CGD works on these themes, see Moss, Pettersson, and van de Walle’s Aid-Institutions Paradox and Birdsall’s Do No Harm.  And watch CGD senior fellow Todd Moss speak at the Dead Aid DC book launch.)

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1. Lawrence Michelo Says:
   March 27th, 2009 at 3:51 am

   Roodmans critique on Dambiso Moyos’ book is not in good faith. Some points might be valid but overall Roodman is one of those people that believe that Africa without western aid is a dead continent.

   To me and us(i speak for many people who support Moyos’crusade), our biigest challenge is to africa’s development now is western aid. Its corrupted governments, civil society and has attracted false, cheap and ill concieved ‘experts’ expatraits that have a colonial slave mentality.Patronising africans and suffocating the market(private sector).

   These charity/aid organisations are many and huge- they come in all forms and manners. mention them-CRS,World Vision,World Food Programme ,Christian Aid, UNICEF,Save the Children- etc and not the mention the surrogate local organisations that gang around the term civil society.

   Its the western tax payers money that is being wasted.
   Moyos work, for all its allerged and deficiencies- comes out as voice of the voiceless. We do not need the aid that has and is coming to Africa. It stinks and its evil.

   Tell your people- the ordinary citizens of america, the britian,japan and all those so called donor nations-they are being robbed and cheated by the these new corporate elites-

2. David Roodman Says:
   March 27th, 2009 at 9:04 pm

   Perhaps Mr. Michelo won’t dismiss the message so quickly when it comes from a countryman of Moyo who blogs at the Zambian Economist:

   In short on both theory and practice, Dead Aid falls far short of what is expected of a book advocating such a radical proposal of “turning off the aid tap”. If there’s any consolation in this assessment, it is that Dead Aid will hopefully not find any intellectual traction.

3. MrK Says:
   March 28th, 2009 at 11:00 am

   I would like to offer some support to Ms. Moyo. All of the things she says are true to some extent. For instance, on accountability and aid. I think the reviewer is confusing two kinds of accountability. First, the accountability of the donor recipient to the aid donor. This is most definitely there. However, it directly undermines the aid recipient’s accountability to it’s own democratic base.

   The recipient first asks – will the IMF say yes? Can we get it past the man in DC and his country representative? The people, who in a democracy they are in theory accountable to, don’t really figure in. If the IMF says spend less on education (and they invariably say just that), the government will, no matter what the people want. If the IMF says – sell off your parastatals as quickly as you can (which means for the worst price you can get for it), the government will, even though the people are protesting against it and it is unpopular – which you would think would be the first consideration in a functioning democracy. Both are examples from Ms. Moyo’s own country, Zambia.

   Then, there is the term ‘donor aid’. It makes it sound like charity, when in fact we are talking about the return of African revenues to Africa. In Zambia, 2004, the now foreign owned mines exported $4,000 million in copper and cobalt. My guess is that $2400 million of that was pure profit. They paid $6 million in taxes to the state. However, the state received $600 million in ‘donor aid’. So where did those $600 million really originate? From western taxpayers? Only if those western taxpayers are the same mining corporations who took $4000 million out of Zambia first.

   So why would Zambia need ‘donor aid’? It would receive much more money if it directly taxed the mines. Or if the mines were allowed to only pay taxes in Zambia instead of their home countries of the UK, USA, Canada, Australia and India.

   Then, there is the odd fact that the IMF wants thrift in the government, and it encourages this by demanding reductions in spending on education and healthcare – public services which build long term capacity. At the same time, these governments run 30 or so ministries, concentrate all decision making in central government and have many superfluous positions that are used for payback to political supporters, etc, which take up most of the budget. And yet, in no country does the IMF insist on efficient government – just a reduction in social spending and the handing over of state assets to western corporations – which do pay tax in their own countries.

   This sounds suspiciously like neocolonialism to me. It isn’t just that their policy recommendations are ‘wrong’, it is that they have a very specific outcome – which is to provide the West with a steady stream of low priced raw materials, and prevent the countries that provide those raw materials from developing by building capacity – an educated middle class, infrastructure, and economic diversification away from just exporting raw materials.

   The very term ‘Donor Aid’ is a misnomer.

4. Seye Bassir Says:
   March 31st, 2009 at 3:28 pm

   There are 5 main problems with the aid industry:

   1. Aid is irrelevant. Aid has never been more than 1% of Africa’s GDP. And obviously, Africa’s GDP is maybe 100th of the level needed to sustain decent living for Africans, So even if you doubled or tripled or even quintupled aid, it would still not do enough.

   2. Investment is far superior to aid when it comes to getting people out of poverty. If you’re ready to give the money away as charity or aid (if you will), then you might as well decide that every aid dollar should be invested. That way, aid will be subject to discipline, would be more sustainable, and would allow for prioritisation.

   3. Aid makes the discussion about African development, and the world’s policy about Africa to revolve around aid. Unfortunately this promotes the notion of Africa as a hopeless continent instead of the correct narrative of Africa as a place of great opportunity, however challenging, for capital. This contributes to Africa not getting as much investment as it should given its being the region with the highest returns on investment in the world. More than anything, what holds Africa back is its lack of integration with the rest of the world. Africa is the one continent that is isolated from all the others.

   4. Aid focuses on what does not work in neglect of what does work. While 300-350M people in Africa might live in extreme poverty, whatever is the fashionable definition of that, There is a larger number who do not live in this kind of poverty. Resources should go towards this people, especially crucial foreign capital and knowhow, etc. If those who do find a way to prosper in Africa are supported Africa is more likely to find growth and development that way.

   5. The aid industry is unfortunately a waste of time involving sending 20 year old Canadians to build fences in Africa. African human resources should power African development. This is fundamental. Western missionaries can not save African and should not earn cushy salaries in Africa doing things Africans could well be doing.

   Those three points taken together dictates that African must simply forget about aid and focus on other means of finding resources for development.

5. Iyinoluwa Aboyeji Says:
   April 24th, 2009 at 8:19 am

   Mr Roodman,
   This is a reasoned critique. You seemeed to have been reading my mind. The problem with Africans is that they have a affirmative action mindset to things…they want to protect thier own….they can’t be fair in praise or criticism. Many of them HAVE NOT even read the book and they are talking..spouting soundbites everywhere.
   I think until Africa’s leaders grow up, aid should be sued to babysit them. Debt is a huge responsibility Africa’s ineffective and corrupt governments cannot handle and the last thing I want is for my generation to be saddled with corporate sovereign debt because these adults want to assuage their feelings.

   Please can you talk to our parents about things that make much more sense and are actually more crucial to development like breaking down Africa’s regional economic barriers. We have a market of 900 million people and countless resources….if we utilised this to the best advantage..we would be balling by now (forgive my slangish english)

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