Is Foreign Aid Helping Or Hurting Africa?

Is Foreign Aid Helping Or Hurting Africa?

A young girl walking on the outskirts of Kibera, the largest slum in Africa. Photo: <a href="http://www.flickr.com/photos/lo_/402495067/in/photostream">subcomandanta (flickr)</a>
A young girl walking on the outskirts of Kibera, the largest slum in Africa. Photo: subcomandanta (flickr)

More than $50 billion of foreign aid is given to African countries every year to address poverty on the continent. Although this may seem generous, and to some a solid strategy to treat Africa’s ailments, Dambisa Moyo — a Zambian economist with a background that includes Harvard, Oxford and Goldman Sachs — says just the opposite.

In her new book, Dead Aid: Why Aid is Not Working and How There is Another Way for Africa, Moyo claims that foreign aid has been "an unmitigated political, economic and humanitarian disaster.”

In a recent op-ed piece in the Wall Street Journal, Moyo writes that although she isn’t completely against humanitarian aid, she doesn’t believe "charity-based aid" can provide long-term sustainable development for Africa. Her biggest issue is with “government-to-government aid,” and funds from large monetary institutions like the World Bank. Moyo says the $60 trillion of this aid that's been given in the past 60 years is not working, evident from the fact that the number of Africans who live on less than $1 day has doubled in the last 20 years. And most foreign government aid, she argues, has been pocketed by corrupt politicians.

Trade, foreign investments and microfinance opportunities can provide a better future for Africans, Moyo said in an interview with the New York Times.

As expected, Dambisa Moyo’s claims have come under fire. In an interview with Newsweek, ONE Campaign co-founder Jamie Drummond says “Dead Aid” is “a poor polemic, with nothing new of substance, filled with anecdotal micro examples which ignore mountains of evidence." Madeleine Bunting from the Guardian calls Moyo’s claims “poorly argued” with “frequent pre-emptory glib conclusions.”

I wanted to get another perspective on Dambisa Moyo's assertions regarding the effects of foreign aid on Africa. So I asked Laura Miller — Program Officer for Central Africa at Mercy Corps — to respond to some of Moyo's claims based on her experience in the international-aid business, including stints in the Central African Republic and the Democratic Republic of the Congo.

Manasi Sharma: Moyo blames “government-to-government aid” and “large developmental organizations” like the World Bank, rather than charity-based aid for Africa’s worsening situation. She says funds from governments and the bank haven’t contributed to development and in many cases are misused. I know you represent “charity-based aid,” but I’m interested in your opinion since it’s one of her main points.

Laura Miller: The main objective of bilateral aid isn’t always humanitarian relief; it’s also used to help strengthen fragile or strategic states and improve trade relations with the West. Money from the World Bank is often geared more towards large infrastructure projects such as water systems and road networks. Usually the recipient government is responsible for managing funds given by the World Bank. Some countries’ governments are more transparent and provide more oversight over aid money than others.

Moyo does question the value of “charity-based aid,” too. She says it might help after a disaster, but says it only provides “band-aid solutions” and can’t be the “platform for long-term sustainable growth.” Her example is giving a young African girl a scholarship even though she’s unlikely to find a job after finishing school. What are your thoughts?

Mercy Corps is in involved in both emergency response and long-term sustainable development, so I don’t believe that charity-based aid is only a band-aid solution. In emergency situations, Mercy Corps evaluates if the agency can respond appropriately within the context of what's going on. However, many of Mercy Corps’ programs are geared towards long-term sustainable growth, such economic development.

Even if Moyo is correct that after receiving an education it may be difficult for graduates to find work, education is still important, and aid agencies such as Mercy Corps are working to help strengthen economic opportunities. Although humanitarian agencies cannot help everyone, we are making important strides in the countries where we work.

How does Mercy Corps decide which in-country organizations to work with to make sure the money from donors is put to its proper use?

Mercy Corps works with local and international organizations that are registered locally or have permission to operate in country. Before receiving funding, organizations typically must show that they are operational; this includes showing proof of bylaws, articles of incorporation, management structure and budget and project management experience. There's also a “checks-and-balances” system throughout the process which includes financial and program reports and site visits, all of which is outlined in a signed agreement between the two agencies.

Moyo says foreign aid damages the local economy when important necessities like mosquito nets and food are simply given away. Are locals being put out of work because of free aid?

It is extremely important to support the local economy because too much dependence on foreign aid can crush the local economy, and it's not sustainable in the long run. Material aid is appropriate when goods cannot be procured locally. Some organizations use a social marketing approach; instead of distributing goods for free, goods are sold through existing markets, which ensures that this cycle can continue over the long term.

According to Moyo, foreign government aid and funds from the World Bank have allowed corrupt African dictators to stay in power. Do you agree?

I think this is a larger issue than foreign aid alone. I’d venture to say that both donor governments and constituencies have gotten savvier over the years as to how aid is used.

Here's a pretty disturbing charge by Moyo: She says foreign aid actually increases the risk of civil conflict. People will take up arms to be in power because "the victor gains virtually unfettered access to the package of aid that comes with it."

I don’t think that foreign aid has necessarily increased civil conflict; again there are a lot of other factors at play. If a country is embroiled in political upheaval and civil conflict, some agencies or private companies may cease working in that part of the world. Mercy Corps works in transitional environments and applies “Do No Harm” for its humanitarian interventions.

Some of Moyo’s solutions to help Africa’s development have to do with stopping the inflow of “free money,” opening up markets and investing in civil service. Are these suggestions compatible with Mercy Corps’ initiatives?

Many of Moyo’s solutions can help development in Africa, but it’s important to focus on all levels of society: the household level, the community level and the institutional level. Mercy Corps’ focus on economic development dovetails with some of Moyo’s proposed solutions, though we operate more at the community level. Through our programs we promote demand-driven development, link producers with markets, and foster entrepreneurship among the local population.

Curated news and insights about innovative, market-driven solutions to poverty explored through news, commentary and discussion.

Learn more »

Global Envision newsletter