The Empiricist

Aid does not work.
Despite a trillion dollars of aid to Africa over many years, the place is worse than ever. But is aid actually creating the problem it is supposed to be solving? Author and economist Dambisa Moyo thinks so.
She says that when it comes to other poor countries, for example, Asian countries, the discussion is about trade and direct investment, but with Africa the solution is always “aid.”

I went to Kenya for the first time and visited the largest slum in Africa. It’s got about 1.2 million people living in it, and it’s been there since 1918. Frankly, it’s a perfect representation of the aid model. The UN for Habitat is right next door, yet this slum is spiraling out of control. It’s got no clean running water; it’s got nothing. It’s a direct example where they could have gone in and shown that aid works, but the slum is still there.

On the topic of celebrities, she would like them to mind their own business. They do not represent Africa or Africans:

The fact that there was a vacuum big enough for these celebrities to step in and speak, ostensibly, on behalf of the African continent is worrying…
We expect African leaders to come up with policies about where they want to take Africa. We expect these leaders to attend G8 and other international gatherings to articulate a view of where they see Africa. The African people do not expect their countries to be represented by celebrities.
…these celebrities don’t portray Africa in a positive light. This continent suffers from a very severe PR problem. The world is asking us as to raise our children in an environment where we’re constantly told that we can’t do anything—we’re poor, we’re dirty, we’re impoverished, we’re hungry, we’re corrupt, we’re war-torn, disease-ridden.

Hear that, Bono? You’re making it worse. Go back to something you understand, like music.

So why doesn’t aid work?
There are several reasons.
* it cripples local industries. If there are shipments of free clothes arriving on the docks every week, and crates of free food being hauled in every day, how can a local African entrepreneur compete? He’s better off just joining the line for handouts than trying to make a living.
* it warps local markets in other ways. For instance creating a demand for services that visiting rich westerners might want to use
* it creates false industries, industries of dependence. Supply chains are set up that are nothing more than feeding tubes.
* it creates an environment that is prone to corruption
* it removes government accountability
* it removes the need for personal responsibility
* it gives the greatest power to foreign nationals.

So if it doesn’t work, and everybody can see that it doesn’t work, why do we still have an aid industry? Why do aid agencies continue to give aid when it is having, at best, no effect? Moyo says that winding up aid programs means that these organisations would cease to exist. They have a vested interest in keeping aid programs going.

There is an incentive structure for the donors, and African countries know this. They know that the World Bank can only survive if it’s spending money. So when the conditionalities are not met, the aid continues to flow anyway. If all the African countries colluded and said “We’re not taking any more aid money,” the World Bank would have to shut down. Look at Ghana. The World Bank discouraged Ghana from going to the capital markets to raise money because it wanted to keep the aid flowing

Aid is nothing but a mirage.
Its basis is not rationality or logic, or a clear-headed solution to the problem but pity. People and countries give aid for emotional reasons that are not well thought out. Countries giving aid continue to get richer (even though they don’t recieve any aid); countries getting it remain a mess.
There’s a lesson in that.

The celebrities need to leave Africa alone.

(Moyo’s book is here: Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa)