Financial Times Editorial
May 31, 2009
If Africa’s underdevelopment has been compounded mainly by official aid, as the Zambian economist Dambisa Moyo argues in her book Dead Aid, then addressing it might be as straightforward as she suggests. Aid could be turned off, African governments would work harder to foster growth and private capital might prove more effective in curbing poverty. If aid were the principal vehicle to achieve prosperity the solution would be equally simple. It could be expanded.
Awkwardly for protagonists on either side of this heated debate, the problems posed by many of sub-Saharan Africa’s 48 states resist either prescription. One reason is the legacy bequeathed by Europe. Africa is made up of fragmented, mostly artificial nations. Many lack the scale necessary to draw sustained investment and resources sufficient to pump prime development. The continent’s infrastructure remains woefully inadequate, designed to service trade with Europe rather than to promote the emergence of more powerful African trading blocs.
The notion that foreign aid is the main driver of corruption is also misguided. Yes, during the cold war aid propped up parasitic elites and delayed real independence. Aid in some forms continues to undermine the sense of responsibility and management capacity of governments. Oil and some other resource income though, have proved more pernicious. And, the record of private capital when it comes to corruption is hardly encouraging. Western banks have stashed billions stolen by African dictators. Multinationals have bribed their way into contracts and concessions. Even export credits promoting trade not aid have a less than holy record.
Most western companies were cleaning up their act just as African trading patterns began to shift. But it is naive to think that the Chinese, Indians and others who form part of a new wave of investors will behave better. Nor is there evidence that Chinese development assistance, driven by commercial interests, will be more effective than western aid, motivated at least partly by guilt, in fuelling transformational growth.
Africans are understandably tired both of being portrayed as beggars and represented by western rock stars and academics. It is a welcome sign if independent African voices, such as Ms Moyo’s, are challenging the status quo and gaining international prominence for doing so.
African governments, as she also argues, should be doing more to improve the investment climate. But it understates the scale of Africa’s challenges to suggest that commercial interests and commercial debt can drive the continent’s development alone. This does not mean that aid should continue forever, or be given in such quantities that it severs ties between rulers and ruled. Targeted aid in health, education and infrastructure has worked in other parts of the world. In Africa, economic performance has improved in the past decade. Health and other development indicators were following suit. Would that have been so if there had been no western aid? In a few countries maybe. But as the downturn halts the momentum, the risks associated with scaling back would be huge.