Foreign Aid

Mozambique typifies aid dilemma

Richard Lapper
Financial Times
June 1, 2010

Using an empty wine bottle and a plastic box of sand, José Antonio is busy trying to explain the principles of solid state physics to a class of rowdy 16-year-olds.

But with 68 pupils squeezed into a classroom designed for half as many, he is struggling. “It is not easy. You need to explain things individually, but with so many it is impossible,” he says, shouting to be heard above the din.

The teacher’s dilemma would be familiar to his colleagues in Mozambique’s education system. Helped by foreign aid that supplies almost half of the country’s national budget, one of Africa’s poorest and most aid-dependent countries has succeeded in drawing more children into education, with secondary school attendance up more than fivefold since 1998.

But schools are finding it hard to cope. “We are victims of our own success,” says Cardoso Ubisse, the director of the school where Mr Antonio teaches in Maputo, the capital. “Since I started working in the 1980s, the quality of education has fallen.”

The school’s experience highlights a broader problem: no matter how much aid Africa receives, it never seems to be enough. After decades of outside assistance, the continent is as dependent as ever on the whims of foreign donors.

Questions about the effectiveness of aid have given rise to a lively debate. Conventional wisdom holds that it is still essential if Africa is to have any chance of reducing poverty. But some development economists dissent from this view, arguing that aid fosters dependency, encourages corruption and undermines the ability of Africans to manage their own economies.

In her book Dead Aid, Dambisa Moyo, a Zambian economist, argues that radically reducing aid would force governments to ease curbs on business, develop better relations with emerging economic powers, such as India and China, and raise more money from international markets.

Mozambique is a good place to examine these arguments. Aid represented more than 20 per cent of the country’s gross national income in 2008, compared with the average for sub-Saharan Africa of just over 9 per cent, according to a study by the International Monetary Fund.

Yet the country has also been something of a model reformer, adopting many of the reforms that Ms Moyo advocates as an alternative to outside assistance. The government is steadily increasing the amount it raises from domestic tax revenues, a move that would eventually reduce its dependence on donors.

The IMF, which monitors Mozambique’s economy under an arrangement designed to reassure investors, is set to approve moves by the government to raise money on the markets.

The authorities have welcomed foreign investment, winning hundreds of millions of dollars in the rapidly growing mining and energy sectors. These inflows have helped make Mozambique one of Africa’s fastest-growing economies.

The government receives aid in the form of general budgetary support, rather than for specific projects, a procedure that takes away some of the costs of disbursement.

“It is something good coming out of Africa,” says Ndolamb Ngokwey, the United Nations representative in Maputo. “More is expected but after 15 years of war and massive destruction, Mozambique is at least moving in the right direction.” Mr Ngokwey welcomes the debate opened up by Ms Moyo’s book.

“For aid to be credible it must have an exit strategy. We can’t be in this business for ever,” he says. But Mr Ngokwey cautions that “it is not realistic to think that a country like Mozambique would have achieved what it has achieved without aid”.

At Mr Ubisse’s school, that was made abundantly clear earlier this year after donors briefly froze disbursements after a dispute with the government over last year’s elections. The impact was immediately felt.

“We were several months without funds and managing this place became even more of a headache,” says Mr Ubisse. “We were unable to buy paper and ink and the telephone was then cut off. Colleagues just couldn’t accept that there was no money for extra desks.”

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Categories: Foreign Aid, Off Aid

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