I have talked about this issue previousy here and here, and I just found this on TED. Here is a very informative and convincing interview of a serious player in the field. Ghanaian economist George Ayittey, author of Africa Unchained, which argues that Western aid is actually hurting Africa, comments on a new book that promotes his same view: Dead Aid by Dambisa Moyo. Moyo is an African economist who worked at the World Bank as well as the Head of Economic Research and Strategy for Goldman Sachs for the last 8 years.
Ayittey discusses Moyo's book and the topic in general at TED and in an interview linked on the TED page. The TED speech that Ayittey gave in 2007 is very bold. He discusses the difference between Cheetahs and Hippos. You'll have to listen to get it, and it's worth listening AND getting it. He is extremely pro Democracy and pro Capitalism (which he explains Africa had before Colonialism) as you can tell from his interview below, but here's just a taste from his TED talk: When discussing the 204 African heads-of-state since 1960, a group of African internet forum participants couldn't name more than 15 GOOD ones. Ayittey then explains that the vast majority of African leaders have failed their people. He says, "the slave of the post-colonial leaders [is] an assortment of military, foofoo heads, Swiss Bank Socialists, Crocodile liberators, vampire elites, poc revolutionaries...." Ultimately, Government in Africa is the problem.
Excerpts from the interview:
From the comments I discovered that Ayittey does find aid such as organized by Kiva.org a reasonable effort. You can learn more about Kiva and their microloans from the link in the margin under Resources.
Ayittey discusses Moyo's book and the topic in general at TED and in an interview linked on the TED page. The TED speech that Ayittey gave in 2007 is very bold. He discusses the difference between Cheetahs and Hippos. You'll have to listen to get it, and it's worth listening AND getting it. He is extremely pro Democracy and pro Capitalism (which he explains Africa had before Colonialism) as you can tell from his interview below, but here's just a taste from his TED talk: When discussing the 204 African heads-of-state since 1960, a group of African internet forum participants couldn't name more than 15 GOOD ones. Ayittey then explains that the vast majority of African leaders have failed their people. He says, "the slave of the post-colonial leaders [is] an assortment of military, foofoo heads, Swiss Bank Socialists, Crocodile liberators, vampire elites, poc revolutionaries...." Ultimately, Government in Africa is the problem.
Excerpts from the interview:
The consensus that emerged decades ago was that foreign aid had been ineffective in reversing Africa’s economic decline. Dambis and I are simply restating a fact. And it is not just Africa. That foreign aid has failed to accelerate economic development in the Third World generally was also accepted. In 1999, the United Nations declared that 70 countries — aid recipients all — are now poorer than they were in 1980. An incredible 43 were worse off than in 1970. Chaos, slaughter, poverty and ruin stalked Third World states, irrespective of how much foreign assistance they received" (The Washington Post, Nov 25, 1999; p.A31). Except for Haiti, all of the 13 foreign aid failures cited — Somalia, Sierra Leone, Liberia, Angola, Chad, Burundi, Rwanda, Uganda, Zaire, Mozambique, Ethiopia, and Sudan — were in Sub-Saharan Africa. The African countries that received the most aid —Somalia, Liberia, and Zaire — slid into virtual anarchy.
It was widely reported in the news media that foreign aid programs had failed abysmally in Africa:Western governments and development agencies knew of scandalous failure of Western aid. Alan Woods, the former administrator for US AID noted in 1989 that, the United States had provided some $400 billion in aid to the developing countries, he pointed out that no country receiving U.S. aid since 1968 has graduated from a less-developed to a developed status. Worse, he concluded, "only a handful of countries that started receiving U.S. assistance in the 1950s and 1960s have ever graduated from dependent status." A 1989 bipartisan congressional task force of the U.S. House of Representatives Foreign Affairs Committee confirmed this:
- The New York Times reported that, "at first, many Western aid donors, particularly in Scandinavia, gave enthusiastic backing to Tanzania’s ill-conceived Ujaama socialist experiment, pouring an estimated $10 billion into Tanzania over 20 years. Yet, today as Mr. Nyerere leaves the stage, the country's largely agricultural economy is in ruins, with its 26 million people eking out their living on a per capita income of slightly more than $200 a year, one of the lowest in the world" (Oct 24, 1990; p. A8).
- The Economist observed that for all the aid poured into the country, Tanzania only had "pot-holed roads, decaying buildings, cracked pavements, demoralized clinics and universities, and a 1988 income per capita of $160 [lower than at independence in 1961]" to show for it (June 2, 1990; p. 48).
"Current aid programs are so encrusted in red tape that they no longer either advance U.S. interests abroad or promote economic development" (Wall Street Journal, March 2, 1989; p. A16).
Two years later, the U. S. General Accounting Office, the Senate Governmental Affairs Committee and a presidential commission released a report in April 1992, which revealed severe management problems at the U. S. AID. Commenting on this report, the Washington Post noted: " `Aid too often does not know whether its programs are efficiently run or how effective they are,' the report said . . . The review found that during fiscal 1989 and 1990, AID evaluated the effectiveness of only 125 of its 1,900 projects . . . The poor evaluation record had made it impossible for Congress to make effective foreign aid decisions, Frank Hodsoll, Office of Management and Budget (OMB) deputy director for management, said" (The Washington Post, July 17, 1992; p. A10). On the House floor, Congressman John Miller (R, Washington) was more scathing: "Over the past couple of years AID has been plagued with mismanagement. Scores of AID employees have been indicted for corruption. Commission after commission has investigated AID and said this agency needs to be reorganized" (Congressional Record, June 25, 1992; Vol. 138, No.93).
A blistering affirmation came from a very unlikely source. Sir William Ryrie, executive vice president of the International Finance Corporation, a World Bank subsidiary, declared that "the West's record of aid for Africa in the past decade [1980s] can only be characterized as one of failure" (Financial Times, June 7, 1990; p. 5). In 1993, "A Clinton administration review of U.S. foreign aid programs concluded they are often wasteful, incoherent and inconsistent with the administration's objectives, and proposed a radical overhaul that would abandon country-by-country funding . . . Many countries (receiving U.S. aid) view these allocations as something approaching `entitlements'" (The Washington Post, Sept 18, 1993; p. A8).
Much of the aid to Africa was used to finance grandiose projects and to underwrite misguided, repressive policies. The rest was embezzled by elite gangsters.
...
Is there a fundamental place where you diverge from Moyo?Ultimately, Ayittey explains:
Though we are both on point regarding the failure of aid programs in Africa, we diverge in two respects.
First, Dambisa wants all aid to Africa stopped in five years, which won’t happen. Over the decades, various African civic groups and persons, including myself, have called for a cutoff of aid to Africa. In a report drafted during a five-day forum hosted by UNESCO in Paris in 1995, more than 500 African political and civic leaders urged donor nations to cut off funds to African dictatorships and called for free elections in such nations within two years. If the West could impose sanctions against Libya and South Africa, then Africans could also call for sanctions against their own illegal regimes.
Second, I believe that the foreign aid resources Africa desperately needs to launch into self-sustaining growth and prosperity can be found in Africa itself, not in China as Dambisa believes.
Moyo's work speaks to that deep urge among Westerners to "do something" -- even something that may be deeply unproductive. What's a more productive way to "do something"?
I think Westerners should resist that urge to “do something,” because the worst type of help one can receive is that which doesn’t solve your problem but compounds it. If Westerners want to help, they must carefully scrutinize and reform current aid policies to make them more effective. Both the Clinton and Bush administrations tried to but failed. Business as usual is no longer an option, which is what both Dambisa and I are against.
Foreign aid should be tied not on promises of African leaders but to the establishment of a few critical institutions:
- An independent central bank: to assure monetary and economic stability, as well as stanch capital flight out of Africa. If possible, governors of central banks in a region, say West Africa, may be rotated to achieve such independence. The importance of this institution resides in the fact that the ruling bandits not only plunder the central bank but also use its facilities to transfer the loot abroad.
- An independent judiciary -- essential for the rule of law. Supreme Court judges may also be rotated within a region.
- A free and independent media to ensure free flow of information. The first step is solving a social problem is to expose it, which is the business of news practitioners. The state-controlled or state-owned media would not expose corruption, repression, human rights violations and other crimes against humanity. In fact, it is far easier to plunder and repress people when they are kept in the dark. The media needs to be taken out of the hands of government.
- An independent Electoral Commission to avoid situations where African despots write electoral rules, appoint a fawning coterie of sycophants as electoral commissioners, throw opposition leaders in jail and hold coconut elections to return themselves to power.
- An efficient and professional civil service, which will deliver essential social services to the people on the basis of need and not on the basis of ethnicity or political affiliation.
- The establishment of a neutral and professional armed and security forces.
The establishment of these institutions would empower Africans to instigate change from within. For example, the two great antidotes against corruption are an independent media and an independent judiciary. But only 8 African countries have a free media in 2003, according Freedom House. These institutions cannot be established by the leaders or the ruling elites (conflict of interest); they must be established by civil society. Each professional body has a “code of ethics,” which should be re-written by the members themselves to eschew politics and uphold professionalism. Start with the “military code,” and then the “bar code,” the “civil service code” and so on. These reforms, in turn, will help establish in Africa an environment conductive to investment and economic activity. But the leadership is not interested. Period.
Effective foreign aid programs are those that are “institution-based.” Give Africa the above 6 critical institutions and the people will do the rest of the job.
Africa is poor because it is not free."
Getting Western aid policies changed is a frustrating experience because of institutional resistance. Aid has become an "industry," with its own powerful lobbyists who seek a continuation of current programs at increased funding. Since Congressional requirements and regulations channel over 70 percent of all U.S. aid projects to American contractors, there is every incentive on the contractors' part to clamor for continued funding. According to a Clinton administration review report, the U.S. spent $27.7 billion on foreign assistance. "About 75 percent of that money was spent in the United States to purchase such items as food and equipment sent abroad or the salaries of aid workers" (The Washington Post, Sept 18, 1993; p. A8). Former Congressman Dave Nagle said in an interview that “80 percent of foreign aid is spent in the United States buying food, equipment, expertise and services. But he said many Americans wrongly believe most the $13 billion a year the U.S. has been spending on foreign assistance goes directly to foreign leaders" (The Washington Times, 13 October, 1995, A17). As George Soros once said, “Foreign aid generally serves the interests of donors than recipients” (The Wall Street Journal, March 14, 2002; p.B1). So it is not surprising that it is difficult to stop it.
From the comments I discovered that Ayittey does find aid such as organized by Kiva.org a reasonable effort. You can learn more about Kiva and their microloans from the link in the margin under Resources.