The calamitious impact of foreign aid

The London Free Press
By Rory Leishman

In a candid address to the Parliament of Ghana last Saturday, United States President Barack Obama pointed out to the oppressed people of Africa: “Development depends on good government. This is the ingredient which has been missing in far too many places for far too long.”
With reference to the corrupt rule of Robert Mugabe, the longstanding Marxist dictator of Zimbabwe, Obama observed: “The West is not responsible for the destruction of the Zimbabwean economy over the last decade.”
Dambisa Moyo disagrees. She is a former consultant to the World Bank who was born and raised in Lusaka, Zambia, and holds an earned doctorate in economics from Oxford University. In her book, Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa, she persuasively argues that African dictators like Mugabe would not have been able to maintain their prolonged grip on power, if their grossly incompetent governments had not been propped up with hundreds of millions of dollars in foreign aid.
Altogether, the United States, Canada and other donor countries have handed out close to $1 trillion in foreign aid to Africa. Most of this well-meant assistance has been wasted. Moyo points out: “Africa’s real per capita income today is lower than in the 1970s, leaving many African countries at least as poor as they were 40 years ago.”
Half of the 700 million people living in Sub-Saharan Africa get by on less than a dollar a day. Life expectancy in the region averages only around 50 years.
Meanwhile, many less-developed countries on other continents have achieved rapid and sustained economic growth. China is a case in point. Despite having had a lower standard of living than most African countries just 30 years ago, China now has an annual income per person of close to $6,000: That’s more than three times greater than Ghana, Kenya and almost all other African countries.
Moyo asks: “Why is it that Africa, alone among the continents of the world seems to be locked into a cycle of dysfunction? Why is it that out of all the continents in the world Africa seems unable to convincingly get its foot on the economic ladder? … What is it about Africa that holds it back, that seems to render it incapable of joining the rest of the globe in the 21st century?”
She explains: “The answer has its roots in aid.”
Granted, not all foreign aid is bad. Moyo acknowledges that the equivalent of $100 billion in today’s funds which the United States dispensed under the Marshall Plan to the war-ravaged countries of Western Europe was hugely successful. Why, though, has almost $1 trillion in aid to Africa so failed to benefit the people of Africa?
Moyo argues that among many social, cultural and economic factors, one key element was that recipients of assistance under the Marshall Plan realized the program was only temporary. They knew they had better make good use of the aid, because they would soon have to get along without it.
In contrast, leaders in Africa have learned to look upon foreign aid as a permanent handout. Instead of using the assistance to promote self-sustaining economic growth, most African rulers have diverted the proceeds to enrich themselves and prop up their corrupt governments.
Obama told the Ghanaian parliamentarians that his administration will increase assistance to African countries that have established democracies, uphold the rule of law and are determined to curtail corruption.
Moyo thinks this approach is inadequate. She calls upon the United States, Canada and other donor countries to liberate Africa from a stifling dependence on foreign aid, by announcing their intention to phase out virtually all aid to Africa over the next five to 10 years.
Will leaders of the donor countries pay heed to this advice? Let us hope so. Moyo pointedly notes: “one would expect Western moralizers to adopt policies which help those in need rather than hinder them in the long run and keep them in a perilous state of economic despair.”