The failed promise of aid in Africa

What these two books have in common is firstly that they have exceptionally compelling titles for those interested in their subject matter. Secondly, is the obvious fact that they are concerned with aid and Africa. Thirdly, these books will interest those students, policymakers and government officials who ostensibly claim to be interested in eradicating aid. However, this is where their similarities end. The two authors have sharply contrasting ideological visions for Africa’s disengagement from aid dependency. This is indisputably on account of their backgrounds. Moyo has worked at the World Bank and Goldman Sachs, studied at Harvard and Oxford universities, whereas Tandon is a radical scholar, public intellectual and former director of the South Centre (an intergovernmental think tank of the developing countries). In other words, their different experiences not only inform their analysis of aid, but their wholly differing prescriptive solutions to Africa’s myriad problems, which they agree are rooted in aid dependency.

Both authors eloquently illustrate how aid has failed to deliver the promise of economic growth and poverty alleviation in Africa. Moyo’s caustic attack is greater than Tandon’s. She forcefully argues that not only has aid often been stolen by corrupt governments, it has often been unproductive; it has led to indebtedness and as President Paul Kagame of Rwanda poignantly states, since 1970, much of the US$300 billion allocated to Africa was spent on creating and sustaining client regimes of one type or another, with minimal regard to developmental outcomes on the continent (p. 27). Moyo claims that aid ‘is the silent killer of growth’ (p. 48). In chapter four she gives a cogent critique of the damaging effects of aid in that it reduces savings and investment as a result of the ‘crowding-out effect’ of aid; it discourages private finance capital; causes inflation; stifles the export sector and inculcates an aid dependent psychology in African people (pp.61-66).

On the other hand, Tandon’s ‘aid taxonomy’ is a far greater analytical breakdown of the five different types of aid, compared to Moyo’s simplistic three forms (humanitarian or emergency aid, charity aid and bilateral/multilateral forms of aid). Using a colour classification Tandon identifies purple aid as based on the principle of solidarity; green/blue aid encompasses humanitarian aid and transfer of technical assistance; yellow aid is given on the principle of geo-strategic and security interests; orange aid are concessionary grants given for commercial gain – and in Tandon’s opinion should not be considered as aid – and lastly red aid is given on the basis of ideological principle to influence countries to implement the policies of the Washington Consensus (pp. 18-22). Tandon contends that it is this latter aid that permeates and dominates the kinds of aid given by the DCD-DAC.

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Central to both books are their strategies for extricating African countries from their addiction to aid and setting them on paths of economic development. Moyo argues that ‘the cornerstone of development is an economically responsible and accountable government’ (p. 57). Yet Moyo fails to define what she means by development. However, implicit in her overall arguments and vision is a model of development that imitates the West. In contrast, central to Tandon’s arguments is that one must be clear on clarifying what development means for the discourse on development has been considerably enmeshed in ‘conceptual traps’ (p. 128) that engender false questions and false solutions.

For Tandon, development is essentially ‘self-defined; it cannot be defined by outsiders’ and ‘is a process of self-empowerment’ (p. 12). For Tandon development is a process that needs to be in the hands of Africans rather than imposed and directed by policy makers in the North. Therefore, in his seven steps to ending aid dependence the first and major step of ‘adjusting the mindset’ places the emphasis not only on African leaders, development experts and officials but African people to make this psychological shift. Such a change in mentality, which is essentially ‘an act of political will’ (p.77), cannot be achieved immediately. The subsequent steps are: ‘budgeting for the poor and not the donors’, followed by ‘putting employment and decent wages upfront.’

Step four involves ‘creating the domestic market and owning domestic resources’ such as water, land and all natural resources. ‘Plugging the resource gap’ is step five and step six involves ‘creating institutions for investing national savings.’ Whilst Moyo recognises national savings as important, she focuses on the role of the private sector in doing this, whilst Tandon focuses on the state and the community sector, which have been relatively neglected in the literature.

The last step in Tandon’s proposals involves ‘limiting aid to democratic priorities’. He contends that ‘before we decide what role aid plays in the development process, we have to understand what development means and what constitutes aid.’ (p.78) Like Moyo Tandon sees a positive yet very limited role for certain kinds of aid.

Moyo’s exit strategy is clearly wedded to the neoliberal paradigm reflected in the title of chapter 6: ‘A Capital Solution.’ For her, African countries need to issue bonds, increase trade with the Chinese and other partners such as India, Russia and Turkey; engage in greater micro-financing, and increase domestic savings. Whilst Tandon is of the view that ‘the role of foreign investment should be treated just as carefully as aid’ (p. 79) Moyo sees it as a critical plank in her proposals for Africa. She considers wooing potential investors is fundamental and though she accepts that ‘in order for borrowers (countries or companies) to access bond investors, they need a credit rating,’ (p. 83) such a hurdle is often determined by the same ‘white blue-eyed bankers’ that President Lula of Brazil characterised as causing the current financial implosion of the West. Moyo appears to accept the dictum that he who pays the piper calls the tune.

It appears Tandon’s emphasis is on Africa seeking to forge new ways to engage and simultaneously change the global economy with an agenda focused on the ‘national project’ and with greater South to South cooperation. Moyo’s prescriptions seek to integrate Africa into a system that is weighted against Africa’s interests. To illustrate this, Moyo argues: ‘But, most of all, acquiring credit ratings and experience in the capital markets is the passport for Africa’s participation in the broader world architecture. It is incumbent on African governments to play ball.’ (p.88)

Perhaps the Achilles heel of Moyo’s thesis is that her exit strategy from aid dependency for Africa may be unlikely or very difficult in the current global economic recession. For in the present economic crisis in which capitalism is being discredited, it raises questions as to what kind of economic system is desirable to provide the maximum benefit to the majority of African people?

Another weakness and disturbing observation is that Moyo is cited in the Foreword by Niall Ferguson, as calling for ‘a decisive benevolent dictator to push through the reforms required to get the economy moving.’(p. xi) It is necessary to ask, has Africa not had too many ‘benevolent dictators’ since independence, who have promised economic betterment when in reality standards of living have worsened catastrophically for Africa’s poor?

Furthermore, whilst Moyo hails the Chinese as Africa’s new friends, she fails to examine the example of the pink revolution that has recently swept Latin America by leaders such as Evo Morales of Bolivia, Rafael Correa of Ecuador, and Hugo Chavez of Venezuela. The rejection of the neoliberal paradigm in this corner of the globe has practical relevance for Africa where similarities of a colonial past and continued economic exploitation remain. There is also greater scope for not only trade but equally an ideological vision of ways in which wealth can be redistributed more fairly which can be learned by African countries from these pink countries.

Moyo’s peripheralising of African people is demonstrated in the following point she makes:

‘Ordinary people across Africa, the millions who bear the brunt of the economic catastrophe, have an incentive to change the aid regime of course. They would, if they could – who wouldn’t? But they eke out their existence under a veiled (and often not so veiled) threat of intimidation, punishment and even death. In order to overturn the state of aid-dependency, Africans need the gritty defiance of the unknown man who stood against the Chinese tanks in Tiananmen Square in June 1989. But such a rebellion carried enormous risk, and when pitted against the omnipotent state, more likely than not, will fail. This leaves it to Western citizens. They have power, and could hold the key to reform. It was, after all, thanks to the 60,000 ordinary Americans who wrote to the US Congress laying out their desire for freer trade access for African countries that the AGOA was born. It is this type of activism that is needed to help jump-start Africa’s development agenda, and set it on the right track.’ (p. 149).

There is certainly a role for Western citizens to play in holding their governments, banks and multi-national companies accountable for the unfair trading rules of an unjust economic system that also includes the WTO. Such Western citizens must also encourage the loot that resides in Western bank accounts as a result of African dictators safeguarding money that belongs to African people, to be returned to the African majority.

Yet, to argue that challenging aid-dependency lies with Western citizens to ‘jump-start Africa’s development’ is to make African people passive subjects in a process of economic transformation that African people should ultimately be in control of. In addition, Africa has many unknown men and women who have stood against the crushing forces of the state, in a similar way to the unknown Chinese man. The deaths of hundreds of Ethiopians in 2005, Kenyans in 2006 and Zimbabweans in 2008 are testimony to African people’s active desire for reform of their societies.

Moyo claims to outline ‘another way for Africa’ yet her proposals will continue to perpetuate the neo-colonial system many African countries continue to be entrapped by. The challenge for any African leadership with the political will and courage to embrace Tandon’s seven steps is to do so within a Pan-Africanist vision and in collaboration with other African countries within a medium to long-term timescale.

BROUGHT TO YOU BY PAMBAZUKA NEWS

* Ending Aid Dependence by Yash Tandon is published by Fahamu Books, 2008 (ISBN 1-906387-31-1).
* Dead Aid Why Aid is Not Working and How There is Another Way for Africa by Dambisa Moyo is published by Allen Lane, 2008.
* Dr Ama Biney is a pan-Africanist and scholar–activist who lives in the United Kingdom.
* Please send comments to [email protected] or comment online at Pambazuka News.