Politics & Policy

Worse than the Disease?

Dambisa Moyo identifies a genuine problem. But would her cure make matters worse?

There is much to sympathize with in Dambisa Moyo’s argument in Dead Aid, as Kevin Williamson has pointed out. The West’s largely unexamined flow of foreign aid can and usually does distort local economies. It increases corruption by turning African treasuries into ever-replenishing cookie jars, to which venal politicians help themselves.

Worst of all, foreign aid infantilizes African governments, allowing them to exist in a state of perpetual beggardom while avoiding responsibility for hard budget decisions and needed structural reforms. This is no way to develop a country, no way to build a nation.

#ad#Yet for everything that is right in Moyo’s argument, her plan to alter this status quo is a disappointment.

Her idea is straightforward and certainly sounds fair: Make Africa play by the same rules as every other continent. Turn off the foreign-aid spigots within five years, and let African governments wade into the world lending markets by themselves. Get a bond rating and get a loan, or sign a direct-investment agreement of the type China is doling out to resource-rich African states. Stop whining, Moyo tells Africa and its celebrity enablers, and get to work.

The problems with this approach flow from Moyo’s untimely optimism about the economist’s craft and the power of markets. She argues, for instance, that it is now more possible than ever for African countries to borrow on the open market because of “improved liquidity.”

Clearly, Moyo was writing before the credit crisis, which — as hardly needs to be said — has devastated liquidity around the globe. Lenders today are much less keen and able to lend, especially to debtors with a poor record of repaying their loans. (Almost every African country has defaulted on a loan.)

If you are the president of Zambia, a country rich with copper, then perhaps your govenment will qualify for a bond issue. You can use money from the sale of the bonds — or, as Zambia is actually doing, Chinese investment — to build roads and technical schools to boost the mining industry, which will then bring in royalties and tax revenues, allowing Zambia to build hospitals and schools, to pay its judges and its police, and to repay its bond obligations.

But suppose you govern an African country whose main features are malaria and AIDS — with the occasional accoutrement of a tuberculosis, cholera, or polio outbreak — and your main export is cashew nuts. Saving the lives of the most marginal members of your society is not a revenue-building exercise, and the cashews will not bring in enough money. Moreover, if the government has no money, the judges and the police will look for other people willing to pay them.

In a world of plenty, we must ask ourselves what obligation we have to help a man who would be mistreated by the authorities or die simply because he was unfortunate enough to be born into an undeveloped and, to some extent, undevelopable place.

This moral quandary is central to the question of foreign aid. But Moyo obscures it by drawing a distinction between acceptable, temporary “emergency aid” that saves lives and the routine budgetary assistance African governments receive from the West. This is a false distinction. Setting aside the need for budgetary aid to shore up ill-funded but functional state institutions in Africa, even the life-saving “emergency” aid the West gives to Africa tends to be long-term and institutional. It has all the same undesirable effects on the local economy and politics as the aid Moyo unwaveringly opposes.

Consider the huge U.S. program to prevent and treat AIDS — PEPFAR, the President’s Emergency Plan for AIDS Relief. The “emergency” in the name implies that this life-saving effort is, as Moyo recommends, short-term. Not so. PEPFAR has received appropriations for ten years, and the odds are good that it will be around for another decade or two. It is a bureaucracy itself, sometimes maddening in its procedures, and it feeds a host of even less efficient (which is to say corrupt) African bureaucracies. Health ministries in Africa have come to rely on this “emergency fund” as part of their year-to-year budget, and as utterly central to their AIDS policies.

There is no doubt that PEPFAR has had some of the same deleterious effects as other foreign aid. For instance, PEPFAR distorts the market. Doctors who might have been poorly remunerated practitioners in the government’s shabby network of district hospitals — the backbone of most African health care — have instead been co-opted by a specialty network of NGOs and donors who can pay their people well.

And PEPFAR, despite an attempt to route funds around government to privately run institutions, is nonetheless corruptible. As the last election season geared up in Kenya, at least one minister whose portfolio relates to the national effort against AIDS demanded that her staff (whose salaries were paid with American funds) turn over 15 percent of their income to her political machine. A year or so later, it was revealed that some $200 million earmarked for AIDS was missing from Kenya’s health ministry. The donor community announced its intention to suspend its quarterly disbursement of AIDS funds to Kenya, but it never followed through, and it ultimately resumed the aid flow less than half a year after the scandal.

In the end, however, should even such a spectacular bamboozle obscure PEPFAR’s raw accomplishment? By any fair account, the program has saved somewhere between half a million and one million lives. This fact is more important than any dysfunction.

In any foreign-aid situation, because one party (wealthy but locally powerless) is giving and another (locally powerful but wealthless) is receiving, there will be a gamut of errors ranging from misunderstanding to gross misrule. We can try to mitigate these problems, but I agree with Moyo that they are to some extent an innate part of foreign aid’s government-to-government structure.

Yet to jettison this structure is to make a risky gamble, the stakes of which are large, and are denominated in human lives. Moyo believes, essentially, that some combination of the markets, private donors, and African governments could supplant inherently unprofitable but worthy programs like PEPFAR. Particularly in the current world financial circumstances, I believe that is a gamble few reasonable people would make.

– Travis Kavulla is a journalism fellow with the Phillips Foundation, and last year was a Gates Scholar in African history. He writes from Kenya.

Travis Kavulla — Travis Kavulla is director of Energy and Environmental Policy at the R Street Institute. He is a former president of the National Association of Regulatory Utility Commissioners who held elected office as a Montana public service commissioner for eight years. Before that, he was an associate editor for National Review.

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