MADRID, Spain — Dambisa Moyo is a Zambian economist who has written extensively on the topic of foreign aid. She exposes the reality of aid and explains how its mechanism is flawed and can leave aid receivers worse off than previously. Due to corrupt governments and aid being tied up, donations do not always end up where they are supposed to. This is important to understand in order for real change to be possible. Dambisa’s main idea is that “we need jobs, we need investment, we need trade, we need foreign direct investment, whether investment is domestic but also from the outside.” In one of her books, she addressed the issue of foreign aid in Africa.
The Hidden Downside of Foreign Aid
According to Britannica, foreign aid is the “international transfer of capital, goods, or services from a country or international organization for the benefit of the recipient country or its population. Aid can be economic, military, or emergency humanitarian.” The main aid donors are the 22 members that form the Development Assistance Committee (DAC). Their main motivations for giving aid may be due to a need to compensate for past wrongs or to combat the uneven distribution of global natural resources and wealth. It also could simply be the moral obligation to help the poor improve their standard of living.
Different types of aid exist. It can be multilateral, whereby a government of one country gives to or through an international agency, such as the International Monetary Fund (IMF), World Bank or the United Nations. It can also be bilateral such as when the government of one country gives aid to another. Additionally, there is an important distinction to make between tied and untied aid. The former is when a government gives aid with the condition that it will go toward buying products originating from the donor’s country. Contrarily, the latter does not have any conditions attached to it.
Dambisa Moyo’s Point of View on Foreign Aid in Africa
In Dambisa Moyo’s book “Dead aid: why aid is not working and how there is a better way for Africa,” she challenges the reader to rethink foreign aid. In the last 60 years, developed countries gave more than $1 trillion in aid to developing countries. However, Dambisa explains that this has not necessarily made the receiving countries better off. In fact, it has not offered sustainable economic growth or a reduction in poverty. She explains that world events have influenced aid and that the conditionalities attached to the aid are demeaning its effectiveness. Essentially, she criticizes these foreign aid initiatives for not being economically viable or having a job-creating effect. Instead, she claims they are fueling corruption and leaving Africa in a state of dependency on the donor countries.
Moving forward, Dambisa Moyo has insisted that change should come from the inside. By that, she refers to a need for political will. Instead of resources going down the drain, there should be an adoption of an alternative to financing development. She also refers to the Chinese model of development as an effective one, characterized by high savings and heavy investment. Other developing countries have actually admired China for its successes in economic development, particularly how it has managed to pull millions out of absolute poverty. Moreover, she insists that foreign aid should not be focusing on band-aid solutions and short-term investments. Instead, she believes that foreign aid should focus on long-term solutions that involve the locals and take their realities into account.
– Alexandra Piat