A calm response to Moyo’s stimulating and provoking theses
Formulate an argumentation how SDC or a multilateral organization as a reaction to the stimulating and provoking theses of Dambisa Moyo.
Provocative and stimulating; these are the appropriate adjectives to describe the theses presented in Dambisa Moyo’s „Dead Aid – Why Aid Is Not Working and How There is Another Way for Africa”. Indeed, the book is tackling a sensitive issue that is gradually gaining in importance in the international development community: the effectiveness of aid. Born and raised in Zambia, Dambisa Moyo completed her studies in the US. She holds several academic titles, among others a Master of Public Administration in International Development from Harvard University and a Doctorate in Economics from Oxford University. Moyo has worked at the World Bank and for eight years at Goldman Sachs. The Time magazine named Moyo one of the world’s 100 most influential people. She can be considered to have the background and the qualifications to give a special insight into the topic of development aid.
According to the author, “in the past 50 years more than $1 trillion in development-related aid has been transferred from rich countries to Africa.”4 However, in spite of this aid, Africa’s economic, political and social conditions have not improved. Consequently, the author concludes that the post-war aid strategy has failed. Indeed, she claims that aid has a destructive effect on African countries’ development. Through aid false incentives are set, economic growth is stalled and poverty increased, which in response triggers a new flow of aid. Countries relying on aid are thus trapped in a vicious cycle of aid dependency. Moyo argues that alternatives to the current aid system do already exist in the private sector. She proposes a set of free-market tools, enabling poor countries to efficiently finance development and eventually leading to sustainable long-term growth, reduce poverty, aid dependency and foster good governance. The latter is important because, “(…) in a world of good governance, which will naturally emerge in the absence of the glut of aid, the cost (risk) of doing business in Africa will be lower (…).”5 But how can good governance be fostered? Moyo proposes to gradually reduce and finally, within five years, to cut systematic aid altogether. She argues that when aid decreases, developing countries will be forced to implement her proposed financing alternatives in order to maintain their level of spending. Consequently, the growing wealth and the use of the tax money will strengthen the citizens in holding their government accountable for its actions, ultimately leading the country in a virtuous circle to good governance and prosperity.
Basing development’s success on markets, the author challenges the role of the international institutions and NGOs as actors in the development policy and criticizes their “aid-business”. In Moyo’s view, these institutions are one of the key sources of the problem and understandably, the book has provoked much discussion in this sector. Therefore, the Swiss Agency for Development and Cooperation (SDC) looked for arguments with which it could react to Moyo’s criticism.
The aim of this paper is to have a closer look at the effectiveness of development aid. Is the money indeed wasted and should it be stopped like Moyo suggests? How could the SDC react to the provoking theses of „Dead Aid“? In order to answer these questions, Moyo’s propositions are examined critically. Once this is done, a set of proposals are developed that could serve as a vital ground for new strategies within the field of aid.