Bono, Beware: Dambisa Moyo on Aid, Microfinance, and the Problem of Celebs in Africa

The Zambian economist and author of the new book Dead Aid explains her beef with the U2 frontman, her love for the Chinese, and her high hopes for her home continent.

Dambisa MoyoIf there is such a thing as a sensation in African development, it would be Dambisa Moyo. The author of the new book Dead Aid, she has taken on many of the conventions of the relationship between the West and Africa--aid, celebrity spokespeople, the "China does bad" storyline that has been covered in this magazine. In her book, she argues that government aid has not helped Africa, despite an inflation-adjusted $1 trillion being poured into the continent over the last four decades. She stopped by Fast Company's New York offices to chat about her book and her ideas. Here's an edited transcript of our conversation--and click here for her answers to readers' questions.

FC: The book has been received with such enthusiasm. Why do you think that is?
Moyo: It's kind of bizarre. The book is kind of obvious--there's a lot of restating of well-known arguments. Perhaps those arguments have been in localized quarters--among academia and development experts. But maybe the interest has been sparked because people outside of the development business know something's been going wrong and that there are alternatives. I think that's what people are excited about: There is another way.

FC: What's surprised you about the response to the book?
Moyo: The thing that surprised me the most is just how NGOs have taken a very aggressive approach to the book. The book was written in a polemical sense to try to get the debate going. I wanted everyone to get involved, from people who are diehard aid proponents to people who hate aid. I want to have them really question the system the way we are now questioning the capitalist system--one year of problem with the credit crisis, after 300 years of evidence that capitalism works, and it's out the window. We have 60 years of problems with aid and nobody has really been saying anything.

FC: What have the NGOs said?
Moyo: I'm a bit annoyed because I think they have been quite mean, misrepresenting some of the things I say. I keep saying there are three types of aid: humanitarian aid, charity aid--I'm not talking about those in the book--and government aid. I keep getting these emails saying, Oh, Dambisa Moyo is going to kill babies. African babies are going to die of malaria and AIDS. They don't want to move the debate forward.

FC: Who has attacked you publicly?
Moyo: ONE, Bono's organization. They wrote a letter that's on their Web site. I've spoken to them one on one--no pun intended--and I've told them numerous times that I'm not criticizing their kind of aid. They say, Yeah, yeah, let's have dinner and chat some more. The next thing I know they've launched a campaign.

FC: You've been called the Anti-Bono.
Moyo: By New York magazine. I was not happy about that at all, because it's a red herring. The celebrity thing is incidental to the issue. There's freedom of speech--anybody can comment--but this is about economic policy and serious government interventions. To focus on the celebrities ... Who cares? Besides, they perpetuate a negative view of Africa. All that comes out from them is what I call it the Four Horsemen of Africa's Apocalypse: war, disease, corruption, poverty. They never say, "Wow, guys, let's try and change people's image." They focus very much on the negative. They've become the face of Africa, and that's an artifact of the aid model. Where are the African governments? They should be at the forefront, articulating a view for this continent. But they just can't be bothered to say anything. I think they would care if they needed to, but they're sitting on aid. They basically can't be bothered to articulate a view. So anyone can jump in and say, "I'm speaking on behalf of Africa and Africans," which is essentially what these celebrities have done.

FC: Bono worked very hard on debt relief, which you criticize.
Moyo: I don't have a problem with debt relief in and of itself. I see the arguments. But there's this problem of moral hazard: people behave badly if they think they're always going to get bailed out. What's the point of giving debt relief if you're just going to add new aid? I don't view it as a break with the aid cycle.

FC: What countries are the worst offenders?
Moyo: Across the continent, most countries have at least 70% dependency on aid. It's easier for me to strip out the good ones. South Africa and Botswana--those two are on one scale. Ghana. Rwanda--President Kagame has been on record saying that aid is not the solution. Barring those guys, everyone else is guilty on some level of pursuing a lax model. For instance, I get irritated when I hear of countries pulling their bond ratings. Zambia is one. Yes, we know the system of bond ratings is not perfect, but it's a good thing to be transparently measured.

FC: Why would they pull the ratings?
Moyo: Many African countries have a lazy muscle. Why go to the trouble of getting a bond rating when I can just go to the World Bank? Or go to the G20? Or actually, have Bono go to the G20 and ask for you. I don't even have to leave my country. That's a cynical view, but it's hard for me to interpret it any other way.

FC: You write positively about microfinance but lately there has been much criticism of microfinance.
Moyo: Has there?

FC: Well, there's the problem of scale, for one thing. Also, it helps people be a little less poor but doesn't necessarily help pull them out of poverty.
Moyo: Scale is an issue. That's absolutely right. Somebody yesterday said to me that Kiva has been sitting on a lot of money and can't find anyone to borrow it. But I don't think that's a reason we should shy away from it. Those organizations can scale up--instead of lending $25 or $100, they will start to lend $10,000, which would be good because there is that gap in the market. But we also haven't done it long enough. I see why people say it doesn't meaningfully move people out of poverty--maybe they're earning $5 a day now instead of $1. But the economy has to move as a whole. Without being a monopolist or a thief, I don't think you can see big jumps in income in an economy. Microfinance is quite localized. Until the economy as a whole starts to grow, it's always going to be small.

FC: You're a big fan of China in Africa.
Moyo: I love the Chinese.

FC: We did a story in our June 2008 issue called China Storms Africa that looks at the many negatives: the environmental destruction, for instance, and the corruption.
Moyo: Stuff that the West never did, of course. It's slightly hypocritical--only slightly. The Chinese in Africa are not perfect. They shouldn't come in carte blanche. But it's the responsibility of African governments to manage those alliances—and they'll only do it if they are incentivized to do it. Under an aid model, what do they care? Let's take the extreme example of Sudan. I don't want to live in a place with a tyrannical dictator running footloose and fancy-free, and it's not great with a civil war, but the infrastructure in Sudan right now is amazing and the West did not deliver that in 60 years. There was a brilliant survey in 2007 in which Pew basically went to 15 countries and surveyed Africans and asked what they think of Chinese being there. Consistently and by big margins, the Chinese were viewed as positive. [Ed. note: The one exception was South Africa.]

FC: The Chinese really never bother about what kind of government is in power.
Moyo: Nobody does really.

FC: The West talks about it much more.
Moyo: It seems to me to be a double standard.  The West doesn't really care--come on. They gave money to Mugabe up until 2006. Most of the biggest despots in Africa--Mobutu, Idi Amin, Bokassa--who was in charge at those times?

FC: You make the argument that democracy is not a prerequisite for economic growth.
Moyo: The evidence shows it's not: China, Singapore, Chile achieved record growth and poverty reduction without relying on democracy. What's really important is the economics first. There's a great paper by Adam Przeworski I cite in the book that says you can't get long-term, stable democracy to stick unless your people earn at least $6000 a year. Thailand, which had a coup recently, is below $6000 a year, and Africa has had four coups in the past month--Madagascar, Guinea, Guinea-Bissau, Mauritania. His point is not disproven.

FC: Would you go so far as to say it's a hindrance to economic growth?
Moyo: Look, the job of African president is bloody hard. Some of these countries have been completely addicted to aid. They've been force-fed the notion of democracy. Kagame is doing some amazing things in Rwanda, but what I hear is: He's an authoritarian! You can just see how these cycles can be perpetuated. There's scope to transform things dramatically, but only if you have the right incentives. They don't right now.

FC: What incentives would you put in place?
Moyo: We're not going to get innovation or people contributing to the global community with this dependence on aid. So I would give a finite, clear timeline--10 years--to say we are going to reduce our dependence on aid. I had a meeting with Kagame in February, and he said, "Don't talk to me about getting off aid. I buy it. How?"
First thing I said was, "Do you have credit ratings?" I'm not saying you necessarily have to go to the bond market, though it is a great way to raise funds. But it's a great indicator for investors. What's the credit rating of a company? What's the credit rating of the country? He said, We have some rating from such and such. I said most investors will only look at S&P and Moody's, even though they have their history. Get that box ticked.
Second, how much money are you making from trade? They have to focus much more on building alliances with China.
The other thing I find incredibly irritating is how fragmented the continent is. I went to Kenya, Tanzania, and Rwanda, and I needed three visas and to change currencies three times. Give me a break. I would really try to do much more in terms of regional integration.  Zambia is 10 million people. Southern Africa is 200 million. That's a big difference to the investor.

Next, Dambisa Moyo takes reader questions, submitted via Twitter. Click here to read her answers.

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3 Comments

  • Rachael Rho

    In her book "Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa", Dambisa Moyo cites entrepreneurship and job promotion as solutions toward a better way for Africa. An example of this is in Rwanda where two businesswomen who own salons have come together to start a beauty school to provide a vocation and a future for Rwandans. Go to this site to learn more about the school and how you can help get it opened www.rwandabeautyschool.org. The two entrepreneurs, Jeanne and Sylvie, are being helped by the Business Council for Peace (Bpeace) - a New York based international network of business volunteers that help women entrepreneurs in post-conflict countries expand their businesses, create employment, and build a peaceful future for their communities. For more information on Bpeace, go to www.bpeace.org.

  • Sara Paterni

    The battle against HIV/AIDS in sub-Saharan Africa has largely been funded by aid. As a direct result of increased aid, the number of people in Africa on life-saving antiretroviral drugs increased from 50,000 in 2002 to 2.1 million in 2007.[1] Largely because of newly effective smart- aid, several countries have achieved even more dramatic progress. In Senegal and Rwanda, over half of the people in need of antiretroviral medication are receiving it, and in Botswana and Namibia, these coverage rates are above 75%.[2] There is clearly much more that has to be done, but in 2002 the percentage of Africans in need who were receiving treatment was only 1%.[3] AIDS used to be a death sentence, but today two pills costing less than 50 cents a day can bring someone who was on death's door back to life, to his or her family, job and community. To deny the poor access to these drugs is to literally sentence them to death.

  • Brian Sweeney

    In Dead Aid Moyo tries to make the case that aid doesn't work by citing a study that showed that only 20 per cent of aid for education in Uganda actually reached schools. There was a significant problem in Uganda with education aid delivery in the mid-90s, but what Moyo fails to include in her book is what happened next. Local parent teacher associations, the Ministries of Education and Finance, international NGOs and donors worked together to dramatically improve aid efficacy by making it possible to track the money to the school door.

    By announcing transfers of education funding in newspapers and on the radio, the government informed parent associations of the amount of money their schools should be receiving. As a result of the government's campaign for better tracking and transparency, the percentage of resources reaching schools increased from 13 percent in 1996 to 80 percent in 2002.[13] This model has since been replicated in other African countries, helping to boost overall education policy across the continent and, in combination with increased development assistance and debt relief, has helped drive the enrolment of 34 million school children in the years since. This kind of "bottom-up accountability" is an example of how civil society, aid donors and governments can work together to help improve aid systems and deliver smarter aid continent-wide. In Moyo's hands this is a story of how Africans and aid donors failed; the truth is it's an inspiring story of success.

    On the subject of corruption, it's also important to distinguish between aid that goes to civil society groups and aid that goes to governments as budget support, and shades of variation in between. ONE advocates that the better a government scores on governance indicators, the more it should be considered for budget support, the worse it performs, the more aid should go through civil society groups or be withheld. Aid can and should also target the strengthening of transparency, anti-corruption measures and media independence. Facilitating bottom up accountability and entrepreneurial African solutions is the essence of the smart-aid approach