Economist: Aid To African Nations Not Working Well

Steve Inskeep talks with Zambian-born economist Dambisa Moyo about her book Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa. Moyo has been a consultant for the World Bank and an economic sub-Saharan Africa specialist for Goldman Sachs. She says American and European good intentions discourage innovation and breed corruption.

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STEVE INSKEEP, host:

Much of Africa gained only marginal benefits from the years of prosperity in the early years of this decade, which was not from lack of trying. Western aid to Africa grew dramatically, exceeding $37 billion in 2006 alone. Our next guest thinks that Western assistance is itself part of the problem.

Ms. DAMBISA MOYO (Economist): I believe that having an aid-dominated society discourages entrepreneurship. It makes the government unaccountable, and obviously it's the post rampant corruption through government but also into the wider population.

INSKEEP: Economist Dambisa Moyo has worked for Goldman Sachs and also for the World Bank, which is one of the major institutions channeling aid from the West to Africa. She's now the author of a book released today called "Dead Aid," which says assistance has hurt countries, including her own home country, Zambia.

Ms. MOYO: I grew up in an era of what I call the yes-we-can period of Africa. This was post-independence. My parents, as I talk about in the book, are two of the first black graduates from the University of Zambia. And so there was lot of expectation about how finally Africans were going to govern themselves and actively be able to become equal partners on the global stage. In that period we've gone from a time when there's a lot of Pan-African confidence and dignity associated with being Africa and Africans, to a time where there's a lot fatalism, destitution.

INSKEEP: Does Lusaka, your hometown near the capital of Zambia, look more modern than it did when you were a kid or like it's going backwards in time?

Ms. MOYO: Well, you know, it's more modern in some ways. Obviously you can use a mobile phone and so on. There are Internet cafes everywhere. But the economy is not growing, and that's what we should be worried about. I mean although we have seen some positive spurts in the last five years with the emergence of the Chinese coming in and obviously the global economy, the concerns are about making sure that trajectory sticks, and that's really what my book is about.

INSKEEP: You just said with the Chinese coming in, is their approach to Zambia different than the Western approach to Zambia?

Ms. MOYO: Completely different. Their interest is couched in business. They are there to make money, and my view is that that is a good thing. Now, that's not to say that the Chinese should come to Africa carte blanche and there should not be some dialogue with African policy makers on how Chinese money coming to Africa can be beneficial for Africa; that of course is a very important piece of it. But even in the worst case scenario, there are now roads where there have not been roads in Africa for 60 years. People in Africa now have jobs where they haven't had jobs over the 60 years when the Western - ostensibly Western rule was in place.

INSKEEP: What's China's interest in Zambia?

Ms. MOYO: It has changed quite dramatically. Originally it was definitely on the mining sector.

INSKEEP: They wanted some copper, basically.

Ms. MOYO: They wanted copper, obviously to help finance their own development programs. But it's changed dramatically. Now they are investing in agricultural products. One of the things that people don't seem to be aware of is that Africa has got 15 stock exchanges now; things like banking stocks, telecommunications. The Chinese have actually just bought 20 percent stake in one of the largest Pan-African banks. So they are diversifying their portfolio, their - sort of their approach to Africa.

INSKEEP: Are Western firms, which certainly do plenty of business outside the United States and in Europe, are they missing an opportunity here?

Ms. MOYO: I believe so. I think there's a tremendous opportunity and I think it really is a reflection of the bad PR that Africa has. You know, you think Africa and you think - as I call it in the book, the Four Horsemen of Africa's Apocalypse. You think of war and disease and corruption and poverty. And the Chinese don't look at it that way. They see an opportunity and they've done tremendously well in terms of investing in Africa.

INSKEEP: Although by your own statistics that you list here, I mean poverty is pretty extreme in Africa right now.

Ms. MOYO: It's absolutely is, and it will get worse if we don't stem the tide of aid to Africa. I mean we know what works. You know, this is not a need to invent a new wheel. We know that places like China and India were poorer than many African countries just 30 years ago. And now they're vying for top economic position in the world. And we should learn from that instead of pushing a product that has failed consistently, not just in Africa but across the globe.

INSKEEP: So are you saying that rather than feeling guilty about Africa, Americans should feel greedy about Africa and invest the remains of our portfolios in Africa?

(Soundbite of laughter)

Ms. MOYO: I'm just saying that the aid model is - to Africa is definitely predicated on pity, and Africa doesn't need pity. I think it's time that we started to innovate away from a system that has not delivered those things and we should do what we know is the right way to actually deliver growth and reduce poverty. And America knows how to do that.

INSKEEP: Dambisa Moyo is the author of "Dead Aid: Why Aid Is Not Working And How There's a Better Way for Africa." Thanks very much.

Ms. MOYO: Thank you so much for having me on the show.

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