Foreign Aid as Contagion: Review of Dambisa Moyo’s Dead Aid

Over US$2 trillion of foreign aid has flowed through poor countries over the past fifty years.  Of this amount Africa is the biggest recipient, receiving more per capita in foreign development assistance than any other region in the world.  Since the 1940s, close to US$1 trillion of aid has been transferred from rich countries to the African continent. Africa thus finds itself at the new millennium inundated and flushed with foreign aid.  In Dead Aid (2009), Dambisa Moyo tells the story of how the billions of aid-dollars infusing Africa have not only failed to deliver the promise of economic prosperity but have in fact crippled Africa’s development.  Aid has not released Africa from what Jeffrey Sachs calls the “poverty trap” but has only imprisoned it in what Dead Aid dubs as “the vicious cycle of aid.”  In her analysis, aid is depicted as a kind of corrupting agent, a parasitic contagion.  To the extent that she uses biological metaphors which liken the economy as a physiological organism, which, like a body, can grow and decay, Moyo’s litany against aid-based development gives a picture of foreign aid as though aid were to the economy as AIDS is to its vulnerable populations.  The basic argument of the book is that, contrary to common perception, foreign aid has caused monumental injury, exposing those who receive it only further harm by damaging the very political and economic systems aid is supposed to support.  As she writes, “the most aid-dependent countries have exhibited growth rates averaging minus 0.2 percent per annum” (46). This is because aid, Moyo argues, is “not benign,” but “malignant” (47).
The question of what it means to think of foreign aid as a kind of contagion will guide the following review and summary of Moyo’s Dead Aid.  How does Moyo understand the form of capital that is foreign aid, and why does it seem to lead only to further underdevelopment?  For the characterization of foreign aid as contagion, indeed as precisely dead aid, is the polemical basis on which she makes the claim that the problem is not that rich countries are not giving enough of aid, but that they are giving it at all in the first place.  Hence, with regard to policy, Moyo calls for nothing less than the total termination of foreign aid assistance.  A consequential question that follows, then, is, what notion of freedom is presupposed in Moyo’s call to emancipate Africa from what she calls its “culture of aid”?  
It is important to note at the outset that while Moyo’s critique of aid proceeds by culling data and statistics from political economy, it is an argument that is directed largely at the domain of culture.  As she writes, decades after achieving official independence from the West, Africa finds itself at the new millennium living in a culture of aid.  (She opens her book with the sentence, “We live in a culture of aid.”)  Aid is figured as not only a problem of political economy, but also a problem of culture.  This is why her argument explicitly takes on what she calls the “myth” of aid, whose ideology, according to Moyo, has for more than half a century propagated the idea that aid is Africa’s panacea.  The myth of aid is the idea that the giving of aid is a necessary “good.”  It seems to me that Moyo wants us to read “good” in both senses of the word; that is, as a “good” moral virtue and as merchandise, a charitable commodity—”goods” to give.  On this view, the “goods” of aid signify the giving of aid to Africa as a moral imperative and as a rational economic solution.  Its mythological status derives from the seemingly universal consensus that aid is an unquestioned, and unquestionable, good.  Moyo contends, however, that to live in a “culture of aid” is to allow the myth to have us believe that foreign aid is “what we ought to be doing” (xiii).  Hence, foreign aid obtains a moral feeling, an ethical value, whereby the industrialized nations of the North are encouraged, indeed morally compelled, to participate in the worldwide pity for Africa. Under such a moral economy, the giving of aid as an ethical good confers to the one who gives the font of charity.  As Moyo wryly writes, the “Western, liberal, guilt-tripped morality has seeped into the development equation” (26), suggesting that the subjective intentions behind ethical considerations alloy what is supposed to remain objective.
What Moyo finds so odious about the myth of aid is that it covers over what she sees as the more baleful realities of aid-driven development.  The cultural ascription of aid as a charitable gift functions merely as an ideology, a myth, which mystifies the actual ways in which aid “make[s] the poor poorer, and growth slower” (xix).  The tragic truth Moyo seeks to uncover is that Western donors, in spite of their presumed good intentions and munificence, have unwittingly contributed to Africa’s underdevelopment, encouraging a culture of aid-dependency, in which Africans are “kept in [their] perpetual childlike state” (32).  The argument of Dead Aid therefore works by first denuding the ideological myth of aid as a rational economic solution for Africa, on the one hand, and undermining the moral principle that makes the giving of aid a political and ethical imperative to Western donors, on the other.  Moyo’s argument concerning aid recalls Jacques Derrida’s concept of the pharmakon as both poison and remedy.  In his analysis of the 1997 Asian Financial Crisis, Pheng Cheah, for instance, proposes to analyze financial flows—to which foreign aid is also a part—as autoimmune processes:  “On the one hand, inflows of money strengthen the well-being of the national economy and are therefore a source of power and security that can be drawn on in self-defense against any external threats.  On the other hand, since this integrates the nation into a circuit of capital market processes in which other actors who have even more money can attack and weaken the nation…what is medicine is also poison” (“Crises of Money,” positions 16(1)213).  In Dead Aid, what Moyo seeks to expose is the history of aids’ nefarious geopolitical entanglements, including the various ways foreign aid assistance was used as a tactical gambit during the Cold War; the bureaucratic inefficiencies and bad management that have kept millions of aid-dollars away from those in need; and the flawed structure of aid that makes aid less an economy remedy than a poison, a contagion—dead aid.
Moyo points out that while Africa is showing some contemporary signs of economic progress (she cites instances of democratic elections, >5% annual growth rates, and the high rankings of African stock exchanges as examples), the actual economic reality is that Africa remains the same, at times much worse, than forty-years ago.  Again, her historical periodization does not seem incidental, as though to suggest that Africans are poorer now than they were just after independence.  Implicit is the suggestion that decolonization appears to have resulted only in regression and underdevelopment at near pathological levels.  She writes, “Africa’s real per capita income today is lower than in the 1970s, leaving many African countries at least as poor as they were forty years ago” (5).  The world-system has not favored the African continent.  Moyo reports that while the proportion of the world’s population living in extreme poverty fell after 1980, the proportion of people in sub-Saharan Africa living in extreme poverty increased to almost 50% (5).  Indeed, the number of Africans living in extreme poverty in 2002 has doubled since 1981, roughly 600 million of Africa’s billion people remain trapped in poverty, indicating how Africans are poorer today than in the 1980s.  In other words, while the rest of the world is enjoying economic growth, Africa has not.  “Africa is (negatively) decoupling from the progress being made across the rest of the world” (6).  While Brazil, Russia, India, and China are enjoying economic growth rates, sub-Saharan economies have become aid-dependent and have “failed to generate consistent economic growth, and have even regressed” (29).  If other developing countries are able to get their foot on the economic ladder, why not also Africa?  The problem, according to Moyo, lies in aid: “when aid flows to Africa were at their peak poverty in Africa rose from 11 percent to a staggering 66 percent” (47).
Now, aid has tended to be in the form of concessional loans as opposed to grants. These loans are concessional because they are funds lent to African governments at below market interest rates and with longer lending periods than ordinary commercial markets.  What has happened, however, is that over recent decades, policy experts have shifted preference from loans to grants.  This change of policy favoring grants over loans was made possible by critics who apparently argued that loans, with their repayment structure, shortened the necessary amount of time for investments to gestate and therefore disabled positive returns. Loans, in other words, generated debt, rather than revenue.  Unlike loans, grants did not have such temporal constraints, and were consequently viewed as “free resources” for investment.  But the development of aid-assistance became such that the distinction between loans and grants no longer mattered.  For instance, the concessional terms under which loans were given made repayment less threatening, and then there was the practice of forgiving loans altogether.  The difference between loans and grants became practically irrelevant. For Moyo, this had negative consequences.  It merely encouraged governments to view all forms of aid-assitance as “free” and therefore unhampered by the time-constraints of repayment that are found in loans. As she writes, “the prospects of repayment mean loans induce governments to use funds wisely and to mobilize taxes and maintain current levels of revenue collection” (8).  If “policymakers in poor economies may come to view [foreign loans] as roughly equivalent to grants” (8), the implication is that they lose sight of the responsibilities that come with accepting loans, leading to a lack of financial discipline.  “Without the inbuild threat that aid might be cut, and without the sense that one day it could all be over… there is no incentive for long-term financial planning, no reason to seek alternatives to fund development, when all you have to do is sit back and bank the cheques” (36, my emphasis). In other words, aid dismantles the mechanisms of financial discipline.
Aid corrupts by fostering corruption. Grants turn into grafts, to paraphrase Moyo. Even where there are good fiscal and economic policies in place, even where there is sound democratic institutions, aid corrupts and renders them null: “aid could make a good policy environment bad, and a bad policy environment worse” (40).  Aid proves inimical to democracy itself.  According to Moyo, where democratic legal frameworks facilitate the distribution of aid, such democratic processes participate in its own demise by encouraging the circulation of aid. “The uncomfortable truth is that far from being a prerequisite for economic growth, democracy can hamper development as democratic regimes find it difficult to push through economically beneficial legislation amid rival parties and jockeying interests” (42). On this view, democratic processes can slow down the reforms necessary to get the economy to take-off.  Hence, what is needed is not a multi-party democracy, but a “benevolent dictator to push through the reforms” (42).  For Moyo, democracy is not the prerequisite for economic growth.  It is rather that economic growth is the prerequisite for democracy.  Only an aid-free Africa can effectively furnish the conditions for democracy to flourish.
Moyo’s critique of foreign aid thus depicts aid as a corrupting agent, which trains, on the one hand, a culture of aid-dependency with little or no financial discipline, and destroys, on the other hand, the maturation of political democratic systems in Africa. Marx had once made the distinction between machines and humans as “dead” and “living” forms of capital, in which the machine represents merely the capture and effacement of living human labor power. In Moyo’s analysis, the kind of capital represented by foreign aid is dead precisely because they incapacitate the generation of self-developing capital, relying instead on the inflow of something that is external.  This can be seen in the various ways aid produces debt burdens and higher interest rates, which, in turn, lead to a decline in the demand for African export commodities, leaving many African countries in a “state of near destitution and renewed dependency” (19).  Thus what seems implicitly valorized in Moyo’s critique is a certain notion of African self-development, whereby the principle of growth would ideally be something that comes from within, rather than from the outside.  In contrast to an aid-free development which would encourage growth that is internal (a principle of change as arising out of and from itself, a spontaneous self-genesis), aid-driven development would necessarily entail a supplementation by an external agent, such that change and growth appear possible only  as a favoring by something foreign, a donor.  Thus foreign aid appears as something that is heteronomous. Moyo’s vision of an aid-free Africa is predicated on what political philosophy distinguishes as negative freedom, that is, a notion of freedom conceived as “freedom from X.”  The injunction is to free oneself from aid and the culture of dependency it ostensibly produces.  Recalling Moyo’s remarks regarding aid and democracy, it is only after accomplishing this negative freedom (freedom from aid) can something like positive freedom (for Moyo, political democracy) become possible.  By doing away with dead aid, Africa can realize the positive freedom that stems from the capacity of to self-generate and self-develop.  This is why much of Moyo’s polemic is directed against the social forms of dependency aid supposedly helps create, for they trammel African autonomy and hinder the region from finding its own wherewithal to achieve political and economic sovereignty.
Where the language of African autonomy had previously assumed a revolutionary tone, Moyo’s millennial vision of an aid-free Africa, despite its attack on taken-for-granted assumptions behind aid-giving, falls flat on radicalizing the status quo.  It merely images a future to be finally one with the world republic of commerce.  Indeed, the prescriptions that make up the last part of Moyo’s book are given as so many policy recommendations to render Africa more competitive for investments in international financial markets. Moyo’s criticism against foreign aid seems to be in inverse proportion to her zeal for neoliberal market paradigms.  She cites, for instance, Botswana as an illustrative example of a government that successfully freed itself from aid by implementing market strategies such as trade liberalization.  Economies in East Asia are also used as a comparative guide and further proof in the benefits that governments can accrue when they choose to liberalize their economies in favor of laissez-faire principles.  South Korea, Taiwan, and Singapore are praised as examples of governments that achieved higher rates of growth and poverty reduction due to their implementation of free-market policies.  The question of whether or not such a wholesale adoption of market policies may perpetuate forms of inequality is scarcely analyzed, however.  This seems even more urgent given the obvious historical differences that inform Africa’s social and political life than those in East Asia.  Perhaps the biggest weakness of Moyo’s account of foreign aid is the scant attention she pays to the legacy of Western colonialism (it receives less than a paragraph’s attention on p. 31), a history to which foreign aid necessarily belongs.  Moyo also evades the neocolonial system of rules which continues to regulate and determine the political realities of Africa.  Without such necessary analyses Dead Aid risks being part of an academic output that subscribes, without caution, to the quasi-theological doctrines of market teleologies.  If aid increasingly acts like a viral contagion, the question remains whether the same can be said about the logics of finance that play themselves out in international markets, most spectacularly in the recent global financial crisis.  As Achille Mbembé observes, market forces operate “by doing everything possible to dismantle state intervention in the economy (such as controls, subsidies, protection), without making the state more efficient and without giving it new, positive functions, the result has been that the state’s (already very fragile) material base has been undermined . . .  its capacities for reproduction have been reduced, and the way has been opened for it to wither away” (On the Postcolony, 75).  To the extent that the range of choices in Africa has been reduced to democracy and market economies, it becomes increasingly difficult to discern where one form of domination and servitude ends and where another one begins.
P.N.
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This entry was published on May 11, 2011 at 5:44 PM. It’s filed under Development, Postcoloniality, Reading Notes and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow any comments here with the RSS feed for this post.

One thought on “Foreign Aid as Contagion: Review of Dambisa Moyo’s Dead Aid

  1. hollywoodtroy on said:

    Great review! I just saw an interview with her and I couldn’t help but think, “Is it me or is there something missing from her analysis?”. She is now sort of a “media darling”, but thank you for pointing out some ommisions and inconsistencies in her work. In the coming decades, people should be on gaurd against “endearing faces” spewing similar arguments (and sounding very eloquent when doing so) like the old Milton Friedman types did.

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