The Arguments Against Foreign Aid Next theory - Development Assistance Philosophy >> Zambia has been a recipient

of considerable foreign aid over the years. Foreign aid has grown significantly in absolute terms (if not as a percentage of donor GDP) but this has shown up a paradox - as aid to Africa has grown, the continent has actually become poorer rather than better off. There are a number of arguments put forward against development assistance. The arguments come from different philosophical standpoints. The political right argues that foreign aid will have a number of negative effects 1. Foreign aid often falls into the hands of corrupt officials who affect the projects that are chosen to be financed. If Official Development Assistance (ODA) is used to build a stateof-the-art hospital in the district of the capital city in which most ministers and their families live rather than to finance vaccination programs nationwide, the waste can be greater than if officials in recipient or donor countries were to embezzle some proportion of the vaccination funding. 2. Aid money is often misspent, even when handled honestly. By imposing solutions from outside, it may be used for projects that generate large numbers of jobs and are beneficial to the government in the short run while providing few long-term benefits. Their creation and maintenance draw scarce local resources and entrepreneurial initiative from other uses, crowding out private investment and initiative. There is thus a particularly sharp divergence between private cost to the government - close to zero - and social cost. 3. Transfers of low interest concessionary finance or grants to fill the savings or foreign exchange gaps will interfere in the market determination of interest rates and exchange rates. The political left argues that foreign aid will also create problems 1. Aid can create an impression amongst receiving countries that More Developed Countries (MDCs) are wealthy, free-handed donors which provide what seem like huge sums of money by local standards. The impression can also be that this is given without moral judgment, since many of the people who administer aid may be seen as authoritarian and corrupt. As well as leading to a sense that there is some sort of right to aid, it can also distort values of openness, self-help and honesty. It encourages many people in recipient countries to consider migrating to the source of this wealth, since they assume that it must be a rich place where all can prosper. 2. The flow of aid is not always dependable, both because it is manipulated for political reasons and also because in times of recession in developed countries, the aid budget makes an easy target for a reduction in spending. 3. Aid is often seen, like most forms of charity, as quite a patronising concept, one party acknowledging its own superiority and aiding the other party not on merit but out of a sense of wanting to help. Dependency theory argues that aid ensures the continuation of the Less Developed Countries (LDCs) on the periphery and the dominance of the MDCs in the core. Indeed this is often cited as one of the reasons why African countries are

reluctant to take a full part in international affairs - partly because they feel that their silence or support has been 'bought' with aid money. The Benefits of Receiving Aid

What motivates a country to seek and accept financial assistance from abroad? There are three main reasons: 1. Economic Reasons 2. Political reasons 3. Moral reasons Economic Reasons Clearly the most important reason why countries seek and accept aid is for the purpose of economic development. There are three several economic reasons why Zambia has accepted aid:
y y y y

To improve the investment climate, develop human capital, promote entrepreneurship, as well as provide direct support in fostering trade To enable payment of interest on foreign debt To supplement the lack of domestic resources such as foreign exchange To enable infrastructure changes to be made to the economy such as dams and roads

Donors and recipients do not always agree about the purpose of aid. Donor countries have based their ideas of economic development on neo-classical models, that prescribe investment in physical or human capital as a means of producing economic growth. For recipient countries, aid is a valuable source of foreign exchange with which to help reduce balance of payments deficits worsened by debt servicing and poor terms of trade. In countries like Zambia with a large parallel economy and narrow tax base, foreign aid is also an important addition to government income. There is therefore also disagreement about the amount and the conditions placed upon recipient country by the donor country that lends it. Recipient countries would prefer to have aid in the form of grants with no conditionality, such as the structural adjustment programmes of the World Bank, and not tied to a donor country's exports. Donor countries often argue that this results in resources being 'wasted' on military goods or supporting inefficient bureaucratic government enterprises, such as extravagant parliament buildings, or being corruptly appropriated by government officials. Political reasons In some cases foreign aid is seen as being necessary in order to maintain power. Often foreign aid in the form of military goods provides the power base that suppresses opposition and maintains the existing government in power. The ending of the Cold War between NATO and the Soviet Union has contributed to the fall in Official Development Assistance (ODA) to the

continent of Africa, while Israel and Egypt, for example, were the two major recipients of ODA in 2003. Moral reasons Many people within the Less Developed Countries (LDCs) and the More Developed Countries (MDCs) consider that the MDCs have a moral responsibility to provide development assistance for the poorer countries. This may be because of basic humanitarian reasons or a feeling that the colonial powers such as the UK that occupied countries such as Zambia have a responsibility to redistribute resources, having exploited so many of the resources of the LDCs during colonisation.

African business, politics and lifestyle

See all analysis and opinion

Time to stop aid for Africa? An argument against

FEB 23, 2009 00:35 EST

y y y y y

Tweet inShare

AFRICA | AID | AU | CORRUPTION | DEPENDENCY | DEVELOPMENT | ECONOMY | GLOBAL FINANCIAL CRISIS | INVESTMENT | MARKETS | OXFAM | POVERTY | TRADE | UGANDA | UN | UNITED NATIONS | WEST

Earlier this month, Zambian economist Dambisa Moyo argued that Africa needs Western countries to cut long term aid that has brought dependency, distorted economies and fuelled bureaucracy and corruption. The comments on the blog posting suggested that many readers agreed. In a response, Savio Carvalho, Uganda country director for aid agency Oxfam GB, says that aid can help the continent escape poverty if done in the right way: In early January, I travelled to war-ravaged northern Uganda to a dusty village in Pobura and Kal parish in Kitgum District. We were there to see the completion of a 16km dirt road constructed by the community with support from Oxfam under an EU-funded programme. The road is bringing benefits in the form of access to markets, education and health care. Some parents say their daughters feel safer walking to school on the road instead of through the bushes. Many families have used the wages earned from construction work to pay for

school fees and medical treatment. This is the impact of aid. Having lived and worked in east Africa, I have witnessed the positive effects of aid. But done badly, it can be very limiting and even has the potential to create more harm. To avoid this, it must be provided within an enabling environment in which it is used as a catalyst for change and not as an end in itself. Governments must show leadership through an accountable system. For individuals, access to resources including aid is like an investment. Aid can build up poor peoples assets, support good governance and enhance skills and capacities to bring about transformation. But it can become a bane when it makes communities dependent, lazy and hopeless. Governments, aid agencies and the United Nations need to ensure the delivery of aid is well planned and coordinated, leading to higher selfreliance among poor communities. Aid is also beneficial when trade is fair. There are several examples in Africa, like the case of coffee farmers in Uganda, where aid has been used effectively to improve the overall quality of the coffee seeds, thereby giving farmers better prices for their produce. When they have access to markets at home and abroad, they generate income which is ploughed back into increased output, better access to health and education, and overall improvement in the quality of their lives. To make this happen, developed countries need to stop procrastinating and put in place fair trade practices. Aid works well if governments are accountable in other words, when they are responsible and encourage active citizenship. On this continent, civil society is still weak and needs to be nourished. But stopping aid will not resolve frustrations about poor governance, which is partly a result of weak public scrutiny. Aid should be used to help fight corruption and promote accountability through active input from ordinary people. As I have argued here, receiving aid is not just an act of charity. It should be understood as the right of poor communities to a life of dignity. As stated in international conventions, people have a right to good health, food, water and education. We all need to ensure the planets resources are equitably distributed. As Mahatma Gandhi said, you must be the change you want to see in the world. So what do you think? Which argument is most convincing?

Feb 23, 2009 3:48 am EST

Strangely enough, even though I am in favour of foreign aid, I found Ms Moyos perspective a little more convincing.

Ghandian philosophies dont always quite mirror the situation on the ground and while I agree that Aid has its in benefits, in the long-term it would be nice to see African countries becoming self-sufficient. Or to be even more optimistic for Africas wealthier nations to become the largest donors to their neighbours. We definitely do need aid, at least for the time being, but the culture of dependence and of expectations from our former colonial masters needs to be curbed~

For the most part, AID is a glorious racket. Research shows that out of every $1.00 given about 10 cents gets to the ground. I accept AID is required in extremis, where there is a genuine famine or catastrophe but otherwise its a absolute waste of time. Whole Bureaucracies sit and wait like a Plague of Locusts for the AID flow. It creates a dependency syndrome. Look at Kenya, when the National Cereal Board has been book entried to oblivion and now we are going cap in hand for Food. Those who administer AID are no better. They waste it on new Pradoes and fancy Expense account lunches, for the most part. Aly-Khan Satchu http://www.rich.co.ke

One of the many ways in which aid has become such an insidious, damaging racket for the people of Africa is how organisations involved in dispensing it use their role to speak on behalf of the Africans. Oxfam is one of the worst examples of this. Their officials and spokespeople, almost invariably non-Africans, jump with alacrity to tell the world what is or is not good for the Africans. During the EPA negotiations between the EU and African nations Oxfam almost suggested the Africans had no clue what thy were doing in the negotiations, and could not be trusted to decide for themselves which of the difficult compromises to be made was best for them. If the EU provided aid to build a road in Uganda, that is obviously a good thing. I dont know what intermediary role Oxfam would have played in this aid project, but I am cynical about how quick Satchu is to sell his organization with Reuters help; his company logo prominently displayed in his tale. That is one of the most shameful and cynical things about the saving Africa aid industry: how it has become a feeding frenzy for foreign poverty campaigners and charities to aggressively seek to benefit from being middlemen in dispensing aid to

the poor helpless Africans, whose helplessness is so extreme and pathetic that outfits like Oxfam must speak for them! Sure there examples of good and effective aid. But even within those examples there is much that is fundamentally wrong and needs to be changed. This is not only from the sides of the donors and the recipients, but from many other perspectives as well, including that of those who have a vested interest in the business of aid that does not always coincide with the interests of the the recipients. I often find Oxfam to be a good example of this kind of aid paternalism.

Africa needs to stand on it own now, we rich enough to trade with the world, we can expand our resources and knowledge across the board if we do away with corrupt leaders. We need to trade with other countries other than rely on hand outs. We have rich natural resources, raw materials and crop that we can trade in and earn a proper living.

While should continue to flow where needed, good governance, the rule of law, sound economic management and democratic principles sustainability is the long term answers to what create the conditions for aid to be needed. The crisis in Democratic Republ;ic of Congo, for example, is man made Made in Congo by Congolese Leaders. After the so called historic democratic election, Mr. Joseph Kabila did not only created a democratic crisis by silencing his critics, he is the one who refused to settle differences with Laurent nkunda that has ignited the humanitarian crisis. And for 2011, he has already paved his way like Mugabe to succeed it though he has not implemented a single electoral pledge

We truly know that Africa does not need help from West, but Africa needs a good governance. That is all. We also know that Africa is suffering from a chronic disease called:lack of leadership. Most african leaders come to the power with the assistance of West, and in consequence they do not have the support of african population. In these conditions, the so called West help is only an occulte (private) business between some West leaders and their african puppets ( african leaders ) which allow them to keep african people in poverty, ignorance, submission

Perhaps not time to stop Aid, but time to wean Africa off Aid.

Natural disasters not withstanding, Africa has lived with famine, floods and more disastersfor a long time. Why is it that we have not learnt to fill our granaries when we have some of the worlds richest soils? My take, donors with the right thinking should now empower Africa to be ready when disaster strikes. In times of hunger, why not put the billions of dollars into sustainable projects? For instance, Kenya is in a food crisis, instead of only providing relief food, why not add a couple more billions into irrigation systems, best farm practices such we can stop relying on the weather ? Floods: why not invest in Dykes that mean for us here in Kenya, we wont hearing sad stories from Budalangi every year. For me the question of Aid is..who is, in the long term the true beneficiary? If it is the poor , suffering African, then Sustainance is the way to go. He needs a fish now, but a fishing rod will give him a lifeline.

As on the last question, which argument is most convincing? I still feel, Dambisas is! But the real point is that we need a STRONG and INDEPENDENT AFRICA (Economically and Financially) and though there might be different ways of reaching there, one of them should be, to be able to engage with all our so called leaders in Africa and demand Accountability. Africa is heading in this bad direction because we have adopted an attitude of laissez-faire, which has led us to becoming so depended on AID. To stop the culture of dependency, lets start by stopping AID and engaging in TRADE!

I will quoute Ryan Shen-Hoover (www.investinginafrica.net) aids role is as an ambulance. Do we need ambulances? Yes. Should everyone be riding around in one? No. As Aly-Khan Satchu points out, aid to Africa primarily goes to expensive lunches & 4x4s. He did not add overpaid administrators. Cut off aid & open up to African imports for real gains.

The cliched Trade not Aid remains true. I recently blogged on Buy Kenyan, Build Kenya. What an absurdity to have cranberry juice at $6/quart when fresh fruits are available a-plenty. http://www.coldtusker.blogspot.com

It is said that giving aid to other countries is a process where money is taken from poor people in rich countries and given to rich people in poor countries.

I have also seen the aid work been done in Northern Uganda and for the most part, good work is done. But the biggest problem is still corruption, even amongst aid agencies. Do aid workers really need air conditioned 44 s and 5 star hotels to help the cause? People in IDP camps in Northern Uganda are surviving on aid but would that money not be better spent getting them out of IDP camps and returned to their homes where they can be independent? Perhaps aid agencies dont want recovery as it may affect their comfortable lifestyles. I would agree that Africa still needs money in the poorest areas to create infrastructure so they can recover, but good governance is also required as too much aid is wasted with corruption.
Posted by Roddy Sandeman | Report as abusive

Feb 23, 2009 3:46 pm EST

What is aid? Aid usually refers to financial assistance given by richer countries to poorer countries. There are two main types of aid, Humanitarian aid and Development aid. As news of the global economic slump becomes more dire by the day, African countries are very likely going to suffer quite heavily from a crisis which they did not at all create and it is a wrong minded approach to say that Africa doesnt need aid. Even Gordon Brown recognized today there is urgent need to work towards a global deal and grand bargain to deal with the economic downturn.

The economic crisis has already pushed an estimated 100 million people back into poverty. The right question to ask is: How Policy Reform and What Effective Aid can help Africa meet this challenge and hopefully achieve the MDG? This question will require fresh thinking and creative solutions.
Posted by Rabelin Tchoumi | Report as abusive

Feb 23, 2009 4:26 pm EST

I have been an aid worker for 15 years. I have seen very few aid organisations that pride themselves with how fast they work themselves out of business in a country (in the right way). If anything, often projects are invented to justify an agencys presence in a country. You ask 10 Africans, and 9 will answer that Africa needs NO aid but good governance. You ask 10 Africans, and 9 will answer with disgust the continent has become dependent on aid, addicted on hand-outs. How long have we, aid providers been in Somalia, Ethiopia, Uganda, Angola, DRC, etc etc 40 years? 50 years? And what is the net balance? More go hungry every year. Read the FAO reports. We just added another 90 million new hungry last year.
Posted by Peter | Report as abusive

Feb 23, 2009 6:26 pm EST

The current method in which foreign aid is distributed is broken and needs to be fixed. The way in which aid is typically distributed does very little to correct the poverty or economic hardships many people face, simply because aid is usually in the form of a handout. It has come to the point where aid can be counterproductive to motivate people to work, much like the US welfare programs. Where aid does work is to take that money and start a venture in which opportunities are created. I have seen this done and have done this approach to aid in Africa. It is a way to leverage aid (by a factor of 10 or more) create employment, produce revenue to support existing programming and form the foundation for seed capital to start new ventures. This approach breaks the cycle of reliance on aid, creating a self-reliance, self

esteem, and a perpetual source of aid. Conventional funding and aid for poverty stricken countries is a dinosaur. It is time to stop the method in which we have heaped aid on countries in the past, not addressing the root cause for the aid. Ron
Posted by Ron | Report as abusive

Feb 24, 2009 1:22 am EST

AID is a offshoot of white mans burden theory wherein a developed nation felt for the poverty of the third world countries,however in light of recession, things are much more clear to the donor countries and hence the need to revise the strategy on spending money on AID.
Posted by sanjay malik | Report as abusive

Feb 24, 2009 8:30 am EST

Let them have the aid while it lasts. They need to make the most of it. Because within the next few decades, the price of fossil fuels will begin to increase, and global warming is going to increase the price of food. And then? Well, international aid is simply going to become too expensive. The developed nations will be too busy maintaining their own standard of living, to throw tons of food and cash down the continental equivalant of a money pit.
Posted by Anon. | Report as abusive

Feb 24, 2009 12:00 pm EST

Chido Makunike,

Thank you for your comments. I could not have put it better. Mr Oxfarm who is defending donor aid should explain how this has benefitted the continent as a whole over the past 30 years. Why are most of our people still at the same spot despite all the oxfarm help eh? I only agree that HUMANITARIAN aid packages are useful for an African country at war or just emerging from war, where the hungry need to be fed pending the time when the war-torn nation is able to organise a meanful government able to respond to the people . In other words I have no problem with HUMANITARIAN AID as opposed to DEVELOPMENT AID, which most discerning Africans like myself, chido and Dambisa Moyo opposed to and Mr Oxfarm Carvalho is defending. But most african nations are at peace not at war (bar ocassional communal clashes)and most are not suffering famines nor droughts. What Africa needs is FAIR TRADE and FOREIGN INVESTMENT. We should build up our infrastructure and strengthen our economic relationship with China, Brazil, India and the Gulf Arab States who are more inclined to treat us equally rather than our Western colonial exploiters (oh, sorry, Western Trade Partners). If we must have some form of aid, then I insist that Mr. Oxfarm Carvalho should persuade the West to mount an african version of the 1947 Marshall Plan used in war-devastated Europe. If he cannot do that then, he should accept that token aid packages designed to burnish the PR image of the charity-giving West has failed and will continue to fail.
Posted by chimaoge okezue | Report as abusive

Feb 24, 2009 2:14 pm EST

I believe that we should not stop aid in Africa. According to the research through the Borgen Project (www.borgenproject.org) there are 963 million people that go to sleep hungry every day. Malnutrition and hunger related diseases accounted for 60% of deaths. 126.5 million children in developing countries are underweight (many of those developing countries are in Africa). In 2008, the World Food Programme (WFP) has purchased a record-breaking 552,000 metric tons of food in southern Africa, the equivalent of providing 2.75 million hungry people with a full food basket for an entire year. These are just some of the reasons that we should continue to give Africa aid packages. The Borgen Project also discusses many ways in which we can make countries better by giving them a car to travel from town to town to give health care.
Posted by cougar_gal06 | Report as abusive

Feb 24, 2009 3:38 pm EST

The road is a case against the aid that he wants to continue. Was this road the best use of money that were spent there? The agenda was decided by the ones who were giving the aid. The Uganda goverment should have built this road and instead Museveni was spending money on arms and giving a ministry post to his wife. This is what the money from EU and Oxfam is helping him to do. Self reliance comes from start to finish.That is the most important lesson. We must rely on ourselves and not on others who will tell us how to be self reliant.
Posted by Edward | Report as abusive

Feb 24, 2009 7:54 pm EST

I believe the people of Africa should be helped in what ways we possibly can especially spiritually. All lands need to hear the gospel of the Lord Jesus Christ. That God sent his only begotten Son to die for our sins on the cross, he was buried, and rose from the dead and went back up to Heaven.Trust him as your Saviour and God.
Posted by george smith | Report as abusive

Feb 25, 2009 5:04 am EST

I cant believe that a topic about Africa didnt moderate out the comment by the Jesus-lover. Africa is a continent with hundreds of Gods, animists. To use this forum to promote one pretend-god over another is kind of insulting. It doesnt matter. Poverty in Africa has become an industry in Europe and North America. High-paid celebrities and executives get points for promoting African poverty. I highly suggest that anyone who cares does some information gathering on aid policies that hurt Africa i.e. farm subsidies for wheat, pork, beans, corn. Let me put in terms nobody can dispute:

I will offer you $100 million of grains in the form of aid. All of this aid will come from my farmers. I know this will flood your local market and bankrupt ALL of your local farmers. Who can compete with FREE?!? But its aid. Next year we will increase the aid to $125 million because all your farmers will also need aid. You will depend on us for eternity. ________________________________________ _____________ Africa has the ability to produce its own food. It needs education, equipment, and inputs (fertilizer). Thats it. The hands willing to work already exist. Give Africa a chance to compete and break up the mega-agricultural companies. When we get over that little problem, Africa wont be the poor man of the world any longer.