Dead Aid Bandwagon

If you are a development nerd, you have probably read ad nauseam about Dambisa Moyo’s new book, Dead Aid. In the last few months, there has been an interesting debate happening between different schools of thought. Essentially, Moyo argues that foreign aid to African countries is one of the preeminent root causes of Africa’s underdevelopment (for lack of a better word), and that instead of throwing billions of (wasted) dollars into the hands of dicators, African governments should instead be given access to more private finance. 


Having worked at the World Bank and Goldman Sachs, Moyo – who hails from Zambia – offers a refreshing perspective on the aid debate (which is typically dominated by white males… no surprises there, right?)

Her book unleashed an outpouring of commentary – some condemning her views, others wholeheartedly agreeing, and everything in between. I have been tempted to throw in my two cents, but the more I read about it, the more convinced I am that a) everything that could be said, has been said and, b) the debate over whether aid should be stopped or not is such a macro discussion that, ultimately, we’re getting stuck at the “50,000 foot” view – and that doesn’t really help move the debate forward constructively. Because, as we all know, foreign aid will NOT end – even if you were able to show by a+b=c that aid caused most of Africa’s problems, Official Development Aid (ODA) is still a critical foreign policy tool, and to call for its halt is unrealistic.

Anyway.  

Most recently, Francis Fukuyama voiced his opinion on the matter in Slate. He compares Moyo’s argument with another prominent African scholar’s views, Wangari Maatai. His piece, I thought, actually touches on a couple of really key issues, which most commentary on “Dead Aid” have failed to focus on. Excerpt:


Both women see sub-Saharan Africa’s fundamental problem not as one of resources, human or natural, or as a matter of geography, but, rather, as one of bad government. Far too many regimes in Africa have become patronage machines in which political power is sought by “big men” for the sole purpose of acquiring resources—resources that are funneled either back to the networks of supporters who helped a particular leader come to power or else into the proverbial Swiss bank account. There is no concept of public good; politics has devolved instead into a zero-sum struggle to appropriate the state and whatever assets it can control.

This view actually echoes what one of the most prominent French African scholars, Jean Francois Bayart, writes in his book “L’Etat en Afrique: La politique du ventre“. In this book, he writes that the “politics of the belly” – which is to say the political culture that is prevalent in Africa whereby rulers seek to accumulate power and possessions –  is not only the fundamental issue that has been plaguing the continent, but also a product of its very particular social, political and economic history. In his book (which I unfortunately don’t think has been translated into English), he describes how complex social and political networks arose in the context of colonial and post colonial sub-Saharan Africa, and how the polity that emerged is defined by an intricate interplay between foreign dependency, reliance on local (and often socially constructed) tribal or ethnic identities and leaders’ destructive desire to selfishly accumulate resources. 

Of course, given that we’re talking about a whole continent, generalizations are very hard to make – so while one can certainly find counter points to Bayart and Fukuyama’s argument, there is an element of truth to it, which to me captures the most powerful criticism of Moyo’s book: it’s not aid per se that’s the problem – it’s what’s being done with it, and how it’s being managed. And of course, Moyo knows this. But, as Owen Barder notes:


It seems to me that Dambisa Moyo has set up a false dichotomy between aid and entrepreneurship. Many of the things Moyo would like to see – better access to financial services, a better business environment, lower tariffs – can be (and are) supported by aid. 

It’s been frustrating to read Bono’s response to Moyo, as well as the reactions from a lot of people “shocked” that Moyo would call for an end to foreign aid. But, if (like me…) you subscribe to the Easterly school of thought that holds that most ODA ends up being horribly wasted and that an entirely new ODA regime needs to come about, then her argument, while virulent and, frankly, aggressive, makes sense. 

Just recently, from (of all places) USA Today:


Two United Nations agencies spent millions in U.S. money on substandard Afghanistan construction projects, including a central bank without electricity and a bridge at risk of “life threatening” collapse. 

In the current context, I think it’s great to debate the virtues (or lack thereof) of ODA – however, focusing on that macro question shouldn’t be a reason to turn our focus away from the real issue: today, there are millions of aid dollars at work – how do we actually make them work, with a view to incrementally decrease countries’ dependence on foreign assistance? 

Oh, aid effectiveness… You are hella elusive. 

A Worrying Trend

World food prices are soaring, and this is having serious consequences on people’s livelihoods in the developing world. In addition, for organizations and agencies involved in food distribution or aid, the spike in food prices is also having an adverse effect on their ability to meet the needs of their beneficiaries. In recent news:


USAID announced that the cost of wheat and other food had gone up by 41 percent setting its budget back by US$121 million, which meant it would have to reduce the amount of food aid sent overseas (more here)

With local and international food shortages, merchants in Kano’s Dawanau grain market, the largest in West Africa [Nigeria], have hiked their prices. The price of a 50kg bag of maize has doubled since September from US$21 to US$42 and a bag of millet rose from US$29 to US$42, according to Magaji Ahmad, one of the merchants. Cowpeas, which sold at US$58 are now US$100, he added (more here)

In Burkina Faso, which was badly affected by floods in 2007 and has this year been roiled by violent protests over high food prices, sacks of corn are selling for double the price they were a year earlier, setting back impoverished Burkinabe 15,000 CFA francs (US$30) a sack compared to 7,500 CFA francs (US$15), according to FCPN.

“Recent assessments indicate that that food and nutritional situation could deteriorate due to a continued rise in food product prices,” FEWSNET warned.

Food riots have also recently taken place in Guinea Conakry, Mauritania and Senegal. Those countries depend heavily on imported wheat and rice which are more affected by high global commodity prices than upheavals in the regional markets […] Stephanie Savaraud, West Africa spokeswoman for the World Food Programme (WFP) said that school feeding and supplementary feeding would be appropriate responses to help support Burkina Faso, but warned that WFP faces its own funding crunch. “Rising prices for basic commodities mean WFP needs 30 percent more money this year to feed the same number of beneficiaries,” she said. “If we don’t get that then we will need to give less food to people.”(more here)

Food Market in Ouahigouya, Burkina Faso – August 07


These problems in West Africa are obviously not happening in a vacuum – this in the context of rising food prices worldwide , due to a combination of interrelated factors, like increasing transportation costs due to the spike in oil prices, or poor crop yields in some regions because of droughts or floods. However, as usual, the poorest will bear the brunt of the current crisis – the excerpts above reveal two major consequences: one, that people are finding it increasingly harder to provide for themselves; two, that international agencies and NGOs are going to face difficulties trying to fulfill their mission – their budgets are not increasing, while their expenses are. While finding a solution to the former is a global challenge – governments all over the world are trying to address this issue – the latter problem highlights a structural problem in food aid – the fact that most food aid programs do not use local agricultural products. USAID only sends US agricultural products overseas, tapping into the giant production surplus its industry has generated

(on that topic, I highly recommend a documentary called “Famine Business” – I saw this at a film festival in Cape Town in 2003, and since then, it has mysteriously disappeared…. The only quote available on Google: “Film-maker Jihan El Tahri travels to Zambia to investigate claims that food aid is not necessarily the altruistic way of helping the poor that it seems. With the current Agriculture Minister for Zambia describing food-aid as ‘the use of food as a weapon of mass destruction’, El Tahri asks just who benefits from the famine business in an era of genetically modified food.”)

In any case, it seems that international agencies and organizations involved in providing food aid should place the utmost importance on supporting local agricultural production by purchasing food from local farmers. The WFP has a yearly budget which reaches nearly $3 billion – and they also have some of the lowest overhead cost of any large international agency. If these funds could be used productively, by investing in local production, this could yield some large scale benefits for producers in developing nations.

Food aid could help feed people not simply through charity – giving food to the hungry. It could also be construed as a means to boost local food producers, who find it terribly hard to export on the world market. Not only would this galvanize local economies, but it would also cut down on transportation costs. As everyone not living in a cave knows, transportation costs are soaring. Not only that, but in a world where concerns surrounding climate change and pollution are becoming increasingly important, buying locally also provides food aid agencies the opportunity to do their part in protecting the environment….

I don’t have all the answers to this incredibly worrying issue of soaring world food prices – in the short run, this could fuel instability in the poorest parts of the world (it already has in Burkina Faso and Egypt, for example.) In places like Liberia and Sierra Leone, where poverty prevails and where the threat of political instability is all too real, this becomes a serious issue. The Food Crisis Prevention Network recommends building stocks in high risk zones, and commended Burkina for subsidizing certain food products. But in countries where warehousing and stocking is dependent on fragile infrastructure, and subsidies strain already exiguous budgets, these are only band-aid solutions and do not address the root causes of the problem – at all.

Meanwhile, Haitians are eating mud cakes.

Fasten your seat belt, we will be experiencing turbulence.


Getting the Word Out, part 2

My last post was about NGOs, why they’re important, why we should support them – there are other types of non profits, which also need to be described, explained, dissected…. Too often, for the general public, the non profit sector is considered a homogenous lump of idealists, with similar objectives, motivations and “raison d’être”. However, it is not so at all, and one of the most common misconceptions about this sector is how organizations such as UNICEF, the World Food Program, USAID – to name a random few – are construed.

International Agencies (not-for-profit):
The United Nations has its own more or less “independent” agencies – each is specialized (in theory), and furthers a global agenda. Whether it be UNICEF eradicating childhood mortality, WFP feeding the hungry, UN-Habitat developing an understanding of policy implications of growing urbanization – all of these agencies are fundamentally different from NGOs, per their structure, their mode of operation, how they select projects and partnerships…

While it should be noted that for example 58% of UNICEF’s income comes from governments (source: UNICEF Annual Report, 2006), that also means that nearly 40% is coming from the private sector – there are many NGOs that have a higher proportion of public funding.

Then, you also have agencies such as USAID (United States Agency for International Development), or AFD (Agence Francaise de Developpement), DFID (the UK’s Department for International Development), all of which are ever present in the field. These are very different organizations that are controlled by national governments – not to say that their work is of less importance, but their objectives are often motivated by geopolitical and strategic considerations for foreign policy.

Here is a video of Henrietta Fore, administrator for USAID (note: the US is the largest bilateral donor in absolute terms – not in relative terms)



So international nonprofit agencies, NGOs – “are they similar??”, you must be asking yourself. Well, in a way, yes – they exist to supplement public and State actions, and act where there is a void. A lof ot them have similar income structures as well. So what is the fundamental difference?

The fundamental difference is that UN agencies and national aid agencies are staffed by public servants, who represent their countries’ interest within that organization. Power struggles within these organizations and between them (UNICEF and UNESCO are typically at odds over who should get the most funding for education) are prevalent, and often, these structures operate like large bureaucracies.

Of course, some very large, influential NGOs are also faced with these issues – but to a lesser extent. It is quite difficult to untangle the reality of the global non-profit sector – there is such a large variety of organizations, that operate in myriads of ways, in every corner of the earth.

I mentioned Zoe’s Ark in my previous post (the French NGO which tried to have Darfur orphans adopted in France, except they essentially abducted Tchadian children…) The consequences of their actions negatively impacted all non profits which work in the developing world – both the beneficiaries of aid and financial supporters of nonprofits don’t differentiate between Zoe’s Ark, Doctors Without Borders, and UNICEF.

As I’ve tried to show, the international non profit sector is rich (in diversity), complex and is made up of largely different organizations. Do we compare Shell, Exxon or BP with MTV? Do we compare plastic container makers with Avis Rent-A-Car? We operate essential distinctions between all of these organizations, and the same type of critical approach is needed when assessing the international non profit sector.