poverty.jpgWe have good hearts and we want to help. Unfortunately, at times our attempts to help, our interventions, can be ineffective and even backfire. Situations are complex, people are even more so, issues are interrelated, and systems interdependent. Touch one part and all parts are effected. This is life.

The solution, to the extent there is one, is to accept the complexity of life and to be mature enough not to demand instant gratification of our good intentions. To know that if we truly want to help, we must discipline ourselves to act effectively even if that means accepting the reality that it will take time for an effective solution to work, that first efforts will almost always need to be modified and improved upon with lessons learned on the ground. If it were easy, it would already have been done.

The genesis for these thoughts is a new book on the heart-rending problems of Africa called “Dead Aid,” written by Dambisa Moyo, who is the former Head of Economic Research and Strategy for Sub-Saharan Africa at Goldman Sachs in London. Moyo also worked at the World Bank in Washington, D.C., where she was a co-author of its annual World Development Report. It follows a similar book titled “The White Man’s Burden,” by William Easterly, a New York University economics professor who previously worked at the World Bank. (Amazon.com reviews with detail of both are below.)

The West has sent untold billions of dollars in aid to Africa, most of it with good intent, but has very little to show for it. Why? In large measures we do not understand the immense complexities of the social, tribal, and political systems we are dealing with, the entrenched perverse incentives that exist, the cultural barriers, the list goes on and on.

The short answer is that we try to do too much too fast and we don’t take the time to learn before we plunge. Often the fastest way out of a complex situation is really the quickest way back in.

With people, often fast is slow and slow is fast. Taking the time to get local people fully on board may seem to be dawdling but involvement breeds commitment and if you push people, frequently they dig in their heels.

Bad mistakes have been made. To not learn from them would be even worse. Indeed the lessons are transferable and applicable at one level or another to any organization facing crisis or undergoing change.


“Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa” by Dambisa Moyo.

Moyo is the former Head of Economic Research and Strategy for Sub-Saharan Africa at Goldman Sachs in London, where she worked for eight years. Moyo has also worked at the World Bank in Washington, D.C., where she was a co-author of its annual World Development Report.

Dambisa Moyo was born and raised in Lusaka, Zambia. Her mother is chairwoman of a bank called Indo-Zambia Bank. Her father, the son of a South African mine worker, runs Integrity Foundation, an anti-corruption organization.

Moyo is the author of “Dead Aid,” an indictment of the foreign aid industry which was released spring 2009. She argues that Western aid to Africa has not only perpetuated poverty but also worsened it. In the book, she calls for all development aid to Africa to be halted within five years because it has brought dependency.

She insists that largely aid has held back Africans. “You get the corruption — historically, leaders have stolen the money without penalty –and you get the dependency, which kills entrepreneurship. You also disenfranchise African citizens, because the government is beholden to foreign donors and not accountable to its people”, she says.

Because they can count on aid, Moyo argues, most sub-Saharan African countries don’t even bother to issue bonds. That would require a country’s president and cabinet minister to sell their countries to investors. Moyo has a Ph.D. in economics from Oxford University, and her Master’s Degree is from Harvard University’s Kennedy School of Government. In addition, she holds a Bachelor of Science in Chemistry and an MBA in Finance from American University. She lives in London.

Matthew Rees (WSJ March 17, 2009) points out that it is one of the great conundrums of the modern age: More than 300 million people living across the continent of Africa are still mired in poverty after decades of effort — by the World Bank, foreign governments and charitable organizations — to lift them out if it. While a few African countries have achieved notable rates of economic growth in recent years, per-capita income in Africa as a whole has inched up only slightly since 1960. In that year, the region’s gross domestic product was about equal to that of East Asia. By 2005, East Asia’s GDP was five times higher. The total aid package to Africa, over the past 50 years, exceeds $1 trillion. There is far too little to show for it.

Moyo believes aid money pouring into Africa, underwrites brutal and corrupt regimes; stifles investment; and leads to higher rates of poverty — all of which, in turn, creates a demand for yet more aid. Africa, Ms Moyo notes, seems hopelessly trapped in this spiral, and she wants to see it break free. Over the past 30 years, she says, the most aid-dependent countries in Africa have experienced economic contraction averaging 0.2% a year.

America’s policy toward postwar Europe is often cited as the model for African assistance, but Ms. Moyo reminds us that the vaunted Marshall Plan was limited to five years and was focused on reconstructing societies ravaged by war. In Africa, she says, the aid spigot never stops flowing. “There is no incentive for long-term financial planning,” she observes, “no reason to seek alternatives to fund development, when all you have to do is sit back and bank the cheques.”

Moyo is not alone in asking tough questions about good intentions gone awry. Rwanda’s president, Paul Kagame, has said of the $300 billion in aid given to Africa since the 1970s that “there is little to show for it in terms of economic growth and human development.” Senegal’s president, Abdoulaye Wade, has expressed similar sentiments.

Much of “Dead Aid” outlines an agenda for Africa’s economic development, such as expanding its trade and developing its banking sector — that is, creating a reliable system of credit that will allow individuals to earn interest on their savings and businesses to receive the loans they need to grow. While criticizing outsiders for their misguided ideas, she does not ignore Africa’s self-inflicted wounds. She notes there are steep obstacles to doing business there. According to the World Bank, nine of the world’s 10 most hostile business environments are in Africa.


“The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good” by William Easterly.

Easterly, a New York University economics professor who previously worked at the World Bank, divides the international development aid community into two groups: there are planners, who have grandiose large-scale utiopian plans for ending poverty, and there are searchers, who favor piecemeal interventions by finding things that actually work. Planners have good intentions but don’t motivate anyone to carry out their plan or hold anyone responsible for getting results. Searchers, on the other hand, find out first what the poor need then try to meet the demand.

Easterly has special contempt for aging rock stars such as Bono and Bob Geldof for soliciting money for large anti-poverty programs, but he gets apoplectic when he talks about Jeffrey Sachs’ book “The End of Poverty” – which he gave a scathing review in the Washington Post. Easterly does not believe that ending poverty is a valid policy goal. He says its like mandating that a cow should win the Kentucky Derby. Anger brings out some strange analogies. Sachs represents everything that Easterly thinks is wrong with the development community.

To drive home the point, Easterly argues how “the West spent $2.3 trillion in foreign aid over the last five decades and still had not managed to get 12 cent medicines to children to prevent half of all malaria deaths. The West spent $2.3 trillion and still had not managed to get $4 bed nets to poor families. The West spent $2.3 trillion and still had not managed to get $3 to each new mother to prevent five million child deaths.”

Easterly likes repeating the $2.3 trillion to emphasize how the West keeps spending and getting very meager results. Let me add one of my own: the US has incurred $2.3 trillion worth of new debt in the last five years with very little to show for it. The question is: does this spending do good or ill? What would Africa and the rest of the developing world look like if this money had not been spent? Would they be prosperous and democratic? Easterly fails to explain why aid has done “so much ill.” It is pretty obvious that many of the grand development schemes of the planners have failed, but it is not obvious that these societies would have been better off without aid.

The critique of large-scale planning made in the West may appeal, at first glance, to free traders who call for market solutions to solve the problems associated with poverty. However, he is also critical of those who attempt to “plan” markets. (Think of Sachs’ “big bang” market schemes for Eastern Europe after the fall of the Berlin Wall.) His years at the World Bank have made him very cynical about imposing “Washington Consensus” on other countries.

The approach favored by Easterly is to examine each culture individually and offer aid specific to local conditions. Sounds good. He offers many case studies that are very compelling, yet it is difficult to draw many conclusions because they are specific to each situation. Many of his case studies showed that aid administered actually helped rather than hindered development. One of the conclusions drawn, however, is that healthcare and primary education are two areas where aid has been successful.

In the end, Easterly and Sachs have more in common than Easterly would like to acknowledge. They both believe that it is important for the West to give aid to the rest, and that it is important that those providing aid get results and be held accountable. Where they differ is that Easterly adamantly believes that the large scale planning administered by organizations such as the UN and the World Bank will never reach the people that need it. He might be right.