June 25, 2022

How International Aid Failed Africa and Made Poverty Worse

Data show that wages have declined and poverty has surged in Africa since the 1970s, despite international efforts.

The Zambian economist, Dambisa Moyo, wrote a book—Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa—to denounce how the hypocrisy of political correctness did nothing but continue to impoverish the African continent through international aid.

Moyo has a PhD in economics from Oxford University, a Masters in Public Administration from Harvard University, and has worked as a consultant for the World Bank for a couple of years and at Goldman Sachs where she was head of economic and strategic research for sub-Saharan Africa.

The main argument of the African economist’s text is that the aid destined for Africa, instead of promoting economic growth, condemned the continent to poverty and continued dependence on international aid for survival.

Moyo points out that while billions of dollars are received annually by Africa, its nations remain mired in misery. Economic growth is extremely slow, and African nations are becoming increasingly indebted, with their economies ruined by inflation. This increases governmental instability, civil unrest, and of course, paralyzes social development.

The economist points out that aid is a complete disaster in political, economic, and humanitarian terms. She supports her assertions with data: “Over the past 60 years, billions of dollars in development aid have been transferred from rich countries to Africa. However, per capita income today is lower than it was in the 1970s, and more than 50% of the population (350 million people) live on less than a dollar a day, a figure that has almost doubled in two decades.”

She says that the victimhood of some African groups is the biggest obstacle to the continent’s development “… look at it this way. China has a population of 1.3 billion people and only 300 million live like us (with a high standard of quality of life). There are 1 billion Chinese living below that standard. Do you know anyone who is worried about China? No one.”

The background behind all this is that the aid money in Africa is used for famine relief, medical emergencies, drinking water supplies, and other basic needs, which of course is extremely important, but they only attack the symptoms and not the cause. If the money sent is not put into production, people will continue to barely survive with external aid, but will never be able to overcome poverty; furthermore, part of this money sometimes serves to perpetuate and sustain totalitarian regimes in power, because to get the resources to the population it is necessary to go through them, and a large part of the resources is lost due to corruption.

What a continent like Africa needs is investment in economic fields that generate structures of sustained development. This requires education, of course,, but also the promotion of an entrepreneurial culture, to produce employment and raise the continent’s production, which is the only thing that can allow Africans to have their own homes and eat their own food in a couple of decades, without having to depend on the arrival of money from developed countries.

It has been denounced that even international aid has weakened the few local producers that exist in Africa, since they send subsidized products (even free of charge) to the region, which compete directly with the products manufactured there.

In 1990 there were 280 million people living in extreme poverty in Africa; today that figure exceeds 430 million. Countries like South Sudan and Niger have extreme poverty rates above 90%, so it is estimated that by 2030 approximately 9 out of 10 extremely poor people will live in sub-Saharan Africa.

In contrast to the situation in Africa, according to the World Bank, there were 1.9 billion people in extreme poverty worldwide in 1990, and today, that figure has decreased to 736 million people; in other words, while more than 1.1 billion people worldwide have emerged from extreme poverty in the last 30 years, the opposite trend has occurred in Africa, where the figure has increased by at least 150 million people.

RELATED: How One Entrepreneur Is Waging War on Poverty in Africa

In recent years, initiatives have been taken in Africa to boost the economy, tourism being one of them. In fact, in the last two decades this industry had an annual growth of 9%, which is positive, but much more is needed. A continent like Africa needs a diversification of its economy, it needs more transparent and less authoritarian political systems, and at the same time, it requires constant training to the members of its societies to inaugurate sustainable economic projects.

The African reality can be transferred to all the nations of the world that go through similar processes of backwardness and poverty, some due to conjunctural and historical particularities, but a great majority due to ideological and economic vices such as socialism, which has led to the bankruptcy of different nations in Eastern Europe and Latin America.

The truth is that no nation can get ahead or make the economy grow with eternal subsidies, without entrepreneurship and without private companies. Not all aid is good, there is aid that kills, as Dambisa Moyo shows.

Without economic structures, without education and training, without employment, handouts will simply postpone the bad times of societies condemned to dependence on external gifts. And without a doubt the African people are capable of much more.

This El American article was reprinted with permission.

This article, How International Aid Failed Africa and Made Poverty Worse, was originally published by the Foundation for Economic Education and appears here with permission.  Please support their mission.