FortySouth

Dambisa Moyo (bio) is an economist from Zambia who argues in her new book, Dead Aid, that African nations need to stop receiving aid from their developmental partners to spur economic growth and entrepreneurship.

This critique of foreign aid to African nations is neither new nor without merit – more recently Andrew Mwenda at TED Africa spoke audaciously against more aid as being the panacea to Africa’s economic problems.

Is all aid and charity “bad”? I don’t think so because there are many humanitarian programs that can be effectively run on a larger scale by NGO’s with external funding than most Governments have the capacity or resources for – resettlement, rebuilding, food supply. Indeed as she notes in her diary on the Financial Times of a recent visit to Rwanda:

Following Kagame’s lead, Rwanda is already obsessed with turning the “no-aid” development theory into a reality. This is not to say that the country does not use aid, nor that all of the country’s aid programmes have been wholly ineffective (some argue that the country has managed to eradicate malaria using aid programmes).

If not more aid, then what can be done to encourage economic growth and wealth creation (via NYT)?

If people want to help out, what do you think they should do with their money if not make donations?
Microfinance. Give people jobs.

But what if you just want to donate, say, $25?
Go to the Internet and type in Kiva.org, where you can make a loan to an African entrepreneur.

I think that in the absence of political will, the effort to wean African nations from their gross dependence on foreign aid to govern is significantly hampered. Foreign aid comprises perhaps 70%, if not more, of many African nation’s annual budgets. It goes without saying that such over dependence of foreign assistance stifles local entrepreneurship.

Admittedly, this is not a problem that will go away overnight – going from 70% dependency to, say 40%, will probably take years. What is important is that the process begins and that movement is in that direction.

The end of the fiscal year is nigh and the Budget season is upon us. The composition of this years budgets will indeed be indicative of the trend for the next couple of years.