Quote: “Given what we know about foreign aid, and how it encourages and sustains corruption, why do Western governments insist on parceling out aid to poor countries?” (54)
Comment: Moyo asks this question at the beginning of the “Why give aid if it leads to corruption?” section of chapter four. Throughout the entire foreign aid unit I had been wondering what the drive to give aid to Africa was if research clearly showed it to be a failure. Moyo explained previously how giving aid to a corrupt government essentially ensures that the government will pocket the money and the communities will receive little to none of the benefits. She claims that the two leading reasons that NGO’s, the IMF, World Bank, government agencies, and smaller charities all continue to supply aid to corrupt governments are that their livelihoods depend on it or they misunderstand the corruption. For example, the organizations that donate the aid are often more interested in the amount shipped overseas, rather than the effectiveness of the aid after it is delivered. If the money is not sent someplace, the risk of their job being terminated increases. In other words, “Donors have the added fear that were they not to pump money in, poor countries would not be able to pay back what they already owe, and this would affect the donors’ financing themselves. This circular logic is exactly what keeps the aid merry-go-round humming.” The result is actually more detrimental to the African people living under corrupt rule, than it would be without aid at all. In fact, it is arguable that the donors are in greater need of this aid distribution than the recipients in Africa are. Moyo also gives examples in history where the United States has halted the flow of aid to countries it thought were being ruled by corrupt governments, and provided aid to countries it thought were not. However, in both cases, it was actually the opposite and once more, the ignorance of the donors guaranteed that conditions in both Malawi and Tanzania to worsen.
Question: How many people within an aid-giving organization really know what is occurring overseas/Is it just the “people at the top”? Do they know the result their work can bring to African people and nations?
1. “With mounting pressure for greater transparency in the oil, gas and mining sectors, from organizations like the Extractive Industries Transparency Initiative (EITI), the days of blatant looting and corruption in these sectors are surely numbered. But donors continue to sit in comfortable air-conditioned rooms in the West and pen the tragic fate of countries they ostensibly seek to help.” (Page 49)
I found this interesting because of the direct correlation to the concept of geographical location of a specific country as well as amount of natural resources available and the direct correlation between the economic standing. Western countries invest in countries in Africa due to two main factors: natural resource investment and foreign aid. The biggest difference between natural resource endowment and the money given through foreign aid is the fact that aid is “an active and deliberate policy aimed at development.” With initiatives being taken in order to make the natural resource business more transparent there is the potential for the money to be distributed more fairly throughout the ranks. For example, the oil money that Nigeria makes from companies such as Shell is spread only to the top officials leaving the workers and other Nigerian’s affected are put in a very tough situation. The looting and corruption is a by-product of economic depression and vulnerability. The locals are forced to live in a situation where there is no other option to maintain the livelihood’s other than taking away from major companies which in turn decreases the effectiveness of their national economy. The issue is two-fold; if you were to change one factor you must account for the other factor that will change as a result.
2. “Aid supports rent-seeking – that is, the use of governmental authority to take and make money without trade or production of wealth.” (Page 52)
This quote reminded me of two types of people who come into wealth: 1) those who work hard for a long time in order to build up a healthy collection of money and 2) those who are born into a substantial amount of money. Speaking only on the basis of generalizations the second grouping of people do not have as much drive or push to make things better or make a significant impact when it does not benefit them because they have never had to start from an uncomfortable situation. The first grouping of people however have had to start with nothing relatively speaking and have had to learn how to make the changes necessary to build up a healthy and credible financial situation. This analogy could easily be translated to the economic situation relating to Africa. As of right now it appears that the majority of African situations fall into the second grouping except they do not have a steady financial situation – they have just been “raised” to believe that if they just wait long enough the West will feel morally obligated to provide foreign aid.
Questions:
“If it is so obvious, as it must be to everyone involved, that aid is vulnerable to such blatant manipulation, why is it that donors continue to donate?” (Page 53)
Quote: With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments - providing them with freely usale cash." (Page 49)
Comment: This is a good point. Aid agency never know when one government will decide to take the generous money from the aid and use it for personally purposes. This causes aid agency to be more cautious with who they give their aid money to because of the corrupted governments. However they won't give money to countries who need it because they are afraid of getting ripped off. "This is the vicious cycle of aid." Its never a fixed situation because aid agency will never know what certain people will do.
Questions: How can aid agency figure out who will abuse the money and who won't?
Quote: “Donors have the added fear that were they not to pump money in, poor countries would not be able to pay back what they already owe, and this would affect the donors’ financing themselves.”
Comment: Throughout this aid unit we have learned that foreign aid has saved various lives, but for the amount of money has it truly saved as many lives as it could? It is hard to predict whether foreign aid has actually had a major impact on the countries because the governments are corrupt and therefore the money gets used in areas unknown. It would seem that without some type of regulatory system the donors are ultimately throwing away valuable dollars that could be helping the lives of many Africans. If the foreign aid continues to rise, and the donors are loosing money, what happens when it is taken away? If the African countries become depend on foreign aid how will they ever become independent? How will the donors be able to support themselves especially when the donors are doing their very best to help others? In order to prevent this from happening donors should focus their money in building programs that will eventually sustain themselves. This will guarantee both a success for the African countries and the donors.
Question: Is it worth the donors to put themselves at a financial risk if their money isn’t helping?
Quote: If it is so obvious, as it must be to everyone involved, that aid is vulnerable to such blatant manipulation, why is it that donors continue to donate? (Pg. 53) Comment: I think this is a very interesting point. If people know, or do not know (which may be even more of a problem) that the money they are throwing at African countries is a major cause of corruption, why are they still doing it? It has been proved that aid tends to be given to some of the most corrupt countries in Africa. Why might this be? Could it just be out of ignorance, thinking that because the money given is aid, it will not fall into the hands of corrupt politicians? However, aid almost always falls into the hands of government officials in countries that have been ridden with corruption. Corruption feeds off of aid like a leech. It sucks everything out, and then asks for more. By giving countries with major corruption problems more and more aid, the gap between the rich and poor is being widened; usually the opposite of what the aid was intended for. This may be the problem, the intentions of donors. All of them probably mean well, and want to help out, and do their bit. Or maybe have some left over colonial guilt. However, they probably do not know that the aid that they are giving to such countries as Guinea and Cameroon is going straight to the government that has already had its fair share of the nation’s treasury. This is what Moyo is trying to accomplish with her book: education. That is the problem when it comes to aid, people do not know where their money is going, and whom it will actually end up helping. As Moyo states in her book, aid can actually act as the perpetrator of corruption, and other problems that are rife in Africa. Hopefully with the spread of this book, people will begin to realize what the implications of their good intentions could be. Question: Why is it that aid tends to be given to the most corrupt countries in Africa? What is the reasoning behind this? Could it be something more than just the ignorance of donors?
Quote: “To make matters worse, a top Malawian official at the state-run grain marketing board who was to be a key witness in the two corruption cases ‘mysteriously disappeared’. Yet even with these allegations of corruption the US government did not see fit to remove Malawi from the qualifying Millennium Challenge Account list” (Moyo).
Question: Why is aid continually poured into these countries if it has been proven time and again to cause limitless trouble for the recipient countries?
Comment: Moyo comments that the influx of foreign dollars is detrimental to the economic success of weaker countries, because it overwhelms the local currency with the powerful foreign dollars. Thus, the export prices go up, and business connections begin to dissolve. There is also no “positive corruption,” since the foreign dollars can’t be used within the afflicted country. Therefore, the money goes out to foreign banks and trust funds, and the local economy continues to suffer.
What’s more, there is no real standard of evaluation in terms of corruption, so one foreign investor may see a largely corrupt nation, while another might see a perfectly legitimate country which should receive aid. This results in some foreign investor, one way or another, being thoroughly unhappy with the decision to inject aid to a struggling economy, especially the ever changing politico-economic situation of African nations.
Quote: “Others estimate that of the US $525 billion that the World Bank has lent to developing countries since 1946, at least 25% (US $120 billion) has been misused. Vast sums of aid not only foster corruption- they breed it.
Comment: I definitely agree with this quote. The fact that over $120 Billion of World Bank money has been misused is ridiculous. Why even bother giving money to these countries if corrupt leaders are just going to misuse it. I propose a solution to this, either A stop giving aid altogether or B carefully screen countries/ their leaders before they are given aid. Closely screening leaders and their countries before giving them aid would save so much more money in the long run. If were able to take that US $120 billion that was wasted on corrupt leaders/ countries and use it to give to other countries that were more deserving, then it would be win win for everyone. It does no good to give Aid to a country if their leader is not going to use it to help better the situation of its people.
Question: How can you tell whether aid money is being used correctly?
Quote: “More generally, the academic Larry Diamond observes that development agencies continue to give aid to the most corrupt and unaccountable African states, with known authoritarian and corrupt governments. His list includes Cameroon, Angola, Eritrea, Guinea and Mauritania, each receiving aid equaling or even exceeding the African average of US$20 per capita. There is no end to it.”
Comment: Directly After reading the quote above, I thought to myself; “well since these countries are the poorest, most corrupt, and most in need of aid, then clearly the most money would be dumped in them for sake of moral reasons.” This means that aid agencies would have an incentive to donate because they are afraid that if ridiculous amounts of money aren’t given, then these countries will continue to decline. In fact, it’s just the opposite… mentioned again and again throughout the book- “Aid is killing Africa!”
I then went on to read that on top of the moral aspect, there are economic, political and other practical reasons explaining why aid is given, even if it leads to even more corruption (as illustrated by the countries mentioned). Moyo first describes the pressure to lend, in which she says that, “The World Bank employs 10,000 people, the IMF over 2,500; add another 5,000 for the UN agencies; add that to the employees of at least 25,000 registered NGO’s, private charities and the army of government aid agencies: taken together around 500,000 people, the population of Swaziland,” That was a hell of a statistic if you ask me. She definitely put it into perspective that all of these agencies and employees dedicate their life for the purpose of aiding- their lives depend on aid. In fact, they are in the business of aid “seven days a week, fifty-two weeks a year, and decade after decade.”
Economically speaking, “successful lending is measured almost entirely by the size of the donor’s lending portfolio, and not by how much of the aid is actually used for its intended purpose.” Another very strong quote by Moyo describes how “money” drives the planet. It’s not what you do with the cash, but it’s how big the pockets are. Honestly, it kills me to know that the 500,000 employees of the Aid agencies compete for who has the largest loan, not who saved the most lives or balanced the most corrupt government. Much more can be done with less money, and as many have mentioned in class-finite micro lending is essential for independence of African countries.
On the political spectrum, Moyo mentions that “donors are apparently unable to agree on which countries are corrupt and which are not.” From the eyes of the west, many believe that Africa is just one large pit of corruption and that the way to save it is just to dump loads of money into it. To be honest, before really becoming interested in Africa, or taking PCA, I had a similar view. Thankfully, once I really took the time to look deep into the issue, I realized that Africa has hope, and it’s definitely the most diverse place on the planet. It has the best and worst of everything and it's somewhere that does not need heaps of money, it needs lot of time with the right leaders and the right decisions. Africa is rising.
Question: We know there are good intentions, but is it possible to convince Aid agencies that their lending has only caused harm?
Quote: "With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid."
Comment: Corrupt governments need to learn how to fix there problems on there own. When aid is given to corrupt governments they do not use the money to fix the problem, the leaders/officials use it towards luxurious items. Its like when you give a child lots of sugar and tell him to be calm, it doesn't work. Another problem with these governments is that they think aid is permanent: "Aid flows are viewed (rightly so) as permanent income." They have the mindset that they will always have this constant flow of money. There is no way of solving the problem, it is just a continuous cycle. I think that aid is wrong when it is provided in the wrong way. I believe that the countries will prosper when handed materials to use instead of money to abuse. One solution is to have an affective monitoring system that makes sure the aid that is being brought to the countries is actually helping, except there are so many problems that are prevalent besides aid that makes it a harder problem to solve. Africa is going to be running around in circles for decades unless they change something.
Question: Would Africa fall if there was no aid at all?
Quote: "For most developmental organizations, successful lending is measured almost entirely by the size of the donor's lending portfolio, and not by how much of the aid is actually used for its intended purpose. As a consequence, the incentives built into the development organizations perpetuate the cycle of lending to even the most corrupt countries."
Comment: Aid donors fail to understand the consequences of aid; they see only their benefits. Giving aid has changed from an altruistic act to an act of selfishness and ignorance. Most African countries receiving aid are not benefiting from the influx of foreign monies, but instead are suffering from the corruption, increased inflation, and weakened economy that the aid brings. Meanwhile, the donors believe they have done something good for the world: they think that they have saved lives, built economies, and strengthened nations. Either the donors do not see what they are doing, or they do see but also know that they themselves rely on aid. This world now sees an entire industry devoted to the giving of aid, and this is an industry that provides support for some 500,000 people (and yet these people are not the people that donors claim to want help). Many donors believe that the only way to receive payment for loans they have previously given is to continue to give aid, which of course only perpetuates the cycle. If the world's understanding of the consequences does not improve drastically, aid will never work, and Africa will only suffer more.
Question: Does altruism exist in today's world? Can any beneficial act be truly altruistic?
Quote: “For most developmental organizations, successful lending is measured almost entirely by the size of the donor’s lending portfolio, and not by how much of the aid is actually used for its intended purpose” (54).
Comment: In this section, Moyo explains the thinking process of the actual donor organizations operating in Africa and their motivations for continuing the tradition of irresponsibly giving ineffective aid packages to corrupt African nations. As stated in the quote, many aid organizations and lenders operate under a set of outside rules that, unfortunately, come to dictate how much money they will receive for future projects or determine the reputability of their organizations. Large international monetary institutions such as the World Bank and IMF were founded on the principle that they would lend and be active in encouraging growth throughout the world. Unfortunately, many people believe that in order for these organizations to accomplish this, they must lend, borrow, and give constantly. If they do not do this, their international roles will be questioned and criticized by people not wary of the situation of growth and development in Africa. Thus it seems that these international monetary organizations simply show what people in the developed world want to see. However, for Africa, this is the source of many problems. Smaller NGOs and private charities also are under pressure to lend, mainly because undereducated donors do not realize the unique situation regarding aid in Africa. Because donors for these organizations often believe that successful aid is measured in the amount of money given to poorer countries, they will balk and cut off funding if aid organizations cut off funding or have leftover money which they were not willing to give to corrupt governments. The misinformation of many donors to these developmental organizations is also the cause for many problems regarding aid in Africa. All this comes to continue the cycle of corruption and lack of growth facing many African nations today. If more people in the developed world responsible for a large portion of funding and influence in developmental organizations were better educated of the special aid situation in Africa today, we might actually be able to transition into a better aid model along the lines of Moyo’s proposed limited lending schedules. However, until donor organizations can operate without fear of a widespread backlash against their operations, they will not realistically be able to bring about any significant change in the African aid game.
Question: What are some other ways besides education that could be used to change public opinion and help donor organizations impact African nations in a more positive way?
Quote: With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments - providing them with freely usable cash.
Comment: This quote reminds me too much of Nigeria. Corruption hurts Nigerian Society by neutralizing or in Nigerian terms “settling” government officials. Whether it be bribery or money mismanagement, capital seems to disappear in Nigeria. A quote from Untapped states that “an estimated $400 billion of the country's oil revenue has been stolen or misspent since the country's independence in 1960.” Aid can only fuel the corruption fire in nations like Nigeria, especially if it is unregulated. Dead Aid has confirmed a lot of the observations I have made over the year regarding Africa as a continent. Of course, I never went as far as thinking that all aid needs to be removed from Africa. There just seems like there is a disconnect between the the foreign white man and the “African” and it is seems to be helping the white man alot more than the “African.”
Question: How would an organization go about making sure that it’s projects don’t become corrupted?
Quote: With Aids help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid.
Comment: This is something I fully believe in considering that the aid is not run the correct and proper way. Too often we throw money at a problem that just needs simple direction and monetary spark to get it started. Although it is an often used phrase I truly believe that the, “teach a man to fish and you’ll feed him for a lifetime,” philosophy is completely applicable regarding aid in Africa. Giving the people the means to invest without actually teaching them how to do so will not accomplish anything but create black holes in which money is poured in but never circulated around the community or used to help anything in the long term. I strongly believe in Aid which focuses on needing actual work being put in. This also individualizes the aid which eliminates the often deleterious actions of the higher ups who may take some of the aid money to pay off the mortgage for their second home rather than provide shelter for African children. Aid obviously needs some monetary component, but too much money and corruption is bound to happen. With less excess of cash and more training on financial literacy as well as some job training, we can create sustainable programs that help the actual people out, with little to no corruption in the process.
Question: considering the success of the Greenbelt movement, why have other humanitarian efforts in Africa not tried to take the same approach?
Quote: “Maybe it wouldn’t be so bad if African leaders, like some of their Asian counterparts, reinvested stolen money domestically, instead of squirreling it away in foreign bank accounts.” (56)
Comment: Moyo makes an interesting case in her discussion of corruption – rather than argue wholesale against any and all forms of corruption, she’s ok with certain types of corruption that she deems “positive”. In her argument, Moyo brings up the different “styles” of corruption practiced by government officials in various regions around the world. In her comparison of Asian officials with their African counterparts, she claims that the type of corruption most commonly found in Asia is not really corruption at all, but rather a different form of disseminating foreign aid money to the masses. While she makes a good case for this type of “positive” corruption to be promoted in Africa, I think she’s ignoring more pressing problems – in its growing, fragile state, Africa doesn’t have the time or money to spare to risk promoting this supposedly benevolent form of corruption. What Africa needs is for its leaders to crack down with an iron fist, imposing strict regulations on fairly (hopefully) elected government officials, and trying to stop corruption all together. When Africa is in a more stable place, perhaps then there will be an opportunity to explore “positive” corruption, but that time is many years away. While it would be great if Africa’s corrupt politicians read Moyo’s book and began investing their illicit cash in the local economy, that’s unlikely to happen – these corrupt officials simply need to be removed from office.
Question: What makes African & Asian officials have such diametrically opposed views of corruption? Is it a cultural thing? Will Africa’s leaders continue to let corruption run rampant, or will measures eventually be taken to ensure Africa’s stability and success?
Quote: With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments - providing them with freely usable cash.
Comment: It is an interesting observation to say that foreign aid is what props up corrupt regimes in Africa. It is true that these governments are not collecting a large amount of tax revenue, however they are not providing much for their people either. Large amounts of aid in the form of supply or cash has gone missing in the past even when donated to nations with "stable" governments. Perhaps the solutions is to donate more to organizations that are not affiliated with the government to end the cycle of corruption
Question: Would donating to different sources really help the situation?
“With respect to aid, poor economies face four main economic challenges: reduction of domestic savings and investment in favor of greater consumption; inflation; diminishing exports; and difficulty in absorbing such large cash influxes” (60)
In the quote above Moyo essentially summarizes the negative economic implications of aid. The first point Moyo addresses is how savings are reduced when aid is given. This is obvious because people will not save money when they know money will come in through aid. In essence, they become completely dependent on aid rather than the livelihood they create for themselves. Secondly, and perhaps most importantly, aid contributes to inflation. When there is an influx of money, money that wasn’t involved in the economy before, the currency becomes devalued. This has a negative impact on everyone as prices rise and daily expenses rise, making life even more difficult. The next point goes hand in hand with inflation: diminishing exports. Since inflation can rise to incredibly high rates businesses can find it difficult to compete on the global stage because they have to raise prices due to inflation in their home country. Also aid can put small businesses out of business by adding intense completion—these business can then not export anything. This last point is somewhat more abstract and has to do with inflation. When all of these economic implications of aid are combined it becomes clear that aid can actually stifle growth.
Can these negative implications be reversed? If they can will it require the help of outside forces?
What type of aid can avoid these negative factors.
Quote: “As if that was not bad enough, in order to combat the cycle of inflation, domestic policymakers raise interest rates. But, at a very basic level, higher interest rates mean less investment” (53)
Comment: Ms Moyo alludes here to the idea that international aid is not true investment. This idea that international aid is not equivalent in any way to capital investment is key to understanding Ms Moyo’s book, Dead Aid. Indeed, Ms Moyo notes that international aid drives inflation in the countries where it is administered in ways that typical capital investment does not. This inflation occurs because aid, as opposed to capital investment, is money that is artificially injected into the economy, where it may saturate the market rather than bolster it. If a market is saturated with aid money, significant inflation will almost certainly ensue, and monetary policy has to be adjusted. Monetary adjustments like raising interest rates via the central bank (i.e. administering government bonds and adjusting interbank interest rates) will likely be pursued by central bankers and “policymakers” (53), which, as Ms Moyo points out, can lead to decreased investment and decreased growth.
Question: Is there a way that international aid organizations can administer types of aid without foisting too much inflation on the countries they are trying to help?
Quote: “With aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid.”
Comment: The vicious cycle of aid is one that causes economic dependency, poverty, increased debt, and inflation. Although many may think that giving aid to people living in impoverished countries is a moral thing to do, the vicious cycle becomes stronger and stronger. With aid, countries become so dependent on the foreign aid that they have no incentive to try and build up their economy on their own. Inflation, debt, and corruption plague these impoverished countries when their biggest source of revenue is from foreign aid. Many still believe that the reason Africa is still not a continent full of developed countries can be traced all the way back to the colonization of these countries my European powers. Although these countries now have independence, foreign aid is a type a colonization from the developed world in that African countries have become very dependent on it. This vicious cycle of foreign aid and having power over African countries is hindering the growth of Africa as a continent and ultimately causing people to become more and more impoverished.
Question: Is stopping foreign aid from being sent to African countries the only way to stop this vicious cycle?
Question: When will the time come where African countries do not need to be monitored by developed nations or third part organizations to prevent corruption? How can an African nation ever prove that aid is working when corruption is running rampant in the said country’s government?
Quote: “But, at a very basic level, higher interest rates mean less investment (it becomes too costly to borrow to invest); less investment means fewer jobs; fewer jobs mean more poverty; and more poverty means more aid” (62).
Comment: It is understandable that less investment can bring up the job crisis, and job crisis causes poverty, but what is interesting is that Moyo says “They can either raise interest rates to combat inflation to the inevitable determent of the economy” (64). Moyo says that corrupt government officers go to buy cars or clothes or other places to spend money, because of there are not many cars or clothes or many luxury in the country, which leads to the increasing of the price, in term of combating inflation, the policy makers increase the interest, which is exact same suggestion Moyo makes later, I am quite confused in here. Also, Moyo talks about “Since they cannot put all the aid flows to good use (even if they wanted to), it is more likely than not that he aid monies will be consumed rather than invested (as before, thereby raising the risk of higher inflation)” (65), I think there are many places to invest money, that is why so many government officers size the opportunity to put those money into their own pocket. However, usually government will lower the interest to encourage people to consume their money, in other word, the spending will lead the manufactory produce more goods, and bring up the economy again. This idea might just works in richer country, but what I am confused about is that: does the spending of the corrupt officers encourage the goods production of their countries? So, more production means the owner needs more people, which creates more jobs, is it the way to create jobs?
Question: Yes, Aid-dependency is bad, but does the aid bring more jobs, more money into this continent? Is it the policies’ fault rather than the aids?
“Corruption is a way of life” “The point about corruption in Africa is not that it exists: the point is that aid is one of its greatest aides.”
With the majority of Africa’s governments steeped in corruption, aid is not helping. In fact, as Moyo points out, foreign aid is actually worsening the issue of corruption in Africa. Moyo references Uganda, where, in the 1990s, “corruption was thought to be so rampant that only 20 cents of every US$1 dollar of government spending on education reached the targeted local primary school.” The fact remains that when aid is added to this mix of corrupt officials and access to money, the access to money increases and the corruption increases. Moyo draws the conclusion that corruption breeds corruption. This is true in that once officials are corrupt, they inevitably get their other corrupt official friends to help them siphon money off or initiate more large-scale projects that will provide ample opportunities for corruption. Furthermore, even if foreign aid money is specifically ‘allocated’ for something—ie: education, nutrition—that money can very easily be ‘re-allocated’ by corrupt officials with itching hands. Despite all this, however, the fact remains that foreign powers continue to provide fodder for corruption, in the form of aid, to African countries whose officials then misappropriate the money, plunging their people further into poverty, to beget more aid.
If this is indeed a vicious cycle, as Moyo proves, how can we ever break out of it? Must we overthrow all the corrupt governments, or stop all foreign aid, or take some other radical approach?
Quotation: “With aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid.”
Comment: The word aid is what is subjective here. According to Moyo, the majority of aid given to Africa is terribly detrimental to the regions for a myriad of reasons, including lack of knowledge of the area and its people, the inconsistent nature of the giving and the patronizing attitudes of the majority of the donors. Not only that, but so much of the “aid” goes straight into the pockets of the corrupt leaders of these various regions that the citizens who are meant to be helped by this money never see a penny of it. From there, the nation has more problems, citizens suffer more, and people begin to give more aid thus continuing the vicious cycle.
Question: Who’s responsibility is it to fix this cycle of aid? Who has the ethical obligation to fix such a deep seeded issue?
Wow, excellent post. I'd like to draft like this too - taking time and real hard work to make a great article. This post has encouraged me to write some posts that I am going to write soon. pacific national funding
Please post your detailed QQC on the above pages here before class on Friday
Quote: “Given what we know about foreign aid, and how it encourages and sustains corruption, why do Western governments insist on parceling out aid to poor countries?” (54)
ReplyDeleteComment: Moyo asks this question at the beginning of the “Why give aid if it leads to corruption?” section of chapter four. Throughout the entire foreign aid unit I had been wondering what the drive to give aid to Africa was if research clearly showed it to be a failure. Moyo explained previously how giving aid to a corrupt government essentially ensures that the government will pocket the money and the communities will receive little to none of the benefits. She claims that the two leading reasons that NGO’s, the IMF, World Bank, government agencies, and smaller charities all continue to supply aid to corrupt governments are that their livelihoods depend on it or they misunderstand the corruption. For example, the organizations that donate the aid are often more interested in the amount shipped overseas, rather than the effectiveness of the aid after it is delivered. If the money is not sent someplace, the risk of their job being terminated increases. In other words, “Donors have the added fear that were they not to pump money in, poor countries would not be able to pay back what they already owe, and this would affect the donors’ financing themselves. This circular logic is exactly what keeps the aid merry-go-round humming.” The result is actually more detrimental to the African people living under corrupt rule, than it would be without aid at all. In fact, it is arguable that the donors are in greater need of this aid distribution than the recipients in Africa are. Moyo also gives examples in history where the United States has halted the flow of aid to countries it thought were being ruled by corrupt governments, and provided aid to countries it thought were not. However, in both cases, it was actually the opposite and once more, the ignorance of the donors guaranteed that conditions in both Malawi and Tanzania to worsen.
Question: How many people within an aid-giving organization really know what is occurring overseas/Is it just the “people at the top”? Do they know the result their work can bring to African people and nations?
1. “With mounting pressure for greater transparency in the oil, gas and mining sectors, from organizations like the Extractive Industries Transparency Initiative (EITI), the days of blatant looting and corruption in these sectors are surely numbered. But donors continue to sit in comfortable air-conditioned rooms in the West and pen the tragic fate of countries they ostensibly seek to help.” (Page 49)
ReplyDeleteI found this interesting because of the direct correlation to the concept of geographical location of a specific country as well as amount of natural resources available and the direct correlation between the economic standing. Western countries invest in countries in Africa due to two main factors: natural resource investment and foreign aid. The biggest difference between natural resource endowment and the money given through foreign aid is the fact that aid is “an active and deliberate policy aimed at development.” With initiatives being taken in order to make the natural resource business more transparent there is the potential for the money to be distributed more fairly throughout the ranks. For example, the oil money that Nigeria makes from companies such as Shell is spread only to the top officials leaving the workers and other Nigerian’s affected are put in a very tough situation. The looting and corruption is a by-product of economic depression and vulnerability. The locals are forced to live in a situation where there is no other option to maintain the livelihood’s other than taking away from major companies which in turn decreases the effectiveness of their national economy. The issue is two-fold; if you were to change one factor you must account for the other factor that will change as a result.
2. “Aid supports rent-seeking – that is, the use of governmental authority to take and make money without trade or production of wealth.” (Page 52)
This quote reminded me of two types of people who come into wealth: 1) those who work hard for a long time in order to build up a healthy collection of money and 2) those who are born into a substantial amount of money. Speaking only on the basis of generalizations the second grouping of people do not have as much drive or push to make things better or make a significant impact when it does not benefit them because they have never had to start from an uncomfortable situation. The first grouping of people however have had to start with nothing relatively speaking and have had to learn how to make the changes necessary to build up a healthy and credible financial situation. This analogy could easily be translated to the economic situation relating to Africa. As of right now it appears that the majority of African situations fall into the second grouping except they do not have a steady financial situation – they have just been “raised” to believe that if they just wait long enough the West will feel morally obligated to provide foreign aid.
Questions:
“If it is so obvious, as it must be to everyone involved, that aid is vulnerable to such blatant manipulation, why is it that donors continue to donate?” (Page 53)
Quote: With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments - providing them with freely usale cash." (Page 49)
ReplyDeleteComment: This is a good point. Aid agency never know when one government will decide to take the generous money from the aid and use it for personally purposes. This causes aid agency to be more cautious with who they give their aid money to because of the corrupted governments. However they won't give money to countries who need it because they are afraid of getting ripped off. "This is the vicious cycle of aid." Its never a fixed situation because aid agency will never know what certain people will do.
Questions: How can aid agency figure out who will abuse the money and who won't?
Quote: “Donors have the added fear that were they not to pump money in, poor countries would not be able to pay back what they already owe, and this would affect the donors’ financing themselves.”
ReplyDeleteComment: Throughout this aid unit we have learned that foreign aid has saved various lives, but for the amount of money has it truly saved as many lives as it could? It is hard to predict whether foreign aid has actually had a major impact on the countries because the governments are corrupt and therefore the money gets used in areas unknown. It would seem that without some type of regulatory system the donors are ultimately throwing away valuable dollars that could be helping the lives of many Africans. If the foreign aid continues to rise, and the donors are loosing money, what happens when it is taken away? If the African countries become depend on foreign aid how will they ever become independent? How will the donors be able to support themselves especially when the donors are doing their very best to help others? In order to prevent this from happening donors should focus their money in building programs that will eventually sustain themselves. This will guarantee both a success for the African countries and the donors.
Question: Is it worth the donors to put themselves at a financial risk if their money isn’t helping?
Quote: If it is so obvious, as it must be to everyone involved, that aid is vulnerable to such blatant manipulation, why is it that donors continue to donate? (Pg. 53)
ReplyDeleteComment: I think this is a very interesting point. If people know, or do not know (which may be even more of a problem) that the money they are throwing at African countries is a major cause of corruption, why are they still doing it? It has been proved that aid tends to be given to some of the most corrupt countries in Africa. Why might this be? Could it just be out of ignorance, thinking that because the money given is aid, it will not fall into the hands of corrupt politicians? However, aid almost always falls into the hands of government officials in countries that have been ridden with corruption. Corruption feeds off of aid like a leech. It sucks everything out, and then asks for more. By giving countries with major corruption problems more and more aid, the gap between the rich and poor is being widened; usually the opposite of what the aid was intended for. This may be the problem, the intentions of donors. All of them probably mean well, and want to help out, and do their bit. Or maybe have some left over colonial guilt. However, they probably do not know that the aid that they are giving to such countries as Guinea and Cameroon is going straight to the government that has already had its fair share of the nation’s treasury. This is what Moyo is trying to accomplish with her book: education. That is the problem when it comes to aid, people do not know where their money is going, and whom it will actually end up helping. As Moyo states in her book, aid can actually act as the perpetrator of corruption, and other problems that are rife in Africa. Hopefully with the spread of this book, people will begin to realize what the implications of their good intentions could be.
Question: Why is it that aid tends to be given to the most corrupt countries in Africa? What is the reasoning behind this? Could it be something more than just the ignorance of donors?
Quote: “To make matters worse, a top Malawian official at the state-run grain marketing board who was to be a key witness in the two corruption cases ‘mysteriously disappeared’. Yet even with these allegations of corruption the US government did not see fit to remove Malawi from the qualifying Millennium Challenge Account list” (Moyo).
ReplyDeleteQuestion: Why is aid continually poured into these countries if it has been proven time and again to cause limitless trouble for the recipient countries?
Comment: Moyo comments that the influx of foreign dollars is detrimental to the economic success of weaker countries, because it overwhelms the local currency with the powerful foreign dollars. Thus, the export prices go up, and business connections begin to dissolve. There is also no “positive corruption,” since the foreign dollars can’t be used within the afflicted country. Therefore, the money goes out to foreign banks and trust funds, and the local economy continues to suffer.
What’s more, there is no real standard of evaluation in terms of corruption, so one foreign investor may see a largely corrupt nation, while another might see a perfectly legitimate country which should receive aid. This results in some foreign investor, one way or another, being thoroughly unhappy with the decision to inject aid to a struggling economy, especially the ever changing politico-economic situation of African nations.
Quote: “Others estimate that of the US $525 billion that the World Bank has lent to developing countries since 1946, at least 25% (US $120 billion) has been misused. Vast sums of aid not only foster corruption- they breed it.
ReplyDeleteComment:
I definitely agree with this quote. The fact that over $120 Billion of World Bank money has been misused is ridiculous. Why even bother giving money to these countries if corrupt leaders are just going to misuse it. I propose a solution to this, either A stop giving aid altogether or B carefully screen countries/ their leaders before they are given aid. Closely screening leaders and their countries before giving them aid would save so much more money in the long run. If were able to take that US $120 billion that was wasted on corrupt leaders/ countries and use it to give to other countries that were more deserving, then it would be win win for everyone. It does no good to give Aid to a country if their leader is not going to use it to help better the situation of its people.
Question: How can you tell whether aid money is being used correctly?
QQC:
ReplyDeleteQuote: “More generally, the academic Larry Diamond observes that development agencies continue to give aid to the most corrupt and unaccountable African states, with known authoritarian and corrupt governments. His list includes Cameroon, Angola, Eritrea, Guinea and Mauritania, each receiving aid equaling or even exceeding the African average of US$20 per capita. There is no end to it.”
Comment: Directly After reading the quote above, I thought to myself; “well since these countries are the poorest, most corrupt, and most in need of aid, then clearly the most money would be dumped in them for sake of moral reasons.” This means that aid agencies would have an incentive to donate because they are afraid that if ridiculous amounts of money aren’t given, then these countries will continue to decline. In fact, it’s just the opposite… mentioned again and again throughout the book- “Aid is killing Africa!”
I then went on to read that on top of the moral aspect, there are economic, political and other practical reasons explaining why aid is given, even if it leads to even more corruption (as illustrated by the countries mentioned). Moyo first describes the pressure to lend, in which she says that, “The World Bank employs 10,000 people, the IMF over 2,500; add another 5,000 for the UN agencies; add that to the employees of at least 25,000 registered NGO’s, private charities and the army of government aid agencies: taken together around 500,000 people, the population of Swaziland,” That was a hell of a statistic if you ask me. She definitely put it into perspective that all of these agencies and employees dedicate their life for the purpose of aiding- their lives depend on aid. In fact, they are in the business of aid “seven days a week, fifty-two weeks a year, and decade after decade.”
Economically speaking, “successful lending is measured almost entirely by the size of the donor’s lending portfolio, and not by how much of the aid is actually used for its intended purpose.” Another very strong quote by Moyo describes how “money” drives the planet. It’s not what you do with the cash, but it’s how big the pockets are. Honestly, it kills me to know that the 500,000 employees of the Aid agencies compete for who has the largest loan, not who saved the most lives or balanced the most corrupt government. Much more can be done with less money, and as many have mentioned in class-finite micro lending is essential for independence of African countries.
On the political spectrum, Moyo mentions that “donors are apparently unable to agree on which countries are corrupt and which are not.” From the eyes of the west, many believe that Africa is just one large pit of corruption and that the way to save it is just to dump loads of money into it. To be honest, before really becoming interested in Africa, or taking PCA, I had a similar view. Thankfully, once I really took the time to look deep into the issue, I realized that Africa has hope, and it’s definitely the most diverse place on the planet. It has the best and worst of everything and it's somewhere that does not need heaps of money, it needs lot of time with the right leaders and the right decisions. Africa is rising.
Question: We know there are good intentions, but is it possible to convince Aid agencies that their lending has only caused harm?
Quote: "With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid."
ReplyDeleteComment: Corrupt governments need to learn how to fix there problems on there own. When aid is given to corrupt governments they do not use the money to fix the problem, the leaders/officials use it towards luxurious items. Its like when you give a child lots of sugar and tell him to be calm, it doesn't work. Another problem with these governments is that they think aid is permanent: "Aid flows are viewed (rightly so) as permanent income." They have the mindset that they will always have this constant flow of money. There is no way of solving the problem, it is just a continuous cycle. I think that aid is wrong when it is provided in the wrong way. I believe that the countries will prosper when handed materials to use instead of money to abuse. One solution is to have an affective monitoring system that makes sure the aid that is being brought to the countries is actually helping, except there are so many problems that are prevalent besides aid that makes it a harder problem to solve. Africa is going to be running around in circles for decades unless they change something.
Question: Would Africa fall if there was no aid at all?
Quote: "For most developmental organizations, successful lending is measured almost entirely by the size of the donor's lending portfolio, and not by how much of the aid is actually used for its intended purpose. As a consequence, the incentives built into the development organizations perpetuate the cycle of lending to even the most corrupt countries."
ReplyDeleteComment: Aid donors fail to understand the consequences of aid; they see only their benefits. Giving aid has changed from an altruistic act to an act of selfishness and ignorance. Most African countries receiving aid are not benefiting from the influx of foreign monies, but instead are suffering from the corruption, increased inflation, and weakened economy that the aid brings. Meanwhile, the donors believe they have done something good for the world: they think that they have saved lives, built economies, and strengthened nations. Either the donors do not see what they are doing, or they do see but also know that they themselves rely on aid. This world now sees an entire industry devoted to the giving of aid, and this is an industry that provides support for some 500,000 people (and yet these people are not the people that donors claim to want help). Many donors believe that the only way to receive payment for loans they have previously given is to continue to give aid, which of course only perpetuates the cycle.
If the world's understanding of the consequences does not improve drastically, aid will never work, and Africa will only suffer more.
Question: Does altruism exist in today's world? Can any beneficial act be truly altruistic?
Quote:
ReplyDelete“For most developmental organizations, successful lending is measured almost entirely by the size of the donor’s lending portfolio, and not by how much of the aid is actually used for its intended purpose” (54).
Comment:
In this section, Moyo explains the thinking process of the actual donor organizations operating in Africa and their motivations for continuing the tradition of irresponsibly giving ineffective aid packages to corrupt African nations. As stated in the quote, many aid organizations and lenders operate under a set of outside rules that, unfortunately, come to dictate how much money they will receive for future projects or determine the reputability of their organizations.
Large international monetary institutions such as the World Bank and IMF were founded on the principle that they would lend and be active in encouraging growth throughout the world. Unfortunately, many people believe that in order for these organizations to accomplish this, they must lend, borrow, and give constantly. If they do not do this, their international roles will be questioned and criticized by people not wary of the situation of growth and development in Africa. Thus it seems that these international monetary organizations simply show what people in the developed world want to see. However, for Africa, this is the source of many problems.
Smaller NGOs and private charities also are under pressure to lend, mainly because undereducated donors do not realize the unique situation regarding aid in Africa. Because donors for these organizations often believe that successful aid is measured in the amount of money given to poorer countries, they will balk and cut off funding if aid organizations cut off funding or have leftover money which they were not willing to give to corrupt governments. The misinformation of many donors to these developmental organizations is also the cause for many problems regarding aid in Africa.
All this comes to continue the cycle of corruption and lack of growth facing many African nations today. If more people in the developed world responsible for a large portion of funding and influence in developmental organizations were better educated of the special aid situation in Africa today, we might actually be able to transition into a better aid model along the lines of Moyo’s proposed limited lending schedules. However, until donor organizations can operate without fear of a widespread backlash against their operations, they will not realistically be able to bring about any significant change in the African aid game.
Question:
What are some other ways besides education that could be used to change public opinion and help donor organizations impact African nations in a more positive way?
Quote: With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments - providing them with freely usable cash.
ReplyDeleteComment: This quote reminds me too much of Nigeria. Corruption hurts Nigerian Society by neutralizing or in Nigerian terms “settling” government officials. Whether it be bribery or money mismanagement, capital seems to disappear in Nigeria. A quote from Untapped states that “an estimated $400 billion of the country's oil revenue has been stolen or misspent since the country's independence in 1960.” Aid can only fuel the corruption fire in nations like Nigeria, especially if it is unregulated. Dead Aid has confirmed a lot of the observations I have made over the year regarding Africa as a continent. Of course, I never went as far as thinking that all aid needs to be removed from Africa. There just seems like there is a disconnect between the the foreign white man and the “African” and it is seems to be helping the white man alot more than the “African.”
Question: How would an organization go about making sure that it’s projects don’t become corrupted?
Quote: With Aids help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid.
ReplyDeleteComment: This is something I fully believe in considering that the aid is not run the correct and proper way. Too often we throw money at a problem that just needs simple direction and monetary spark to get it started. Although it is an often used phrase I truly believe that the, “teach a man to fish and you’ll feed him for a lifetime,” philosophy is completely applicable regarding aid in Africa. Giving the people the means to invest without actually teaching them how to do so will not accomplish anything but create black holes in which money is poured in but never circulated around the community or used to help anything in the long term. I strongly believe in Aid which focuses on needing actual work being put in. This also individualizes the aid which eliminates the often deleterious actions of the higher ups who may take some of the aid money to pay off the mortgage for their second home rather than provide shelter for African children. Aid obviously needs some monetary component, but too much money and corruption is bound to happen. With less excess of cash and more training on financial literacy as well as some job training, we can create sustainable programs that help the actual people out, with little to no corruption in the process.
Question: considering the success of the Greenbelt movement, why have other humanitarian efforts in Africa not tried to take the same approach?
Quote:
ReplyDelete“Maybe it wouldn’t be so bad if African leaders, like some of their Asian counterparts, reinvested stolen money domestically, instead of squirreling it away in foreign bank accounts.” (56)
Comment:
Moyo makes an interesting case in her discussion of corruption – rather than argue wholesale against any and all forms of corruption, she’s ok with certain types of corruption that she deems “positive”. In her argument, Moyo brings up the different “styles” of corruption practiced by government officials in various regions around the world. In her comparison of Asian officials with their African counterparts, she claims that the type of corruption most commonly found in Asia is not really corruption at all, but rather a different form of disseminating foreign aid money to the masses. While she makes a good case for this type of “positive” corruption to be promoted in Africa, I think she’s ignoring more pressing problems – in its growing, fragile state, Africa doesn’t have the time or money to spare to risk promoting this supposedly benevolent form of corruption. What Africa needs is for its leaders to crack down with an iron fist, imposing strict regulations on fairly (hopefully) elected government officials, and trying to stop corruption all together. When Africa is in a more stable place, perhaps then there will be an opportunity to explore “positive” corruption, but that time is many years away. While it would be great if Africa’s corrupt politicians read Moyo’s book and began investing their illicit cash in the local economy, that’s unlikely to happen – these corrupt officials simply need to be removed from office.
Question:
What makes African & Asian officials have such diametrically opposed views of corruption? Is it a cultural thing? Will Africa’s leaders continue to let corruption run rampant, or will measures eventually be taken to ensure Africa’s stability and success?
Quote: With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid. Foreign aid props up corrupt governments - providing them with freely usable cash.
ReplyDeleteComment: It is an interesting observation to say that foreign aid is what props up corrupt regimes in Africa. It is true that these governments are not collecting a large amount of tax revenue, however they are not providing much for their people either. Large amounts of aid in the form of supply or cash has gone missing in the past even when donated to nations with "stable" governments. Perhaps the solutions is to donate more to organizations that are not affiliated with the government to end the cycle of corruption
Question: Would donating to different sources really help the situation?
Economics of Aid
ReplyDelete“With respect to aid, poor economies face four main economic challenges: reduction of domestic savings and investment in favor of greater consumption; inflation; diminishing exports; and difficulty in absorbing such large cash influxes” (60)
In the quote above Moyo essentially summarizes the negative economic implications of aid. The first point Moyo addresses is how savings are reduced when aid is given. This is obvious because people will not save money when they know money will come in through aid. In essence, they become completely dependent on aid rather than the livelihood they create for themselves. Secondly, and perhaps most importantly, aid contributes to inflation. When there is an influx of money, money that wasn’t involved in the economy before, the currency becomes devalued. This has a negative impact on everyone as prices rise and daily expenses rise, making life even more difficult. The next point goes hand in hand with inflation: diminishing exports. Since inflation can rise to incredibly high rates businesses can find it difficult to compete on the global stage because they have to raise prices due to inflation in their home country. Also aid can put small businesses out of business by adding intense completion—these business can then not export anything. This last point is somewhat more abstract and has to do with inflation. When all of these economic implications of aid are combined it becomes clear that aid can actually stifle growth.
Can these negative implications be reversed? If they can will it require the help of outside forces?
What type of aid can avoid these negative factors.
Quote: “As if that was not bad enough, in order to combat the cycle of inflation, domestic policymakers raise interest rates. But, at a very basic level, higher interest rates mean less investment” (53)
ReplyDeleteComment: Ms Moyo alludes here to the idea that international aid is not true investment. This idea that international aid is not equivalent in any way to capital investment is key to understanding Ms Moyo’s book, Dead Aid. Indeed, Ms Moyo notes that international aid drives inflation in the countries where it is administered in ways that typical capital investment does not. This inflation occurs because aid, as opposed to capital investment, is money that is artificially injected into the economy, where it may saturate the market rather than bolster it. If a market is saturated with aid money, significant inflation will almost certainly ensue, and monetary policy has to be adjusted. Monetary adjustments like raising interest rates via the central bank (i.e. administering government bonds and adjusting interbank interest rates) will likely be pursued by central bankers and “policymakers” (53), which, as Ms Moyo points out, can lead to decreased investment and decreased growth.
Question: Is there a way that international aid organizations can administer types of aid without foisting too much inflation on the countries they are trying to help?
Quote: “With aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid.”
ReplyDeleteComment: The vicious cycle of aid is one that causes economic dependency, poverty, increased debt, and inflation. Although many may think that giving aid to people living in impoverished countries is a moral thing to do, the vicious cycle becomes stronger and stronger. With aid, countries become so dependent on the foreign aid that they have no incentive to try and build up their economy on their own. Inflation, debt, and corruption plague these impoverished countries when their biggest source of revenue is from foreign aid. Many still believe that the reason Africa is still not a continent full of developed countries can be traced all the way back to the colonization of these countries my European powers. Although these countries now have independence, foreign aid is a type a colonization from the developed world in that African countries have become very dependent on it. This vicious cycle of foreign aid and having power over African countries is hindering the growth of Africa as a continent and ultimately causing people to become more and more impoverished.
Question: Is stopping foreign aid from being sent to African countries the only way to stop this vicious cycle?
Quotation: "With aid's help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid."
ReplyDeleteComment: This statement could not be a better one sentence summary of what we have been learning in Post-Colonial Africa class and what I have been reading in Dead Aid so far. Let’s take Zimbabwe for example. The United States has in place crippling sanctions on Zimbabwe to send a message to Robert Mugabe letting him know that he cannot continue down a path of tyranny and corruption. China on the other hand is putting aside the corruption, the crimes against humanity, and the like by keeping Robert Mugabe in power with an influx of millions upon millions of dollars to keep Zimbabwe afloat. This large amount of aid coupled with the deep rooted corruption of Mugabe and his government, only fosters more corruption as Dambisa Moyo correctly puts it. This vicious cycle of aid can be seen not only in Zimbabwe, but in the vast majority of African nations with varying levels of corruption. A solution to end this vicious cycle is to put in place a system where aid can be restricted and specified just as a donation to a 501©3 can be. If I really appreciate the work of Water for Ghana (I just made this up) and I especially like there new campaign where they go from community to community educating the people on how to filter dirty water, I can specify that the money I donate to them will go to solely funding this campaign. If this could be transferred over to aid where nations can specify different projects and sectors they want to tackle, they can easily see if this money is being put into what they specified or if it is simply lining government officials’ pockets.
Question: When will the time come where African countries do not need to be monitored by developed nations or third part organizations to prevent corruption?
How can an African nation ever prove that aid is working when corruption is running rampant in the said country’s government?
Quote:
ReplyDelete“But, at a very basic level, higher interest rates mean less investment (it becomes too costly to borrow to invest); less investment means fewer jobs; fewer jobs mean more poverty; and more poverty means more aid” (62).
Comment:
It is understandable that less investment can bring up the job crisis, and job crisis causes poverty, but what is interesting is that Moyo says “They can either raise interest rates to combat inflation to the inevitable determent of the economy” (64). Moyo says that corrupt government officers go to buy cars or clothes or other places to spend money, because of there are not many cars or clothes or many luxury in the country, which leads to the increasing of the price, in term of combating inflation, the policy makers increase the interest, which is exact same suggestion Moyo makes later, I am quite confused in here. Also, Moyo talks about “Since they cannot put all the aid flows to good use (even if they wanted to), it is more likely than not that he aid monies will be consumed rather than invested (as before, thereby raising the risk of higher inflation)” (65), I think there are many places to invest money, that is why so many government officers size the opportunity to put those money into their own pocket. However, usually government will lower the interest to encourage people to consume their money, in other word, the spending will lead the manufactory produce more goods, and bring up the economy again. This idea might just works in richer country, but what I am confused about is that: does the spending of the corrupt officers encourage the goods production of their countries? So, more production means the owner needs more people, which creates more jobs, is it the way to create jobs?
Question:
Yes, Aid-dependency is bad, but does the aid bring more jobs, more money into this continent? Is it the policies’ fault rather than the aids?
“Corruption is a way of life”
ReplyDelete“The point about corruption in Africa is not that it exists: the point is that aid is one of its greatest aides.”
With the majority of Africa’s governments steeped in corruption, aid is not helping. In fact, as Moyo points out, foreign aid is actually worsening the issue of corruption in Africa. Moyo references Uganda, where, in the 1990s, “corruption was thought to be so rampant that only 20 cents of every US$1 dollar of government spending on education reached the targeted local primary school.” The fact remains that when aid is added to this mix of corrupt officials and access to money, the access to money increases and the corruption increases. Moyo draws the conclusion that corruption breeds corruption. This is true in that once officials are corrupt, they inevitably get their other corrupt official friends to help them siphon money off or initiate more large-scale projects that will provide ample opportunities for corruption. Furthermore, even if foreign aid money is specifically ‘allocated’ for something—ie: education, nutrition—that money can very easily be ‘re-allocated’ by corrupt officials with itching hands. Despite all this, however, the fact remains that foreign powers continue to provide fodder for corruption, in the form of aid, to African countries whose officials then misappropriate the money, plunging their people further into poverty, to beget more aid.
If this is indeed a vicious cycle, as Moyo proves, how can we ever break out of it? Must we overthrow all the corrupt governments, or stop all foreign aid, or take some other radical approach?
Quotation: “With aid’s help, corruption fosters corruption, nations quickly descend into a vicious cycle of aid.”
ReplyDeleteComment: The word aid is what is subjective here. According to Moyo, the majority of aid given to Africa is terribly detrimental to the regions for a myriad of reasons, including lack of knowledge of the area and its people, the inconsistent nature of the giving and the patronizing attitudes of the majority of the donors. Not only that, but so much of the “aid” goes straight into the pockets of the corrupt leaders of these various regions that the citizens who are meant to be helped by this money never see a penny of it. From there, the nation has more problems, citizens suffer more, and people begin to give more aid thus continuing the vicious cycle.
Question: Who’s responsibility is it to fix this cycle of aid? Who has the ethical obligation to fix such a deep seeded issue?
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ReplyDelete