Tag Archives: Dambisa Moyo

A Brief History of International Development Aid

I’m in the middle of writing a critique of Dambisa Moyo’s Dead Aid – mainly because the book uses highly selective evidence to promote neo0liberal ideology – but I will concede that the way Moyo conceptualises the history of development aid from the 1940s is a fairly useful teaching tool for A level Global Development – so here’s a brief summary of the second chapter of the book – (NB I said useful conceptually for A level, I’m not actually implying that her account is factually accurate – thankfully when you’ve got an exam board that lives in a 1980s timewarp, the actual facts aren’t necessarily that important for the exam)

Moyo splits ‘the history of aid’ up into ‘seven phases’ – starting with the earliest days of Bretton Woods in the mid 1940s – which saw the establishment of institutions such as the IMF, then outlines details of the Marshall Plan in the 1950s – but I’m going to start my brief summary with the third phase in the 1960s -which are followed in each successive decade with next four phases.

The 1960s – The decade of Industrialisation

The Kariba DamHere there was a shift to to the development of large scale industrial projects, with funding going directly to governments in African countries and coming primarily from the  USA, but also from European governments.

A good example of this is the Kariba hydroelectric dam that straddles the boarder between Zambia and Zimbabwe – began under British colonial rule in the 1950s and finally completed in 1977 at a cost of $480 million.

While pointing out that records from the 1960s are not perfect, Moyo sites the following stats for country receipts of aid by the mid 1960s –

  • Ghana – $90 million
  • Kenya, Malawi and Zambia – all having recieved an averge of about $315 million

The 1970s – the shift to a poverty focus

This historical period starts with the 1973 Arab embrago on oil, which lead to oil price rises, followed by food price rises and recession across Africa. In 1975, for example, Ghana’s eGDP contracted by 12% and inflaction had risen to more than 100% by 1977.

In practical terms this lead to aid being redirected away from large infrastructure projects and towrds rurual projects in agriculture and rural development and social services – such as innoculation programmes, housing and literacy campaigns. By the end of the 1970s, the proportion of aid allocated to social service had increased from 10% (in the previous decade) to over 50%. Much of this aid came in the form of concessional loans which would need to be paid back.

Moyo also notes that despite the increasing inflows of aid, increasing numbers of people in Africa were falling into poverty.

The 1980s: Neoliberalism, Structural Adjustment and the lost age of development

Moyo begins – By the end of the 1970s, Africa was awash with aid. In total, the continent had ammassed around $36 billion in foreign assistance. This decade saw a shift away from governments giving aid and towards multilateral aid – with the World Bank and the IMF playing a more central role. Also, aid became focussed less on poverty reduction and more focussed on assisting (some may read coercing) developing world governments to adopt free-market policies.

The 1979 oil spike, precipitaed by the Iran-Iraq war lead to more financial problems for Africa as Western financial institutions responded to the corresponding price increases by raising interest rates – which meant that Africa’s debt service payments reached around $8 billion in 1982, while at the same time, worldwide recession meant declining income from exports, meant that in the 1980s, 11 African countries were eventually defaulted on their debts.

The solution to this crisis was to ‘restructure the debt’. Thus the IMF formed the Enhanced Structural Adjustment Facility – to lend more money to defaulting nations to help them. Of course this in itself did little to actually alleviate Africa’s problems – it was still dependent on concessionary loans from the West.

At the same time as this restructuring – there was also an ideological shift amongst donors – towards ‘neoliberalism’ – and aid now shifted so that when governments received it they had to agree to instigate ‘free-market reforms’ – minimising the role of the state, privatising previously nationalised industries, liberalising trade (less restrictions on private companies and exports/ imports) and reducing the number of government employees.)

Between 1986 and 1996 six African countries – Benin, the CAR, Guineas, Madagascar, Mali and Uganda shed more than 10% of their civil workforce, and overall across Africa, many industries were privatised.

The 1990s – A question of good governance

By the end of the 1980s, emerging-market countries’ debt was at lest $1 trillion — and the cost debt servicing had become so substantial that from 1987-1989 there was a net outflow of money from poor to rich countries of $15 a year.

Having seen the failure of aid in previous decades, donor institutions now laid the blame for Africa’s economic woes at the door of weak political leadership and institutions and there was an increased focus on the need to link aid to the promotion of good governance – in other words, credible institutions, transparent rule of law and freedom from corruption. There was also a growing belief that African countries needed a dose of Western Democracy in order to develop.

Moyo also notes that the increasing link between aid and democratic accountability was aided by that fact that in the 1990s, the cold war was thawing, which meant an end to the US and Russia providing aid to politcally dubious regimes in Africa for military purposes.

Finally, the later part of the 1990s saw the rise of ‘donor fatigue’ – ODA peaked in 1992 at a high of $17 billion and then fell to £12 billion in 1999.

The 2000s – the rise of glamour aid

While I think her overview of the preceding decades of development aid is useful, her casting of ODA in the most recent decade is flippant. She

Bono (pronounced Bohnoh) 'feeding the world'

fails to even mention that aid targetting came to be better informed by the 8 Millennium Development Goals, or the new philanthropy headed up by Bill Gates. Instead Moyo simply casts the 2000s as the era in which a new army of moral campaigners took to our TV screens – most noteably Bono, who not only wrote the forward to Jeffrey Sach’s 2005 ‘End of Poverty’ but also met with world leaders to discuss development issue and campaing for more aid to combat Africa’s problems. The only other substantive example she mentions about aid in the 2000s is the ‘Jubilee debt campaign.

So there you have it – with the exception of the last decade, a useful, if somewhat generalised account of the history of Western Development aid over the last half century.