Africa Doesn’t Need More Development Aid, It Needs More Capitalism

Asian countries have received much less development aid than African countries. Zambia-born Dambisa Moyo, who studied at Harvard and earned a Ph.D. from Oxford, identifies Western development aid as one of the reasons for the failure to rid Africa of poverty. “In the past fifty years, over $1 trillion in development-related aid has been transferred from rich countries to Africa,” Moyo points out in her book Dead Aid.

But has more than $1 trillion in development assistance over the last several decades made African people better off? No. In fact, across the globe the recipients of this aid are worse off; much worse off. Aid has helped make the poor poorer, and growth slower … The notion that aid can alleviate systemic poverty, and has done so, is a myth. Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased. Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world.

To be clear, Moyo’s criticism is not directed against ad hoc famine and disaster relief but against long-term financial transfers aimed at boosting economic development. These funds have frequently ended up in the hands of corrupt despots rather than those of the poor. William Easterly, Professor of Economics and African Studies at New York University, also believes that foreign aid is largely pointless and frequently counter-productive.

Hope For Africa

But there is still hope for Africa. The rise of broadband and mobile technologies has led to a loosening of state control across many industries and allowed entrepreneurs to thrive independent of government support and political connections. Many of this newly emerged class of self-confident young Africans have studied overseas—typically in Europe or the United States, but increasingly in China or India, as well. Many of them work for international corporations before they return to their native countries. Unnoticed by the wealthy global north, Africa is seeing the emergence of a class of entrepreneurs who are driving and shaping the economic upswing across the continent.

Africa offers plenty of economic opportunities. However, some of the predictions of a massive boom across the continent currently bandied about by pundits are based on models that fall short of a realistic appreciation of the facts on the ground. Attempting to replicate Asian success stories in Africa without taking the differences between the two continents into consideration would be too simplistic.

Hunger and poverty are not fought through development aid but through entrepreneurship and capitalism.

But Africa could definitely learn one thing from Asia: Hunger and poverty are not fought through development aid but through entrepreneurship and capitalism. Even U2’s lead singer Bono, who formerly organized massive festivals to raise aid for Africa and for so long espoused anti-capitalist rhetoric and a seemingly unshakeable belief in foreign aid as a solution to hunger and poverty in Africa, has changed his tune under the weight of evidence to the contrary. “Aid is just a stopgap,” he confessed in 2013 during a speech at Georgetown University. “Commerce and entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.”