Analysis of Dambisa Moyo´s Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa

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Dambisa Moyo, originally from Zambia, is an economist and author of the controversial book: Dead Aid: Why Aid is Not Working and How There is a Better Way For Africa. This very controversial book explores foreign aid and how it has harmed Africa, and in turn she offers ‘solutions’ to how Africa can thrive without foreign aid. Moyo offers four sustainable sources of funding which will allow Africa to flourish: free trade in agricultural goods, the encouragement of financial intermediation, large scale of foreign direct investments, and access to international capital markets (9). By reducing restrictions on trade there are no tariffs for imports, or subsidies for exports as well as no quotas, this would allow for mutual gains from trade of goods and services from both partners. (1). The book asks that the US, EU and Japan allow African countries to increase earnings from primary product exports by scrapping various subsides they pay for their farmers, allowing Africa to focus their efforts on manufacturing products or providing services where they have a clear comparative advantage (9). An entity that acts as the middleman between two parties in a financial transaction is the purpose of financial intermediaries, which can offer great benefits for African consumers such as: safety, liquidity and economies of scale (2). Therefore, Moyo suggests that by fostering the spread of microfinance institutions, such as the ones that have flourished in Asia and Latin American, it will allow an encouragement of financial intermediation to be implicated (book). Large-scale direct investments, for example the ones given by China, could allow African countries to experience growth in their work force, technology, facilities, and operational mana...

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...ld. (7) FDI’s have allowed Ghana to transfer general knowledge and specific technologies in production and distribution, as well as industrial upgrading, work experience for the labor force and introduction of modern management as well as accounting methods. This raised the productivity of capital, affecting its competitiveness and attracting new capital on more positive terms- expanding the strategic inputs in traditional export sector to expand the volume of trade to upgrade production through product and process innovation and overall raising growth (6). As can be seen Ghana has flourished with some of Moyo’s solutions, however it cannot be denied that Ghana is a country still dependent of foreign aid. Therefore, a conclusion can be made that Moyo’s sustainable sources of findings can accomplish growth within Africa, but that aid does not necessarily mean harm.

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