31 August 2009

Dambiso Moyo is right. Stop Aid to Africa. But not why you think.

This argument is going to be a little bit half-baked, but then as Simon says, "One of the wonderful things about a blog, is that you can write down thoughts which may or may not be interesting but without claiming to have done in-depth research or have in-depth knowledge – you are just 'putting it out there'."

I should also credit Abhijeet for most of these ideas.

Aid to Africa should stop.

Not because it is detrimental to growth, as Dambiso Moyo argues. But because it is SO DAMN EXPENSIVE. Southern Sudan is an extreme case. It is more expensive than most places in Africa. But it is not qualitatively different to the rest of Africa. The reasons it is expensive to operate in are essentially the same across the continent; low population densities, people dispersed across large distances, along with insecurity and political barriers to trade and migration, all making transactions costs huge.

Operating in Asia is cheaper because people are closer together.

What this means is that your money goes much further in Asia, as any backpacker can tell you. This also includes your aid money.

India's national school-feeding programme, which now reaches over 150 million kids, costs 2 cents per day per child. For their school-meal programme (operating in over 80 countries, including in both Africa, Asia and Latin America) WFP want $25 cents per day per child.

Some more back-of-an-envelope calculations (based on figures from BSF South Sudan and India's national primary school programme) reveals similar cost ratios for school construction in India and Southern Sudan, basically at least 10:1.

Now if what we care about is poor PEOPLE and not COUNTRIES, then how can we justify spending money on poor Africans, if it means choosing 1 poor African ahead of 10 poor Asians. On what ethical grounds is that fair?

This is not to say forget about Africa, just that Aid as our means of assistance is ridiculously cost-ineffective. So let's look at some other ways we can help, such as:

Trade - As Paul Collier has called for - lets have EU-US wide preferential market access for Africa, guaranteed for 15 years. (And maybe lose the subsidies? Please? No? Ok fine just the market access then.)

Migration - Come on, let's ease up just a little huh? It's good for us too I promise. Make it temporary or something.

Technology - Lets get serious about funding technology for Africa. That includes IT and tropical disease research.

Security - Yeah OK this one is a bit more controversial, but I'm broadly with Collier.

And then there's investment and the environment, which I know next to nothing about, but I'm sure there's plenty we can do.

Bottom-line - there is LOTS we can do to help in Africa without giving a penny of aid for service delivery.

And I'm not even saying stop aid, just send it where you get bang-for-your-buck.

Thoughts anyone?

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