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NN42, June 2009

A Safari Towards Aid Effectiveness?

Editorial - Moyo on Aid Effectiveness and China in Africa

By Kenneth King, Norrag

As a critical commentary for more than 20 years (since 1986) on many aspects of international cooperation in education and training, NORRAG NEWS welcomes the recent debate about To Aid or Not to Aid, sparked by Dambisa Moyo. Everyone has joined in, including several of our authors in this issue. This special issue gives a sense of these debates, as well as engaging, in some articles with Dambisa Moyo?s critique of aid, including her appraisal of China in Africa.

Our own position has not been principally about whether aid is good or bad for the health or wealth of nations, - principally because there is no such a black and white possibility, when international cooperation in our field of education has covered such a range of activity, North-South, South-South, and East-West. It covers the new Chinese Volunteers Serving Africa, the multiplicity of university-to-university links programmes, the myriad of NGO education initiatives, both local and international, the new modalities of sector budget support, and direct budget support, as well as a whole range of journals, publications, commissions, consultancies and of course NORRAG NEWS itself! NORRAG NEWS has been supported first by Sida (Sweden) and then by DFID (UK) ever since it was launched in 1986. So even if, like me, you don't appreciate the term ?aid industry?, it is a vast world-wide enterprise, and it is important to be aware of its history and development, whether in China, Japan or USA.

NORRAG NEWS, for its part, has sought to get behind the discourse of international cooperation, and clarify what this is about. We have therefore over the more than 20 years since we were established in 1986, examined much of the language and discourse of aid, such as the politics of ?development partnerships? (NN41), and the fascination with ?best practice? by donor agencies (NN39). Equally, when a new approach or a new phrase was born such as ?capacity building? (NN10) or ?sector-wide approach [SWAP]? (NN25), we have sought to dissect its strengths and weaknesses. We have looked critically at the ?targetisation of aid? (NN33), and the notion of ?education for sustainable development? (NN40). We have examined ?knowledge-for-development? (NN28) as well as the ?globalisation of development knowledge? (NN29). A good example was our special issue on the ?Language of Politics and the Politics of Language? (NN34). As much as anything, we have tried to give our readers a critical insight into the brave new world of world conferences, on ?Education for All?, Higher Education (NN16), Adult Literacy (NN21), TVET (NN38), as well as the World Fora in Dakar (NN26), Jomtien (NN8, NN9), New York, Gleneagles (NN36), and Paris (NN16).

Moyo on Aid Effectiveness

So, if we turn to Moyo?s Dead Aid, we are naturally inclined to understand some of its discourse. Our purpose, in this special issue, had been to assist readers to interrogate the aid effectiveness literature, and the rather abstruse world of the Paris Declaration and the Accra Agenda for Action. Moyo?s purpose, however, is to unseat the myth that aid can be made effective. Like the aid community, she is concerned to reduce poverty, and to offer economic growth to Africa, but to do so without reliance on aid. Her goal is an ?aid-free solution to development?. Why? Because, for her, the cycle of dysfunction that seems to characterise Africa, even if there current signs of promise, has its roots in aid. [We suspect that she would have enjoyed and profited from reading David Ellerman (2005) and Roger Riddell (2007), neither of whom is mentioned in her book or bibliography.]

As our concern in this special issue is with aid effectiveness, it will be useful to clarify what can be learnt from Moyo about why ?aid is not working?. So we shall look briefly at her take on aid effectiveness and also her admiration for China?s approach to international cooperation. These are only, of course, two elements in her analysis.

Fortunately, she has in her book a short section on ?aid effectiveness: a micro-macro paradox? (44-47). What her paradox points to is that aid may appear to work, as a one-off, but it doesn't lead to sustainable long-term benefits. This is of course precisely the problem that many agencies have had with the so-called project approach since the 1990s ? aid ?worked? at the micro-level because of the way that the projects were funded and insulated from the wider political environment; but project success did not mean wider system success. Moyo is correct to say that ?aid effectiveness should be measured against its contribution to long-term sustainable growth?, and it is particularly viewed from this lens that she finds aid wanting (Moyo 2009: 44-5). She rightly contrasts the negative impact of food aid on small farmers with the buying, through aid, of food from African farmers and redistributing it to areas of need. Similarly, encouraging the local manufacture of mosquito nets she approves versus the sudden swamping of Africa with mosquito nets from outside. She notes that there needs to be much more of this kind of thinking ? i.e. aid supporting what is already working and on the ground. From this example of effective aid, she turns quite suddenly to the history of aid from the USA to South Korea (45).

What is less clear is her view of aid effectiveness when it comes to aid from USA to South Korea. She claims that as many US resources were poured into South Korea between 1950 and the 1980s as US gave to all the 53 African countries between 1957 and 1990. However, it is precisely the Asian countries which she picks out as amongst the dozen or so that have ?experienced phenomenal economic growth? (29). It would be interesting to know if she thinks South Korea was an example of the ?kind of financial lift that Africa will need? ? ?an equivalent of its own Marshall Plan?. A little later in the book (37-8), it turns out that South Korea along with some 21 others, such as Chile, China and Thailand, are the very ones which used to rely on aid but no longer do so. And in any case their aid flows have, she says, been relatively small and of short duration. But this was clearly not the case for South Korea; aid was very considerable and of long duration.

So is it possible that the problem of aid has been that, unlike South Korea, there has simply not been enough? Readers may want to recall the sheer quantity of resources that the former West Germany has been transferring to East Germany since unification. This amount ? to the former East German lander, a single small geographical space like South Korea ? has each year dwarfed the total amount that Germany has allocated to development aid, for the entire developing world!

It is a very good moment to review the idea that more aid might make a difference since the pledge of the Gleneagles Summit of 2005 to double aid to Africa by 2010 is far from being on target in June 2009; indeed only some 10% of what was pledged to Africa has actually come through, despite UK, Germany, USA and Japan being allegedly on course to meet their targets (www.alertnet.org/thenews/newsdesk/LB198537.htm). The same was true of the Monterrey pledges following 2 years on from the Millennium Summit of 2000. This conspicuous failure allows Moyo to claim that most donor pledges have gone unmet. Not that things would necessarily have been different if they had been met. People who believe that things would have been different if the pledges, targets and goals had been achieved are regarded, however, as ?big-push? thinkers. And Moyo is right to be critical of this tendency in the aid business, as readers of David Ellerman, in NORRAG NEWS (e.g. NN36) will recall.

So we have a bit of a dilemma so far in Moyo?s short section on aid effectiveness:

? Aid needs to build widely on what is there, and not just on micro-successes;
? Does aid need to be massive and sustained over time as in South Korea, or does it need to be of short duration and relatively small scale (e.g. the 22 countries that have graduated successfully from receiving aid [including S. Korea??])?
? Should there be targets such as 0.7% of GDP, the MDGs, Monterrey, and the G8? But if these were met, would that be different from the ?Big Push? approach?

Having raised some useful issues about micro/macro sustainability, scale, duration, pledges and targets, Moyo then switches the argument, and claims that the underlying problem of aid is its fungibility ? the fact that moneys given for one thing can readily be diverted to another. In other words, aid can and does lead to corruption. Or in her own words ?More grants mean more graft? (46).

The last part of Moyo?s aid effectiveness section contains a whole series of large and quite serious claims ? the most generalised being that the aid industry knows ?in its heart of hearts that aid doesn?t work, hasn?t worked, and won?t work?. The second being that aid has had no appreciable impact on development. The third being that as aid to Africa has increased, growth has decreased, and hence ?a direct consequence of the aid-driven interventions has been a dramatic descent into poverty? (46-47). The last being that aid is not benign but malignant. It is not part of the solution; ?it?s part of the problem ? in fact aid is the problem? (47).

The core reason for aid failing as a strategy, therefore, is that aid is an aide to corruption. The logic is this: that aid aids corruption; corrupt governments interfere with the rule of law, civil liberties and with transparency; this makes domestic and foreign investment unattractive; this in turn reduces jobs and increases poverty; with growing poverty, donors give more aid.

What are we to make of Moyo?s four pages on aid effectiveness? They are a powerful cocktail of some accurate assessment about what works, some estimates or guesstimates by other authorities, and personal assertion and generalisation. Most important her comments are short, sharp, critical and eminently readable. Which is what we ask our NORRAG NEWS contributors to be!

Moyo has no discussion of the Paris Declaration or the Accra Agenda for Action in her book. But can we blame her? She did talk about the importance of avoiding the excesses of the project approach, but she has in her book sought to keep clear of the complex modalities and architecture of aid. We can give an example of what she has perhaps rightly or strategically avoided.

Running alongside the shift from project to programme or sector, and even to direct budget support in certain situations, is a discourse amongst donors about the ownership of policy. Clearly, it is understood that policy should be owned by the national government, and that in situations where policies are appropriate, donors would support them through SWAPs or direct budget support. But what about situations where local policies do not accord with donor priorities? There would be policy dialogue to ensure that policies were, for example, pro-poor or pro-equity etc etc. There is therefore something of a contradiction in what came to be called policy-based aid, since aid is apparently also used to adjust or align policies which are not acceptable to the donor community. Yet the various declarations from donor countries such as the Paris Declaration of OECD are all about how donors (or what are now called ?development partners?) should be harmonising and aligning their support with the government?s policies. The government is the owner of policy, and is, in the overworked phrase, in the driver?s seat.

The summation of this tendency in donor thinking is, indeed, the Paris Declaration on aid effectiveness, ownership, harmonisation, alignment, results and mutual accountability. To allow you to get a sense of the Paris discourse the following introductory summary gives a genuine flavour:

Scale up for more effective aid
We reaffirm the commitments made at Rome to harmonise and align aid delivery. We are encouraged that many donors and partner countries are making aid effectiveness a high priority, and we reaffirm our commitment to accelerate progress in implementation, especially in the following areas:

i. Strengthening partner countries? national development strategies and associated operational frameworks (e.g., planning, budget, and performance assessment frameworks).
ii. Increasing alignment of aid with partner countries? priorities, systems and procedures and helping to strengthen their capacities.
iii. Enhancing donors? and partner countries? respective accountability to their citizens and parliaments for their development policies, strategies and performance.
iv. Eliminating duplication of efforts and rationalising donor activities to make them as cost-effective as possible.
v. Reforming and simplifying donor policies and procedures to encourage collaborative behaviour and progressive alignment with partner countries? priorities, systems and procedures.
vi. Defining measures and standards of performance and accountability of partner country systems in public financial management, procurement, fiduciary safeguards and environmental assessments, in line with broadly accepted good practices and their quick and widespread application. (OECD, 2005)

It can be seen at a glance that encouraging and monitoring more effective aid is a massively complex project. But for those interested in the targetisation of development, the Paris Declaration also has targets for each of 12 key areas of assessment of progress in aid effectiveness. These would include such measures as the proportion of donors using partner country systems of public financial management. These are of course the very systems for which, in point vi above, donors are themselves ?defining measures and standards of performance and accountability?.

It is hard not to agree that Moyo was right to avoid getting into the intricacies of SWAPs, DAC and Non-DAC, Direct Budget Support, aid modalities, not to mention the Paris Declaration, and the Accra Agenda for Action. To do so, she would have to join the club and become an aid ?insider?.

But there is one other section or chapter in her book that we should examine, her chapter on the topic that the ?Chinese are our friends? (98-113). Like her, they too appear to want to stay outside the donor club.

Moyo on the ?The Chinese are our friends?

The chapter on China-in-Africa is highly relevant to this special issue (see other articles on China by Davis, Davies, Formica, Liu, Nordtveit, and King). What may be of interest is whether the Chinese are perceived to escape the Moyo criticism of being aid donors. Moyo analyses the famous Beijing Forum for China-Africa Cooperation (FOCAC) Summit of November 2006, and comments that it was at this summit that the Chinese government unveiled its Africa strategy. In fact, China?s Africa strategy was unveiled 10 months earlier in January 2006.

Her chapter contains a summary of the Chinese President, Hu Jintao?s, speech in November 2006, which Moyo summarises as follows:

"With this, he launched China?s new multi-pronged assault on Africa, which would focus on trade, agricultural cooperation, debt relief, improved cultural ties, healthcare, training and, yes, even some aid (but thankfully only a small component of their strategy)". (Moyo, 2009: 104)

As a matter of fact, the eight points of the FOCAC declaration of November 2006 could almost entirely be regarded as ?aid? (or ODA, official development assistance).

Here they are:

8 FOCAC TARGETS FROM THE BEIJING SUMMIT OF NOV 2006

To forge a new type of China-Africa strategic partnership and strengthen our cooperation in more areas and at a higher level, the Chinese Government will take the following eight steps:

1. Double its 2006 assistance to Africa by 2009.
2. Provide US$3 billion of preferential loans and US$2 billion of preferential buyer?s credits to Africa in the next three years.
3. Set up a China-Africa development fund which will reach US$5 billion to encourage Chinese companies to invest in Africa and provide support to them.
4. Build a conference centre for the African Union to support African countries in their efforts to strengthen themselves through unity and support the process of African integration.
5. Cancel debt in the form of all the interest-free government loans that matured at the end of 2005 owed by the heavily indebted poor countries and the least developed countries in Africa that have diplomatic relations with China.
6. Further open up China?s market to Africa by increasing from 190 to over 440 the number of export items to China receiving zero-tariff treatment from the least developed countries in Africa having diplomatic ties with China.
7. Establish three to five trade and economic cooperation zones in Africa in the next three years.
8. Over the next three years, train 15,000 African professionals; send 100 senior agricultural experts to Africa; set up 10 special agricultural technology demonstration centres in Africa; build 30 hospitals in Africa and provide RMB 300 million of grant for providing artemisinin and building 30 malaria prevention and treatment centres to fight malaria in Africa; dispatch 300 youth volunteers to Africa; build 100 rural schools in Africa; and increase the number of Chinese government scholarships to African students from the current 2000 per year to 4000 per year by 2009. (King, 2009b)

These 8 FOCAC targets are to be achieved by 2009, three years after the Beijing Summit. In the way that they are laid out, it is difficult not to regard these as ?aid? commitments, and it is difficult to imagine that at the next Ministerial FOCAC meeting in Sharm el-Sheikh in November 2009, China will not find itself regarded as having pledged the above 8 targets to all the 49 African countries with which it has diplomatic relations. There is also little doubt that China will be able to report that it has successfully delivered on these (King, 2009a).

So we should underline the fact that although Moyo says that the aid component of these 8 items from the Beijing Summit is mercifully small, almost all of them are actually aid pledges, whether grant aid or concessional loans. What is important to recognise with Moyo is that China continues, despite these explicit aid commitments, to regard itself as ideally involved in South-South cooperation with Africa, not just in an aid relationship. In fact it is distinctly uneasy with the aid discourse, and shows little interest in being included in the donor clubs in most of the countries where it is operating.

Moyo makes the important point that it is Chinese foreign direct investment (FDI) that really makes a difference to the China-Africa relationship. She is correct in this. But she should perhaps note that it not just FDI, but also direct immigration of Chinese entrepreneurs into African countries that may also make a difference, along with the strong belief in people-to-people aid in its assistance projects. Moyo is very impressed at China?s Africa partnership. So she concludes: ?China?s African role is wider, more sophisticated and more businesslike than any other country?s at any time in the post-war period? (Moyo, 106). But she needs to acknowledge that China is combining a complex aid relationship, bundling grant aid, concessional loans and FDI along with a relatively unplanned emigration policy which is taking many thousands of Chinese citizens to Africa. It has been estimated, for example, that there are perhaps one million Chinese currently in Africa. This presence on the ground of Chinese entrepreneurs, large and small, from the Cape to Cairo, is what also makes China?s aid and FDI different from any other donor. It fundamentally changes the enabling environment for some of its aid initiatives, reinforcing them, and creating a demand for items such as long and short term training aid to China, as well as Confucius Institutes, as a source of Chinese language learning (See Nordtveit in this special issue).

We would argue that Moyo?s review of China in Africa would be stronger if she sought to acknowledge and position its increasing amounts of straightforward ODA. China, too, would appreciate her analysis more if she were able to justify her unfounded allegations of the coming ?Chinese domination?. Here is her summary in the final chapter called ?Making Development Happen?: ?And it is in Africa that their (the Chinese) campaign for global dominance will be solidified. Economics comes first, and when they own the banks, the land and the resources across Africa, their crusade will be over. They will have won? (Moyo, 2009: 152). Even a cursory read will turn up a lot of such throw-away lines ? whether about elephants and giraffes, about the role of aid in South Korea?s success, or China?s campaign for world domination.

It will be interesting to see if this lack of care and evidence will result in Dead Aid living less long, and being less influential over time than the Lords of Poverty by Graham Hancock, published exactly 20 years ago, in whose critical path she treads. He doesn't make it into her bibliography either!

References

Ellerman, D. (2005) Helping people help themselves: from the World Bank to an alternative philosophy of development assistance, University of Michigan Press, Ann Arbor.

Hancock, G. (1989) Lords of poverty. The freewheeling lifestyles, power, prestige and corruption of the multi-billion dollar aid business, Macmillan, London.

King, K. (2009a) ?China?s education cooperation with Africa: Meeting the FOCAC targets?? meeting on Africa Day, 25th May, 2009, University of Hong Kong, HK.

King, K. (2009b) ?China?s cooperation with Africa. Is aid dead as a strategy??, Hong Kong Institute of Education, 26th May 2009, Hong Kong.

Moyo, D. (2009) Dead aid. Why aid is not working and how there is another way for Africa, Allen Lane, London.

Riddell, R. (2007) Does foreign aid really work?, Oxford University Press, Oxford

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