Sat 29 Jan 2011
After a few days off (a sort of sherbet for the mind, as it were), I’m back with Chapter 4 . . .
p.48: The chapter starts with a strong diatribe about the ubiquity of corruption in Africa. First, it depends on where you are . . . and when you are. Ghana in 1997 was run with small bribes. Ghana now is navigable without much, if any, bribery – and a new generation of public servants is more efficient and transparent than ever. Which leads to my next point . . . in the last chapter, Moyo warned against arguing that African culture somehow prevented development from taking root, and demanded we move past surficial explanations. Here, however, she never interrogates why corruption happens – inadequate salaries of public servants, huge financial demands on the employed by extended families that lack access to social safety nets, etc. By leaving this discussion out, Moyo is implying that Africans are inherently corrupt – and she is not moving past the surficial to interrogate causes. Aid does not cause corruption to happen – aid is what is stolen when corruption exists.
p.50: Moyo is making staggeringly sweeping statements about how aid leads to corruption, arguing against the view that increased civil servant salaries reduces corruption. She offers no evidence, just armchair psychology. But there is evidence . . . that increased salaries help. I’ve seen it myself, in Ghana. It is not a magic bullet, but her dismissal of this corruption reduction tactic is unconscionable. She’s just tossing away arguments that don’t fit her narrative.
p.51: Er, this isn’t Moyo’s fault (except that she is using it as evidence), but a study statistically examined the correlation between an ordinal scale of perceptions of corruption and economic growth? Are you joking? Do you know how many variables you’d have to control for to even begin to make that sort of analysis meaningful?
p.52: Wow, this is all sorts of loose correlation . . . OK, let’s say that 25% of all World Bank lending ever has been misused (as she claims). First, is misused the same as stolen? No – sometimes it was rerouted to other projects that were over budget, and might have had some productive outcome. You have to capture that before you claim how much aid has actually been lost. Second, this statistic does not really support the claim “vast sums of aid not only foster corruption – they breed it.”
In fact, let’s do some quick math here. The World Bank had been making loans for 63 years at the time Moyo was writing. Let’s say that an average of 110 countries a year received those loans (a low estimate, for sure), we have 6930 country/year data points. Divide the $525 billion in total loans made by the Bank across this time, and we find out the average loan per data point (country/year) is . . . $75 million. Sorry, but this is not vast, by any stretch.
But let’s get concrete. Ghana’s 2009 GDP was $29 billion. That same year it pulled in $7.8 billion dollars in revenues. Its net aid receipts were $1.2 billion. Yeah, that’s a lot of money, but still only 15% of Ghana’s total revenues. In the scheme of things, aid is not the big slush fund Moyo is trying to make it seem.
p.53: Holy crap, if you are going to point out we lend to corrupt governments, you might want to talk about why . . . and bring a real discussion of geopolitics to the table. We lent to Mobutu because we feared the communists – everyone knows that. So the problem wasn’t aid, it was the geopolitics driving bribes in the form of aid.
p.54: The section is title “Why give aid if it leads to corruption?” Well, mostly because the links are pretty unclear, and because you’ve done nothing in this chapter to link them meaningfully.
To her credit, though, she is quite right about the agencies and how they value the size of the portfolio of lending, not the outcomes. The World Bank has long been accused of this, and there is enormous pressure in every agency to get the budget spent on something . . . lest the budget be reduced next year. However, USAID just took a huge step toward addressing this with Shah’s call for independent, transparent and publicly-available impact assessments of all projects. Really crap projects will soon be visible to the public, and those responsible for them will be held to much greater account if this comes to pass.
p.55: Moyo has no idea what she is talking about on the Malawi food corruption issue. As a result, she misapplies it to her larger argument that we lend regardless of corruption. The issues of corruption in Malawi in 2002 had nothing to do with the food insecurity of the country that year – that was driven by the removal of a seed/fertilizer subsidy program at the insistence of the US and World Bank (who saw it as a market distortion).
p.57-58: And we are further into territory for which she seems to have no real understanding . . . the problem of government accountability is not really driven by aid. The argument that aid reduces the need for taxes – and so the middle class and the population more generally could care less what the government is doing is astonishingly Western-biased (and neoliberal as hell). The lack of responsiveness preceded aid, and persists because the state tends to lack the capacity to do anything for much of its population. If anything, you could argue that aid has failed to improve state capacity such that the citizenry might feel bought in . . . but aid is not eroding civil society.
p.59: Mother of God, aid is what people are after when they try to take over a country? Really? Hell, even her example argues against this – Sankoh wanted the DIAMOND MINES, not aid. She undermined her own argument – who the hell edited this book?
p.61-63: Well, yes, aid can be inflationary, causing problems for exports. This is a problem that should be addressed.
p.64: Yes, inadequate absorptive capacity (the ability of a country to take up income of any sort and use it productively) can be a huge challenge in aid, and lead to waste and fraud. But how often is it a huge challenge? Note what I observed above – average annual World Bank lending, per country per year, is only $75 million. That’s not a huge amount of money. Absorptive capacity examples are much clearer in contexts where oil comes online quickly . . . which is why I am a bit concerned for Ghana at the moment.
p.66: OK, I’m getting worn out here by the overgeneralized, unsupported statements: “Aid engenders laziness on the part of African policymakers.” Really? All of them?
But what is the source of frustration here? Keep reading, and you find this:
Because aid flows are viewed (rightly so) as permanent income, policymakers have no incentive to look for other, better ways of financing their country’s longer-term development. As detailed later in this book, these options, like foreign direct investment and accessing the debt markets, offer more diversified and greater prospects for sustainable development.
This sounds a hell of a lot like an investment banker pitching a fund . . . oh, wait . . . she’s an investment banker. Assuming Moyo believes that this really is the best way to go, it strikes me as remarkable how unreflexive she is about her own background and biases.
p.68: Oh, hubris: it seems that nobody has ever thought of an alternative to aid. Really? There is a lot of stuff in the later postdevelopment literature, all kinds of efforts to reimagine capitalism . . . now, we can argue about whether or not these are viable alternatives, but at least explore them before we run to the capital markets!
This is deeply frustrating – I like a controversial argument, but I also like a well-framed and supported argument. We have the first part, but the second is completely absent thus far.