Read Moyos critique of aid and aid culture a few weeks back. Whilst no doubt her opinions have some validity and strike a strangely populist chord, a senior position at Goldman Sachs hardly indears her to the audience. Of course, this gave her a priveleged insight into the workings of international finance but has also engendered a certain myopia with regards to market shortcomings and its true potential to address the endemic problems associated with poverty and underdevelopment.

The principal focus of the discourse is the slow and inexorable rise of aid culture since the inception of the Bretton Woods institutions in the immediate aftermath of WW2. The end of the war represented a perfect opportunity to reshape the world order and in particular, the global finance system under the auspices of the Western victors; leading to the creation of the IMF (manage global finance) and the World Bank (investment in reconstruction). In concise chronological terms, Moyo has tracked the development of the aid business as follows:

1950’s – Cold war development. Not aid in its true sense; finance from either side of the iron curtain simply being used to buy the support of developing nations in a strategic battle for ideological supremacy.

1960’s – Period of modernisation. Finance provided for large scale industrialisation projects. However, bad planning and mismanagement led to excessive levels of waste and debt(Ayittey).

1970’s – Robert McNamara becomes head of the World Bank and turns the institutional focus on the battle against poverty based on large-scale aid packages. Attempts to alleviate the suffering of the developing world are however severely undermined by oil shocks leading to high interest payments on development loans for heavily indebted poor countries. Financial problems are exacerbated by the lost freedom dividend of the post colonial era, many leaders (even those of the independence movements) turning their backs on the principals of liberation and imposing the one party autocratic state (often leading to tyranny), stand-up Mobutu, Mugabe, Amin, Taylor, Conte, Al Bashir, Mubarak, the list goes on.

1980’s – Referred to as the lost age of development. Debt crisis led to Structural Adjustment Programmes, loans being offered to indebted nations on the basis that they restructure their economies in line with free market principles; deregulation, private ownership and investment, removal of state support and subsidises, reduction of the deficit etc.

1990’s – Focus on governance and democracy as a platform for national development. Moyo suggests that this decade was a period of donor fatigue

2000’s – Decade of glamour aid focussed on debt relief.

The problems with aid as defined by Moyo are listed as follows:

1) Erosion of social capital: The focus of society moves away from production (assuming that is the raison d’etre of society). As aid is made available the economic and social environment become increasingly politicised in an attempt to secure the largest portion of the aid budget.

2) Aid inhibits middle class growth: In the absence of growth based on production and tangible business assets, the nation remains economically weak, undermining the potential for concentrated wealth and reinvestment amongst the middle classes. Instead, all available wealth (including aid receipts) is concentrated amongst the non-productive political elite (Ayitteys vampire state)

3) Foments Conflict – Power means access to the state wealth through the political strutures supported by aid. Such incentives encourage national strongmen to foment and promote conflict as a means of gaining access to the highest positions of power.

4) Promotes corruption – Aid money is fungible and readily transferred into private bank accounts. Moyo estimates that $10bn of aid money disappears from the African continent in a single year.

4) Economic Fallout – Moyo suggests that contrary to popular belief developing nations are overwhelmed with foreign aid, lacking the administrative capabilty to absorb such amounts within a fragile economy. This excess of liquidilty creates high local inflation reducing the incentives to save (creating a consumer culture) and pushing up prices both locally and in relation to export produce.

5) Public Services – Aid money negates the need to create a credible institutional structure based on a transparent system of tax collection. This is despite the size and gross inefficiencies associated with a public sector in developing nations.

In contrast to a system undermined by aid and a mentality of dependency in perpetuity, Moyo proposes a solution to poverty founded on market principles and centred in the commercial bond market. From a political perspective an Asian model of benign dictatorship is preferred, Moyo recommends strong, short term, autocratic governance as a vehicle for developing credible institutions and a business friendly environment. This demonstration of compliance to the Washington Consensus will improve credit ratings, lower interest rates in relation to sustainable loans and produce growth. Moyo also recognises the need for reform of the WTO and world trade rules in order to protect fragile markets from asymmetrical competition from large industrial blocs (US,EU,BRIC).

Irrespective of the financial crisis (for which Goldman Sachs is under investigation) and the all-to-real weaknesses of global capitalism, I would suggest that Moyos essay is neither an original nor detailed account of poverty and the market approach to deliverance. I can only presume it got so much attention because she is African with a rational, digestable, western perspective on African problems. However, her account lacks the depth of an authentic scientific research and only considers membership of the Washington Concensus in terms of its potential benefits.

In short, Moyo fails to address the risks associated with global capital, particular for the weak and vulnerable nations for which she is concerned. This despite reference to the SAPs designed to create just the kind of business friendly environment proposed. This very instrument wrought devastation across the entire developing world in the 1980’s from which it is still recovering (Easterley). Whilst Moyo recognises a number of hurdles to authentic market entry i.e WTO, she fails to highlight the lack of political will to change the asymmetrical relationship, afterall for capitalism to truly succeed someone, somewhere has to be exploited. In this context, Easterley’s conclusion appears to be correct; you can not impose capitalism on a sovereign nation (or continent) and presume that it will adhere.

My main criticism however is at the profound level of African identity and culture, a theme that despite her heritage, Moyo almost completely ignores. African thought and values are not a development of the European Enlightment project nor western notions of liberalism and freedom. Whilst there is evidence to suggest that African society is fragmenting (presumably as a result of market forces), its authentic identity is founded on notions and symbols of solidarity, unity and a communal lifestyle. It seems that Africa chooses equality over freedom (though it doesnt mean they dont want freedom), operating on a different social paradigm to western industrial cultures.

This does not negate the basic principles of trade and profit, market places thrive in Africa no less than anywhere else. I believe its simply a rejection of western style corporate capitalism; it fails in Africa principally and somewhat prosaically, because Africans dont want it. Imposing this particular brand of market freedom on an unwilling society can only undermine social identity and stability, exaggerating existing problems of poverty. Ironically, Moyo appears to have fallen into the colonial mindset; knowing whats best for the continent, rather than letting it decide for itself.