Dambisa Moyo' book "Dead Aid" is gaining influence among African leaders (I wanted to point to President Kagame's thoughtful commentary in the FT). I would like to add the following comments. Volumes of aid to Africa per se are not the issue; instead the issue is the quality of political leadership and the effectiveness with which aid is put to in Africa to support the continent's development. Aid, by itself, is not a bad thing and, if utilized properly, can help resource constrained economies make wise investments to move from a low to a higher base of performance. Post-war Western Europe and Japan reconstructed into a modern economy through massive aid provided through the Marshall Plan, and many developing economies in East Asia (China, Korea, etc) and South Asia (e.g., India) have taken off because of large injections of external aid and, of course, the determined will and good policies of those nations. I find the debate championing the ending of aid to Africa as a dangerous one for it misses one key economic argument: resource fungibility. Having little less external resources does not imply meager internal resources will be better utilized. Africa has a financing gap--- and aid is a part filler. Depriving aid to Africa champions presume ending aid to Africa will make African economies face harder budget constraints and that African leaders will make wiser resource allocation decisions, as a result. This could not be further from the truth. Instead, I would argue that, if this were the case, we will see economies like that of Zimbabwe fare better. Instead, on account of resource fungibility, depriving aid to African economies, given prevailing patterns of governance and resource use in African economies, would likely hurt Africa's poor more. What we need to push for is not less aid but more aid to Africa and help untangle those aspects which reduce aid effectiveness: weak and underutilized capacities, aid unpredictability, aid tying, and aid fragmentation. We should continue to push for and assist countries improve their governance and accountability capacities and systems to ensure that aid and resources of African countries are utilized more effectively for growth and lasting poverty reduction.
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