Charity CHAMPs – get involved with microphilanthropy now!

Last night I attended a Munk Debate on the topic of foreign aid. Dambisa Moyo and Hernando De Soto argued the view that foreign aid does more harm than good, while Stephen Lewis and Paul Collier were for foreign aid. It was a very stimulating discussion, with both Dambisa and Stephen both getting quite passionate about their views. You can read the Toronto Star’s coverage here.

Some of Dambisa and Hernando’s arguments supporting that aid does more harm than good were:

• Africa cannot rely on aid forever; the continuance of aid as it exists now only makes governments more complacent and less likely to take responsibility for its own citizens
• $1 trillion has already been spent on Africa in the last 60 years, and poverty has not decreased
• Aid fuels corruption, encourages inflation, causes debt and civil unrest, and kills entreprenurship
• Africans need property rights in order to raise capital, not more aid

While Stephen and Paul aruged that:

• Aid has fed over 12M African children, decreased malaria rates by 50% in some African countries, and has provided for immunizations
• Africa cannot rely on private investment and global finance alone; private investment often comes with negative side-effects (think China’s involvement with Africa), and aid is required to transition African countries to mixed economies
• Aid has helped Botswana’s transition, and in the grand scheme of things aid is not the only vehicle required for change – security, trade policy, and governance are all needed. Expunging aid would not only remove a key proponent of change, it wrongly diminishes the importance of other factors.

Interestingly, going into the debate the public was 61% for foreign aid. After the debate, that support fell 5% to 59%.

Of course I had my ears perked up for microphilanthropy, and specifically microfinance.  From my perspective Dambisa seems to support microfinance as a great way to create jobs, which is a better solution than money hand-outs. Paul Collier also agreed that microfinance has been doing good, although he thought that its benefits are overrated. He called it a “love affair with the pheasants”, and stated that it underlines the larger failure of urban African economies to take off.

In general I think everybody agrees that aid for Africa is well intentioned, and that there are ways about how aid is implemented that definitely requires changing to become effective. In my opinion, to go to either extreme of saying that aid should be cut off entirely or that aid should be given freely through the current system would be a mistake, which is why I had a real difficulty casting a ballot at the end of the evening. The word “aid” to me means more to me than just providing cash handouts and I can’t imagine that Dambisa’s book, “Dead Aid”, actually aruges that all forms of aid are doing more harm than good. Of course, I haven’t read the book (I do want to though), but wouldn’t raising awareness on African issues also constitute “aid”, and how would you argue that raising awareness is negative?

So the question remains. What do you think? Does foreign aid do more harm than good? Let me know your thoughts!