Charity CHAMPs – get involved with microphilanthropy now!


Does Foreign Aid to Africa Do More Harm Than Good? How About Microfinance? by sylvng

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!

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7 Comments so far
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Aid certainly has its limitations. Microfinance seems to work, but may not address all economic issues. Every different type of philanthropy will argue that they are the best, the most effective and have the highest impact. At least people are trying!

Comment by Anonymous

I just listened to the CBC Idead podcast of the debate and have to get this off my chest.

Bear in mind that both Moyo and de Soto are products of Western economics training, which tends to indoctrinate its pupils with free market fundamentalism. Not all economists fall into this philosophy, but a surprisingly large number do.

These fundamentalists tend to start with free market solutions and rationalize everything toward that goal. Rationalizations seem more convincing in the field of economics, where the lack of empirical evidence is glaring.

There are three billion people living on under $2 per day. One trillion dollars over 60 years is peanuts compared to the economies of even the poorest nations. It works out to providing 23 million people with $2 per day over that time span.

Sure, aid is flawed. But the biggest problem with aid is that we’re not providing enough of it. To suggest it’s a net negative for the continent is absurd. Laissez-faire, property rights and other Ayn Rand fantasies are not the answer.

Comment by sisu hockey

In my opinion, perhaps one of the greatest things that Dambisa seems to be doing is keeping the need for developing nations to be incented (or at least not un-incented) to become independent of aid front and centre. Since the chances of signficant changes in aid levels (either up or down) seem to be unlikely in the short term, the more effort that is devoted towards ensuring aid is not a crutch, the better. I think that’s really the point behind all the rhetoric.

Comment by Kevin

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Comment by Lifyeffobecex

Hi all. Everybody likes to go their own way–to choose their own time and manner of devotion.
I am from Singapore and , too, and now am writing in English, give true I wrote the following sentence: “Org issues payment medicaid chi ctrib.”

THX :(, Roma.

Comment by Roma

Everything posted made a lot of sense. However, what
about this? suppose you composed a catchier post title?
I mean, I don’t want to tell you how to run your website, but what if you added a post title that grabbed people’s attention?
I mean Does Foreign Aid to Africa Do More Harm Than Good?
How About Microfinance? | Charity CHAMPs –
get involved with microphilanthropy now!
is kinda vanilla. You could peek at Yahoo’s home page and note how they create post headlines to grab people interested. You might add a video or a picture or two to grab people excited about what you’ve written.
Just my opinion, it would make your posts a little livelier.

Comment by Franklin




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