By PRABASHINI MOODLEY | Managing Director, Old Mutual Corporate
As economist and author Dambisa Moyo explains in her book Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa: “Foreign aid fosters a culture of dependency that can significantly undermine the potential for innovation and self-sufficiency among African nations.
When countries receive sustained financial support without the necessity for accountability or self-reliance, it often leads to a mindset where leaders and citizens alike become reliant on external assistance rather than seeking local solutions.”
International funding has undoubtedly played a role in supporting developing nations, but its effectiveness has often been debated. Several studies and reports have highlighted that a significant portion of international aid fails to reach its intended recipients due to factors such as administrative costs, inefficiencies in distribution and, of course, corruption.
A 2023 study published in the Journal of International Development, for example, pointed out a number of investigations that found a link between Chinese aid projects in Africa and increased local-level corruption.
Many opinions have also been critical of output-based aid (OBA). Critics of OBA schemes point out high administrative costs from activities like food voucher distribution, monitoring outcomes, and even voucher theft or counterfeiting.
American political scientist and professor Nicolas van de Walle has even argued that international aid has sustained economic stagnation in Africa by disincentivising governments to undertake reform, sustaining poor bureaucratic systems that would otherwise have been corrected naturally through market forces.
This is not to say aid should be dismissed altogether, but it prompts the question: Is our society receiving the right kind of support? More importantly, how can we better structure ourselves to create sustainable progress rather than rely on short-term relief?
