30. Dambisa Moyo Says Foreign Aid Can’t Solve Problems, but Maybe Corporations Can

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**Steve Levitt** (0:36)
What hasn't my guest Dambisa Moyo done? Born in Zambia at a time when blacks weren't even given birth certificates. She's earned an undergraduate degree in chemistry, an MBA, a second master's degree, this one from Harvard, and an economics PhD from Oxford.
She worked at the World Bank and Goldman Sachs. She's written four best-selling books, was named one of Time Magazine's 100 People Who Shape Our World. She runs marathons, and she sits on the board of some of the largest corporations in the world.

**SPEAKER_5** (1:06)
Welcome to People I Mostly Admire with Steve Levitt.

**Steve Levitt** (1:12)
If you know me at all, I would never invite someone on this show just because she has a sparkling resume. What matters to me is that Dambisa has big, radical ideas. Most prominent among these ideas is her claim that the more than $500 billion in foreign aid that's been directed towards African countries over the last 50 years, not only hasn't helped Africa, it has actually hurt Africa. Bill Gates vehemently disagreed. When her book Dead Aid came out, laying out her arguments on the topic, Gates described the book as promoting evil. Who's right? I have no idea, but I'm excited to hear what she has to say.
We are both economists, but very different kinds of economists. I study little things, and you study big things. So I'm expecting you to teach me a whole lot today. Is that a deal?

**Dambisa Moyo** (2:05)
I will do my best.

**Steve Levitt** (2:06)
So let's start with Africa. You've been an outspoken critic of foreign aid to Africa. But before we dive into the specifics of your argument, I was hoping you could fill me in on some facts and understanding about how Africa has been doing economically.
What's been going on?

**Dambisa Moyo** (2:23)
In the last 10 years, Africa hasn't really been decoupled from the broader constructs of the world. Trade growth has slowed. Capital flows have been challenged because of capital restrictions and controls for repatriating money. The advent of China across Africa, but obviously globally, China is today the largest foreign lender, trading partner, as well as the largest investor in many countries. And of course, Africa has been a beneficiary of that, with awards and all of what that entails. Where we are today, the situation is precarious, to say the least. Although we have seen a number of COVID cases, Africa has, knock on wood, seen nowhere near the sort of devastation that one might have expected. And indeed, we're not seeing in India.

**Steve Levitt** (3:13)
There's a general impression, or at least my impression, that the economic performance overall, growth rates in Africa, the incomes are extremely low, and that may be surprisingly low, given people's expectations over time. Is that an accurate statement? I know Africa is a big continent with a lot of diversity.

**Dambisa Moyo** (3:32)
Yeah. So listen, as economists, we love numbers. So let's put some numbers on this. In order to double per capita incomes in one generation, a generation being about 25 years, you need to be growing at 3% per year.
And for countries that are a lower economic base, we've seen that we need them to grow at an even faster pace, often around 7% a year. Before COVID hit in earnest in 2020, pretty much all the large economies in Africa were growing far below that 3%. So take South Africa as an example. It struggled post-financial crisis, was growing around 1% to 2%.
There are three key drivers of growth, capital, labor, productivity. And in all these respects, Africa had relatively solid capital bases. In fact, before the COVID situation, they had debt, but it wasn't of any worrisome level. Their populations are skewed to the young, and these regions of the world have invested heavily in mathematics and science. And then productivity really, this is about importing best practices and technology. Ability to leapfrog was really supposed to be an additional driver of success. But the truth is, we've not seen the outperformance we'd expect from Africa or, more generally, from the emerging markets.

**Steve Levitt** (4:50)
So thinking about the longer term, if we go back to the 1970s or maybe the 1960s, places like Singapore, South Korea, Indonesia, Malaysia, they would have had incomes per capita that were similar to Africa.