Does Africa's Future Depend on Global Financial Institutions?
About This Event

"The IMF is back," announced International Monetary Fund (IMF) managing director Dominique Strauss-Kahn at the G20 summit in London. Both the IMF and the World Bank have declared that Africa is in a state of economic crisis and plan to address the continent's development at spring meetings of the joint Listen to Audio

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World Bank-IMF Development Committee and the IMF's International Monetary and Financial Committee. Preliminary discussions have yielded numerous policy proposals, such as allotting 0.7 percent of all stimulus plans to a World Bank "vulnerability fund," tripling lending to poor countries, and boosting the IMF's reserves by $1 trillion.

But are these plans, which rely on large expenditures from developed countries, viable solutions to Africa's development challenges? Will the global recession necessarily impact Africa more than the rest of the world? What risks and opportunities for economic reform does the global recession present for Africa? Does the reassertion of these international financial institutions' influence on the continent counteract the domestic and regional interventions that African countries are taking themselves to promote economic stability and growth?

Join us as we discuss these and other important questions with Dambisa Moyo, author of Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa; Nicholas Eberstadt, Henry Wendt Scholar in Political Economy at AEI; and Paul Wolfowitz, AEI visiting scholar and former World Bank president. AEI resident fellow Mauro De Lorenzo will moderate.

Event Summary

WASHINGTON, APRIL 24, 2009--The international development establishment has responded to the global economic crisis with calls for increased aid and lending to Africa. On April 21, AEI scholars and Dambisa Moyo, the author of Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa, gathered to discuss proposals for increasing foreign assistance to Africa and reasserting the role of international financial institutions—particularly the International Monetary Fund (IMF) and the World Bank—on the continent. According to Moyo, the international financial institutions should play a short-term role in helping Africa weather the financial crisis. "My sense is that bailout aid is required," she said. "I do believe that given the situation in the markets, there is a role for the International Monetary Fund." Nevertheless, this role should not extend to open-ended aid commitments. Instead, loans and foreign assistance to Africa should be targeted toward short-term goals that will allow the continent to survive the worldwide downturn.

AEI's Henry Wendt Scholar, Nicholas Eberstadt, agreed that foreign assistance is not the solution to Africa's development challenges. Over the past sixty years, he said, official development assistance (ODA) has failed to bring significant economic development and growth to the continent. "Looking toward the future will require a big change of the role of ODA in the region and not least the expectations for ODA's performance." Eberstadt previously addressed foreign aid reform in an AEI Development Policy Outlook, in which he and Carol Adelman argued for a new "business model" for U.S. foreign aid.

AEI visiting scholar and former World Bank president Paul Wolfowitz put forward a more positive outlook toward Africa. The continent is home to some significant emerging economic success stories, such as Mozambique and Rwanda, whose presidents have implemented business-friendly reforms and attracted investment to their countries. "There's something going on there and, to put it in its shortest single word, it is leadership."

Africa's strategy for dealing with the global economic crisis will be different than that of the United States, Europe, or Asia. Global financial institutions and foreign aid may be able to mitigate the downturn in the in the short-term, but they cannot be substitutes for long-term private sector growth.

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Mauro De Lorenzo is a resident fellow in foreign and defense policy studies at AEI, where he is researching a book about the political economy of reform and foreign aid in transition countries and the place of development policy in America’s relations with the nonaligned world. In 2005, Mr. De Lorenzo worked as a consultant to Afghan construction companies in Kabul. He earlier served as a research associate at both the American University in Cairo and the Makerere Institute of Social Research in Kampala, Uganda, focusing on refugee policy and the wars in the Great Lakes region of Africa. In 2002, he researched and was associate producer of The Price of Aid, a BBC documentary about the contradictions inherent in using food aid to address economic policy failures in Africa.

Nicholas Eberstadt holds the Henry Wendt Chair in Political Economy at AEI and is also a senior adviser to the National Bureau of Asian Research in Seattle. He serves on the advisory board of the Korea Economic Institute of America and is a founding member of the U.S. Committee for Human Rights in North Korea. Mr. Eberstadt is currently, inter alia, a member of the President’s Council on Bioethics and the Visiting Committee for the Harvard School of Public Health. Mr. Eberstadt is regularly consulted by governmental and international organizations, including the U.S. Census Bureau, the U.S. State Department, the U.S. Agency for International Development, and the World Bank. Mr. Eberstadt has published over three hundred studies and articles in scholarly and popular journals, mainly on topics in demography, international development, and East Asian security. His dozen-plus books and monographs include The Poverty of Communism (Transaction, 1988); The Tyranny of Numbers (AEI Press, 1995); The End of North Korea (AEI Press, 1999); Korea's Future and the Great Powers (University of Washington Press, 2001); The North Korean Economy: Between Crisis and Catastrophe (Transaction, 2007); Europe's Coming Demographic Challenge: Unlocking the Value of Health (AEI Press, 2007); and, most recently, The Poverty of "The Poverty Rate": Measure and Mismeasure of Want in Modern America (AEI Press, 2008).

Dambisa Moyo is the author of Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa (Farrar, Straus and Giroux, 2009). Ms. Moyo was born and raised in Zambia, Southern Africa. She worked at Goldman Sachs for eight years in debt capital markets, hedge fund coverage, and global macroeconomics. Previously, she worked at the World Bank. Ms. Moyo was recently nominated to the board of Lundin Petroleum, a global independent oil and gas exploration and production company. She is a member of Cambridge University’s Centre for International Business and Management and the Royal Institute of International Affairs. She is also a patron for Absolute Return for Kids, a hedge fund-supported children’s charity, and serves on the board of the Lundin for Africa Foundation, which pledged $100 million toward microfinance initiatives. Ms. Moyo argues for more innovative ways for Africa to finance development, including trade with China, accessing the capital markets, and microfinance.

Paul Wolfowitz is a visiting scholar in foreign and defense policy studies at AEI, where he studies development issues. He has spent more than three decades in public service and higher education. Most recently, Mr. Wolfowitz served as president of the World Bank and deputy secretary of defense. Prior to that, he was dean and professor of international relations at the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University. He has also served as under secretary of defense for policy (1989-93) and U.S. ambassador to Indonesia (1986-89). Mr. Wolfowitz was the assistant secretary of state for East Asia and Pacific affairs (1982-86) and director of policy planning at the Department of State. He worked as deputy assistant secretary of defense for regional programs at the Department of Defense and as special assistant to the Strategic Arms Limitation Talks, Arms Control and Disarmament Agency (1973-77).

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