Global crisis an opportunity for Africa

By Matthew Tostevin

LONDON (Reuters) - Far from being all bad news for Africa, the global financial crisis is a chance to wean the continent from aid that has only entrenched poverty, a former World Bank economist said.

Dambisa Moyo's arguments, set out in a new book, fly in the face of warnings from some African leaders, global financial institutions and campaigners that the world's poorest continent needs more donor money to survive the downturn.

"In a way the crisis actually provides the African governments with the situation where they cannot rely on aid budgets coming through from the West," she told Reuters in a television interview on Wednesday.

"There is a real opportunity for policymakers to focus on coming up with more innovative ways of financing economic development," said Moyo, a Zambian who until recently worked for Goldman Sachs and has just published "Dead Aid".

Moyo believes Africa not only has little to show for more than $1 trillion in well-meant development aid over the past 50 years, but is worse off because of its effects in distorting economies and encouraging bureaucracy and corruption.

As alternatives she seeks an increase in trade, particularly with Asia, more foreign direct investment, more microfinancing and more efforts to raise money through capital markets.

The global financial crisis appears to have made all those avenues much harder, however. Kenya, Uganda and Tanzania are among states that recently shelved bond issue plans. Foreign funds have been leaving African markets.

But Moyo, who lives in London, said she was not discouraged.