Modern Mining May 2025

COLUMN

“Trade, not aid” may be a false dichotomy By Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

One of my very first forays into academia was a book review on development aid. The topic happens to have become a major news item since Trump re-ascended to the White House. Some of you may recall the book: Dead Aid : Why Aid is Not Working and How There is Another Way for Africa published in 2009 by Dambisa Moyo, a Zambian author. In my last column here, I drew attention to a 2008 paper published by a scholar who was then with the World Bank; he persuasively argued that aid is indeed more of a curse than oil in respect of its detrimental impact on broad-based development.

Dr Ross Harvey, director of research and programmes at Good Governance Africa (GGA)

South Africa’s trade relationship with the US is valued at roughly US$20 billion.

I n 2009, Moyo wrote that “at least US$10 billion of foreign aid receipts depart Africa every year,” drawing attention to the massive levels of corruption associated with siphoning off aid money into Swiss bank accounts. She argued that aid fundamentally undermines the incentive to build human and physical capital, the crucial ingredients for creating a future tax base. Moyo made a forceful argument that African governments, especially, needed to be weaned off the addiction to aid. No one paid attention. Now Trump has turned off the taps. Moyo argued for fair trade and innovative financing to replace aid. A strong notion emerged at the time that what the continent required was “trade not aid.” An understandable sentiment, except that it has proved to be a false dichotomy. Trade is certainly preferable to aid, but the two are not mutually exclusive. Properly directed aid

can and should build the foundation for stronger trade. One problem with many aid sceptics is that they often don’t adequately address the niggly question of comparative advantage and the negative terms of trade that afflict most African nations. As I wrote in my review: “One critique Moyo doesn’t address adequately, however, is that even if Africa did trade more, trading in our traditional comparative advantages (commodities) would render us stuck in a commodity-cycle, where the [value is] low and supply and demand are volatile at best. Surely economic diversification is a must, lest the export of raw materials continue to be the unpredictable mainstay of African economies. … Given tendencies to path dependence in developmental trajectories, it is not clear that blind continuation of commodity exports is at all the wisest strategy.”

34  MODERN MINING  www.modernminingmagazine.co.za | MAY 2025