Are NGOs Killing African Entrepreneurship?

I've heard complaints about NGO distortion of local economies before, but somehow, this one hits me particularly hard:

"Africans don't see a reward system in place for being entrepreneurial. In fact, they view it as a matter of survival, not an opportunity to lift themselves out of poverty. Rather, what they learn at a very early age, is that in order to make good money, they should learn to speak English incredibly well and then maybe, just maybe, they can get a job driving for an NGO. In a few years, if they play their cards right, they might be able to land an NGO job as a project manager and even advance further."

Sammy's point was simply this. As a struggling businessman creating new start-ups, he could not compete with what NGO's were paying for some of the best and brightest. And even worse, he said, "by the time the NGO's are done with them, there isn't an ounce of entrepreneur left."

Matt Rognlie's post on the topic implies that we should be following a minimalist approach to aid:  focus on the things that we know really, actually work (think public health) and leave the rest alone.




I don't really know what to do with this.  On the one hand, it's terrible to think that aid is keeping economies from developing--and this isn't the only such critique; there are also fears that aid acts like a "resource curse", insulating political leaders from the need to win public support for their spending, and breeding corruption.  On the other hand, I'm not sure I'm quite willing to walk up to a woman dying from malnutrition to tell her that I'm sorry, we'd like to help, only unfortunately it would distort the local economy and so I'm afraid you'll need to lean into the strike zone and take one for the team.

On the third hand, I'm conscious that in this scenario, I am biased towards the seen harm, rather than the unseen--I'll never identify the people who might have been pulled out of poverty if we hadn't screwed up their economy, so my tendency is to discount them.

Aid is the most depressing topic in economics.  I don't know how William Easterly and Jeffrey Sachs stand it.