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Aid

What is aid?

Aid (also called international aid or foreign aid) is the voluntary transfer of resources from one country to another. Aid may be bilateral, given directly from one country to another, or multilateral, dispensed via international organisations such as the World Bank, IMF (see World Bank/IMF) and European Development Fund, or via charities or NGOs (non-governmental organisations) such as Oxfam, ActionAid or Médecins Sans Frontières. Most types of aid fall into two categories: humanitarian aid and development aid.

What is humanitarian aid?

This is emergency aid supplied to alleviate suffering in the immediate aftermath of a war or a natural disaster. It often involves the provision of food, medicine, transport, temporary housing (e.g. refugee camps) and logistical support (management of the flow of supplies and information).

What is development aid?

Development aid (or development assistance) is a much bigger sector than humanitarian aid, requiring far more money, as it focuses on helping extremely poor countries develop economically and socially in the long term. This can involve improving infrastructure, building schools and medical centres, providing clean water supplies, tackling the effects of climate change in vulnerable countries (see Climate Change), enabling access to anti-retroviral drugs, setting up microfinance initiatives (see Microfinance), providing financial grants, loans, or debt forgiveness grants, and donating skills and expertise in many different areas. In the long run, development schemes aim to help poor countries become self-sufficient, well governed, safe and economically prosperous.

Which countries supply the most aid?

The world’s principal aid donors are the 22 rich DAC (Development Assistance Committee) states of the OECD (Organisation for Economic Co-operation and Development). Of these, the USA, Germany, France and UK give the most aid in real terms, but as a percentage of Gross National Product (GNP) they give less than the 0.7% demanded by the UN in order to meet the Millennium Development Goals. In fact, most DAC countries are lagging behind on an average of 0.47% of GNP—the only countries doing better than the 0.7% target, and therefore the most generous donors in relative terms, are Sweden, Luxembourg, Denmark, Norway and the Netherlands. In 2005, wealthy countries pledged to step up their aid donations at the G8 summit at Gleneagles, and also agreed to write off US$40 billion worth of debt owed by 18 HIPC (Highly Indebted Poor Countries) to the World Bank, IMF and African Development Fund. Since then the UK has made good on its commitments to increase aid, and this looks set to continue despite the economic crisis, with Alistair Darling’s 2009 Budget pledging to deliver 0.6% of GNP by 2010-11 and reach the UN target of 0.7% in 2013.

What are the Millennium Development Goals?

These are a set of eight international development goals to be met by 2015 which grew out of the United Nations Millennium Declaration signed in September 2000. All 192 UN member countries and over 23 international organisations agreed to meet these ambitious goals, which were: eradicating extreme poverty and hunger (halving the number of people that live on less than a dollar a day); ensuring all children receive primary education; eliminating gender disparity at all educational levels; reducing by two-thirds the mortality rate of children under five; improving maternal health; halting and reversing the spread of AIDS, malaria and other diseases (and ensuring universal access to AIDS treatment by 2010); ensuring environmental sustainability and establishing a global partnership for development. Progress towards meeting these goals has been steady in Asia and South America, but sub-Saharan Africa is falling well short and some of its countries are unlikely to meet any of them. Despite a falling number of armed conflicts, Africa is still rife with disease, poverty and weak governance and remains the biggest focus and challenge for development programmes today.

How does the UK government spend its aid budget?

This is handled by DFID (the Department for International Development), a branch of the government with its own Secretary of State (currently Douglas Alexander MP). In 2007/8, 57% of DFID’s programme was spent on bilateral aid, both development and humanitarian—the largest recipients of bilateral development assistance were India, Ethiopia and Tanzania, whereas the largest humanitarian aid channels were to the Sudan, the Democratic Republic of Congo and Iraq (see Darfur, Congo and Iraq); roughly 10% of bilateral assistance went to UK Civil Society Organisations such as the British Red Cross, VSO (Voluntary Services Overseas) and Oxfam; 38% of DFID’s programme went on multilateral aid, chiefly to the European Commission’s Development Fund, followed by the World Bank and the United Nations.

How effective is aid?

There are plenty of success stories that testify to the effectiveness of aid in saving the lives of poor people, particularly those suffering from diseases; for example in Morocco, cases of blinding trachoma—a bacterial eye infection—have fallen 75% since 1999 thanks to a massive donation of antibiotics from a pharmaceutical company; in China, a World Bank loan financed a tuberculosis project which is now saving an estimated 30,000 lives per year; and in Uganda and Malawi, anti-retroviral drugs issued by the Global Fund to Fight AIDS, TB and Malaria have kept hundreds of thousands of HIV/AIDS sufferers alive since 2001 who would otherwise have died. However, there are many cases where aid has not reached its intended target, or has been hampered by poor planning, corrupt governments in recipient countries or war. In 2007, the fighting in southern Afghanistan made it too dangerous for DFID to deliver much-needed food aid to thousands of starving people, which only increased local support for the Taleban insurgents. Beyond the effectiveness of delivering food or medicine, the effectiveness of development aid is difficult to measure and is a matter of some controversy.

Why?

On the face of it, richer countries helping poorer countries seems like a straightforwardly good thing. And it is true that if all aid were suddenly to stop, millions of people around the world would suffer as a result. However, there is an ongoing debate surrounding the long-term effects of aid on developing countries. It often centres on the fact that aid is seldom given for purely altruistic reasons, but usually comes with strings attached. Aid programmes were started in earnest during the Cold War by the USA/NATO and the Soviet Union as a way of fostering alliances with weaker countries and influencing their politics with capitalist or communist ideology. Since the collapse of communism, the World Bank and the IMF have been accused of being run (at least in part) by people with vested business interests who use aid programmes to open up new opportunities for global capitalism in developing countries. Some say this sort of ‘neo-colonialism’ leads to exploitation and benefits the corporations more than the countries concerned, whereas others argue that aid creates a dependence on the donor countries, and that increased trade is instead the key to sustainable development—hence the slogan ‘trade not aid’. The OECD estimates that 58% of all foreign aid is ‘tied aid’—consisting of bilateral agreements in which money has to be spent in the donor country, thereby increasing the donor country’s exports and exerting its political influence over the recipient country. Tied aid is also less efficient than ‘untied’ aid, increasing costs for the recipient country by around 20%, much of which is spent on paying the high wages of international consultants. Aid has also been criticised for sustaining weak or corrupt governments; with a steady stream of unearned revenue at their disposal, they do not need to rely on the taxes of their citizens, who thus lose the ability to hold them accountable. Alternatively, it might allow such governments to free up funds to spend on potentially dubious areas such as defence, while the essential needs of their people are left to aid programmes.

‘Millions in Africa are poorer today because of aid; misery and poverty have not ended but have increased.’

DAMBISA MOYO, Zambian economist and author of Dead Aid

‘Development assistance based on proven technologies and directed at measurable and practical needs—increased food production, disease control, safe water and sanitation, schoolrooms and clinics, roads, power grids, Internet connectivity, and the like—has a distinguished record of success.’

JEFFREY D. SACHS, American economist, Special Advisor to UN Secretary-General Ban Ki-moon and author of Common Wealth and The End of Poverty