In 1970 the world’s richest countries agreed to give 0.7% of their GNI (Gross National Income) as aid to developing countries. Now 45 years on and trillions & trillions of dollars later my question is, where has all this money been spent when still more than 35% of people in Africa live on less than $1 a day and there are still diseases such as malaria killing whole generations. Who is actually benefitting from international aid – is it the recipient or the donor?
I once read an article that stated ‘If everyone in the America stopped buying donuts for a year and this money was donated to Africa we could eradicate poverty in Africa all together’. I’m not necessarily taking this statement as gospel truth BUT think about how much money has been donated as aid over the last 45 years from richer countries (This is not including donations from numerous charities and non-profit organisations). If this money was being used effectively, then shouldn’t we have seen a significant increase in the living standards of most people in Africa?
What we don’t know about is that a lot of these aid donations are tied to various restrictive conditions, for example it would be cheaper for an African country to build its railway network using local expertise and resources rather than hiring expensive foreign consultants, experts and engineers. Not only is this a much more expensive option but it also prohibits job opportunities in that country, which could be a source of income for a lot of local people. Countries such as the US are notorious for this; in ‘the reality of aid’ report published in 2000, it stated that 71.6% of aid given by the US was tied to the purchase of their goods and services.
Many could pose the argument that at least aid is being given, however most of the time this aid is counteracted by crippling amounts of debt that is paid by developing countries. Debt payments equal to almost triple the amount of aid donations given by rich countries each year. For an improvement in equality, funds should be moving from the developed world to the developing not the other way around, however these long term debt agreements prevent this from happening.
Similarly, developing countries are faced with an asymmetric trade system, for example, foreign trade policies such as the EU farm policies put developing countries at a significant disadvantage when trading. These constrictions all play a part in causing aid dependency, rather than promoting sustainable economic growth. If developed countries really wanted to see the eradication of poverty in Africa there would be targeted investment focused on infrastructure, greater debt relief and fewer barriers to trade. This way aid can be used to empower the local people by creating more job opportunities and thus increasing local purchasing power.
It is imperative for us to see a switch of focus from the amount of aid given to the effectiveness of that aid, because from where things stand now, the wealthier countries have very little to show for their 45 years of aid donations.
By Toro Kehinde
Twitter & Instagram: @toro_ox