International development aid

Development aid has long been recognized as crucial to help poor developing nations grow out of poverty. There are numerous forms of aid, from humanitarian emergency assistance, to food aid, military assistance, etc.

In 1970, the world’s rich countries agreed to give 0.7% of their GNI (Gross National Income) as official international development aid, annually. Since that time, despite billions given each year, rich nations have rarely met their actual promised targets. For example, the US is often the largest donor in dollar terms, but ranks amongst the lowest in terms of meeting the stated 0.7% target.

Furthermore, aid has often come with a price of its own for the developing nations:

  • Aid is often wasted on conditions that the recipient must use overpriced goods and services from donor countries
  • Most aid does not actually go to the poorest who would need it the most
  • Aid amounts are dwarfed by rich country protectionism that denies market access for poor country products, while rich nations use aid as a lever to open poor country markets to their products
  • Large projects or massive grand strategies often fail to help the vulnerable as money can often be embezzled away.

[Anup Shah]

Africa still needs aid

Views by Bob Geldof, musician, member of the Africa Progress Panel chaired by Kofi Annan, and a businessman and campaigner against poverty: 

With the U.K. becoming the first G-8 country to spend 0.7 percent of its gross national income on overseas aid, the government’s recent budget was an exciting moment for the international development community.

But with extreme poverty falling all around Africa, and the continent’s mineral resources providing more revenue now than international aid, some observers are asking whether international aid is out of date.

Africa needs trade, not aid, they say. In truth, however, they still need both.

Africa has the world’s fastest growing population, expanding by more than 20 million every year, and must create jobs fast to keep its unemployment rate from rising. Some analysts highlight the Middle East, where failure to generate enough jobs for young, urbanized populations had catastrophic consequences for political and economic stability.

Trade – in its broadest sense – will create the jobs that Africa so badly needs. So Africa’s leaders must identify and nurture labor-intensive industries such as agriculture, manufacturing, and hospitality in order to create more jobs. This belief in trade is entirely consistent with a profound respect for aid. I have learned that one begets the other.

The 2005 Gleneagles G-8 summit, for example, brought debt cancellation and increasing levels of aid that helped to school tens of millions of children and triggered an intellectual stampede that is propelling at least some of Africa’s rapid economic growth. Today, Africa has some of the world’s fastest growing economies and foreign investors are tripping over themselves for a slice of African profit.

Almost two dozen of Africa’s 54 nations have now reached middle income status, and more undoubtedly will do so by 2025. As noted by the World Bank’s lead economist in its Nairobi office, if sub-Saharan Africa were a single country, the World Bank would already classify it as middle-income, with an average income of more than $1,500.

But Africa, like every other continent, needs its aid. Away from the investment analyses and high growth headlines, some 40 percent of Africa’s one billion population still live on $1.25 per day or less.

Trade, jobs, and opportunities remain critically important for Africa.