“For it is in giving that we receive.” This iconic quote was a prayer of peace by Saint Francis of Assisi, inspiring the spirit of generosity and selflessness in many who sought to be enriched. Except the same quote could be applied to explain why developed western nations even bother with foreign aid, but for far less altruistic reasons. Foreign aid is not always given with the most compassionate of agendas, as the various parties in the process (save for the actual intended recipients of it)—from the governments that give the aid, to the leaders of the aid-receiving countrieshaving their own designs on them. All of these result in little to no improvement in the lives of those who so desperately need this aid. Sometimes, aid may even exacerbate the situation for the recipients. As such, global aid does not always improve and sometimes even worsens the lives of those who need it the most.

On a governmental level, it may appear as though leaders of developed nations provide global aid for solely humanitarian and altruistic purposes. But this is not necessarily true. More often than not, aid is carefully and rationally calculated. Contrary to popular belief, aid is a trade for policy masquerading as charity and is made between leaders for their own intentions.  For the aid-giving countries, their motive for giving aid could be to influence the aid-recipient to act in a way that benefits them, politically or economically. These conditionalities attached to the aid makes donor countries focus too much on the commercial advancement of their country instead of what the recipients need. In the United Kingdom, the Overseas Development Administration (ODA) allegedly granted aid connected to the achievement of foreign policy goals or British companies winning export orders. The scandal concerned was about a hydroelectric dam on Pergau River in Malaysia which was funded by the UK foreign aid budget in 1991. In return, the Malaysian government bought around £1 billion worth of arms from the UK. On another occasion, in 1995, the World Bank promised loans to Mozambique if it cut its export tariffs on raw nuts in an attempt to open up its economy. Not long after, the country’s once-thriving nut industry was in the doldrums, leaving 10,000 people out of work. U.S. Representative Howard Berman once mentioned, “Aid is not a gift. The United States provides foreign assistance because it serves our interests.” It is painfully clear that tied aid is designed to benefit the donors and not the recipients, with no improvement to the lives of those who are actually in need of it.

However, selfish as aid may be, the idea of rendering aid to develop other countries to prevent their problems from reaching us may be incentive enough for aid to be effective and actually help those who need it. Bill and Melinda Gates recounted such concepts in their Annual Letter 2019, discussing how countries like the United States invest in foreign aid because it increases stability abroad and security at home, that is if the aid provided does produce results. Examining the recent Ebola outbreak, strengthening global healthcare systems decreases the chances of a deadly pathogen like Ebola becoming a global epidemic. Improving the education and safety abroad keeps people from leaving their countries to seek better lives elsewhere and could help in the long-term in alleviating the migrant crisis happening in many of these aid-donor countries, like the US and Europe. This new mindset change towards solving problems in other countries to prevent them from reaching us has led to a paradigm shift in the aid industry, from being humanitarian to be results-driven. This idea is echoed in Raj Kumar’s new book, “The Business of Changing the World: How Billionaires, Tech Disrupters, and Social Entrepreneurs Are Transforming the Global Aid Industry”, where Kumar writes that the aid industry has transformed from one organized around good intentions to one with competition for good results. And this is good news for the aid recipients. At last, donors are actually trying to make an impact instead of being driven by their own ulterior motives. In the past, aid was often given without consideration to people’s actual needs as outsiders assumed they knew what they needed. For example, following the 2004 Indian Ocean Earthquake, Sri Lanka’s foreign minister reportedly said that the aid coming in, despite the goodwill, was “not very useful”, as it included containers full of teddy bears and rice when the country was expecting a bumper harvest. But with the transforming of the aid industry itself, we could see less of such incidents occurring in the future, with recipients’ lives being improved in a tangible sense.

Yet, another major obstacle in foreign aid really impacting the lives of those in need are the very governments in charge of the aid-receiving countries. In many of these developing countries, corruption is rife and dishonest leaders would siphon the funds meant to help their countrymen for their own gain. A prime example of this is South Africa’s president, Jacob Zuma, who spent a whopping US$16 million to do “security updates” to his house. In actuality, he had built a new swimming pool on his property and called it a “fire protection device”, when the funds used for the project could have gone to help the South African community. Yet this preposterous situation is not a standalone case, as such cases are widely prevalent across the developing world. In Nepal, which suffers from poor governance and endemic corruption, the delivery of aid was delayed following the Gorkha Earthquake that hit the country in 2015. Isolated villages high up in the Himalayas were yet to be reached three weeks after the initial quake, increasing the potential for more deaths. Its reputation of corruption has also deterred aid, as donors are less willing to donate, ultimately impacting the innocent people affected by the quake. In this way, corrupt governments of aid-receiving countries inhibit the delivery of aid, using the resources for their own private benefit instead, which winds up hurting the people who actually need the aid.

On a societal level, excessive long-term aid can be damaging to the accountability systems of the country and cause a crutch mentality to develop. Whilst long-term aid in the aspects of education and healthcare can drastically improve the local systems, the reliance on non-governmental organizations (NGOs) and external parties to deliver essential services to the community can reduce trust and power in the government. Moreover, since aid is fundamentally different from taxes, in that they do not come from people’s own pockets, they are less likely to demand accountability from the government, letting corruption slide and adopting a fatalistic attitude to the state of affairs of the country. The over-dependence on the private aid sector to deliver is exemplified in Nepal where the high incidence of corruption has led foreign aid funds to flow into NGOs and not the government, resulting in a brain drain in its civil service as civil servants leave the government sector to work for the better-funded private aid industry. This could pose a problem for the country in the long-term as the aid industry has to exit one day. On the difference between aid and taxes, behavioural economics indicates that people react differently to money that they perceive to be theirs, and money that they perceive to belong to others. A study by the University of Toronto and Chicago in which two groups of factory workers in China were given the same 80 yuan bonus, except that the first group was told that the bonus would be taken back if they failed to produce 10 units more of goods, while the second group was told they would be given the bonus afterwards if they produced 10 units more of goods. The results were surprising as one would expect given the same conditions, workers would work the same, yet the first group worked harder than the second. This effect is due to loss aversion, which would account for the nonchalant attitudes many people in the developing world have towards corruption cases since they do not pay taxes and the funds embezzled are coming from foreign aid. They simply do not care since the money is not theirs, and hence demand less accountability from the government. In the long-run, this could be detrimental for the governance of the country as leaders have more freedom, allowing them to act in selfish ways without the risk of being voted out of office by the public. It is thus evident that over-dependence on foreign aid can have long-term consequences on the economy and political state of countries.

In conclusion, while the aid industry is reshaping to be more results-driven to have real impacts on people who need it the most, it remains motivated by the selfish gains of the leaders giving and receiving the aid who each have their own agendas. Ultimately, the ones who do not stand to benefit and even suffer from these transactions are those who so desperately need the aid. While the current state of affairs for foreign aid may seem bleak, the shift in the aid ministry to compete for good results instead of mere good intentions may hopefully alleviate the situation, bringing us closer to solving the problems plaguing the needy. 

 

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