As a new inward-looking political dynamic sweeps across the traditional donor countries in Europe and North America, foreign aid budgets are coming under increased scrutiny. This mood in aid politics is most explicit in the Trump administration’s intention to inflict a deep cut in US aid.

Critics suggest that the persistence of high rates of extreme poverty in sub-Saharan Africa and South Asia implies that long term development aid is ineffective. There is concern at the apparent neglect in aid programmes of the correlation between poverty and conflict. A large proportion of low income countries are classified as fragile states, lacking robust governance in the wake of internal violence.

The traditional aid model is already questioned by African governments, wary of their budgetary dependency and resentful of the strings attached to most grants and concessional loans. These conditions might demand adherence to templates for economic management, observance of human rights and democracy, and project work for the donor’s own corporations and consultants.

China’s strategic aid model is more popular, in its lack of conditionality. Offers of finance and construction usually require that loan repayments are realised in the equivalent value of oil, timber or other natural resources.

Campaigners pressing for enhanced commitment to foreign aid can point to many impressive success stories. Foreign aid made a significant contribution to the attainment of the Millennium Development Goals, including the elimination of gender disparity in education, increasing access to safe drinking water, reducing infant mortality and preventing millions of deaths from AIDS.

Aid budgets also cater for humanitarian emergencies, such as the ebola health crisis, often in response to public pressure on donor governments, accentuated through the lens of global media coverage.

The response by many governments to criticism about aid has been to sustain their budgets but redirect funds towards global issues of “national interest”. Prevention of terrorism, control of migration and subsidy for private sector engagement top the list.

For example, the European Union’s Partnership Framework has mobilised significant funding packages for countries across the Sahel region, conditional on efforts to persuade potential migrant workers, and those already in transit, not to attempt a journey to Europe. Several European countries have become the largest single beneficiary of their own aid budgets, on account of funding the management of asylum-seekers and refugees.

Many international NGOs have expressed reservations that vital aid resource is being diverted from its core purpose of global poverty reduction. If aid budgets are simultaneously decreasing and subject to reordered priorities, the funding gap for achieving the Sustainable Development Goals will rise.

Furthermore, such priorities in aid politics diminish the the moral dimension of foreign aid, the altruism of supporting the dignity and rights of the poor. Evidence of this shifting ground is already apparent.  The world’s largest aid recipient is Ethiopia, strategically important for regional conflict resolution and control of migration, but with a lamentable record on political freedoms, according to Human Rights Watch.

Nevertheless, even the most passionate advocates of foreign aid accept that it is an insufficient tool to tackle poverty. Donor countries should additionally address the structural causes of the global divide – unfair trade and subsidy regimes, restrictive enforcement of intellectual property rights for technology transfer, cross-border environmental damage and evasion of corporate tax.

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more Finance briefings (updated updated March 2018)
Cost of Sustainable Development Goals
Aid Statistics
Tax Justice
Sovereign Debt
Innovative Finance
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