New Internationalist Issue 285


[image, unknown] New Internationalist Issue 285

Aid - the facts

The point of aid is to tackle poverty. But it has failed to do so. Targets have been missed and promises have been broken - and now official aid is being cut back to the lowest level in 20 years.

Negative growth

The diagram shows the regional share of the world's population. To the right of the vertical line are the people of countries with incomes in the 1990s that are higher than ever before: to the left, lower than in previous decades. Aid has not managed to eradicate poverty: about 1.5 billion people live in about 100 countries that are actually poorer now than they used to be. They may even be poorer today than ever before in their history. They have experienced negative economic growth. Some countries (including Ghana, Haiti, Liberia, Nicaragua, Rwanda, Sudan, Venezuela, Zaire and Zambia) last reached their current income levels as long ago as 1960, or even earlier. Most of these countries are major recipients of aid.


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Bad shot

Most estimates suggest that less than 20% of aid ever reaches poor people directly. Two-thirds of the world's poor live in 10 countries that together receive less than a third of official development assistance. The Arab States have more than six times the per-capita income of South Asia, yet in 1992 (shortly after the Gulf War) they received more aid. Populations whose governments spent more than 4% of Gross Domestic Product (GDP) on armaments in 1992 received more per-capita aid ($83) than those with military spending of less than 2% GDP ($32). The message is clear: aid is intended to serve the strategic and other interests of the donors and not to eradicate the poverty of recipients.

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Moving target

..........Trends in the distribution of aid between sectors

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The chart shows how aid has shifted away from spending on health and education - the core tasks of poverty reduction - towards debt 'relief' and emergencies. In fact, overall, considerably more than half the total is not 'aid' at all, but returns to the donors in interest payments and purchases of goods and services.


Rwanda (largely because of the genocidal civil war) and Mozambique received more aid in 1994 than their total income from all other sources. All the countries listed here receive so much foreign aid as a proportion of their income that they are 'dependent' - without it their economies would collapse. China is the largest single recipient (over $3 billion in 1993) followed by Egypt ($2.3 billion), Indonesia ($2.0 billion) and India ($1.5 billion). Israel too is a major recipient ($1.2 billion). Rich donors have major strategic interests in all of these countries, which either have large populations like China, India and Indonesia or, like Israel, are wealthy - so aid is a much less significant part of their total income.

Aid receipts as % GNP, 1994 4
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Since 1969 DAC members (see Jargon Digester below) have repeatedly promised to give the UN target of 0.7% of their GNP in aid to poor countries. The promise was reaffirmed most recently at the Social Summit in Copenhagen in 1995. But the 0.7% target has never been hit, or even grazed. In 1994 the average aid given by DAC members stood at 0.3% of GNP - less than half the target and the lowest level in 20 years. If rich governments stick to their current plans, it is certain to fall further. Only Norway, Denmark, Sweden and the Netherlands have ever reached the 0.7% of GNP target; the US gives the smallest percentage of its GNP of all donors. Japan is now by far the world's largest donor. At about $5 billion a year, aid given by charities is less than 10% of 'official' aid. It, too, has been declining in recent years: their grants to the South fell by 6.2% between 1992 and 1993. 5
Foreign Aid from DAC Members 1994

The Jargon Digester

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ODA = Overseas Development Assistance, or 'official' government aid. 4

Aid: to qualify as such, ODA must come from governments, be intended for development purposes (thus excluding military aid), and be in the form of grants rather than commercial loans. Total ODA in 1994: $59 billion.1
Bilateral: grants negotiated directly between one national government and another. Proportion of total ODA in 1994: 69.8%.1
Multilateral: grants provided by international organizations such as the UN agencies and the World Bank. Proportion of total ODA in 1994: 22.2% (plus 8.0% from the European Union).1
Tied: grants given on the condition that they are spent on the purchase of goods from the donor. Proportion of ODA 100% 'tied' in 1994: 24.8%.1

DAC = Development Assistance Committee of the OECD, to which all major aid donors belong.

GNP = Gross National Product - A calculation of total national income, including money from abroad.

GDP = Gross Domestic Product, excludes earnings abroad.

HDI = Human Development Index - Prepared by the UN, this index uses figures on health, education and inequality as well as GNP per capita, to rank the world's nations.

OECD = Organization for Economic Co-operation and Development - The 'club' of rich nations recently joined by Mexico and the Czech Republic.

NGOs = Non-governmental organizations - They range from large aid agencies to small charities and social movements in the South.

1. UNDP, Human Development Report 1996.
2. UNDP, Human Development Report 1994.
3. The Reality of Aid, 1996, Earthscan, London.
4. World Bank, World Development
5. Kunibert Raffer and HW Singer, The Foreign Aid Business, Edward Elgar, Cheltenham, 1996.

©Copyright: New Internationalist 1996 [image, unknown] NI Home Page[image, unknown] Issue 285 Contents

New Internationalist issue 285 magazine cover This article is from the November 1996 issue of New Internationalist.
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