Foreign aid is welcome, but it shouldn’t come with strings attached

Sustainable Development Goals and Foreign Aid

Introduction

In 2022, the World Bank raised the international poverty line, or minimum survival requirement, to $2.15 a day – or $785 annually. This coincided with nominal global gross domestic product exceeding $100 trillion allowing each of us about $12,500. There was, therefore, more than enough wealth to meet everyone’s basic needs. Yet 648 million people – or 8 per cent of the world – struggled in extreme poverty.

The Challenge of Extreme Poverty

This insults our common humanity at a time that the world has never been richer. Covid-19, climate disasters and endless wars are invoked as excuses. But crises are also great for enrichment, by those who can invest to adapt and use their dominance to profit from the dependency of the vulnerable.

The Creation of Wealth and the Sustainable Development Goals

Accordingly, a staggering $42 trillion of new wealth has been created in the crisis-affected 2020s, with half captured by the richest 1 per cent. As world problems intensify, we continue to get richer with global GDP projections accelerating towards $139 trillion in 2030.

That is when the Sustainable Development Goals intend to eliminate poverty. It will not happen with 600 million of the 8.5 billion people in 2030 projected to remain extremely poor. A further three to four billion people will stay deprived in one or more aspects of poverty such as lacking health care, water, food, shelter, or education and jobs.

The Role of Foreign Aid

Seeking silver linings in dark clouds is a favourite pursuit in the development sector. To keep donors motivated, they are constantly reminded that a billion people have been lifted out of extreme poverty since 1990, and more are surviving childhood, getting educated, and living healthier and longer. So, give more aid.

However, can progress be attributed primarily to foreign aid? Besides, the achievements of some such as China, India, Indonesia, Nigeria and Kenya mask the lacklustre journey or even back-tracking by 75 poor, aid-dependent countries.

Foreign Aid Contributions

Meanwhile, donors are accused of stinginess despite official development assistance from governments growing by 34 per cent in real terms since 2019, reaching $223.7 billion in 2023.

Covid-19 and humanitarian crises have driven recent ODA flows. Assistance to Ukraine rose by 9 per cent last year to reach $20 billion, including $3.2 billion of aid. ODA, meanwhile, increased by 12 per cent on 2022 to the West Bank and Gaza, to $1.4 billion, including $758 million in the form of aid. The common accusation of western bias is debatable as numerous other crises such as Afghanistan, Sudan and many African hotspots have received significant help that pushed up global humanitarian volume by 4.8 per cent to reach $25.9 billion in 2022, although this is outstripped by needs.

Improvements in Foreign Aid

All this data mostly represents the West, specifically the 32-member Development Advisory Committee of the Organisation for Economic Co-operation and Development, which contributed 0.37 per cent of their gross national income as ODA last year. That is below the UN target of 0.7 per cent, a figure with little logic and much political baggage.

Last year’s largest ODA contributors were the US, Germany and EU institutions that accounted for more than half of western aid. Another $100 billion or so comes from 20-plus non-DAC donors, the largest being China, India, UAE and Turkey, as well as Saudi Arabia, Qatar and Russia.

Philanthropic aid is also expanding with the top 10 funders, led by the Gates Foundation, contributing $11 billion in 2021. Myriad NGOs and charitable individuals are also helping, such as $3 billion from Mike Bloomberg. Nevertheless, official and private aid is small compared to diaspora remittances estimated at $669 billion, touching families directly in developing countries. Market flows from trade and investment add about $46 billion.

The Challenges and Instrumentalisation of Aid

Although dwarfed by other resource transfers, foreign aid is still important because it is taxpayer-funded via donor governments and so expresses solidarity from richer publics towards poorer ones.

It is under-recognised that the art and science of foreign aid have improved significantly. Over three decades of my development career, I have seen greater data standardisation, tracking and transparency, stronger programme monitoring, many research insights into aid effectiveness, and increased intolerance of misbehaviour and misconduct by aid workers. This is in addition to the necessary agency regulation accompanied by stronger standards and professional training, and game-changing organisational and technological innovations.

There is better policy harmonisation and co-ordination, and a drive towards beneficiary accountability. After much criticism of cumbersome aid bureaucracies, efficiency is slowly improving. Initiatives such as the Paris Declaration on Aid Effectiveness and DAC peer reviews have upped the game.

But these are technical improvements and aid’s noble aim to create a better, fairer world is crowded-out by self-serving objectives. Aid is justified to gain business and generate employment when

SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 1: No Poverty
• SDG 2: Zero Hunger
• SDG 3: Good Health and Well-being
• SDG 4: Quality Education
• SDG 6: Clean Water and Sanitation
• SDG 8: Decent Work and Economic Growth
• SDG 10: Reduced Inequalities
• SDG 16: Peace, Justice, and Strong Institutions

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 1.1: By 2030, eradicate extreme poverty for all people everywhere.
• Target 2.1: By 2030, end hunger and ensure access by all people, in particular the poor and people in vulnerable situations, including infants, to safe, nutritious, and sufficient food all year round.
• Target 3.8: Achieve universal health coverage, including financial risk protection, access to quality essential health-care services, and access to safe, effective, quality, and affordable essential medicines and vaccines for all.
• Target 4.1: By 2030, ensure that all girls and boys complete free, equitable, and quality primary and secondary education leading to relevant and effective learning outcomes.
• Target 6.1: By 2030, achieve universal and equitable access to safe and affordable drinking water for all.
• Target 8.5: By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value.
• Target 10.1: By 2030, progressively achieve and sustain income growth of the bottom 40 per cent of the population at a rate higher than the national average.
• Target 16.6: Develop effective, accountable, and transparent institutions at all levels.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator 1.1.1: Proportion of population below the international poverty line, by sex, age, employment status, and geographical location.
• Indicator 2.1.1: Prevalence of undernourishment.
• Indicator 3.8.1: Coverage of essential health services (defined as the average coverage of essential services based on tracer interventions that include reproductive, maternal, newborn and child health, infectious diseases, non-communicable diseases, and service capacity and access).
• Indicator 4.1.1: Proportion of children and young people (a) in grades 2/3; (b) at the end of primary; and (c) at the end of lower secondary achieving at least a minimum proficiency level in (i) reading and (ii) mathematics, by sex.
• Indicator 6.1.1: Proportion of population using safely managed drinking water services.
• Indicator 8.5.1: Average hourly earnings of female and male employees, by occupation, age group, and persons with disabilities.
• Indicator 10.1.1: Growth rates of household expenditure or income per capita among the bottom 40 per cent of the population and the total population.
• Indicator 16.6.1: Primary government expenditures as a proportion of original approved budget, by sector (or by budget codes or similar).

Table: SDGs, Targets, and Indicators