It is no mystery that today we live in a society in which some are less privileged than others. It is clear and apparent to us everyday when we see the homeless and the diseased. On an international scale, however, it is also an issue as we find countries with lower standards of living and conditions of suffering and turmoil. We see these situations on the news and hear of “developed” countries offering aid to assist and fix some of the issues facing these nations. It is important to realize, however, that while this seems an action of goodwill it is often ineffective and has in some cases worsened the situations for these nations.
Problems that plague the aid administration for example, include corrupt politicians who mishandle funding, worsening debt situations, and a lack of control over plan execution as a result of no overseeing authority being granted to the aid givers. The best way to defeat these obstacles would be first to offer aid in the form of grants, eliminating debt factors, secondly offering step based aid programs where further aid is given based on results, and thirdly credible threats should be advocated regarding further funding in order to deter corrupt governments.
Foreign Aid is defined as a situation in which one nation helps another nation through donations, usually of monetary value, meaning cash. Perhaps the largest type of foreign aid falls in the category of “Development assistance” where the prime objective is to improve to the economic infrastructure and to help reach development goals. The goals can be, for example, quite simply to expand the agricultural sector in order to feed the population, or a more complex goal can be to make improvements in the industrial sector to power up the fledging economy.
In general, aid is given in an attempt to bring a nation to meet certain standards, which the first world classifies as developed. However this may sound like simple procedure but, outlying factors and conditions within a receiving country can greatly complicate matters, rendering the aid wasteful. This is particularly the case for many African nations where corrupt governments loom, hampering aid givers and economic progress. Although this situation seems depressing, it is possible to improve it and ensure that an advancing and onward motion is accomplished and maintained.
The aid sector has expanded greatly over the last few years, having risen by one third, currently standing at 78. 6 billion dollars. It is actually expected to get even bigger with analysts predicting that it will reach the 125 billion dollar mark by the year 2010. It is sad, however, because with the way that this aid is being distributed it is quite frankly going to dire waste. Over the past fifty years one trillion dollars has been donated to the African continent alone and the progress achieved is appalling.
Despite that large amount of money, African nations remain largely dependent on foreign aid, clearly shown by the fact that in the twenty year period between 1975 and 1995 the average amount of aid as part of government spending was found to be at fifty percent. This means that half of the money that governments are spending in these countries are coming from abroad, which is a staggering statistic because it shows how unbelievably dependent on foreign aid these countries have become, despite large donations that have already been made.
Grant based aid is assistance of a gift like nature, because it is a monetary distribution with essentially no strings attached, meaning no payback required at all at any given time. This benefits developing nations with low budgets because it means that they can put the money to use where it is needed without worrying about returning it. In the past aid has been given to countries in a tied form where lower developed countries are tied to first world nations through debt as a result of demands for returning their money .
This worsens situations greatly because countries can no longer use money for their own issues but must instead concentrate on taking their revenue and giving it back with an interest charged to them. With a grant system countries can hold on to their money they make along with aid that they are given and it is an obvious fact that the more money you have the more developments you can accomplish. However this adjustment alone is not sufficient.
Indeed, a grant system will help countries a lot but with the existence of corrupt governments there is still no guarantee that the money will go to good and ethical use. Politicians often dip their hands in their country’s limited treasuries. This new influx of money from abroad will simply further expand their desire to steal, and often there are no consequences for their criminal actions . As a result donors should introduce a step based program were money is granted upon goal achievements. This means small amounts of money at a time and proof of accomplishments should be provided.
Some say that this is making the developing world jump through hoops that the first world sets for them and is rather humiliating for them, but it seems this is the only no nonsense way that they can move forward . The World Bank has already started to administer this idea in what is being called the small grants program. In this there is no debt and further aid depends on plan implementation and success. Although currently this is being offered as an option to developing countries, it is often being ignored as money is still “mishandled”.
One of the reasons on why these countries continue to misuse money is because they do not believe that the World Bank and other respected donors will actually abandon them. They somewhat take for granted the incoming flow of monetary assets. What needs to be done, thus is credible threats must be made that will discourage the present conduct in the future. Threats have already been made to these nations regarding their misuse of money but they are often shrugged off and not taken seriously.
It must be believed that money will no longer be given if the continuing actions persist. This may seem harsh but it may also work. Maybe when these politicians realize that their money source will come to an end they will snap into shape and start performing their duties responsibly. It is vital that they accept the reality and realize that aid is a privilege luxury and not a right that they should assume guaranteed to them. Incidentally, foreign aid is not the only way to take a country forward in our ever expanding and evolving world.
This hypothesis is supported through the incidents in Asia where it was efficient economic policies and not aid that lifted millions of people out of poverty and advanced the nations in terms of economic aspects. In contrast, problems in African countries can be blamed on poor economic decisions made by the ruling institution. The Asian governments opened up their borders to trade and encouraged more direct investment. What followed was the creation of what came to be known as the
“Asian Tigers” which is what the countries of Hong Kong, Taiwan, Singapore, and South Korea became known as . These countries were found to be at similar levels of wealth in comparison to African countries during the 1960s, but a dramatic increase in trade saw them experience rapid growth over the next thirty years . Naturally, this is because if businesses are booming then more money is flowing throughout the countries and governments get pieces of it through taxing which they can then use to implement reforms of any nature.
This creates higher standards of living and generally uplifts and benefits the people of the nation . African nations have been timid to venture in this direction for fear that their younger ? infant industries’ will be taken over by external investment, but it still remains another alternative instead of relying solely on external assistance. All of these measures must be made together in order to ensure improvement in the foreign aid environment.
Grants alone eliminate the debt factor but there is no guarantee the money will not be stolen or accomplishments will be made by these governments. A step by step reward program may ensure some actions are completed but does not eliminate the corruption problem. Only through topping these actions with the imposing of credible threats to these government institutions can anything really be achieved. Hopefully, efforts will be made in this direction in the future otherwise, digression and further suffering, which can already be seen in the world, will continue.