Is it Goodbye Foreign AID?

Development Policy18 Jun 2009Osmund Osinachi Uzor

The MDGs are remarkable events in this 21 century in the sense that the goals have led to increased awareness, coherence and global mobilisation of resources for poverty reduction. The MDGs have also shown that poverty is not a national or regional issue but a serious global problem. The 2003 Rome Declaration on Aid Harmonisation and 2005 Paris Declaration on Aid effectiveness in terms of Aid coordination are measures designed to accelerate progress in the overall attainment of MDGs. The implication of these Aid coordination measures is that the strategic behaviour of donors in terms of using Aid to influence and achieve their goals has reduced (Mavrotas, 2007).

Foreign Aid can be a catalyst for long-term development to recipient countries but was highly influenced by politics and ideology during the cold war. There after, the strategy shifted to donors’ economic interest. Since early nineteen eighties, conditions pegged on Aid have become more stringent, for instance the Structural Adjustment Programs. This was followed by conditions in the area of good governance, human rights and most recently trade. Several factors are linked to Aid conditionality especially for sub-Saharan African countries. These include limited alternative sources of development finance, narrow range of export of primary commodities, failure of governments in Africa to build the capacity that can strengthen their bargaining position or use the Foreign Aid effectively, and vulnerability as in the case of current global financial crisis. The global financial crisis has slowed down donors’ commitments or has led to scaling down of Aid budget in various donor countries in favour of domestic rescue packages. The implication is that Aid cutbacks will have adverse affect on MDGs (Othieno, 2009).

The question is what will be the policy direction ‘After 2015’? In general, MDGs have focused on series of social goals without addressing the macroeconomic and growth problems in sub-Saharan Africa. For African countries with very low income, growth will be the essential instrument for countries in the region to reduce poverty as targeted in MDGs (Bigsten, 2007). To achieve this, the MDGs did not effectively provide the policy strategies in respect to sustainable economic growth that can create jobs in sub-Saharan Africa. As put forward by ILO (2005) …….“changing the policy paradigm to recognize that employment, and the promotion of enterprises that create jobs, is the most effective route to poverty eradication”. On this note, new MDGs policy strategies after 2015 should focus on measures that can create better jobs and income generation. How to make Foreign Aid to be effective and encourage investment for productive employment in sub-Saharan Africa should be the central strategy in a new policy matrix after 2015.


Bigsten, A. (2007). Aid and Economic Development in Africa. In. Sajal Lahiri (ed.) Theoryand Practice of Foreign Aid. Frontiers of Economics and Globalization Vol.1pp 289-307

ILO, (2005). Jobs and the millennium generation: Working out of Poverty. World of Working Magazine No. 55, December, 2005, Geneva.

Mavrotas, G. (2007). Scaling up of Foreign Aid and the Emerging New Agenda. Theory and Practice of Foreign Aid. Frontiers of Economics and Globalization Vol.1 pp 211-226.

Othieno, T. (2009). The global financial crisis: risks for fragile states in Africa ODI, Opinion 130