Foreign Aid: neo-colonialism or a helping hand?

In response to plans Boris Johnson announced on the 16th of June to shut down the Department of International Development, I take a look at the system of foreign aid and ask — what has it achieved?

Centuries of colonisation, characterised by the theft of natural resources, human capital, and wealth has left the global South lagging and underdeveloped. In recent decades, their once-colonial rulers have sought to make amends through the foreign aid system which utilises a mix of loans, grants, and aid packages as a means to improve the lives of those living in developing countries.

Foreign aid as a political weapon

The roots of contemporary foreign aid can be traced back to the end of World War II when the US implemented the Marshall Plan which gave $13 billion to war-torn Europe to aid its economic redevelopment after the war.

Altruistic sentiment can be attributed to the creation of the programme. Still, the Marshall Plan worked best as a tool of US foreign policy during a time which aimed to contain the spread of pro-Communist sentiment by portraying capitalist countries as more prosperous than their Communist counterparts.

Today, the same attitude remains prominent in political thinking. Foreign aid continues to be used as a legitimate weapon to achieve a country’s foreign policy agenda. Of the five most impoverished countries in the world today — Burundi, Somalia, Malawi, Niger, and the Central African Republic — not a single one is a global top ten recipient of aid. Instead, they are overlooked in favour of countries that are situated in areas of serious geopolitical importance or have large, growing markets. 

Nigeria and India are both large beneficiaries of British aid despite having emerging, fast-growing economies. The presence of foreign aid in these economies only helps strengthen the arguments made by critics of the system – foreign aid does not exist to improve lives but to buy alliances.

Foreign aid’s altruistic tendencies have steadily been eroded as it becomes warped into a political weapon, with its ability to bolster the image and influence of the donor country valued more highly than its ability to improve the lives of the world’s poorest.

Is foreign aid helping those in need?

So, can we emphatically say that foreign aid dramatically improves the lives of the world’s poorest? According to the Department of International Development, British aid has contributed to the vaccinations of 12 million children against preventable diseases and prevented 2.7 million pregnant women and children from going hungry, among other things. Yet, it is important to note that only a tenth of the UK aid budget funds humanitarian and emergency aid. 

It is undeniable that those in the Global South do benefit from the presence of foreign aid in their economies, but it must be noted that the primary beneficiaries of foreign aid are often the donor countries themselves.

A concept known as ‘tied’ aid, the conditions of which stipulate that the aid received must be used to buy products from the donor country, allows for donor countries to benefit enormously from giving out aid. The USA is one of the largest perpetrators, ‘tying’ almost 75% of its aid. 

Experts suggest that the ‘tying’ of aid can diminish its value by between 14% to 30%, as it prevents recipient countries from making the most effective and efficient decisions for their country by restricting the choices open to them. 

When a system has self-interest built into it, it is unlikely that the change created will be meaningful enough to fundamentally improve the long-term prospects of those in the Global South. It is a sad truth that the very same system that is meant to help these countries often becomes their biggest challenge on the road to economic growth and improving living standards. In too many cases, foreign aid has created new problems instead of fixing them. 

Taking a closer look – Senegal

When the World Bank and the International Monetary Fund began implementing Structural Adjustment Plans (SAPs) in the 1980s, many in the West believed that this form of foreign aid would help create wealth throughout Africa while also bringing the continent in-line with other Western countries.

However, fast forward nearly forty years, and SAPs have come to be widely regarded as a failed form of neo-colonialism which caused more harm than good to flourishing African economies. And perhaps, the best example of this is the case of Senegal.

Senegal is a West African country with a population of approximately 15 million, and at the time SAPs were being implemented, they were a leading exporter in the groundnut trade. To help expand their industry, Senegal took loans from the World Bank to build the infrastructure they required to grow.

However, as the price of groundnuts fell, Senegal fell into debt repayment problems and was forced by the World Bank to implement a SAP. The SAP forced Senegal to cap government spending and reduce government intervention in industry, which meant that farmers could no longer get guaranteed prices for their crops, plunging many into poverty.

Despite having no empirical evidence that these policies would work, under pressure from the World Bank, Senegal implemented these reforms for ten years. The SAP did nothing to improve Senegal’s economy. Still, the reduced government spending meant that access to access high-quality education and healthcare services diminished, further contributing to a cycle of poverty that could have easily been avoided.

Today, Senegal remains an extremely indebted nation as a direct result of the SAP implemented by the World Bank, highlighting the dangers of foreign aid – especially that given in a loan format. Though Senegal was a victim of a fast-changing market, it was the World Bank’s approach that had the most devastating impact. Senegal’s story highlights the prevalence of a Western ‘one size fits all’ mentality that is rampant throughout the world of foreign aid. It was this mentality that meant the World Bank failed to understand and consider the nuances that Senegal, as a newly independent country faced.

Foreign aid and its negative media

The emergence of globalisation has led to a diversity of cultures within the Western world, but despite this, the foreign aid system continues to be dominated by white voices and ‘Westernised’ theories; culminating in a projection of the Global South that bears little resemblance to its reality.

The countries that make up the Global South have become synonymous with the ideas of poverty and corruption, and often watch on as their images are warped into one word — impoverished. Campaigns led by NGOs and IGOs have only served to help these labels stick, while first world countries that struggle with the same issues can avoid the same labels. 

Rhetoric like this does not only exaggerate the issues these countries face but also makes it difficult for these countries to stand on their two feet. Many of these countries are blessed with beautiful cultural histories and natural wonders that could easily become epicentres of a booming tourism industry. Yet, the only tourism they can attract is voluntourism which further permeates the same tired stereotypes that need to be broken for real change to happen. 

Is there a way forward?

According to World Bank statistics, more than a billion people have been lifted out of poverty over the past twenty-five years, thanks in part to the influence of foreign aid. Foreign aid has helped communities who have been left devastated by various factors and continues to transform the lives of millions across the globe. Yet, the current system of foreign aid also continues to take advantage of those who are struggling and uses their suffering to create wealth for those who are already better off. We cannot say that foreign aid is just ‘a helping hand’ because to say is to remain willfully ignorant about the fact this is a system that deliberately and routinely takes advantage of the world’s poorest for economic and political gain. That is not a helping hand.