What is Aid?

When we talk about aid, we normally mean development cooperation, but there are other kinds of aid, and it can be delivered in different ways.

Development Cooperation
Development Cooperation is the range of ways in which countries work together, including financial or technical assistance received by a developing country to bring about higher living standards for its citizens. Modification of trade policies on the part of developed countries may also be considered as a form of aid, in as much as improved market access can also bring benefits to a developing country. It is distinguished from humanitarian aid as being aimed at alleviating poverty in the long term, rather than alleviating suffering in the short term. 'Foreign aid', on the other hand, includes both development aid and humanitarian aid. Development aid can take many forms it can be a project or a programme, a cash transfer or delivery of goods, a training course or a research project, a debt relief operation or a contribution to a non-governmental organisation.

Humanitarian Aid
Humanitarian aid is provided for humanitarian purposes, typically on an urgent basis as a form of emergency management in response to a crisis. The primary objective of humanitarian aid is to save lives, alleviate suffering, and maintain human dignity. It may therefore be distinguished from development aid, which seeks to address the underlying socioeconomic factors which may have led to a crisis or emergency. Humanitarian aid is delivered by governmental and non-governmental aid agencies which are funded by donations from individuals, corporations, governments and other organisations. (for more detail, see www.HowYouCanHelp.ie)

Official Development Assistance
The nations of the Organisation for Economic Co-operation and Development (OECD), made up of the developed nations of the world, have committed to providing a certain level of development assistance to developing countries. This is called Official Development Assistance (ODA), and is given by governments on certain concessional terms, usually as simple donations. It is given by governments through individual countries' international aid agencies (bilateral aid), through multilateral institutions such as the World Bank, or through development charities and non-governmental organisations (NGOs).

How Does Overseas Aid Work?

Aid is given in different ways:

Bilateral Aid
Bilateral Aid is given by the government of one country directly to another. It can be in the form of money, food, equipment and/or technical assistance. Generally bilateral agreements exist between donor countries and recipient governments which constitute the legal basis for a programme of bilateral cooperation.

Multilateral Aid
Multilateral Aid is assistance given to poor countries through international organisations such as the United Nations, World Bank, the International Monetary Fund, or the EU development fund. Each organisation has its own aid programme and is funded by the world's wealthier, more developed countries.

Non-Governmental (Voluntary) Aid Perhaps the most visible and best known form of aid is that which is channelled through the NGOs and missionary organisations, sometimes called "charities".

What is the Aid Promise?

There are many promises but the two most important ones are:

The 0.7% promise:
In 1970 the world's richest countries committed themselves to giving 0.7% of their GNP (gross national product) to overseas aid. 40 years later, only five countries have reached this target - Denmark, the Netherlands, Norway, Luxembourg and Sweden. Some countries have committed to a plan to bring their contribution up to the 0.7% target but these plans are now in jeopardy given the reactions of governments to the current economic crisis.

The Millennium Development Goal (MDGs)
The MDGs are eight international development goals that United Nations member states have agreed to achieve by the year 2015. They include reducing extreme poverty, reducing child mortality rates, fighting disease epidemics such as AIDS, and developing a global partnership for development. Development cooperation is - amongst other such as fairer trade rules - an important piece in the jigsaw of international efforts for achieving the MDGs. Irish Aid, the official overseas development programme of the Irish government, has identified the MDGs as the overall framework through which it plans its development cooperation activities.

Poverty reduction is the main focus of Ireland's official aid programme. Not all countries have this as their main focus. The United States of America for instance link their aid programme officially to the protection of America by using aid to foster democracy and freedom.

How much is it globally?

In 2011, total net official development assistance (ODA) from members of the OECD's Development Assistance Committee rose to USD 133.5 billion.

Every year in that timeframe aid was also given from charities and from non-governmental agencies (voluntary). This figure varied from USD 5bn to USD15 billion. Some charities and voluntary agencies also receive government money, so it is sometimes difficult to come up with an exact figure.

Bilateral development projects and programmes have been on a rising trend in recent years; however, they rose significantly by 12.5% in real terms in 2008 compared to 2007. In 2008, preliminary data show that net bilateral ODA from the group of OECD governments to Africa totalled USD 26 billion, of which USD 22.5 billion went to sub-Saharan Africa.

It is also important to note that 'aid' accounts for only some 10% of capital flows to developing countries. Trade, investment and remittances play a far greater role when it comes to the 'development' of poor countries.

How is Ireland doing?

Ireland has spent €639m on official aid in 2012. Ireland currently spends 0.50% gross national product (GNP) on aid (GNP = goods and services produced by Irish corporations in Ireland + goods and services produced by Irish corporations in other countries).

The government has promised to increase that percentage to 0.7% by 2015. Because Ireland's pledges on overseas aid are made as a percentage of national income, the sum of money involved reduces automatically if the economy shrinks.

Ireland made a commitment in 2000 to reach the UN target of 0.7% of GNP in ODA by 2007. Ireland did not reach this target, but re-committed to the target at a UN Summit in 2005, pushing back the date of its achievement to 2012. In September 2008, then Taoiseach Brian Cowen recommitted to reaching the target in New York at the United Nations Millennium Development Goals Summit. But in December 2009, the Government indicated that the target would be moved to "2015 at the latest". The Labour/Fine Gael government that came to power in 2011 included an explicit commitment to the 0.7% by 2015 target in its Programme for Government. To date the Government has not published a plan of how it will achieve this third target date.

The cuts to aid budgets since 2008 represent an astonishing 32% - a completely disproportionate cut taking into account the fact that other budget lines were cut by an average of 8%.

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What is the impact of the financial crisis on development?

The current global financial crisis is having a serious impact on low income countries. World trade is experiencing its largest decline since 1929 and commodity prices, particularly for the exports of low income countries, are falling.

Foreign direct investment and other private flows are on the decline, and remittances are expected to drop significantly in 2009. Budgets of many developing countries were hit hard by the rises in food and oil prices in the last two years. Many countries are not in a strong fiscal position to address the current financial crisis.

Some of the impacts of the crisis for developing countries

  • Deceleration of growth, economic contraction
  • Negative effects on trade balances and balance of payments
  • Dwindling levels of foreign direct investment
  • Large and volatile movements in exchange rates
  • Contraction of world trade
  • Increased volatility and falling prices for primary commodities
  • Declining remittances from emigrants working overseas
  • Sharply reduced revenues from tourism
  • Reduced access to credit and trade financing

Whilst the full effects and duration of the financial crisis are still to be seen, it is important for aid to play a countercyclical role to help balance the sharp reversal in overall flows to developing countries. (See also what Dóchas has to say on this issue)

The United Nations Millennium Campaign has released an analysis showing that since the inception of aid almost 50 years ago, donor countries have given some $2 trillion in aid. And yet in 2009 alone, $18 trillion has been found globally to bail out banks and other financial institutions, a ratio of 1 to 9.

How is aid from Ireland spent?

The Irish government organisation which distributes aid is called Irish Aid. It is part of the Department of Foreign Affairs, and has its own Minister of State.

Irish Aid distributes its aid in a number of different ways:

  • Irish Aid enters into funding partnerships with various types of organisations in the delivery of its long-term programmes for development. The money is spent on primary needs such as health, education and in tackling HIV and AIDS. Rural and agricultural development to help people make a living and grow food is also a priority.
  • It also works to develop institutions in the countries where it is involved. This helps governments to combat corruption and better deliver essential services to their people.
  • It contributes to international organisations which spend the money in more specialised ways (eg the World Bank and the European Union).
  • It contributes to Emergency and Relief programmes for natural disasters. Money is be used to finance activities that provide protection for civilians, the delivery of clean safe water, sanitation services, food, shelter, healthcare, or other forms of assistance necessary to sustain life. Humanitarian funding is distributed through UN partners, the International Red Cross and Red Crescent Movement, and Non Governmental Organisations (NGOs). (See also www.HowYouCanHelp.ie)
  • It has programmes with Irish third-level colleges to help fund research into important issues of development (eg health) and also to help Irish colleges work with and develop the capacity of the educational system in poorer countries.
Where is it spent?

In order to ensure that there was a certain scale in the projects and work being funded, Ireland decided to concentrate on a limited number of countries -rather than sprinkling money across a greater number of countries. This makes it easier to get to know the specific problems of a country or region. It also allows adequate arrangements for review and auditing to be put in place.

Ireland spends its aid budget in 9 priority countries: Lesotho, Mozambique, Zambia, Malawi, Tanzania, Uganda, Ethiopia, East Timor and Vietnam. We also fund development in other countries like Sierra Leone, Liberia, South Africa and Palestine, sometimes through local organisations based in those countries.

Why give aid?

The Irish economy is going through an extremely difficult time at the moment and individuals and families are very badly hit, but Ireland is still one of the world's wealthiest and most successful nations.

One of the most impressive things about the last decade is that as Ireland got richer, there was a huge willingness to share our good fortune. In 1981, the total official aid budget was just €22.65 million. By 2008 it was over €900 million. In the area of development, the Celtic Tiger did not go to waste. It left a real legacy in the improvement in people's lives -in countries which benefited from Irish Overseas Development Aid.

The Government's 2006 White Paper on Irish Aid provides sample information about the reasons why Ireland continues to invest in development cooperation.

Each member of the OECD has their Development Aid programme reviewed regularly, and reports are issued. The latest report on Ireland's programmes was published in 2009. Ireland is congratulated for spending its money well. As a donor it is flexible and the expenditure is transparent. Its main focus is on reducing poverty and, according to the OECD, this is done well. Unlike most other donors, Ireland gives the money without any national strings attached: it does not insist that the money is spent buying goods or services in the donor country. The agents responsible for spending the money can spend it in whatever way is most effective and provides best value for money.

Above all Ireland is congratulated for being a dependable donor. Governments which are in receipt of Irish money, have, up to now, been able to plan on long-term programmes in areas like health and education.

It is certain that urgent action is needed to restore the public finances, so that the country is not borrowing money just to pay the day to day bills. But Ireland has made international promises - most recently in front of the UN General Assembly -that it will keep faith with poorer countries.

There has always been a tradition of help and service in Ireland. For generations, there has been some global sense of responsibility. We as citizens of Ireland have a duty to look after the old and the vulnerable -wherever they are, and to the best of our ability. We give aid because it is right that we help those in greatest need. We are bound together by more than globalisation. We are bound together by a shared humanity. The fate of others is a matter of concern to us. For Ireland, the provision of assistance and our cooperation with developing countries are a reflection of our responsibility to others and of our vision of a just and fair global society.

The level of need in these countries is not comparable to anything in Ireland. More than 1 billion people worldwide live on less than the equivalent of $1 a day. This leaves them disempowered and arginalised. Poverty destroys human potential and limits opportunities. Poverty can turn environmental and economic shocks into humanitarian disasters.

Can we afford it?

The official aid budget aid represents less than 2% of the Irish government's current expenditure (and less than 1% of all government spending). It is linked to national income as a percentage so the sum of money involved reduces automatically as the economy shrinks or - in theory - goes up when the economy starts to recover.

The question could also be: can we afford not to spend money on overseas aid? When properly done, aid can help those who are most in need.

The global crisis has increased existing inequalities by making those who have the least responsibility for the crisis pay the highest price: their lives and the lives of their loved ones. There are many examples already how the global crisis is affecting people in other parts of the world. (On the Dóchas website, you can find what NGOs have said about the impact of the crisis on the poorest countries.)

The World Bank has estimated that hundreds of millions of people will fall back into poverty if those countries do not receive "counter-cyclical" assistance from the more affluent parts of the world. In many countries the current problem is a problem of missing security. A lot of countries simply do not have the safety net of social insurance that would protect their citizens from the effects of these crises. It is not just foreign aid but also exports, remittances, investment and equity flows that have dropped since the crisis begun. As Robert Zoellick, the president of the World Bank, said in 2009, the reaction to the global crisis so far has increased global inequalities:

"Most attention in the current crisis has been focused on developed countries where people face the loss of home, assets and jobs. These are real hardships. But people in developing countries have much less [of a] cushion: no savings, no insurance, no unemployment benefits, and often no food."

As a recent ODI study suggests, our investment in overseas aid will significantly boost our own economy through increased trade in the years to come. This illustrates that ODA is an investment in our own future and should be a priority.



Aid Works!

Some potential aid donors may be sceptical, because they are not convinced that "aid works". But there is abundant evidence that aid does work.

For instance in the area of disease, aid works, and has been shown to work, against illnesses such as polio and measles. We have seen the successes of immunisation campaigns for children in impoverished countries, and the eradication of paralysing diseases such as guinea work and leprosy.

These clear aid triumphs have saved the lives of millions of children. To make these successes sustainable, however, aid in an area like health needs to be complemented by practical and targeted aid in other areas like schooling, safe drinking water, and especially agriculture.

Aid brings spectacular improvements in literacy and spectacular declines in infant mortality, when it is channelled to countries with enlightened leaders and efficient institutions. Indeed, enlightened leaders can use aid to build efficient institutions.

Sometimes aid doesn't work, but very often it is because the aid is too little to solve the problems at hand, the aid is not well spread across sectors, or the aid is not properly coordinated among the donors themselves, leading to a plethora of disconnected projects, rather than a true national strategy.

We need to accept that this is a long-tern commitment on everyone's part. It is necessary to support ordinary people by building systems to address the causes of poverty rather than simply ameliorating the symptoms. Development programmes must integrate environmental concerns, to protect the interests of future generations.

Aid is vital, but it is not the whole story. Development is a complex process, in which many different actors have to work together, and not against each other.

Botswana and Uganda are examples of countries where aid has had a real impact on the quality of people's lives and on the countries' capacity to lead their own development. With Ireland's support, Tanzania has made major strides towards universal primary education. Net primary school enrolment rates of children aged seven to thirteen have increased dramatically from 50% in the late 1990s to around 95% in 2005. With Ireland's support, the Government of Mozambique and the Clinton Foundation are currently providing anti-retroviral treatment to more than 20,000 people suffering from HIV/AIDS. With Ireland's support, a new welfare system has been put in place in Ethiopia which keeps hunger at bay for six million of the poorest people in that country each year.

Does aid go to corrupt governments?

Corruption is a problem in most countries, and in every walk of life. But it is the responsibility of those spending donations or tax money to see to it that this money is spent as effectively and as transparently as possible.

There are corrupt governments in some of the countries where Irish aid money is spent. But we should not punish the population because their rulers are dishonest.

Cutting aid and isolating governments increases the scope for graft and exploitation. If no one is watching, corrupt leaders can continue their kickbacks and oppressive regimes can continue to persecute journalists, opposition politicians or activists. Overseas donors of aid can bring about change.

Irish charities and their overseas partners can play a critical role. The missionary organisations and NGOs have had widespread success in supporting brave people who are strengthening society in the countries where they work. But they cannot do the job of government. Governments are essential to development.

There is no way in which a foreign organisation can take responsibility for areas like police forces or running elections. Frankly, the people would not stand for it. But it is impossible to have development without an impartial police force, or properly and fairly run elections. The key is to be able to support reforming and democratising governments with funding in carefully-planned interventions. Doing this does not involve recklessness with money provided by the taxpayer or donated to a charity.