Foreign Aid Hurts More Than it Helps

You may often hear about poverty in “third world countries” and how people from richer countries help them through donations and other efforts that fall under the category of “foreign aid.” Foreign aid comes in the form of government-to-government transfers, grants, or loans. Tax dollars go to international government organizations, which transfer funds into the developing world for things such as food, infrastructure, and healthcare. The aid may include contingencies requiring recipient countries to implement policies that donor countries may deem beneficial. The concept seems like a benign, simple act of giving, but in reality, it can have serious ramifications.

Consultants, NGO’s (non-governmental organizations), and charities also receive aid money from governments to implement contracts. Catholic relief services receive over 70% of its budget from government money. In 2012, World Vision received $175 million in government grants. The international development firm, Chemonics, received more than $500 million in government contracts. In effect, foreign aid has become the cornerstone for the West’s involvement with what became known as the third world.

While on the surface this act of giving may seem like a wonderful idea to the wealthy nations and aid agencies, long term aid in this capacity cripples the economies of the recipient countries and creates a “dependence” mentality for the population of those countries.

According to Herman Chinery-Hesse, a Ghanaian software entrepreneur, this foreign aid is a form of colonialism. In his opinion, the recipient countries are held captive by the donor countries. These donor countries are not particularly interested in seeing the growth of local businesses in these port counties because the tax base generated by the growth of these businesses would generate enough revenue for these countries to lift them out of poverty, thus putting the international donor agencies out of business. He also states that he has never heard of a country developing because of foreign aid.

Out of the 54 African countries, only 16 are democratic, the rest are ruled by dictators who stay in office for up to 40 years. Not only that, they often groom their sons to take over. These dictators want the foreign aid to continue so they can pocket the money and keep the country enslaved to the aid. This, knowingly or not, makes the aid agencies party to the dictatorship of these countries.

While it is absolutely essential to help out when a disaster strikes such as hurricanes or earthquakes, it becomes problematic when the same aid agencies and foreign aid continues to linger long after the disaster.

One example of this dilemma is the US providing rice to Haiti after the devastating earthquake of 2010. Initially, the aid was much needed, however, when the rice kept coming long after the earthquake, it destroyed the rice industry in Haiti. As the rice provided to Haiti was subsidized, the local growers could not compete with the price of “free,” in essence wiping out the industry.

This brings us to the question, “How do we solve the problem of poverty?” While there are many proposals as to how to solve this global problem, here are some ways that “donor” countries can help.

  1. Education: One of the most important tools in eradicating poverty is without a doubt education. If the poor are unable to read and write and understand the basics of economics, they are very ill-equipped to even come up with ways to help themselves. There should be donations made in the form of schools, teacher salaries, books and incentives for people of this poor country to gain an education. They should be given training in specific fields that will strengthen their community such as healthcare, entrepreneurship, skilled trade etc.
  2. Creating Jobs: When jobs are created in these communities and the people hired are from within these communities, it lifts them out of poverty. Not only does that make them self reliant, but it also gets them out of that ‘dependence’ mentality to which they have gotten so accustomed. Instead of just giving away free food, we should invest in the members of these communities so that they can come up with business ideas and give them the means and networking solutions so that they are able to sell these goods and services to the global market. This will not only strengthen the economy on the community level but will also increase tax revenue for the government of these countries making them self reliant and independent.
  3. Micro Financing: Small loans which are given to entrepreneurs within these communities in order to help them start a business. This will make them feel empowered and self-sufficient. This goes hand in hand with creating jobs, increasing tax revenue and creating a better quality of life.
  4. Empowering Women: Women make up 50 percent of the population, but in many of these poor countries they are not part of the workforce. By empowering, educating, and training these women to be business owners, skilled tradespeople, and workers, they can double the income of every household which would have a tremendous impact on the economy of the country as a whole.
  5. Health Care: Last but not least is access to proper health care. This is also tied to education and micro-financing. The key is to train and educate people from within these communities as doctors, nurses and other healthcare professionals so that adequate and quality healthcare can be accessible to all. The construction and maintenance of hospitals can be funded through charity but should employ people from within these communities in effect creating more and more jobs.

We need to start looking at the people from these countries as more than capable of solving their own problem. These people are not incapable, lazy, or stupid. At the end of the day, the aid agencies depend on the poverty of these countries in order to thrive. Donor governments have the upper hand on these countries by practically enslaving them with the amount of loans and grants that are given to recipient countries.

The way to truly help impoverished countries is to provide them the tools, education, and resources to lift themselves out of poverty and dependence on foreign aid.

We need to take a closer look at who exactly is benefitting from this global poverty business. What looks on the outside as such a lovely gesture of giving is quite sinister when looked at closely. We are not helping these countries with the current ways of charity, instead, we are ruining their economies and keeping them dependent.

As the old adage goes, ‘Give a man a fish and you feed him for a day, teach him how to swim and you feed him for a lifetime’. If we empower the citizens of these countries to be self-reliant and be able to stand up on their own is when we are truly helping them.