You’ve likely heard the phrase “foreign aid” a lot in the past few days, and for good reason. Several countries have announced cuts in their aid budgets this year.
To understand the implications of these cuts, which are part of a broader trend in cuts to development spending, it’s important to understand what foreign aid really is.
Keep reading to find out more.
What is foreign aid?
Foreign aid, international aid, ODA, or “global aid,” refers to the transfer of resources and money from mostly high-income countries to low- and middle-income countries. Aid can either be given by richer countries directly to countries in need or to a multilateral institution (like the UN or World Bank) to pass the aid onto countries or projects. The money and resources provided are used to support economic development and help fight poverty.
But here’s the thing: global problems today are much greater and will require even more funding to address them. And proportionate to economic growth, the share of aid to Africa from G7 countries actually hit a 50-year low in 2022.
Where do the funding and resources go?
“Foreign aid” covers a wide range of projects and sectors. It can help people in vulnerable situations – through lifesaving health programs, emergency food aid, and humanitarian aid. It can also go towards helping counties grow their economies – think aid to energy, infrastructure, and education.
The real impact of foreign aid is far-reaching. From providing lifesaving medications to fight HIV, to strengthening global security, here are some examples of how aid impacts real life.
It provides lifesaving medication and treatments
Foreign aid enables many lifesaving programs that advance global prosperity. Global health programs are a big part of this. Funding for antiretroviral treatments to fight HIV/AIDS and ensure babies are born HIV-free, cervical cancer screenings, malaria prevention tools, and medicines to fight tuberculosis are some of the many things foreign aid programs provide.
Despite a waiver for lifesaving assistance, many of these programs remain unable to provide these critically important services during the US 90-day foreign aid freeze.
It ensures people in emergency situations have access to basic necessities
Food, water, and shelter. When emergencies strike, humanitarian aid ensures these three things are provided to the people who need them the most.
During the US aid freeze, soup kitchens in Sudan, refugee camps in Mauritania, emergency shelters in Ukraine, Sudan, and Syria have had to reduce or halt services.
But beyond the basics, it fosters growth over time
Foreign aid plays a pivotal role in fostering economic development, enabling countries to build the capacity needed to eventually graduate from aid dependency. Through investments in critical sectors such as infrastructure, education, and healthcare, aid helps establish a foundation for sustainable growth.
The World Bank’s International Development Association (IDA) exemplifies this approach, providing low-interest loans and grants to the world’s poorest countries to boost economic growth, reduce inequality, and improve living conditions. Since its creation in 1960, IDA has helped 36 countries “graduate” from aid, enabling them to finance their own development and integrate into the global economy — and 19 are now lenders to IDA. This demonstrates how strategic aid can drive long-term prosperity.
It strengthens global security
Investments in foreign aid can have a sizable return in strengthening global security. In fact, every $1 spent on activities that spur economic growth and political stability can avert spending $103 on future conflicts. Activities that fall under this category include those that create jobs, improve public services, and make governments more transparent and accountable – which fall under the category of foreign aid.
Investments in foreign aid can help boost economic growth and political stability by fostering economic opportunities, strengthening institutions, assisting in the better delivery of public services, and more. Ultimately, these investments also result in building strategic partnerships globally, which strengthens global security overall.
So…what does this all mean?
ODA and foreign aid impact lives and livelihoods globally in more ways than we think. It provides lifesaving medicine, delivers the necessities to survive and thrive to those who need it the most, and strengthens global security.
A pause in aid means millions around the world won’t have access to medicines that keep them alive and keep others safe from outbreaks of dangerous disease. A pause creates confusion and chaos for everyone, and it fuels instability and insecurity – making everyone, everywhere, less safe.
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