Aid is not a ‘relic of the past,’ world needs a new vision, Oxfam argues

Somali men carry food aid from a barge to shore. (AP Photo/Karel Prinsloo)

Foreign aid is more important than ever, according to Oxfam.

Simply growing the global economy will not end extreme poverty by 2030. With 1 percent of the world’s economic growth making its way to the bottom 20 percent, “trickle-down economics” does not work. To achieve the Sustainable Development Goals (SDGs), we need more effective aid and better accountability, Oxfam argued in a new report marking the SDGs’ first anniversary.

The world needs a “new vision of aid,” the report said. That means focusing more on providing financial support to countries so they can achieve their own objectives. Some governments lack the financial ability to meet citizens’ needs. Foreign aid plugs that gap.

“Some people are ready to write off aid as a relic of the past, but aid remains an indispensable resource for the poorest countries which can neither raise sufficient revenues domestically nor attract enough private investment for development. Public financing helps these countries to lead their own development path and absorb other forms of development finance,” said Winnie Byanyima, head of Oxfam International, in a statement.

The historic reduction of global poverty in recent decades fuels calls to change or eliminate aid. The number of people living in extreme poverty fell by more than half over the past three decades. Some see this as evidence that aid is less necessary. Oxfam disagrees, pointing to evidence that global inequality is rising as the rich reap most of the benefits from a growing global economy.

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The poorest 10 percent of people saw their incomes rise by just $0.01 each year over the past 25 years. If everything works out perfectly, roughly 100 million people will still be living in extreme poverty by 2030. That total could top 1 billion if factors like climate change and commodity prices significantly harm poor countries.

Ending extreme poverty by 2030 is not going to happen, but the right decisions could put the world on the right path. Oxfam hones in on the 48 least-developed countries. They are the places where government services are often severely lacking. Meeting the goal of poverty reduction and the other targets established by the Sustainable Development Goals requires countries to do more.

“Policymakers cannot rely on momentum from two decades of progress and economic growth to sweep the international community towards achieving the SDGs,” according to the report. “Inequality, climate change, fragility and other conditions confound states’ capacity to forge their own development path. Many countries face particular capacity challenges to respond to their citizens’ basic needs.”

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Aid alone is not the solution. Private finance through investments and money sent home from people working abroad (remittances) are major contributors to development. In some countries, remittance totals exceed total foreign aid received. Yet again, the problem is that the poorest countries are left behind. Most international finance goes to countries with higher public spending.

Growing the capacity of governments to do their jobs will help individual citizens and create the right kind of climate to attract investment and end poverty, argues the report. Active citizens who hold their governments accountable for public spending is crucial. It creates a cycle that can arm countries with the tools they need to end poverty and injustice. There are 23 countries where this new form of aid can effectively improve government and move countries away from aid dependence.

“As our world faces multiple intersecting crises – from inequality to extreme poverty, from climate change to forced migration and displacement – the need for more effective aid could not be greater. Effective aid is crucial to dealing with current crises and putting us on a path to achieve the SDGs,” Byanyima said.

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About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.