ActionAid report: Sharp fall in poor countries' dependency on foreign aid

Real Aid 3 ReportAid dependency among 54 of the world’s poorest countries has declined by a third over the last decade, according to a new report from ActionAid. The Real Aid 3 report also reveals that since 2006 there has been an increase in good quality aid – real aid – from 51 per cent to 55 per cent.

Some of the world’s poorest countries are now far less reliant on aid than 10 years ago. For example Ghana has reduced its dependency on foreign aid from 46 per cent to 27 per cent, Mozambique from 74 per cent to 58 per cent, Rwanda from 86 per cent to 45 per cent and Nepal from 53 per cent to 34 per cent.

ActionAid’s Head of Economic & Social Development, Dr Anna Thomas said: “Our research shows that more developing countries are becoming less dependent on aid and are able to rely increasingly on their own resources to deliver essential services. These results show we’re moving in the right direction – and means that good quality aid - real aid - is working. 

“Not all aid is the same. Real aid is effective and has few strings attached. It puts developing countries where they should be – in the driving seat of their own development. It makes governments answerable to their own citizens, rather than to the donors. And real aid can help countries do things like raising tax revenues more effectively, so they can generate more of their own funds for development.”

ActionAid’s Real Aid 3 report also reveals that the quality of aid is improving so that each dollar spent is getting more results which is a contributing factor to the reduction in aid dependence. But while some countries, like the UK, Ireland and Denmark are giving a high proportion of real aid, in other parts of the world, it is a very different story.

Dr Thomas continued: “This should be a wake-up call to governments that say they are committed to poverty reduction. Our report highlights which countries are delivering substandard aid that whilst well-intentioned, is not as effective as real aid.  Some of the richest countries are the worst offenders, including Germany and France.”

To qualify as real aid, the aid must be targeted at the poorest and the recipient country must be given the space to own and lead its own development plans. Real aid is not tied, is administered efficiently and is used in the recipient country. If it comes in the form of technical assistance, it must be wanted by the recipient and competitively priced. And debt cancellation should not be reported as aid. Dr Thomas concluded: “We are calling on governments around the world to provide much more real aid so that more poor countries can reduce their aid dependency even faster.  Donors and recipient governments can do this in November this year at the High Level Forum on Aid in Busan, South Korea.  This is the perfect opportunity to work together to make sure the poorest countries get more of the real aid they need to tackle poverty more effectively.”