Shortly after taking office in 2017, the Trump administration released its proposed budget cuts for FY 2018. Among the proposed cuts was a 31 percent decrease in the foreign aid budget, which includes cutting funding to the United Nations, the World Bank and other diplomatic institutions. With the already low foreign aid budget potentially decreasing, impoverished nations still do have dependable allies in the U.S. other than the government.
After the release of the proposed foreign aid budget cuts, American business leaders from companies such as Walmart, Nike and Coca-Cola signed a letter to Secretary of State Rex Tillerson urging him to reevaluate the proposed cuts. The May 22 letter highlights the fact that 95 percent of the world’s consumers live outside of the U.S. and that “eleven of America’s top fifteen export markets are in countries that have been recipients of U.S. foreign assistance.”
Not only are private businesses lobbying the government to take responsibility when it comes to stepping up foreign aid policy, but they have also stepped up in their own funding to developing countries and their economies.
According to The Guardian, private sectors have invested money to developing countries at a faster rate than government foreign aid; they receive 27 percent more foreign business investments than development aid. The investments, which have increased nine-fold since the year 2000, are starting to bring countries out of poverty with increasing business capital flow into their economies.
As businesses see more market potential in countries where citizens could come out of poverty and would have more money to spend on luxury goods, they have an incentive to invest in development.
For example, The Coca-Cola Company and The Bill and Melinda Gates Foundation teamed up with TechnoServe to invest in eastern African farmers to produce fruit for their Minute Maid drinks. As a result, local farmers were educated on how to produce better crop yields that would benefit both Coca Cola’s production and the farmers’ incomes. This venture was titled Project Nurture and increased the incomes of 54,000 farmers.
“We are committed to working with you in your role as Secretary of State to share our perspectives on the importance of U.S. international affairs programs to boost our exports abroad and our jobs here at home,” read the May 22 letter to Tillerson. Whether the proposed 31 percent foreign aid budget cut goes into effect or not, private businesses will continue to invest in foreign markets and give aid to developing countries. It is also important to note that, in budgetary matters, Congress holds the power of the purse. While the President is able to propose budgetary cuts, they must be approved by Congress before going into effect.
– Vicente Vera