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The Importance of Foreign Aid in Times of Crisis

Foreign Aid in Times of Crisis
The world seems to be dwindling under a series of historic shocks. Beginning with a global pandemic in 2020 and moving to a new war in Europe as well as significant changes in abortion legislation in the U.S., many parts of the world are moving into an energy crisis. With wealthy nations having their hands full with domestic issues and geopolitical antagonism, developing countries are on their own. Here is why foreign aid in times of crisis is a critical issue and what some are doing about it.

Partnership and Security

When globalization is on the decline, poorer countries often end up on their own. That puts the countries in a position where they have to find countries and organizations that are still willing to provide foreign aid in times of crisis to them after wealthier western countries have disregarded their needs. Instead wealthier western countries defaulted on their promises to raise living standards and increase national security. With the world becoming increasingly fragmented with a lack of genuine cooperation, global welfare and security are at a large risk. Further, global issues, such as the climate crisis, that require a joint effort from as many nations as possible, will be even harder to address.

Changing Weather Patterns

Whilst changing weather patterns are a hurdle that every country needs to face and adapt to, it is the low-income countries that carry the brunt of it. Especially, the sub-Saharan regions in Africa that such weather phenomena affect leading those regions to be reliant on long-term investment. A study that the IMF conducted has shown that one draught can decrease an African country’s medium-term economic growth potential by one percentage point. Meanwhile, savings from long-term investments that go towards improving resilience and coping mechanisms have proven to be of great significance. Some of the coping mechanisms include improved seed varieties, durable health systems and refined access to finance and telecommunications.

In Ethiopia alone, farmers’ yield increased by 40% as a result of improved seed varieties that proved resistant to rust, a fungus. Unfortunately, countries that face challenges of adaption most often do not possess the means to do so. The farmers lack funding and institutional capacity, hence why it is down to the international community to prevent changing weather patterns from threatening development and stability in low-income countries.

Impact of COVID-19

The COVID-19 pandemic has cost 15 million lives and pushed 100 million people into poverty in 2020 alone. The pandemic demanded a unified response across nations, constituting large amounts of foreign aid in times of crisis, to prevent a setback in human development and human rights. Yet, that did not happen. Instead, developed countries injected trillions of dollars into their own recovery, leaving poorer countries to mend themselves. It does not come as any surprise that in May 2022, 72% of people in high-income countries received at least one dose of the COVID vaccine, contrary to 17% in low-income countries.

With developing countries entering the pandemic with lower fiscal buffers than they had in 2008-09, in the aftermath they are now faced with unequal recovery, effects of the climate crisis and economic shocks to food, fuel and financial markets. Arguably, the neglect of the global responsibility that wealthy countries cause this. The U.N. Secretary-General António Guterres’ stressed to the Economic and Social Council segment on operational activities for development, in New York, in May that “In a world of crisis, rescuing the Sustainable Development Goals (SDG) is more important than ever.”

The 2030 Agenda for Sustainable Development

More encouraging is the 2030 Agenda that the United Nations developed which constitutes a reformed development system to provide foreign aid in times of crisis that matches countries’ needs and priorities. No poverty, no hunger, good health, quality education and gender equality are only some examples of the 17 Sustainable Development Goals (SDGs) that aim to accelerate progress in low-income countries.

To promote substantial change, funding is necessary. With less than 10 years left, world leaders at the SDG Summit in 2019 promoted “A decade of action and delivery for sustainable development”. This represents the kind of innovative, cooperative model the world needs to rekindle relationships, strengthen organizations and expand financing in times of crisis.

The World Bank Suspends Debt

In an attempt to ease the burden COVID-19 and other shocks have put on low-income countries, the world has introduced the Debt Service Suspension Initiative (DSSI). The initiative suspended $12.9 billion in debt-service payments for 48 participating countries, allowing them to focus their financial capacities on protecting the lives and livelihoods of their citizens.

Looking Ahead

The multitude of crises and complexity of domestic and global issues that the world is facing has led to a demand for stronger leadership and cooperation at all levels. Moreover, the bar is rising higher for the wealthier nations to live up to their responsibility to lower-income nations by providing enough funding to prevent setbacks in human development and promote sustainable progress.

Pauline Lützenkirchen
Photo: Flickr