Mobile Money for RemittancesCurrently, more people are using mobile phones in sub-Saharan Africa than in the United States (U.S.). In December 2016, the region had 420 million unique mobile subscribers, but the actual number of people with access to mobile phones is likely larger, since this refers only to individual SIM connections, and it is often the case that a whole household will share one phone.

Although this level of mobile access has been rapidly growing in Sub-Saharan Africa, the trend does not apply to financial services. As of 2021, only 40% of adults had a bank account, with banks being located predominantly in cities. The wake of mobile money has transformed the financial landscape and has allowed for financial inclusion for the most impoverished. In particular, mobile money for remittances is removing obstacles to remittance aid.

Costly Financial Transactions

Transferring money to and within Africa poses several challenges.

For those living in rural communities, money transfers are almost always cash-based and require either in-person delivery or an intermediary, such as bus drivers. These processes are time-consuming, often costly and involve high levels of risk.

Essentially, many African migrants sending money (known as remittances) home to their families face significant challenges. Even if they themselves have access to mobile money for remittances, transferring them is extremely costly. The cost of sending money to some African countries is as high as 20% of the transferred amount. To avoid paying such high fees, migrants often resort to more informal means, thus exposing themselves to theft or fraud. This often results in them losing money to fraud or transactional costs, and their intended recipients never receiving the hard-earned money.

Establishing a stable system and lowering the cost of sending remittances to Africa is of even greater concern when considering its significance as an aid source for African families. As of 2022, remittance flows to Africa stood at $100 billion. It therefore accounts for more financial aid than either Official Development Assistance (ODA) or Foreign Direct Investment (FDI).

It is therefore evident that the costs of financial transactions are hampering Africa’s growth.

Mobilizing Money

A recent study by the Foreign, Commonwealth and Development Office (FCDO) of the U.K. government has cited that “it is possible that mobile money opens the door to structural change and economic development.” The study took place in Mozambique and focused on rural households since most poverty in Africa is in rural areas.

By closely monitoring the process of introducing mobile money to an area that had previously only operated on a cash basis, the study yields significant findings. The findings focus on how mobile money could increase migration and therefore is likely to drive urbanization.

Moreover, improving mobile money for remittances is key to the process of empowering individual households. By increasing the stability and safety of such platforms, and closely managing these services, financial transactions have the potential to become cheaper and easier for those sending money back to their families.

The FCDO report also finds that having the stability of mobile money access, there is a higher probability of a migrant emerging from the household, and thus of receiving remittances. It concludes, “the expansion of mobile money services should be a priority for policy.”

Multiplying the Effects of ODA

The FCDO’s research into this topic is promising as an area of government interest. In the most recent White Paper for International Development, the U.K. Foreign Office stated that ODA budgets strategically “unlock larger volumes from other sources.” Investing in lowering the cost of using financial services can decrease obstacles for migrants who are using mobile money for remittances and sending money to their households. It is, therefore, one such source of multiplying the effect of ODA spending and grants households in Africa the autonomy to achieve financial stability and rise out of poverty.

Luke Gouldson
Photo: Wikipedia Commons

Estonia's Foreign Aid
Estonia is a Baltic country located in Northern Europe, which gained its independence from the Soviet Union in 1991. Although it is a newly independent country, Estonia has a developed economy with its globally known advanced digital services industry. Being an EU member state since 2004 and an OECD member state since 2010, Estonia’s economy is growing. The country’s GDP in 2021 was $51,531 billion, with $38,700 per capita, according to The CIA World Factbook.

How is Estonia’s Foreign Aid Organized?

Estonia’s foreign aid focus on two aspects, which are development cooperation and humanitarian assistance. Between 2020 and 2030, Estonia is providing development assistance, in particular to Ukraine, Georgia and Moldova in Europe and to Botswana, Kenya, Namibia and Uganda in Africa. Estonia’s priorities in its development aid are ensuring peace, security and stability, diminishing poverty in target countries, and sharing its development experience with them in line with the United Nations’ Sustainable Development Goals (SDGs).

Estonia’s Ministry of Foreign Affairs states that Estonia’s foreign aid serves not only the development of other countries but also Estonia’s own security. To realize this purpose, two institutions are in charge of organizing Estonia’s foreign aid. On the one hand, the Department for Development Cooperation and Humanitarian Aid of the Ministry of Foreign Affairs of Estonia is the policy maker of the country’s official development assistance program. It sets strategies, and short-term and long-term action plans both for development assistance and humanitarian aid. On the other hand, Estonia Centre for International Development is responsible for implementing Estonia’s foreign aid projects both in development cooperation and in the field of humanitarian assistance, increasing Estonia’s participation in international aid projects and providing a bridge between the stakeholders and the beneficiaries. The centre is delivering its duties in a way that best serves the country’s interest.

The Amount That Estonia Spends on Foreign Aid

Although Estonia organizes its foreign aid professionally, when it comes to numbers, Estonia does not meet the international standards for official development assistance (ODA) amount. In 1970, the OECD’s Development Assistance Committee (DCA) set its ODA target for the first time that member countries should spend 0.7% of their GDP on their ODA programs. There has been no change in this target since then. Additionally, the member states who were members of the EU by 2004 agreed in 2005 to meet this target by 2015. Despite the fact that Estonia joined the EU only in 2004 and received an exemption from the aforementioned commitment, as an OECD member country, Estonia is still under the obligation of sparing an amount for its ODA equal to 0.7% of its GDP.

Estonia used to increase the ratio of its GDP spared for foreign aid. According to Estdev, in 2016, Estonia allocated 0.19% of its GDP for foreign aid, its record so far. Following that, between 2017 and 2020, Estonia spared 0.16% of its state budget for its ODA program. Lately, in 2021 Estonia increased this ratio to 0.17%, which is equal to $59 million, according to OECD.

The Future of Estonia’s Foreign Aid

It is a positive sign that the COVID-19 pandemic did not prevent Estonia from continuing its foreign aid activities at the same level. Moreover, the Estonian government pledged to increase the rate spent on foreign aid to 0.33% by 2030, according to its Ministry of Foreign Affairs. However, this target is far from the OECD ODA target.

 – Murathan Arslancan
Photo: Flickr

Japan’s support to UkraineSince Feb. 24, 2022, Ukraine has been in armed conflict with Russia, which has caused significant deterioration in Ukraine’s economy and an increase in poverty. However, the international community has been quick to come to Ukraine’s assistance. In particular, Japan has provided several essential services to Ukraine through the Japan International Cooperation Agency (JICA). Here is a breakdown of Japan’s support to Ukraine since the recent escalation of the Russia-Ukraine conflict.

Poverty Increase in Ukraine

The humanitarian situation in Ukraine has worsened significantly since the start of the conflict. Approximately 34% of households reported having no income or relying on assistance as of April 2022. The country’s unemployment rate has drastically increased to 34% in 2022, according to the National Bank of Ukraine. However, the actual rate is likely more severe as “so many people in Ukraine had undeclared jobs before the invasion,” NPR says. This is a stark increase from the 8.9% unemployment rate recorded in 2021, according to World Bank data.

This increase corresponds to a third of the population suffering from food insecurity. Food insecurity affects some oblasts (provinces) more severely than others, with provinces in the east and south reporting food insecurity rates of 50%. Luhansk notes the highest food insecurity rates across all oblasts. Further, the Ukrainian economy is projected to contract by close to 32% by the end of 2022.

The easternmost oblasts of Donetsk, Kharkiv and Luhansk are disproportionately affected by the conflict. A greater presence of landmine contamination, continued damage to infrastructure and a generally higher risk of Russian targeting makes these areas less accessible for aid and commerce.

JICA Support

Japan’s support of Ukraine since the beginning of the conflict has three focal points:

  1.  Assistance to attain financial stability.
  2. The “improvement of people’s lives and environment.”
  3. The “promotion of autonomous governance and internal reconciliation.”

The first measure the JICA took to help Ukraine in March 2022 came in the form of “a needs assessment survey team for humanitarian and medical assistance,” the JICA website says. The JICA dispatched this medical team to Moldova to assist with the influx of Ukrainian refugees. The team collaborated with the World Health Organization and the Moldovan Health Ministry to help strengthen already existing systems and also provide advice on resource allocation and data management as the crisis continues to unfold.

ODA Loans

Additionally, on May 16, 2022, the JICA signed an Official Development Assistance (ODA) contract, giving a 13 billion Japanese yen loan to support Ukrainian economic stability. However, this amount was not adjusted in light of the scope of the war, and so, on June 17, Japan modified the original ODA to give an additional 65 billion yen to Ukraine. This combined total is equivalent to a 78 billion yen loan. As stated on the JICA website, the loan’s goals include “fostering de-monopolization and anticorruption institutions, strengthening land and credit markets and bolstering the social safety net… by offering financial assistance to Ukraine, which is facing an economic crisis due to the impact of a military invasion.”

Lastly, in late June 2022, the JICA gave its first of “a series of online seminars” designed to help advise Ukrainian officials in waste and debris management amid the war. Oblasts that are particular targets of the Russian military have experienced a high level of infrastructural damage, contributing to transportation and waste management issues. Considering Japan’s experience with these matters, the JICA hopes to share its expertise and contribute to Ukraine’s stability and crisis recovery.

Looking Forward

For Ukraine to endure during these times while safeguarding the well-being of citizens, it is essential to sustain support efforts like those demonstrated by the JICA. It is likely that Japan’s support to Ukraine will continue to play a critical role as the war unfolds.

– Xander Heiple
Photo: Flickr

Japan’s Foreign Aid
As the world’s third-largest economy, Japan is a global powerhouse. Japan’s foreign aid is also impressive, contributing the fourth largest amount in the world, and the largest in Asia. This article will cover where this aid goes, how effective it is and what Japan plans in its future.

Revising Japan’s Foreign Aid

In tandem with its rise as an economic superpower, Japan became the world’s leading foreign aid donor in the 1980s. However, the international community widely criticized Japan for funding environmentally harmful projects of various corrupt Asian leaders. Japan created its first Official Development Assistance (ODA) charter in 1992, which set out a fairly standard list of goals, such as poverty alleviation and healthcare. Former Prime Minister Shinzo Abe significantly updated it in 2015 by intermingling military and aid funding together, and explicitly linking Japan’s foreign aid projects with the “prosperity of the Japanese people.”


Japan’s foreign aid strategy is unique. Bilateral aid constitutes 77% of Japan’s ODA, meaning the Japanese government donates directly to the recipient country without a third-party organization.

This is well above the 59% average of other OECD countries, a collection of the world’s largest donor countries. Of this bilateral aid, 60% comes in the form of loans in comparison to an OECD average of 9%. Japan’s prioritization of infrastructure projects explains these differences. Japan favors infrastructure because of the immediate, tangible benefits it provides and also because these projects provide work for Japanese manufacturing companies.  In 2018, loans going towards infrastructure projects accounted for over one-third of Japan’s total ODA.

Currently, Japan’s largest infrastructure project is a proposed bullet train from Mumbai to Ahmedabad, a distance of around 330 miles. Besides improving transportation between India’s largest city and one of the country’s most important industrial ports, Indian officials expect the construction to create upwards of 90,000 jobs. Japan has pledged to fund 81% of the construction, equivalent to $12 billion USD, on a 50 year, low-interest loan.

Southeast Asia

Japan considers Asia, especially Southeast Asia, a critical region in which to promote Japanese interests through aid. About 57% of Japan’s ODA went to Asian countries in 2018, with India, Bangladesh and Vietnam being the largest benefactors. In this region, infrastructure, renewable energy and education are the three areas receiving most Japanese aid. Japan’s assistance has been instrumental in improving educational opportunities for women and for people living in rural areas.

Territorial disputes between China, Vietnam and the Philippines have recently intensified in the South China Sea. Abe introduced ‘Japan’s Proactive Contribution to Peace’ in his 2015 update of the ODA charter, which allowed Japan to use its aid budget to fund military operations that work towards “peace and stability” in the region. Recent aid packages to Vietnam and the Philippines included surveillance ships and liberal-arts military training. Japan’s intermingling of its de facto military and foreign aid caused some controversy. However, as long as China stays aggressive and powerful in the region, Japan will continue to provide military aid in Southeast Asia.


Healthcare is a growing priority for Japan, specifically in sub-Saharan Africa. With international pressure to allocate more money to the world’s lowest-income nations and away from Japan’s explicit national interest in the Pacific, Abe responded in 2016 at the Tokyo International Conference on African Development (TICAD) by pledging $30 billion to public and private sector recipients in Africa. At the 2019 conference, Abe launched the Africa Health and Wellbeing Initiative, which aims to improve healthcare using Japan’s extensive healthcare technology.

Japan will give aid through both public and private sectors in what the government calls “Mt. Fuji Shaped Healthcare” that prioritizes basic sanitation before investing in advanced healthcare systems. Japan will customize aid based on the different needs of each country.

On October 3, 2020, Japan gave a $9.4 million grant to Nigeria for medical equipment through the Africa Health and Wellbeing Initiative.

The COVID-19 pandemic refocused international attention on the importance of adequate healthcare. Japan responded in September 2020, committing over $6 billion in both bilateral and multilateral aid (chiefly to UNICEF). This aid will provide healthcare systems, training and vaccine funding for Asian and African countries.

Looking Ahead

The outlook for Japan’s foreign aid is quite positive. Yoshihide Suga, who was elected Prime Minister on September 16, 2020, is not expected to change Japan’s foreign aid policies.

While infrastructure will continue to be the main tenet, Japan’s contributions to poverty reduction and healthcare in sub-Saharan Africa have increased in the past 5 years, and this trend should continue. Additionally, the OECD projects Japan’s total ODA to increase by a modest 3% in 2020. Look for Japan’s foreign aid to grow and diversify, albeit slowly, in the coming years.

– Adam Jancsek
Photo: Flickr

Development AssistanceThe Development Assistance Committee (DAC) is a division of the Organisation for Economic Co-operation and Development (OECD). It facilitates economic development worldwide, partly by providing financial assistance to developing countries. The DAC currently has 30 members, including the U.S., Japan and the European Union. According to analysis organization DevelopmentAid, 155 countries received development assistance from these members and of other non-member donors in 2018.

Development Assistance Programs

Official Development Assistance (ODA) distributes financial assistance annually to low-income, lower-middle- and upper-middle-income status countries. Eligibility is based on national per capita income. Countries transcend eligibility once they exceed the high-income threshold set by the World Bank for three consecutive years.  The highest Gross National Income (GNI) was $12,376 as of 2018.

Many countries have graduated from being ODA recipients to become donors themselves. Researchers from the Overseas Development Institute found countries become donors when possible both out of morality and the recognition that aid can “lubricate commercial, trade and investment opportunities” for a donor country. But, it’s not just high-income countries that recognize this. Some nations have become development donors even while still being ODA recipients. Below are five such countries that are both aid donors and recipients simultaneously, proving foreign aid is often a two-way street.

Five Countries That Prove Foreign Aid is a Two-Way Street

  1. Brazil. With a 2019 GNI of $9,130 dollars, Brazil is an upper-middle-income country. It is an ODA recipient, receiving about $430 million in net ODA and official aid in 2018. According to the data organization Development Initiatives, Brazil’s biggest donors are Japan, Norway and Germany. Most of its ODA capital is directed to improving water and sanitation, agriculture and food security and infrastructure. However, Brazil has long been a donor nation, too. In 2010, the Brazilian government found that from 2005-2009 the country invested “more than $1.8 billion dollars into international development” efforts. In 2010 alone, Brazil disbursed $1 billion in aid abroad. One year later, it received that same amount itself in ODA financing. Brazil’s donations largely go to Latin America, the Caribbean and sub-Saharan Africa, particularly for peacekeeping and humanitarian purposes.
  2. South Africa. South Africa is an upper-middle-income ODA recipient with a 2018 GNI of $5,750. It received about $915 million in net ODA and official aid in 2018. In 2011, it received $1.5 billion, but it disbursed $209 million, according to Development Initiatives. Accurate assessments of total contributions and contribution breakdowns are hard to acquire because South Africa’s foreign aid programs are managed by various government organizations. Nevertheless, the country has several successful programs like the African Renaissance and International Cooperation Fund, which have steadily increased contributions since launching in 2001. South Africa’s foreign aid primarily fosters development across Africa. Conversely, as an ODA recipient, the country gets most of its ODA aid from the U.S., EU Institutions and Germany. It is directed primarily toward health issues.
  3. India. As of 2018 data, India is considered a lower-middle-income country. Its GNI for 2019 was $2,130, an all-time high for the country. However, as a nation far from the high-income threshold, it still receives substantial foreign aid. In 2018, it received $2.45 billion in ODA and official aid. The biggest ODA donors to India are the International Development Association, Japan and Germany. These funds are primarily spent on improvements in infrastructure, health and education. However, in 2011, while India took the third-largest share of ODA aid with $5.4 billion received, it also became the sixth-largest non-DAC member donor country. It disbursed $787 million toward international development cooperation. India’s contributions primarily support technical and economic development in Africa. 
  4. Chile. Chile was removed from the ODA eligibility list in 2018, having reached high-income status. It remained at $14,670. However, before achieving this status, Chile’s international development cooperation had been bilateral. The country was helping other nations throughout the world. Though its main beneficiaries are in Latin America and the Caribbean, Chile disburses money to a variety of areas for various purposes as needed. For example, it contributed $100,000 toward the crisis in Syria. The OECD estimated that in 2010, Chile’s overall contributions reached $42 million. However, it still received ODA at that time. In 2012, Chile was an upper-middle-income country and received $126 million in net ODA, largely from France and European Union institutions.
  5. Indonesia. With a 2018 GNI of $3,840, Indonesia is a lower-middle-income country that received just under $950 million in ODA and official aid in 2018. In 2011, Indonesia received $3.7 billion, making it the tenth-largest recipient of ODA. Japan is its largest donor. Almost 25% of all aid goes toward improving the country’s infrastructure. Despite still receiving such a large amount of foreign aid, Indonesia is seeing some growth. ODA’s share of national GNI has steadily decreased while government spending has increased. Moreover, in 2019, Indonesia created the Indonesian Agency for International Development to ramp up the country’s own participation in foreign aid. The agency will manage a $283 million endowment fund the government has set aside for development cooperation.

Development assistance benefits both national and global economies because it allows countries that don’t have sufficient funds internally to build domestically as well as participate in trade with other nations. This supports the logic in development aid flowing both ways in several countries. Brazil, South Africa, India, Chile and Indonesia are just five countries that exemplify such a circumstance.

– Amanda Ostuni
Photo: Wikimedia

Fight Global Poverty ODA Spending
David Cameron will be remembered by history as the Prime Minister who called the “Brexit” referendum, but during his last days in office, Cameron sought to stress a different achievement: lifting Official Development Assistance (ODA) spending to 0.7 percent of national income.

The target was met during a time of economic austerity and in spite of intense criticism from members of Cameron’s own political party. This resolve should inspire other wealthy countries to do their part in fighting global poverty.

Looking at the data, several facts jump out. The UK has a clear lead among G7 countries and is the only one to meet the UN’s recommended 0.7 percent target. The United States, despite being both the wealthiest country in the G7 on a per capita basis and the largest economy in the world, comes in last in ODA spending relative to national income.

If America spent the average 0.35 percent of other G7 countries, it would spend an additional $33 billion a year. Reaching the level of the UK would mean over $90 billion more.

Warren Buffet and Bill Gates have given away over $54 billion total as part of their philanthropic efforts. The Giving Pledge, Gates’ and Buffet’s initiative to encourage the wealthy to give away their fortunes, has so far attracted total pledges of around $360 billion from 139 of the wealthiest individuals in the world.

The yearly contribution America could give by rising to the UK’s level of ODA spending is larger than the total lifetime donations of two of the richest men in world and a third of the total amount pledged by 139 billionaires. This is a powerful reminder that the political process is a central part of the struggle against poverty.

The first of the post-2015 Sustainable Development Goals is to “end poverty in all its forms everywhere.” This ambitious goal calls for a concerted effort on the part of wealthier countries. Since the UN adopted the resolution in 1970 which stated ODA spending in developed countries should be at least 0.7 percent of their gross national product, only a handful of countries have risen to that level.

Aid skeptics often point out that waste, fraud and corruption mean that much of the aid meant for poor beneficiaries ends up lining the pockets of kleptocrats. This problem is exaggerated, but it should serve as a call to action for reforming aid distribution practices, rather than a reason to cut off support for those who need it most

Jonathan Hall-Eastman

Photo: Flickr

Global aid, formally known as Official Development Assistance (ODA), continued to decline in 2012 as wealthy countries struggled with the global financial crisis. Global aid decreased by four percent in 2012, following a two percent decline in 2011.

Global aid totaled about $125 billion USD in 2012. Most of that came from members of the Organization for Economic Cooperation and Development’s (OECD) Development Assistance Committee (DAC), which includes most of the world’s wealthiest countries: the United States, Japan, and much of Europe. However, contributions of the BRICS countries (Brazil, Russia, India, China, and South Africa) are becoming increasingly important to poverty reduction and assistance efforts.

In 2012, Australia, Austria, Iceland, Korea, and Luxembourg increased their donations to global aid. Countries hit the hardest by the financial crisis, including Italy, Spain, Greece, and Portugal, decreased their contributions.

Donations can be measured both by total quantity of donation and percentage of gross national income (GNI). The US was among the largest donors in total monetary value, but did not reach the minimum threshold of 0.7% of GNI. Smaller countries such as the Netherlands and Denmark surpassed 0.7%. In some cases, donations from non-traditional donor countries such as Saudi Arabia and Turkey surpassed individual donations from DAC-member countries.

The percentage of OECD global aid dedicated to humanitarian causes has increased from 3.3 percent to 8.6 percent over the last two decades. Global aid is distributed to many different sectors, including economic development, social and administrative infrastructure, food aid, transportation, and agriculture.

Global aid distribution has also shifted in recent years. The share of aid going to sub-Saharan Africa, traditionally the largest beneficiary, decreased from 47.8% to 41.8%. Meanwhile, aid to South and Central Asia increased from 11.5% to 19.8%.

The OECD’s official report on global aid trends can be found here. Call your senator or representative and let them know that you’d like to see the US contribute more, not less, to global aid.

– Kat Henrichs

Source: IRIN
Photo: The Fact File