Types of aid

An overview of the different types of aid: bilateral, multilateral, and non-governmental or charity aid, and their positive and negative aspects.

Bilateral aid

Bilateral aid is the most common type of aid. It is given by governments to poorer nations, either for development projects, or as support in emergency situations. It makes up the majority of 'official development aid' (ODA), the remaining 25% being multilateral aid (aid provided through an international institution).
The Department for International Development (DFID) manages the British Government's aid to poorer countries. Its strategic aim is 'halving world poverty by the year 2015'.
At a UN conference in 1970, industrialised countries agreed to give 0.7% of their national income in aid to developing countries. By 2002, only 5 countries had reached this target (Norway, Denmark, Sweden, the Netherlands and Luxembourg). The world's largest economies are amongst the least generous: in 2003 the USA spent just 0.14% of their national income on aid, Japan 0.2% and Germany 0.28%. Currently the UK gives under 0.3%.

Benefits of bilateral aid

  • Aid provides investment for projects and development which would not otherwise have been undertaken. It has been particularly successful in Jordan, South Korea and Taiwan.
  • Aid has reverted draconian measures in socialist countries such as China, North Korea and Vietnam.
  • Aid helps expand infrastructure: roads, railways, ports, power generation.
  • Aid which directly supports economic, social or environmental policies can result in successful programmes.

Problems with bilateral aid

  • 'Tied aid' obliges the country receiving aid to spend it on goods and services from the donor country, which are likely to be expensive.
  • Inappropriate technology may be given. For example, tractors are of little use without a ready supply of spare parts and fuel.
  • Aid can go towards the building of expensive, prestigious buildings, such as hospitals, which mainly help the urban rich.
  • Large-scale building projects, such as dams, may damage the environment and force people off the land.
  • The unreliability of the flow of aid may be destabilising and disrupt development programmes, as in Egypt, India and Pakistan.
  • Aid may never reach the people who need it, but instead be used for the benefit of corrupt officials.
  • Aid on its own does not provide a lasting solution to poor countries’ needs.
  • Aid is ineffective where it is directed at repaying loans rather than development projects, for example, Argentina.
  • Food aid has been seen by some as 'food dumping' and can be very destructive on the local economy.

Multilateral aid

Multilateral aid is aid provided through international institutions.
The World Bank and the IMF (International Monetary Fund) are economic institutions which aim to foster economic growth and high levels of employment, and give temporary loans and financial assistance to relieve debt. Key positions in these organisations are held by members of international governments: the UK's Development Secretary sits on the board of the World Bank, and the Chancellor of the Exchequer sits on the board and chairs the Finance Committee of the IMF.

Aid is also provided by various UN agencies:

  • UNICEF (United Nations Children's Fund) aims to build a protective environment for children and provide them with health and education
  • UNDP and UNEP (UN Development Programme/ Environment Programme) focus on the elimination of poverty and environmental regeneration
  • UNESCO (UN Educational Scientific and Cultural Organisation) aims to encourage international peace and universal respect by promoting collaboration among countries
  • FAO (Food and Agriculture Organisation) leads international efforts to eliminate hunger
  • UNHCR (UN High Commissioner for Refugees) protects refugees and helps them to restart their lives
  • UNAIDS provides information and support in the fight against HIV/AIDS
  • WHO (World Health Organisation) works to combat disease and promote health

Problems with multilateral aid

The IMF and the World Bank have a history of making loans to countries on the condition that those countries first accept Western free-market economic policies, privatising their public services, deregulating investment, and liberalising trade. Big business reaps the benefits, and the poor are left sinking in their wake.

Structural adjustment programmes (SAPs) are strategies prepared by developing country governments in collaboration with the World Bank and IMF to promote growth and reduce poverty. An IMF 'stabilisation loan' is offered, with conditions. The stabilisation package typically attempts to address inflation and reduce the government's budget deficit. In Africa, 34 countries have implemented SAPs. The result, in many cases, has been to force them to reduce spending on health, education and development, while debt repayment and other economic policies have been made the priority.

Non-governmental aid and charity aid

Under 10% of all aid is collected by Non-Government Organisations (NGOs) through voluntary donations. Although charities occasionally collect funds for emergency aid, aid from NGOs and charities is usually aimed at long-term development. Sometimes NGOs co-fund projects with governments or the EU. International charities also raise awareness and campaign for change in industrialised nations.

Money raised by NGOs and international charities goes towards:

  1. Long-term aid:

    • Dealing with the root causes of poverty
    • Campaigning for change
    • Local partner organisations
    • Health programmes: maintaining basic health facilities, eradicating malaria and other diseases(such as Medecins Sans Frontieres)
    • Food production, water supplies, education
    • Technical assistance eg training farmers to increase efficiency and prevent soil erosion
  2. Short-term and emergency aid:
    • Helping refugees to rebuild homes and provide farming equipment in order to enable them to be self-sufficient
    • Medical and sanitation supplies
    • Food and blankets

Potential problems with international charities

  • Charities may not prioritise the greatest sources of need. £250m was raised by charities for the tsunami disaster - but areas affected by the tsunami arguably suffered no greater problems than are faced every day by regions of sub-Saharan Africa.
  • Up to 30% of revenue remains in the country of origin to cover administration costs.
  • Charity projects may clash with the indigenous culture (for example, conservation charities that support moving people off the land to prevent deforestation).
  • As with other kinds of aid, corruption amongst politicians and officials may prevent the aid from reaching the people who need it.

Grassroots charities

These have many benefits with regard to aid:

  • The aid process is not 'top-down' but 'bottom-up': decision-making is carried out by the affected people.
  • The emphasis is on sustainability and appropriate technology.
  • The premise is that schemes need not be capital-intensive or large-scale in order to have a beneficial impact.
  • Smaller-scale schemes are aimed at directly helping with local conditions and providing people with what they really need. For example, training health workers to prevent local diseases, or making small-scale bio-gas plants which use manure to provide gas for cooking and fertiliser.

What you can do

  • Find out more about the charity you are giving to. How direct is the aid? Where is your money going?
  • Always make donations to charity non-taxable by giving your address.
  • Campaign, volunteer, fundraise.

Find out more


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