Poor lose out as rich countries link aid with trade: think-tank

LONDON (Thomson Reuters Foundation) - Rich countries are using their aid budgets to promote their own national interests rather than focusing on helping people in poor countries, according to research published by a global think-tank on Tuesday.

As populism and economic pressures rise, countries that have pledged to spend part of their national income on aid are opting for short-term political or economic wins over poverty reduction, Britain’s Overseas Development Institute (ODI) said.

ODI researcher Nilima Gulrajani said donor countries were increasingly tying their aid with trade and investments to promote their own economic interests.

“Even though donors see their own interests intimately tied to the rest of the world, there’s also a desire to instrumentalize aid for short-term geopolitical and commercial gains,” said Gulrajani, lead author of the ODI report.

Aid spending by rich countries fell in 2017 according to figures from the Organisation for Economic Co-operation and Development (OECD) that showed the 29 members of its Development Assistance Committee spent $146.6 billion, down 0.6 percent on 2016.

Only five of the 29 - Denmark, Luxembourg, Norway, Sweden and Britain - met the United Nations’ target of spending 0.7 percent of national income on development aid.

Britain’s Prime Minister Theresa May said last August she would use the country’s international aid budget to deepen trade ties with Africa and help British companies invest on the continent.

Gulrajani and her team analyzed the OECD figures and looked at how aid was allocated between 2013 and 2017 to rank member countries on how well they used their aid budget to alleviate poverty and promote development.

Luxembourg topped the list, followed by Britain, Sweden, Ireland and Norway.

Slovenia, Poland, Austria, Greece and Slovakia scored lowest. Gulrajani said global development was not “at the heart” of their aid spending, and they were more focused on national self-interest.

A recent rise in populism and increased scrutiny of the aid sector has led to an overall shift in the way development funds are being spent, she said.

“You have the growth of populist leaders who increasingly think that global investments are poor value for money and so they want their aid to achieve a short-term value rather than long-term,” Gulrajani told the Thomson Reuters Foundation.

“There’s also fiscal pressures in the Western world where aid has to service multiple objectives, including ... financial returns or geopolitical influence. That also derives from some public scepticism around how well aid is spent,” she said.

There has been a resurgence in nationalist-populist sentiment in many countries around the world, from Brazil to Turkey, the Philippines, Russia and the United States.

Gulrajani said rich countries should focus on long-term development and poverty reduction as that would be a win-win global outcome.

“The fundamental point is that achieving global development is also in their national interest,” she said.

“It’s having a world where there’s less illegal trafficking of vulnerable people, where carbon emissions are falling, where refugee movements are falling - that is in a state’s national interest,” she added.

Reporting by Lin Taylor @linnytayls, Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's and LGBT+ rights, human trafficking and slavery, property rights, social innovation, resilience and climate change. Visit to see more stories