Sceptical arguments express the view that foreign aid has not only failed to achieve its intended goals of reducing poverty and promoting economic growth but may have contributed to economic stagnation. 

Aid Dependence -  Foreign aid often crowds out private investment, reducing the incentives for entrepreneurs to take risks and start businesses. It creates a dependence culture and potentially reduces recipients' incentives to develop their economies. Baroness Moyo's book Dead Aid highlights that “overreliance on aid has trapped developing nations in a vicious circle of aid dependency and further poverty.” 

Concerns About Microfinance - Microfinancing has proved to be a beneficial system to aid people experiencing poverty by loaning small funds to help them start a business in the hope of achieving self-sufficiency and alleviating poverty. However, some for-profit microfinance enterprises and banks such as Citigroup and Barclays have been criticised for potentially charging high interest rates on microloans, which may lead to a ‘debt trap’ for borrowers. Hence, whilst it may lift some out of poverty, others fall victim to enterprises that may hinder economic growth in developing nations.

Some governments and aid organisations have weak accountability mechanisms, which allows for mismanagement and abuse of funds

Corruption - Many indicators hint towards aid facilitating large-scale corruption, as some governments and aid organisations have weak accountability mechanisms, which allows for mismanagement and abuse of funds. For example, in Lebanon, large amounts of aid for civic projects fail to materialise as they do not bypass the corrupt state.

However… supporters of foreign aid argue that it provides short-term assistance to those in abject poverty and desperation. From Covid-19 to natural and economic calamities, life in some countries would be unsustainable without this financial support.

Ethics - As far as the UK is concerned, foreign aid sends a positive, powerful and compassionate message to the rest of the world. “Supporting the world’s poorest is the right thing to do” and that the Government should be “defining Global Britain as a force for good”, according to MP Sarah Champion, former chair of the House of Commons International Development Committee.

Immediate relief - Diseases such as COVID-19 and natural disasters such as earthquakes are examples of foreign aid playing a critical part in helping those in need. Nearly 857 million doses of the COVID-19 vaccine were distributed to developing countries in 2021. Furthermore, the European Union Solidarity Fund granted €400 million to support Türkiye’s recovery after its devastating earthquake last year. Such foreign support significantly boosts the nation to regain normality and supports victims after disasters.

Such foreign support significantly boosts the nation to regain normality and supports victims after disasters

Law - A target of 0.7% of GDP was first agreed internationally in 1970 by the United Nations General Assembly for foreign aid. This is significant because this obliges developed nations to support developing nations which improves international relations and global cooperation towards a positive cause, which helps to deliver prosperity and peace in troubled regions. The UK’s Official Development Assistance in 2023 was 0.58%. Although it has decreased since 2013, its attempts to restore to the UN’s target for foreign aid are on track and by having these rules, countries like the UK will devote enough resources to make foreign aid effective.