Abstract
Introduction
Foreign aid has been used to address various development challenges (Omotola, 2009) such as social (Ofoma, 2023) and economic conditions (Riddell, 1999), political stability (Asongu and Nnanna, 2019) and conflict (de Ree and Nillesen, 2009). Most studies on foreign aid are geared towards socioeconomic issues, and different methods and techniques, such as large-scale quantitative analysis and rational models, have been used to examine the effectiveness of foreign aid (Annen and Moers, 2017; Asongu and Nwachukwu, 2016; Burnside and Dollar, 2000; Deaton, 2013; Easterly, 2005; Moyo, 2009; Steinwand, 2015). Other rare studies examine the effectiveness of foreign aid by analysing the perception of different participants, especially from the recipient states (Alrababa’h et al., 2020; Baldwin and Winters, 2018; Findley et al., 2017; Smith and Nemetz, 2009; Winters et al., 2017). These studies shed more light on different aspects of foreign aid and development initiatives from the populace’s point of view, and they are imperative because the participants are usually directly impacted by the outcome of aid and different development initiatives.
Nevertheless, the contrasting effectiveness of foreign aid remains unresolved and has not been examined among the end-users of aid (i.e. the direct recipients of aid (Aja-Eke, 2023). In addition, there has been no examination of the impacts of foreign aid on people from different socioeconomic backgrounds among end-users of aid. In regard to this, this paper intends to verify if there are contrasting or a more consistent perception of foreign aid among end-users of aid and if the socioeconomic status of the end-users of aid influences their perceptions of foreign aid. This will provide more insights on the impacts of foreign aid on socioeconomic factors and add to the existing literature on aid effectiveness, with the utilisation of
Therefore, to bridge the gap in the existing literature, and answer the research questions, this paper studies the perceived impacts of foreign aid in four states in Nigeria – Akwa Ibom, Anambra, Enugu and Rivers. The study finds that the arguments on aid effectiveness will remain contestable. While people with lower socioeconomic status are more optimistic about the impacts of aid than people with higher socioeconomic status, this is not applicable across all the states. Some states have either insignificant or at worst contrasting opinions about aid. Therefore, aid allocation should not be ‘a one-size-fits-all’ approach. What works in one locality may not necessarily apply in another locality. Rather, a hybrid system that involves the end-users of aid within a locality is encouraged and is imperative for aid effectiveness.
Hence, the rest of the paper is organised as follows: the next section examines the existing literature on foreign aid and the theoretical stance of this paper, which focuses on the heterogeneous effects and conditional impacts of foreign aid. This is followed by the description of the research design, data and method of analysis. The subsequent section after the research design presents the results and discussion. Finally, the last section concludes and provides recommendations on aid effectiveness and how foreign aid allocation can be enhanced.
Aid effectiveness
The literature on foreign aid effectiveness primarily makes use of cross-country analysis or rational models (Annen and Moers, 2017; Armah, 2010; Asongu and Nwachukwu, 2016; Burnside and Dollar, 2000; Deaton, 2013; Easterly, 2005; Moyo, 2009; Steinwand, 2015). This has led to varying results. The effectiveness of aid has also been examined by analysing the perceptions of foreign aid among individuals in recipient countries. Although there are very limited studies on aid perception, some of the exceptions are the study by Findley et al. (2017), which finds that foreign aid enhances corruption and the embezzlement of public revenue in Uganda. Winters et al. (2017) also observed that participants had a higher perception of the quality of a project when it is sponsored by a foreign body than locally sponsored project in Bangladesh. The findings of these studies indicate that useful insights on the effectiveness of aid could be derived by examining the perception of individuals in recipient states.
Current findings on aid effectiveness are inconclusive and remain contestable. Different studies show that foreign aid has an effective, ineffective or conditional impact on development (Annen and Moers, 2017; Burnside and Dollar, 2000, 2004; Deaton, 2013; Easterly, 2005; Moyo, 2009; Steinwand, 2015). For instance, Moyo (2009) believes that foreign aid has done more harm than good in recipient countries, especially African states. Moyo (2009) noted that aid was beneficial in European countries, contrary to their negative effects in African countries. European countries already had the ‘existing physical, legal and social infrastructures’ that simply needed ‘fixing’, while the primary development needs of African countries are the establishment and strengthening of these structures and not the allocation of aid, which provides temporary relief, encourages dependency and creates long term debt from unpaid loans, debts and interest (Moyo, 2009: 11). While the foreign aid literature has been heavily quantitative-based, with a dominance of cross-country analysis, there have also been qualitative evidence of aid dependency in Kenya, Togo and Zimbabwe, as found in the study by Mangwanya (2022). Deaton (2013) also noted that aid is detrimental to development because of the crucial criteria for development in developing countries, which is the establishment of strong institutions and systems.
On the contrary, scholars like Sachs (2006) believe that foreign aid positively enhances development in recipient countries. Sachs (2006) noted that some inherent factors, such as unfavourable socioeconomic conditions, and environmental, historical and geographical factors, are beyond the financial and technical capacity of developing countries to tackle. Hence, developing countries would require additional assistance, which foreign aid provides, to meet some of their development needs. In other words, from Sachs’ perspective, some developing countries may not have the necessary financial and technical capacity to address some of the institutional constraints pointed out by Deaton (2013) and Moyo (2009), even when they genuinely intend to address these constraints. While there have been recent changes in the dynamic of foreign aid in Africa with a gradual, and arguably rapid shift, of aid from Western countries to more aid from China and Asian countries (Gilpin, 2023; Niu, 2016), some studies have shown traces of aid dependency in these growing dynamics as well (Al-Fadhat and Prasetio, 2024).
Nevertheless, other scholars do not have a firm stance on the effectiveness of foreign aid. They emphasise that the effectiveness of foreign aid is conditional and determined by other factors that could either make foreign aid effective or ineffective (Annen and Moers, 2017; Burnside and Dollar, 2000, 2004; Easterly and Williamson, 2011; Tang and Bundhoo, 2017). The theoretical stance, on the conditional effects of foreign aid, can be traced to Burnside and Dollar (2000), who stated that foreign aids promote growth in recipient states with good (economic) policies and strong institutions (Burnside and Dollar, 2004) than in countries with weaker institutions and policies. This is in line with the findings in Tang and Bundhoo (2017), which show how foreign aid is conditional on the ‘economic, political and institutional environment of the recipient stat’ (p. 1473). Annen and Moers (2017) and Easterly and Williamson (2011) also pointed out the characteristics and practices of the donors that influence the effectiveness of aid, such as transparency, fragmentation and selectivity.
The study by Adedokun (2017) and Asongu and Nwachukwu (2016) are also geared towards the conditional effects of aid, with Adedokun (2017) arguing that a general policy for sub-Saharan Africa will be futile, as different heterogeneous factors within and across recipient states and regions will have varying influence on aid effectiveness. On the contrary, Asongu and Nwachukwu’s (2016: 69) findings show how foreign aid deteriorates ‘economic and institutional governance’ such as ‘regulation quality, government effectiveness, corruption control and the rule of law’ but has no impacts on political governance and accountability.
This paper is based on the conditional effects of foreign aid, and the theoretical presumption that the effectiveness of foreign aid is conditional on different endogenous and exogenous factors (Adedokun, 2017; Annen and Moers, 2017; Burnside and Dollar, 2000, 2004; Easterly and Williamson, 2011). In other words, foreign aid can have varying impacts on different aspects of development based on different factors. One major area of study is the impact of foreign aid on economic development. Therefore, this paper extends the existing literature by examining if foreign aid positively or negatively influences economic and social development with the perception of individual in Nigeria. It is generally expected that people with lower socioeconomic status will be more optimistic about the impacts of foreign aid than people with higher socioeconomic status: either because they have directly or indirectly benefitted from aid, they know someone or people that have benefitted from aid, or they have varying ideas of how foreign aid can be used to enhance their status and living conditions. On the contrary, it is expected that people with higher socioeconomic status will be more pessimistic about the impacts of aid as they generally do not need aid or assistance like people with lower socioeconomic status, especially for basic amenities. Hence, the following hypothesis guides this research:
H1: People with lower socioeconomic status are more optimistic about the likelihood of aid than people with higher socioeconomic status.
This hypothesis presumes that most of the people against aid allocation may be from a more privileged background who do not need some form of aid for survival and or struggle to meet their basic needs. While this paper does not study the direct impacts of foreign aid on people from different socioeconomic status, their perception of aid – either positive or negative perceptions – provides an inkling on how foreign aid has either influenced their lives or may influence their lives if received. This will provide a basis for deducing the impacts of foreign aid on people from different socioeconomic status and how aid effectiveness, aid process and aid allocation can be improved.
Research design
This study makes use of 4709 anonymous paper-based survey responses from four states in Nigeria – Akwa Ibom, Anambra, Enugu and River – to examine the
The Biafran Conflict can be traced down to the
On the contrary, the South-South region of Nigeria is the major oil producing region in Nigeria (Kadafa, 2012). The
However, within these two regions, the
On the contrary, Akwa Ibom and Cross River States were selected from the South-South Region. These states have similar characteristics such as ethnic heterogeneity (the indigenous as well as inhabitants of this states are associated and from multiple ethnic groups), a vast majority of the population are Christians, and these two states are oil producing states. However, Rivers State is more prone to conflict than Akwa Ibom State.
4
Therefore, in addition to verifying the perceptions of aid among the participants from different socioeconomic backgrounds, the most similar case selection techniques will enable to observe if there are similar or contrasting views among more and less conflict prone states. Therefore,
Survey description.
This study makes use of logistic regression analysis for the survey. The participants were asked to select how they agree or disagree that ‘foreign aid is useful’ on a 5-point Likert-type scale. This was transformed into a dichotomous variable. Participants that ‘strongly agree’ or ‘agree’ are coded as ‘1’, participants that ‘disagree’ or ‘strongly disagree’ are coded as ‘0’, participants that ‘neither agree nor disagree’ are dropped. Their gender, average monthly income, educational level and age are used to examine their socioeconomic status.
Gender is a very important attribute to study. Most of the studies on foreign aid did not consider the unique experiences of women while formulating their theoretical stance. For instance, women generally experience a lower socioeconomic condition than men (Girón and Kazemikhasragh, 2022). The study by Handrahan (2004), Manjoo and McRaith (2011) and Greenberg and Zuckerman (2009) also show that women are usually discriminated against in aid allocation processes, and policies made to address conflict disfavour women. In other words, the opinions of women are crucial for development initiatives, especially those that influence their wellbeing. The current realities and studies on the socioeconomic conditions of women indicate that the perception of women on foreign aid may be geared towards Sachs’ perspective: foreign aid positively enhances development in recipient countries, especially by addressing unfavourable socioeconomic and internal factors. In other words, while the effectiveness of foreign aid is conditional, it is expected that women may have a more favourable perception of foreign aid than men, as women generally have lower socioeconomic status than men in most societies and in Nigeria. Older people also tend to have more income, access to funds and better socioeconomic status than younger people; although this could be contested, nevertheless, it is an important individual attribute to examine/control (Table 2).
Descriptive statistics.
Salary in Nigerian Naira (NGN – ₦).
The gender of the participants is coded as a dichotomous variable with ‘1’ representing females and ‘0’ representing males. For ease of interpretation, the unit used in the analysis for monthly income is ₦10,000. The educational levels of the participants are equally transformed into a binary variable with ‘0’ representing participants with secondary education and below and ‘1’ representing participants with at BSc level (or equivalent) and above.
Result and discussion
The results in Table 3 show that the arguments on aid effectiveness will remain contestable. The clear pattern is that people with lower socioeconomic status such as women, lower income earners, and younger people are more optimistic about the impacts of aid than people with higher socioeconomic status. However, this is not applicable across all the states. Some states have either insignificant or at worst contrasting opinions. For instance, the general trend shows that women are more optimistic about the impacts of foreign aid than men. This is equally the case in Akwa Ibom State. Nevertheless, there is no significant difference between the perceptions of women and men in Anambra and Enugu State. Most importantly, women in Rivers State are more pessimistic about the usefulness of aid than men in Rivers State. These could strongly reflect the experiences of women with aid in the state.
Perception of foreign aid in Nigeria.
Standard errors in parentheses.
Average monthly income in 10,000s.
In addition, people with lower income are generally more optimistic about the usefulness of aid than people with higher income, although this is not significant in Enugu and Rivers States. Furthermore, older people are more pessimistic about aid, but this result is not significant in Akwa Ibom, Anambra and Enugu States. Finally, the educational levels of the participants did not significantly influence the perceptions of the participants across all the models.
Table 4 attempts but fails to identify convincing patterns or similarities of the participants’ perceptions based on their states/regions and the levels of conflicts in each state. The result shows how perceptions differ within and across different groups. This result is in line with the study by Adedokun (2017), which emphasised that different heterogeneous factors within and across recipient countries and regions can influence the effectiveness of aid. In other words, what works for a particular group of people, at a given time, may not necessarily work for another group, or even the same group of people at another time. A very clear example of this in this study is the results on average monthly income, which is a core variable for socioeconomic (especially economic) status. While lower earners are more optimistic about the usefulness of aid than higher earners, these differences vary within and across regions, states and the level of conflicts. This shows that while quantitative analysis and rational model, which are rampant in the aid and development literature (Annen and Moers, 2017; Asongu and Nwachukwu, 2016; Burnside and Dollar, 2000; Deaton, 2013; Easterly, 2005; Moyo, 2009; Steinwand, 2015), provide general trend and grand theories, this trend may not, and in most cases, will not be applicable in most circumstances. They are just what they are, ‘a trend’ and not the ‘unique realities’ of each locality at a given time. In regard to this, this study firmly supports the heterogeneous effects of foreign aid and the theoretical stance that aid will have conditional impacts. These impacts are shaped by the characteristics of the donors and recipient locality within a given time, as well as other exogenous and endogenous factors.
Varying perceptions of aid within and among regions and states.
These results flag the heterogeneous and conditional effects of aid. Foreign aid can have varying effects based on different factors. It is not a ‘one size fits all approach’. What works in one locality may not necessarily apply in another locality, or group of people. Rather, a hybrid system that involves the end-users of aid is encouraged and is imperative for aid effectiveness. Adequate attention and consultations should be taken before the allocation of any type of aid. The perception of the recipients and individuals within a locality matter, as it can draw pointers to some grey or unobserved areas. Baseline analysis such as consultations, surveys, focus groups, the perceptions of recipients and end-users of aid, as found in Aja-Eke (2023), can point out if and how foreign aid can be used to enhance development in a particular locality and for a particular group of people.
For instance, one of the interviewees in the study by Aja-Eke (2023) indicated that in lots of scenarios, donors come with their own ‘agendas, which may be incompatible with the needs and priorities’ (p. 716) of the people. This is rooted in the argument of why donors allocate aid. The motives of foreign aid donors can be egoistic – geared towards promoting their national interest (Bermeo, 2017; Fuchs and Vadlamannati, 2013); altruistic – a stronger desire to meet the development needs of recipient countries (Azam and Laffont, 2003; Sumida, 2017); or a combination of both (Berthélemy, 2006a, 2006b; Hoeffler and Outram, 2011). These motives influence the allocation and effectiveness of aid. However, the motives of donors are usually a combination of altruistic and egoistic motives. The motives of donors can largely influence the effectiveness of the aid. In other words, the more altruistic and interested the donor is at enhancing the development needs of the recipient states, the more effective the aid will be. However, if the donor is more interested in promoting its national interest (at the detriment of the recipients’ needs) the less effective, or at worst detrimental, the aid would be to the (development of the) recipient state. It should be emphasised that these motives can be in contrast with the needs of a state, locality or group of people. This is evident in other development strategies and programmes such as the structural adjustment programme (Bracking, 1999; Greenaway and Morrissey, 1993; Willis, 2021; Wuyts, 1996), which makes use of either general trends, models and rational analysis without paying attention to the specific needs and unique differences of a particular group of people, and apparently failed. Due to this, a hybrid-aid allocation system that involves the end-users of aid cannot be overemphasised.
Conclusion
This paper makes use of novel data to study the perceptions of foreign aid in four states in Nigeria. The findings of the paper show persuasive evidence that foreign aid could have different impacts on different groups of people, as well as different localities. While the general trends show that foreign aid could enhance socioeconomic conditions, this is not applicable in all the states. In other words, foreign aid, intervention or assistance should not be treated as ‘a one size fit all approach’. Consultations on the peculiar needs of local communities, groups and individuals, as opposed to the mere generic needs of recipient and donor states and government, are imperative for aid effectiveness. These results provide evidence in support of the conditional and heterogeneous effects of foreign aid. In addition, one of the most glaring observations is the varying perceptions of women across all the states. Women are generally more optimistic about the impacts of foreign aid than men. However, this is not the case in Anambra, Enugu and Rivers States. This is also the case when the economic status of the participants is examined. While lower earners are more optimistic about the usefulness of aid than higher earners, these differences vary within and across regions, states and the level of conflicts.
Therefore, the major recommendations of this study are to critically examine, consult and work with the end-users of aid, state and local governments, as well as relevant non-governmental organisations to identify and address the basic needs of a society and group of people at a given time. A ‘one-size-fit-all’ approach will be ineffective.
In addition, this study identified some of the endogenous factors – such as gender, ethnic groups, religion, age, income and intensity of conflict – that could influence the perceptions of foreign aid, which in turn provides an inkling on how these exogenous factors can influence aid. However, the data used in this study are only limited to two regions (the South-East and the South-South regions) and four states (Akwa Ibom, Anambra, Enugu and Rivers) in Nigeria. Due to this, it could not examine the (varying or similar) perceptions of other relevant groups, such as a comparison from people from other religions, ethnic groups and regions in Nigeria. For instance, religion, ethnic and political rivalry have been identified as majors cause of conflict (Abadie, 2006; Byman, 1998; Cederman et al., 2010; Gunning and Jackson, 2011; Lewis and Dawson, 2018). However, Christianity was the predominant religion in the sample and there was no comparison of different ethnic groups in the study. There was also no examination of how different political affiliations influence the perceptions of the participants. Hence, an examination of these factors needs to be done in order to get a clear picture on the perceptions of foreign aid and how aid allocation and aid effectiveness can be improved. Furthermore, critical studies on how the impacts of foreign aid on women influence their perceptions of aid; how the impacts of different types of conflicts across different localities (at a given time and different periods in time) influence the perceptions of aid; and how the impacts of other exogenous and endogenous factors influence the perceptions of aid are equally crucial for future studies. It will also be useful to carry out more studies on how these factors, on a flipside, influence aid effectiveness.
