African Aid Dependency: Nigeria’s Experience

CHAPTER ONE

1.0 INTRODUCTION

The development aid concept has a great deal of good intention, basically to create a good life for everyone in the world. This topic of development or foreign aid covers several other subjects such as global governance, political issues, and development process accountability that involved developed and developing countries and governments herein (United Nations, 2019) (Desai and Potter, 2014). Development aid in this research is the government-to-government aid where the wealthy nations support the developing countries by giving them different grants and loans with lenient repayment schedule to support the development of their countries. It is often called “Official Development Assistance” (ODA). The donor country can provide the recipient country with the aid without any external channel (bilateral) or they can give to an international organisation such as the World Bank or the United Nations Agencies (multilateral), which then shall be distributed to developing countries. Most of the recipients of development aid are African countries.(Brown, 2014). African countries have been receiving development aid since the post World War era and till now the African Government has received more than several trillion dollars on the name of development aid. More billions were borrowed to these same developing countries governments to be paid back with interest. Nevertheless, the state of development in Africa is only slightly better today than when aid policy started. Per capita income, for most of Africa, is either stagnant or declining. Thomas G. Weiss and Ramesh Thakur (2010) stated that Africa’s development aid has always been based on donor’s analysis driven by an imposed development ideas(Andrews, 2009). Andrews (20009), among many other development scholars,has argued in their publications that the development aid form of assistance is ineffective. At the same time, the government of developed countries believed that aid is workingand should continue.However, the debate on aid effectiveness in African countries is still ongoing. (Economic Development in Africa, 2020). Nigeria has been one of the significant beneficiaries of development aids among the African countriessince the aid concept started. According to the World Bank (2018), the considerablewealth inequality within the governmentmakes it easy to think that all it needs to balance is development aid from different wealthy countries. However, (World Bank, 2018)shows that Nigeria’s economy and human development have not grown over the past years; it has recorded more decline in growth since 2010, and even worse since the COVID-19 pandemic outbreak in early 2020.(The United Nations Development Programme, 2020).

1.1 BACKGROUND

Literaturature reviews show that development aid has lost its credibility compared to why it was made into policy as part of global governance after World War II in September 1945. Robert McNamara changed the basic idea and concept of the aid given from a donor country to a recipient country in the early late 1960’s and he essentially promoted the concept of using aid to develop the basic sectors of the least developed countries in the world to make them a proper sovereign county (1968 Head of the World Bank). These resulted into many positive development in African countries, such as building of schools and hospitals, construction of infracstructures like raillway stations, airports. Some Africans students got scholarship to study abroad as well. (Ramalingam, 2015). However, the concept of development aid might have started with a selfless intention but gradually it has become tied to shifting economic and political interests and a growing humanitarian movement, according to many scholars that criticized development aid(Andrews, 2009). The World Bank report (2017) also confirmed that foreign aid to developing countries hadno positive impact on the recipients’ countries’ growth rate and economic and humandevelopment quality. According to (Moyo, 2010) and many other scholars such as Andrews (2009) and Ramalinga (2015), they believed aid has not been effective as intended. In addition, the United Nations report of 2020 shows that African countries have been receiving about 100 billion dollars for a decade now; as well as the poverty statistics have shown that African countries have a poverty rate of 10% in 1970 and currently is over 70% (Tong, 2020). This could be the reason for the criticism that the development aid is receiving all around the year. Empirical research has shown that most development aid processeswerenot transparent,and most aids are conditional. (Economic Development in Africa, 2020). Also, (Ramalingam, 2015) argued that development aid / global aid is usually triggered, supported, and sustained first and foremost by self-interest. In which much of it is to exploit the developing countries more. “Despite the widespread western belief that the rich should help the poor, and the form of this help should be an aid, the reality is that aid has helped make the poor poorer, and growth slower” (Moyo, 2010). Development aid scholars adopted the above quote by Dambisa Moyo because “development aid” does not lead to a countrys’ growth. Instead, it creates and encourages more challenges, including corruption, aid-dependency, and limited exports that negatively affect exportation in most African countries. Findings also show that several inappropriate leadership and management decisions resulted in dishonesty within the government. Furthermore, the dependency mentality that foreign aid will come to the rescue makes the African governments lazy to think deep in finding solutions to their countries’ problems.(Okon, Five Decades of Development Aid to Nigeria: The Impact on Human Development , 2012). Moyo (2010) revealed that one of her proposed solutions to these challenges is gradually weaning the African countries off aid within five years. Also, as proven and tested by emerging countries (BRICS), African countries could engage more in trade, investments, capital markets, remittances, and microfinance to build and boost their economies.

1.2 OVERVIEW OF DEVELOPMENT AID IN NIGERIA

Continue your exploration of Impact of Commercialized Athlete Performance with our related content.

Nigeria has an economical structure that has most population with an average income and thus, it is gradually mounting towards several developing sectors to boost the country’s economy such as industrial sector, banking sector, IT sector, and TV industry. Despite such emergence, Nigeria has a nominally marked GDP growth and it has ranked below 20 in the list of ‘countries with high purchasing power’. Nevertheless, it is still a developing country that depends on foreign aid to provide basic infrastructure and facilities (Okon, 2012). Nigeria has the sense of mixed-ethnicity and the cultural diversity distributed in the 36 states herein. Nigeria has a rich human resource i.e. the work force of Nigeria has potential. It is the United States’ fifth-largest source of imported oil; for this reason, perceived as the most prosperous among the developing countries in Africa. Nevertheless, it is one of the poorest that depend on receiving development aid. (The World Bank, 2021). However, according to the World Bank Report of 2018, Nigerian human resources or the promising work force does not get the proper ground to flourish beyond its limit because of the scarcity of investment from the government. The World Bank (2018) has listed Nigeria as 152nd country in the Human Capital Index. Moyo (2010) argued aid is the cause; she claimed developing countries like Nigeria rely so much on aids instead of looking inwards and thinking deeply to resolve their problems. This aid dependency has resulted in engendered laziness on the part of Africa policymakers and leaders. The president of the Republic of Rwanda, Paul Kagame, he has mentioned in several interviews and here is one of his most reference comments where he mentioned that the main need of the hour is to fix the institutional framework of the country and the funding can wait. According to him, Africa is dead set on the subject of external finance that the African countries do not try to be independent and such economical structure of a country is dangerous. According to his idea, in order to end the poverty, both of the parties in a development aid should work together and the donor country should be involved in the recipient country’s development process herein. For example, more than 90% of the profits from oil export to the developed countries are consumed by the central government of Nigeria. Still, there was never accurate accountability and transparency. Also, there is no evidence or proof that donors seek the Nigerian full opinion to understand what is needed fully (Ramalingam, 2015). Therefore, Nigeria makes an excellent choice to use as a case study on development aid effectiveness in Africa.

1.3 RATIONALE FOR DOING THE RESEARCH

Most donors generate massive percentage of their ODA (Official Development Assistance) fund from their citizen’s taxes. Therefore it requires accountability to show how effective the venture is. Nevertheless, most importantly, effective administration of development aid and governance makes the global world a better and safe place for everyone to live; because development aid supports security and the economic, social, and political development of recipient countries and their people.(Vandana Desai and Robert B. Potter, 2014). Nigeria is one of the current 25 poorest countries globally, receiving foreign aid for decades; it has several natural resources, especially oil, but still lacking in basic infrastructures required by its citizens. As a result, 40% of 206 million people living in Nigeria live in poverty; according to the National Bureau of Statistics and World Bank.(The World Bank, 2021). Therefore, the basis for this research is to evaluate the how to increase the development aid’s efficiency in Africa, using Nigeria as a case study; to know if indeed development aid is an effective tool to help developing countries develop in terms of economy and human development; or not. It will strengthen the points raised in the past and highlight other factors not presented when examining the effectiveness of development aid in Africa: for example, political influence, leadership styles, countries history, and globalization.

1.4 AIMS AND OBJECTIVES

This study aims to critically evaluate development aid in Africa, how donors and the Nigerian government manage development aid funds and factors that influence the effectiveness of development aid in general. The primary objective of this research is to assess the cause of perceived in-effectiveness development aid in Africa, using Nigeria as a case study. Knowing the possible cause will shed light on an appropriate recommendation in terms of potential and proper remedies.

This dissertation would be driven by the research questions below:

Is development aid working in Africa?

Why are African countries the major recipients of aid?

Is development aid working in Nigeria?

Nigeria Vs emerging economy countries, what are they doing differently?

1.5 RESEARCH METHODOLOGY

The research has used both qualitative and quantitative approaches; both are preferable because the two methods increase the information gathered; an excellent way to gain a deeper understanding of issues and experience (Kirsty Williamson, 2018). A more detailed explanation of the methodology will be provided in Chapter 3.

1.6 DISSERTATION STRUCTURE

The remainder of this study is structured as follows;Chapter 2 contains a general literature review on development aid in Africa. Chapter 3 includes a methodology and an overview of development aid in Nigeria; Chapter 4 discussed the empirical findings regarding the effectiveness of development aid in Nigeria. Finally, Chapter 5 contains concluding remarks and recommendations.

CHAPTER 2:

LITERATURE REVIEWS:

2.0 INTRODUCTION:

This chapter shall serve the purpose of preparing the basic concept of development aid and the perspective of different scholars on the topic of African Development Aid, referring Nigeria as a case study in comparison with recently identified developed African countries. The following literature confirms the misunderstanding and challenges surrounding the concepts of development aid in Africa.It also display the link between globalization, governance, and the coordination of development and implementation in developing countries.

2.1 WHAT IS DEVELOPMENT AID? – A CONCEPT:

The concept of development aid has various façade. It has a variety of positive prospects that tends to improve the relationships among the developed and developing countries, and most importantly helps towards developing- most developing countries to ensure there is evidence of growth and development in the country both in the country economy and general human development. Basically, the main purpose of development aid or foreign aid is to help a country out of their poverty cycle and economical dependency (Desai & Potter, 2014). However, findings has shown that any form of discussion on aid to poor countries usually attracts criticism and arguments because high percentage of development scholars believes flooding poor countries with aid is not helping these countries; especially in Africa as majority of African countries that receives aid are still very poor. One of the well known to African President that first question the aid concept is the president of Rwanda; Paul Kagame. He mentioned in several interviews and here is one of his most reference comments where he mentioned that the main need of the hour is to fix the institutional framework of the country and the funding can wait. According to him, Africa is dead set on the subject of external finance that the African countries do not try to be independent and such economical structure of a country is dangerous. According to his idea, in order to end the poverty, both of the parties in a development aid should work together and the donor country should be involved in the recipient country’s development process herein. UNDP 2019 Annual report identified 10 countries as the top donors of the development aid, table three (1) below refers:

The above table shows that huge foreign aid money was channeled into development of the recipient’s country every year, especially African Countries: so why are most African countries still poor? This has been the basis of most of the argument on stopping aid as a means of helping poor countries. Moyo (2009) and other development scholars said aid has never worked and it’s not going to work as the studies is yearly showing declining in the growth of these African countries that receives aids. She mentioned in her book “Dead Aid” that aid policies were set to favor the donor countries economically and it does not help the poor countries in anyway except the high figures of aid fund received only looks good on paper. Abas (2019) also wrote that huge chunk of these development aid money are usually spent on renting fancy apartments for the development aid staff in Africa, pay their children school fees, travel expenses and salaries. Therefore, the money left can barely do anything that could improve lives of the people living in these poor countries. Abas said, these in addition to the underline corruptions and lack of competent leadership in most African countries worsen the case. He regarded the case as major disaster that requires urgent attention as it to a life threatening events. The United Nations World Banks reports also shows that donors have been spending a lot of money but lacking working closely with beneficiaries to truly identified where these poor countries needed help (Balakrishnan, 2013; Andrews, 2009). African countries have been identified to be the major recipients of aids (Andrews, 2009). Few African countries and among his Rwanda, have been able to challenge the aid process and re-worked out the development aid process that comes to Rwanda; by first identified what Rwanda needs to grow and develop both its economy and general human development in terms of facilities etc. These identified needs were now discussed with donors in terms of how it can be achieved, what is needed in terms of fund and manpower as well as what the performance measurement would be. Reports of (Shleifer, 2009) shows that Rwanda approaches to development aid that is earmarked for them is most reliable to achieve the purpose of giving aid and it is recommended to other failing countries. However, the issue of aid failure in most African countries has been argued to be because of several reasons such as donors non-transparency in the program / project formulation, corruptions from both sides (donors and recipients countries), dependency on aid by the African countries, globalization etc. (Moyo, 2009), (Ramalingam, 2015).

2.2 CRITITISM OF AID:

As it has been postulated by Desai & Potter (2014), development aid is financial help received from the Developed countries and World Bank or IMF. It can be defined as the “international transfer of fund in the form of loans”. When a loan or grant is directly given from one government to another, it is called a bilateral aid and when it goes through multilateral assistant agency such as World Bank or IMF, it is called multilateral aid. The main two criteria for development aid are described herein: (1) The donor must not have any commercial objective behind donating the development aid, and (2) The development aid provided by the donor country should not have commercial terms of a loan (Desai & Potter, 2014). The concept of aid has never worked for poor country because the internal systematic corruption of these least developed countries never changes (Moyo, 2009). Along with corruption, the process management teams of these countries do not possess the skill of handling foreign aid as well. Also, She said development aid has been used as a commercial investment by rich countries to exploit developing countries; there was no improvement in all the countries that receives aid since the 2nd World War two in 1945; On the other hand, (Owobu, 2020) gave example of Argentina to receive aid in 1980 and they have grown from aid dependence to aid independence over twenty years now. He said aid work if it is managed economically in well transparent manner and it should be accountable by different management teams. He further said, this is what most African countries lack and that is misunderstanding about aid. Andrew (2009) also said that majority of aid fails due to several reasons from both the donors and recipients countries. Only humanitarian aids have proof of several positive success accomplishments in Africa. Also, it was clear that donors do not deeply investigate what a particular recipients countries’ need is. From various researches and journals, it has been proved that different countries have different developmental issues which require different developmental aid or foreign aid and a global approach to such problem does not work with every country or government. (Abas, 2019). Thus, for development aid to be working for African countries, it needs an approach which is tailored to fit the African countries and not simple blanket approach which works with other countries. (Balakrishnan, 2013).

2.3 DEVELOPMENT AID IN AFRICA:

Many scholars have written about African countries been the major recipients of development aid for the past 40 years, however African countries are still underdeveloped except few countries that have high Human Development Index (HDI) ranging from 0.702 – 0.801(Table 1). (UNDP, 2020) And those countries were eventually identified by OECD as the developed African countries herein. As OECD works in close cooperation with Africa, the understanding and information provided by OECD often stands accurate and from the below mentioned table herein, it can be deducted that only 8 countries among 54 countries (OECD, 2019). Thus, only a little over 10% countries can be considered to be developed countries and rest of the countries are often categorized as the least developed countries and those countries contribute towards the 75% poor person in the World index herein (World Bank, 2019). However, the issue of aid failure in most African countries has been argued to be because of several reasons such as donors non-transparency in the program / project formulation, corruptions from both sides (donors and recipients countries), dependency on aid by the African countries, globalization etc. (Moyo, 2010), (Ramalingam, 2015). Studies shows that only eight (8) out of 54 African countries is confirmed to be developed while some are working hard to achieve this development status, and some has totally lost the means of even trying: in the year 2020 reports (table 2).

2.4 THE CASE STUDY OF AN AFRICAN COUNTRY - NIGERIA

The condition or situation of Nigeria presents a complicated paradox which reflects the situation of Africa as a whole. Nigeria, being the biggest and the poorest country of Africa, has been the perfect case for this study. The economical development of Nigeria depends on the better improvement on various sectors such as health and education. African Development Bank has forecasted that unless Nigeria makes a quick move towards improving its basic sectors such as health, food, shelter, education, it is quite unlikely that the country would be sustainable by 2050. As it has been postulated by Sikiru Jimoh Bablola (2019), Nigeria heavily relies on the foreign aid yet fails to apply them properly in order to release the fruit of it. Nigeria is considered to be one of the populous African countries and the huge population is one of the primary reasons why the huge chunk of foreign or development aid has never worked properly for Nigeria. However, population is not the only reason. There exist several other reasons which shall be discussed later in this study. According to the reports of the World Bank (2020), even though Nigeria has made some relevant progress in terms of utilizing the development aid, the full utilization of the same could not be achieved due to under-investment of the same. In the 20th century, Nigeria had received substantial amount of development aid from several developed countries along with multilateral aid from the World Bank. Also, Nigeria has received several other facilities along with development aid from the IMF and several debt relief programs from the Western Countries but the lack of progress in development has cost Nigeria a case of ‘aid-freeze’ (Bakare, 2011, p.25). The massive development charges, poor internal framework, bad governance and the system of public finance management, are some of the characteristics that have made Nigeria to be freeze case by the European Union as it had been stated by Bakare (2011). Also, with the recent outbreak of the Covid-19 and the pandemic situation, the GDP of Nigeria has fell on the negative graph and since then it has been increasingly hard for Nigeria to return back to its normal phase. As it has been stated by the World Bank report (2019), it has been assumed that 2030 would be year when 90% of the world’s poor people will belong to Africa and among then a substantial amount shall belong to Nigeria herein. Also, the World Bank (2020) has recently made Nigeria aware of that it has been predicted that the recent event of the pandemic is most likely to push Nigeria into deeper problem. Before the pandemic, the number of people falling beyond the poverty line was still under control. However, the Covid-19 situation might push 5 million Nigerian below the poverty line. Thus, the poverty line of Nigeria will only grow higher. And Nigeria, being one of the biggest and the populous countries of Africa, the whole growth percentage of Africa is likely to go down as well.

As it had been estimated by OECD (2006), among the 2.3 trillion dollar that Africa has received as development aid from the developed countries since 1956, Nigeria has received a substantial amount of it, almost 25% (Owobu, 2020). Nigeria has always been considered by the Western power as the country that is in dire need of the ‘Big Push Model’. According to Easterly (2005), a big push model country is often considered to be least developed country that needs huge financial support from the external sources in order to show some sign of development herein. Thus, the same gesture of ‘Big Push Model’ has been adopted against Nigeria in the recent times as well. From the research conducted by eminent Economist, Owobu (2020), it can be observed that on top of the pending 9.8 billion dollar from the World Bank, it has approved another additional 2.2 billion as development aid. However, sadly the cycle of growth has been broken and not mended by such huge push of development aid and it has been observed that most of the Nigeria’s GDP struggles to pay back the debt that has been given. Although many debt relief program has been adopted by World Bank and IMF against Nigeria, the situation of Nigeria only have worsened over time.

2.4.1. CORE ISSUES OF NIGERIA

As it has been already stated by Owobu (2020), Nigeria suffers from several core issues and one of the biggest core issues of Nigeria is that this country has never taken the accountability and changed its internal system to utilize the foreign aid that has been provided to it. The corruption at different governmental level of Nigeria is something astounding (Duru, et al, 2020). Also, from the research papers from several eminent scholars, it can be identified that Nigeria’s policy implementation plan is extremely fragile and most of the foreign aid objectives in Nigeria fails due to poor infrastructure of the country herein. The poor institutional framework of Nigeria never allows it to utilize the foreign aid and on the top of that, the high corruption rate of the country is affecting the Nigerian economical growth.

Thus, from the abovementioned table 4, it can be noticed that Nigeria can be considered to be the top 10 country that received such a huge development aid from the Western Countries, especially the United States (as it shall be discussed later on in Chapter 3). Also, in comparison to the four countries for the past 4 years, it can be seen that the development aid in Nigeria has increased while for most of the other African countries it has decreased. However, the GDP of Nigeria in 2020 was -1.79%. And if we can scrutinize the GDP of Nigeria for the past years, it can be observed that GDP has not crossed the boundary of 2% since 2016 herein.

Thus, even if a large amount of development aid has been given to Nigeria over years, the effectiveness of such aid can be seen from the GDP i.e. it is almost nil or in some cases negative (Fig. 1).

2.5 CONCLUSION:

Looking at the above tables as mentioned in the (The United Nations Development Programme, 2020) HD Report (Human Development Report) states that each African country is unique from the perspective of their population and governmental nature. These were also confirmed in several (Shleifer, 2009) reports, taking all this uniqueness into consideration will help in properly identify and provide help. But he also confirmed that aid have not been managed in this manner. He mentioned that most donors force the solutions they think it’s appropriate on developing countries and were not given chance to be part of decision-making process on how to solve their own perceived problems as regards development. Also and most importantly, African countries need to identify roles of a leader and have rules and a guideline that binds them to abide by the rules; to enable them lead appropriately and with proper accountabilities on their duties.

CHAPTER 3:

3.0 Research Methodology

In this case study that concerns Africa and specifically Nigeria; several data from several sources are collected that are both quantitative and qualitative in nature. For better analysis of this paper, the data has been collected from several secondary sources and empirical studies and empirical literature reviews herein. Also, for the purpose of better assessment of the condition of Nigeria regarding the foreign development aid herein, analytical research methodology is to be followed thoroughly as well. With the help of these three research methodology we shall gather data from various national and international resources to provide a constructive idea on the current assessment of the Nigeria situation herein. However, regarding the data collection system, it has been essentially stated by eminent scholar Bhattaraj (2005) that data obtained from the national sources essentially differs World Bank or IMF, sources that are international in nature. Such incident only creates confusion between researchers as to which data to be believed. Also, as Bhattaraj (2005) has also argued, data collected from international resources or the donor countries tend to be more credible in the case of development assistance or bilateral aid herein. Further, the sphere of research methods and other necessary steps needs to essentially follow more international research or opinions of international economists herein. However, as it has been stated that data collection from researchers such as Burnside & Dollar (2000) or Knack & Keefer (1995) shall show the most accuracy for the purpose of analytical research or comparison of any nature but the opinions and researches of the national economists demand some creditability as well. Also, many Nigerian economists agree with the comments of Bhattaraj (2005) as well. In the works of Economists Duru et al (2020, p.41), they have shown more reliance on the data collected from the World Bank or IMF or OECD, sources that are international in nature and several international research papers and they have also provided with a table on methodology that shows an accurate calculation on data collected herein (Fig. 2).

From the abovementioned table as has been proposed and examined by Duru et al (2020), it can be concluded that for the purpose for analytical research and postulation of theory regarding Nigeria and other Sub-Saharan country herein, we shall refer to the international research papers herein.

AN OVERVIEW OF DEVELOPMENT AID IN NIGERIA

3.1 Introduction

The primary concept of the foreign aid or development aid provided to the LDC or the ‘least developed country’ was first proposed by Breston Wood in the year of 1914. The concept of such development aid was to create a world with free capital market (Todaro, 1977). While the concept of development aid might come across as something noble and socialistic, there have been several debates on the how effective these development aids are. Among many other countries, Africa has been a known country to receive a huge amount of foreign aid which can be totaled to an amount of $7.1 Billion from USA in the year of 2019 (Husted et al, 2020, p. 1). However, Nigeria started receiving the development aid or Official Development Assistance (ODA) since the year of 1984. Taking the case study of Nigeria in the context of foreign aid or development assistance, it could be observed that even though Nigeria has been the first ten countries of Africa to receive development aid from several developed Western countries, the effect of such aid has not helped the country to grow for a brighter future. In the year 20th century, Nigeria had received substantial amount of development aid from the World Bank along with “Enhanced Structural Adjustment Facility” from the International Monetary Fund and several debt relief program from the Western Countries but the lack of progress in development has cost Nigeria a case of ‘aid-freeze’ (Bakare, 2011, p.25). In this section, we shall discuss an overview of the development aid that Nigeria has received in the past 40 year since 1984 and why Nigeria has been added to the list of ‘aid-freeze’ by the foreign Western countries.

3.2 Nigeria and Development Aid

Nigeria has always been listed as the poorest countries in the whole African continent with weak socio-economic growth. Thus, as it has been estimated by OECD (2006), among the 2.3 trillion dollar that Africa has received as development aid from the developed countries since 1956, Nigeria has received a substantial amount of it. Nigeria has always been considered by the Western power as the country that is in dire need of the ‘Big Push Model’. According to Easterly (2005), a big push model country is often considered to be least developed country that needs huge financial support from the external sources in order to show some sign of development herein. Such concept has been recommended for Nigeria by several eminent economists across the world and DAC as well.

3.2.1 USA Foreign Aid

Apart from World Bank and IMF, USA has provided the highest foreign development aid to Nigeria along with other Sub-Saharan African countries. According to scholar Ayam (2008), in a short span of only 3 years, USA has provided Nigeria with more than $3 billion dollar. Also, USA has provided with several Anti-terrorism tool, military tool, mine-resistant armor protected vehicle which comprises of another several thousand million dollars herein (Campbell, 2017). USA has helped Nigeria to stabilize their internal problems by helping out in several technical fields during the crisis of girls’ abduction in Nigeria in 2007 as well (Ayam, 2008). On top of everything, in the year of 2021, USA has announced to provide a development aid to the tune of around $140 million dollar to combat development and GDP crisis in Nigeria due to recent Covid-19 situation as well (US aid press release, 2021; Fig. 3).

3.2.2 Chinese Foreign Aid

Apart from USA, China has been one of the greatest contributors in the Nigeria development aid herein. China has helped Nigeria immensely by sending 500 agricultural scientists and more than 200 field scholars to execute more than 200 mini agricultural projects in order to uplift the economy of Nigeria. Also, several million dollars have been invested in different railway and metro projects across Nigeria such as the Lagos-Kano Rail, Abuja Metro Railway Project etc. Also, more than 1 billion dollar has been provided to Nigeria government for the purpose of completing and developing different airports of the country and Zungeru hydroelectric power project (Atsiya & Tenuche, 2019; Lola et al, 2017, Fig.4).

3.2.3 UK Foreign Aid

UK has granted annual foreign aid to the tune of $250 million and several million dollars have been provided to Nigeria for additional education and health development (Kalu, 2010).

3.2.4 Japan Foreign Aid

From the research conducted by Lehman (2005), it is to be noted that Japan has extensively established more than 148 projects all over Nigeria and the JICA (Japan International Cooperation Agency) was established and channeled through Nigeria for the purpose of making progress in the educational sector (Fig. 5).

3.2.5 The current situation of Nigeria

Nigeria is termed as the Sub-Saharan country of Africa. From a study of the World Bank on assessment of Sub-Saharan African Countries (2019), it is to be noted that in the countries like Nigeria which are categorized as Sub-Saharan countries of Africa, the life expectancy and population is increasing in the nature of convex graph since the year of 2000 but the other elements that would help in the growth of GDP of the countries have seen considerable amount of fluctuations (Fig.6). Even though Nigeria has reportedly shown some signs of positivity in the socio-economic graph, the less investment in the human development or per-capita income has been extremely low due to which it has ranked 152 out of 157 African countries that were taken into consideration (World Bank Report, 2019).

According to eminent Economist Ezeani (2020), Nigeria among all other African countries still relies heavily on the foreign development resources (Fig. 7). Currently, Nigeria owes a huge debt to the tune of 9.8 billion to the World Bank and as it has been postulated by Ezeani herein, around 17.76% of Nigerian GDP is accumulated towards paying back the loan (UNDP, 2008). Further, such debt is being paid by Nigeria after several such debts have been met by the IMF and the World Bank (Bakare, 2011, p.25-30).

Thus, even though Nigeria is one of the largest African countries in the oil export industry with the Western countries, it is considered to be the third poorest country after China and India (Igbuzor, 2006, p.140-141). Thus, the question becomes critical at this point – what is the hidden reason behind Nigeria’s fall despite receiving several million of development aids from foreign countries?

3.3 Nigeria Case Study – Statement of Problem

According to the eminent Economist Chukwuemeka (2005), before identifying the problem of Nigeria regarding development aid, we need to understand how the development aids flow from the different Western countries to Nigeria herein. Development aid provided by the foreign countries essentially grants or loans taken the government of Nigeria herein. It is not just financial aids which are provided during a development aid but it also includes several other military, educational aid along with Human aids for the purpose of monitoring different projects such as railway project, hydroelectric projects etc. It is either a loan provided by the government of other countries, World Bank, IMF etc. or governmental coverage to any other private financial expenditure incurred by the recipient’s government. Thus, it essentially does not cover any kind of private capital movement of whatsoever nature. As it has been discussed above, despite of providing millions and billions of private aid to Nigeria, the result does not show much of the promise. Nigeria still owes a huge debt to the World Bank and Nigeria is still considered to be one of the most poverty ridden countries of the world. In critically assessing the situation herein, it is quite easy to deduct the primary problem which again has been supported by many scholarly works that Nigeria suffers from internal systematic corruption. (Chukwuemeka, 2005, p.258). The Systematic Corruption inside the government is not something new to Nigeria but all other Sub-Saharan African Countries suffer from the same problem. Most of the foreign aids which are given by World Bank and several other Western Countries are being embezzled by the government officials at the earliest stage and the aid does not ultimately reach where it should be. As it has been observed by Chukwuemeka (2005), the projects are being halted and the workers are not getting paid herein. Also, it has been obtained from a study that Nigeria ranks 144 out of 180 countries under the TIC Index (Transparency International’s Corruption Index) as of 2018 (Sahara Reporters, 2018). Thus, even though Nigeria flourishes in the industry of oil and gas, it is only the politicians and the government officials who get the benefits herein. From the research conducted by Campbell (2018), news was leaked that in the year of 2018, every governmental official received 1 million excess salaries annually. The cases of contract fraud are extremely high as well. Also from a public survey done by Ojewale & Nyamekye (2016), it was seen that the Nigerian Citizens were well aware of the situation of corruption in Nigeria as 69% of the surveyed person responded that ‘most’ or ‘all of the’ government officials or police officers are corrupted and the recent ‘anti-graft fight’ by the President seemed to a futile attempt at managing corruption (Fig. 8).

However, it is not always the corruption that fails the development program in Nigeria. There is also the case of Poor Utilization and Misappropriation of the development aid or debts herein. In most of the cases, the development aids are being used in projects for which they are not being meant to and often the aids are diverted to non-aided projects and such callous management system in controlling the aids make the foreign aids go futile and ineffective (Ambe, 2013, p. 58). In connection to the abovementioned two possible reasons, there exist another important aspect to the failed development aid aspect that has been postulated by Chenary & Strout (1997, p.700) – Poor Institutional Framework or bad governance. Along with the incapable governmental officials, the institutional framework to look after a foreign aid in getting the best out of it does not exist in Nigeria. All of the institutions be it educational, railway or any other power sectors, several dollars gets wasted due to the lack of productive management system herein. The layers of working system do not exist properly in Nigeria and Nigerian Government has essentially failed to establish one as well. The lack of necessary policy to regulate the foreign aid and not enough legal liability which should be imposed for the purpose of tracking down the whereabouts of the development aid that is palpable in Nigeria and it is one of the reasons why development aid keeps failing Nigeria.

3.4 Critical Analysis of the Nigerian Development Aid Case

In the case study of Nigeria Development aid, the problems attached to the given topic have been described herein. However, all of these problems do not work alone and they necessarily form a cycle that has kept the issue alive for more than 50 years. If we breakdown the statement of problem as it has been mentioned, we can identify all of these three issues are essentially linked to each other and several economists and scholars have supported to such analysis through their bulk of works which shall be discussed herein. For the purpose of this critical analysis, we shall refer the issue of corruption as C, poor utilization and misappropriation as B and poor institutional framework as A. According to eminent scholar Ugur & Dasgupta (2011), corruption cannot be a problem in disrupting the foreign aid alone. According to these eminent scholars who have researched on this particular field for a long time, corruption is essentially a symptom to a larger background problem. Corruption is essentially a combination of institutional effects and country’s unfavorable economical conditions. Thus, according to Ugur and Dasgupta herein, A+B essentially results in C and C in the end disrupts the distribution of the foreign aid or development aid herein and only 10% of the development aid actually reaches the projects for which they were intended for. As a result, a project which was to be finished within 1 year, takes about 10 years to complete. According to work of Graycar and Sidebottom (2012), the theory of opportunity is applicable in the case of Nigerian development aid. According to this theory, governance i.e. the government officials and the institutional framework and the process of misappropriation of money works under the same line and one influences other to keep the system going on years. This theory says that each of the factors is opportunity for the next one and thus they keep a balanced relationship within themselves. If we critically analyze the opportunity theory, we can identify the underlying problem of Nigerian development aid as A⇌ B ⇌ C. Again, other scholars namely Burside & Dollar (2000), does not agree with the first or the second approach as we have postulated herein and they are of the view that it is the event of corruption that keeps the while rolling. Corruption is essentially a mindset that has a greater effect on the functioning of the government officials and thus the poor institutional framework are often intentional and it is the systematic corruption that is the main enemy that Nigeria has to fight to smooth out the path of the development aid, coming from foreign countries. Thus, if we critically analyze this concept, it would form a non-reversible equation herein i.e. C→B→A. Thus, according to this theory, it is the poor institutional framework that disrupts the working of the development aid in Nigeria while corruption starts the cycle. Hence corruption is the cause and poor institutional framework is the effect herein. However apart from all of these factors, there exist other external factors as well. Abuzeid (2009) and Moyo (2009) are of the view of the external factor and according to them it is not essentially the internal corruption and poor institutional framework that causes the trouble with the development aid. While it is true that the factors as have been mentioned earlier have important role to play but there is another external factor which demands more importance in controlling the Nigerian development aid’s possible efficiency - The interest of the Donor Country or herein referred as D. Abuzeid states that the external factor D is a much bigger player in this field and it can surpass all other existing internal factors herein. By default, the donor country has more power than the recipient country and unless and until the donor country’s interests are fulfilled, they do not necessarily provide with a large amount of the development aid. Thus, to receive such aid, the recipient country essentially agrees to their terms and conditions and that keeps the recipient countries in debt trap for a long period of time. Also, there exist several export terms and conditions which are often set by the donor country, at his disposal. Thus, if we critically analyze, the equation can be built as D→C⇌B⇌A. According to this particular scenario, the donor country is the cause and the bad governance or the poor institutional framework is the effect in causing disruption in distributing the development aid which would change the graph of economical development of a country. This analytical data might have given us a little vague idea about how Nigerian development aid received by other countries have been affected but we have little conclusion as to whether the condition of Nigeria is enough to conclude the subject of development aid in the African continent. Thus, for better analysis and better conclusion, we shall hereby discuss an empirical overview regarding effectiveness of the aid in Nigeria and ascertain what such data speaks of Africa as a whole continent.

CHAPTER: 4

EMPIRICAL FINDINGS REGARDING THE EFFECTIVENESS OF DEVELOPMENT AID IN NIGERIA

4.0 Introduction

In the interest of ascertaining how efficient development aid is in Nigeria, it is of utmost important to analyze the empirical researches and the research findings are of utmost importance. The empirical study not only provides us with a quantitative measure of the situation herein but it also help us deciding what are the real situations of a current place. As it has been mentioned by Bhattaraj (2005) that data collected from national resources are not always reliable and more than often data collected from only one place can be misleading. Thus, keeping in terms with Bhattaraj herein, it is important to understand and the importance of different sources and a detailed empirical research and the research findings herein help us concluding the real figure of a hypothesis herein. Thus, in this chapter, we shall thoroughly discuss about different theories of empirical researches and the conclusions thereof. In this section of empirical findings, we shall rely on several old researches done by international scholars and economists first and after we shall discuss the opinions and researches done by the national researchers, scholars or economists to ascertain a collective analysis of the effectiveness of development aid in Nigeria herein.

4.1 Development aid and Nigerian Economical development – Empirical Review

The nexus between development or foreign aid provided by different Western countries and economical development of Nigeria cannot be ignored. While there is no doubt that Nigerian economical development has not developed as much as it should have, the connection between the two are palpable. Without the external development aid help, Nigeria could not have survived economically. Although Nigeria has many problems such as corruption, poor governance that the country has failed over time to utilize the full strength of the development aid, the aids are indeed necessary. According to research conducted by Arndt, Jones & Tarp (2017), growth in private sector and foreign investment is necessary in Nigeria as this can only lead Nigeria to a good governance and controlled economical situation. Also, according to eminent Economists and scholars, Dollar (2000), in order to establish the necessary nexus between the development aid and economical growth, the inner policy imposition should be improved. Thus, according to them, in the absence of strict governance and a good policy imposition, the foreign aid shall only be drained by the politicians and the economical condition of Nigeria will only deteriorate and get corrupted with every passing day herein. Cooper (2008) empirical findings essentially show that the economical condition of Nigeria has been positively affected by the development or the foreign aid but it lacks the appropriate result. According to him so much of foreign aid has been forwarded to Nigeria but compared to such huge number, very little promising result has been shown. It is true that development aid has positively affected on the economy of Nigeria but the constant internal conflict, bad governance coupled with corruption and geographical restrictions can make the effect to the negative herein. A debate could be drawn on this basis that Nigeria, being a Sub-Saharan country has extreme weather and population growth which essentially affects its economical growth. However, such argument does not stand valid as it has been show by OECD (2009) that among the 25 reviewed countries, there are several other countries that had shown promising economical growth with the help of development aid herein such as South African countries. While all of these countries have essentially faced the wrath of setbacks and other economical issues but they have also improved a lot with the help of foreign aid unlike the situation in Nigeria. Again, there are many scholars who are against the idea of foreign or development aid and debt that is provided by the World Bank or the IMF. According to these scholars and eminent economists, it is more than often that these development aids do not work positively on a country’s economy as the donor country wants to keep their interest over the development of the recipient country. One such example of having negative impact by the foreign aid is Tanzania. According to one research conducted by Conchesta (2008), the foreign aid and the debt program in Tanzanian often lead to a governmental division and such division has only led to the downfall of economical condition. Thus, from the study of Tanzania, it can be held that development aid or foreign aid necessarily led to the economical declination of Tanzania and it had a negative impact as well. In connection the abovementioned study, Riddell (2007), foreign aid or development aid that comes in the form of projects, often aim at exploiting the recipient country as the recipient country needs to buy the raw materials and other technological parts from the donor countries. Thus, the project aid does not necessarily provide the recipient country with much profit herein. One such example of exploitive foreign aid is the Chinese Foreign aid provided to the Nigeria. Such exploitation caused by other foreign aid and development aid is also called the ‘Dutch Disease’ herein. Bakare (2011) employed a new system into Nigeria’s economical system to test out the considerable positive nexus between foreign aid provided by different Western countries and the economical development of Nigeria. Such empirical research method is termed as “Vector Autoregressive Model” (VAR). The research method was employed in order to find the “source of shock” into the growth of Nigeria’s economical condition. With the help of this method, it was deduced by Bakare that for Nigeria, the source of shock in its distressed economical condition is essentially the foreign or development aid and it had a negative impact to the economical condition of Nigeria. However, again by the research developed by Mahmood (2014), it was seen that Mahmood’s model of determining the nexus between foreign aid or development aid and economical growth of a country was essentially positive. In this case bilateral aid was considered as foreign aid which does not apply in its full sense to Nigeria or other African countries herein.

4.2 Development Aid to Nigeria – Empirical Theories

The empirical theories linked to the development of Nigeria are mostly postulated by international scholars and economists and they used these theories to ascertain whether development aid has a positive impact on economical growth of a country herein. Here we shall discuss some of the theories which shall be applicable to the situation of Nigeria and we shall analyze the same on the basis of the current situation.

4.2.1 New Growth Theory

This theory is essentially linked to the neo classical theory where the poor and the least developed countries of the world have tried to implant and impose the technology like that of the developed countries. While technological growth has always been marked as the epitome of success, but it only works according to the context of a nation. Thus, in a country where half of the populations are unemployed and people are striving for any job, imposition of technology will not change the situation but worsen it even more. Just like the Solow Model, technological change has always been linked to a “exogenous change” but in case of the developing or very poor countries, such model has often backfired (World Bank, 2014). According to Jhingan (2008), technological change is often linked to the production of knowledge. And production of knowledge does not equate to production of goods as per economic development. In a country where there are not any skilled man to handle a certain technology or the people are not educated enough to preserve and respect and certain technology, the imposition of such technology will not bring any good to the country. Thus the imposition of Solow model can be successful in countries where people are already educated and the country already has enough skilled laborers to handle and use such technology herein.

4.2.2 Public Choice Theory

This theory of development aid is a contrasting theory that does not credit foreign aid to be helpful at all. According to this theory, development aid or foreign aid can never contribute towards a nation’s economical growth by whatsoever mean. Djankov (2008) is one of the supporters of this theory and according to this theory foreign aid is an external force that a country receives which most likely have zero effect on the internal system of a nation. Thus, foreign aid or development aid only helps in facilitating a corrupt government getting more corrupted and it does not help in reducing the burden of poverty at all. Also, according to Easterly (2005), the public choice theory is extremely harmful and damaging for the recipient country as it is essentially ineffective in helping or correcting a country’s internal system of economical corruptness. Further Williamson (2008) proposes or postulates somewhat same view on the subject of foreign aid as well. According to him, foreign aid or development aid often carried within themselves a greater interest for the donor country and such interest never works in favor of the recipient’s country herein. Thus, recipient’s country almost never get the positive result from the development aid. Also, with the intention to analyze the recurring benefit of the foreign aid, it is needed to be examined under the scrutiny of bilateral aid and multilateral aid to ascertain whether it is given to the recipient’s country for the development of such country or purely in its own interest.

4.2.3 Two-gap Model

The two-gap model is essentially dependent on the Harrod-Domar model of investment. According to this theory, for a country to seek for foreign aid, there exist a gap between the export and the import earnings. The development aid or foreign aid aims at fulfilling the gap and keeping the gap between these two earnings at minimal or almost equal herein. Thus, according to the two-gap model herein, foreign aid or development aid is supposed to fulfill a gap and thus it is called the two-gap model (White, 1992). However, according to Conchesta (2008), the two gap model works perfectly theoretically but in reality, the two gap model can provide us with several missing pieces between the export and the import earning herein. The missing factors play an important role in generating economical development from the foreign aid. Such missing factors in case of least developed countries are less use of technology, education, high population, bad governance, poor infrastructure, political instability. On the top of all of these factors, there exists the issue of high interests to be paid on debt given by World Bank or IMF or other international agencies herein.

4.2.4 Public Interest Theory

The public interest theory is a welfare theory put down by many scholars and economists in favor of the development aid or foreign aid herein. According to Anwar (2000), the public interest theory on the surface states that the foreign aid or development aid is given to the least developed countries for the aid of the poor people and make them be part of a better country with stable economical country. However, the public interest theories also have a different side as well. With the help of development aid or foreign aid, the politicians of the developed countries aim at retaining their power and position and gain support from the least developed countries which shall again make them reelected in the next election. According to Sachs (2005) the public interest theory is essential in order to maintain or fulfill the gap of investment herein and provide a country with better opportunities economically. This is the theory and concept which has worked in the minds of several donor and recipient’s countries for the past 50 years and this theory has kept the process of development aid alive in the first place. However, in critically discussing the same, it can be said that this theory often seeks of the interest of the donor countries more than that of the recipient countries. Also, the politicians of the donor countries adapt to the concept of development aid as a good gesture and to retain his power position in his own country herein.

4.3 Effectiveness of Development aid in Nigeria – Empirical Findings from different research papers

For the purpose of empirical findings to understand and ascertain the effectiveness of development aid or foreign aid in Nigeria, we shall need to research through several research papers which have conducted a thorough research on the subject and has come to a conclusion by collecting data from several empirical sources herein. Herein, we shall discuss and present the findings of such research papers which are important to Nigeria’s economical health and the development aid that Nigeria receives for the same purpose. Thus, in this segment, we shall conclude and analyze four different research papers and their empirical findings in order to conclude the recent and current situation of Nigeria in relation to the development aids herein.

4.3.1 Research Paper by Agunbiade & Salam on Impact of Foreign Aid on the Economic Development of Nigeria: 1986 -2016

This research paper by Agunbiade & Salam (2018) focuses on the development aid’s effect or impact on the economical development of Nigeria for a fixed time period from 1986 to 2016. Nigeria only started receiving foreign and development aid on and from the year of 1984. The main objective of this paper are two folds – to identify the foreign aid or development aid that Nigeria receives from several donor countries and how such development aid has assisted Nigeria in developing its economical growth. According to their research methodology, the authors of this research paper has essentially relied on data collected from different secondary sources, empirical reviews and literature and several primary data provided by national and international sources herein. For the purpose of better result, they have used several mathematical formulas to deduce their result in order to conclude a better result. At first they have introduced a model specification and they have established the relationship between several factors such as the GDP of Nigeria, openness of the economy, savings and the stochastic error term. In the next step, they have introduced the stationary test with the abovementioned factors by Vector Error Correction (VEC) Model. In the third step the co-integration test has been employed by Joselius and by the help of such mathematical formulas, they have produced a conclusive empirical result depending on the empirical findings herein (Agunbiade & Salam, 2018, p. 76-77). According to their empirical findings, it can be concluded from this instant research paper that foreign aid or development aid from the development countries has a strong nexus to the Gross Domestic Product (GDP) of Nigeria in the short and the long term. However, the nexus is not strong enough to influence the economical growth of the country positively. Thus, by critically analyzing this research paper, it can be stated that even though foreign aid stimulates the economical growth of Nigeria, it is not strong enough to push for a positive boundary. The empirical findings of this instant research paper indicates a negative result altogether due to the combined effect of internal corruption system, bad governance and the conflicted interest of the donor country herein. Hence, as we had discussed earlier in Chapter 3, the equation of D→C⇌B⇌A is proved by this research paper where we shall refer the issue of corruption as C, poor utilization and misappropriation as B, poor institutional framework as A and the interest of the Donor country has been referred as D.

4.3.2 Research Paper by Nwosu on Foreign Aid and Nigeria

In this instant research paper by Nwosu (2018), the researcher has used several data from the empirical literature provided by Bakare and Easterly herein. The author has essentially have taken the issue of GDP and the development or foreign aid herein to produce a result herein. For the purpose of empirical findings, several secondary sources and national and international sources have been used. According to Nwosu (2018), the empirical findings of this instant research paper essentially indicates towards a positive approach of foreign aid on Nigeria herein. The author has supported the researchers conducted by eminent scholar such as Fasanya & Onakoya, Olanrele & Ibrahim herein. She has relied upon the co-integration test to ascertain an empirical finding on the nexus between foreign aid and economical development of Nigeria and the same has been proved by her in this instant research paper as well (Nwosu, 2018, p. 21-23). Thus, by critically analyzing this instant research paper, it can be concluded that even though foreign aid or development aid does not produce any effective change on the GDP of the country, the effectively of development aid is definitely positive in Nigeria. According Nwosu (2018), the result of foreign aid or development aid is necessarily positive in Nigeria but it only shows marginal effect on the GDP of the country due to the internal conflicts of the country. The internal conflicts of the country such as corruption and bad governance are the main issues that Nigeria has to fight and once these internal issues are solved, Nigeria can expect the development aid to show positive results on the GDP of the country herein. Hence, as we had discussed in chapter 3, the equation of A⇌ B ⇌ C is proved to be true here where we shall refer the issue of corruption as C, poor utilization and misappropriation as B and poor institutional framework as A.

4.3.3 Research Paper by Chukwuemeka, Okechuku & Okafor on Foreign Aid to Nigeria and Domestic Obstacles

Although this research paper essentially focuses on the education sector of Nigeria and how educational sector of Nigeria has been affected by the foreign aid, this instant paper by Chukwuemeka et al (2014) is extremely essential as it draws an important conclusion by introducing two hypothesis of corruption. With the help of this research, the authors have strived to look into the matter of educational sector and they have also concluded a field survey for the purpose of their study herein (Chukwermeka et al, 2014, p. 65-70). On the basis of the field study, the authors have proposed two main hypotheses in this research paper – whether the decline in education system is essentially affected by the internal corruption and is the foreign aid affected by it and secondly, whether the less effectiveness of foreign aid is due to the bad governance and poor institutional framework herein. They have relied into finding the results from the field study and in the empirical finding they have essentially held that it is the poor institutional framework that works in negative way into dissolving the effectiveness of the foreign aid or development aid herein. The poor institutional framework, corruption and poor distribution process are the main reasons why foreign aid has failed in developing a better educational sector in Nigeria. Thus, if we critically analyze this instant research paper, it can be seen that unlike the previous paper, the altogether result of foreign aid has been seen as a negative but the factors that provides the negative effect have been identified as the internal system of Nigeria which is faulty and broken essentially. Hence, as it has been discussed in Chapter 3 herein, the the equation of A⇌ B ⇌ C is proved to be true here where we shall refer the issue of corruption as C, poor utilization and misappropriation as B and poor institutional framework as A. Also, according to this research paper, it is also the duty of the donor country to look into the matter of internal system of Nigeria before granting a loan or any kind of development aid. Without such monitoring, Nigeria’s GDP will always reside at a negative slope and the corruption of the country will only rise.

4.3.4 Research Paper by Duru, Bartholomew, Bartholomew Millicent & Corresponding on Foreign Aid and Economic Growth: Empirical Evidence from Nigeria

Published in the year of 2020, this is the final research paper we shall be analyzing in order to have empirical finding on the effectiveness of development aid on Nigeria herein. In this paper, to estimate how development aid affects the economical growth of Nigeria, the authors have used the way shown by Augmented Dicky-Fuller and Phillips-Perron “unit root test” which shall check the properties of the data according to a certain time period or time series, that has been collected and how such data has affected the Nigerian economical growth herein. In this study, the authors have collected data from several international and national sources to compile a comparative study. The main factors of this study has been regarded as the GDP of Nigeria along with three variables denoting three different outputs such as the economic growth, capital output and one variable for technological productivity herein. To calculate the empirical finding herein, the authors have strived to used the Autoregressive Distributed Lag (ARDL) Bounds test and the same has been related into the co-integration test as well (Duru et al, 2020, p. 42-45). According to this study, it can be concluded that the nexus between economical growth and foreign aid does not hold true in the long run but it is preserved in the short run. Thus, for economical developments which have short run goals, the foreign aid or any sorts of development aid has come to its rescue. But in the long run, several estimated factors have weighed in such as corruption, technological problem, bad governance, poor framework etc. Thus, if we critically analyze this instant research paper, a definite answer on negative or positive cannot be concluded herein.

4.4 Critical Analysis of the abovementioned Empirical Findings

As it has been seen from the abovementioned empirical findings and several research papers as we have discussed and ascertained in the above, we can critically ascertain that the how development aid or foreign aid affects Nigeria’s economical development is essentially blurry. While in all of the studies, it has been seen that the development aid’s impacts on Nigeria’s economical growth in the long run has always produced negative results but that is not the case of short terms. In the first research paper, the donor country and its interests have been blamed for the negative results in Nigerian economical growth (Agunbiade & Salam, 2018) but as it has been seen from the rest of the research papers that it is not the donor country that is at fault in the case study of Nigeria. The donor country might scrutinize a little before providing development aid to the recipient country but the conflicted interest of a donor country cannot be entirely blamed to have a negative economical development of Nigeria.

CHAPTER 5:

CONCLUSION AND RECOMMENDATIONS

5.0 Conclusion – Is The Developing Aid Working In Africa?

Thus, in concluding the subject matter of African development aid with special reference to Nigeria as a case study, it can be concluded that as it has been seen from the perspective of Nigeria and several empirical findings which have been ascertained in chapter 4 herein, it can be concluded that as a whole, the development aid or foreign aid has not done much for overall economical growth of the African Continent. As it has been ascertained by World Bank (2019), as of 1970, only world’s 10% poor people lived in Africa. However, if we scrutinize the current situation, more than 75% of the poor persons live in Africa. The accelerating poverty in Africa is alarming as it has been seen in the data provided by World Bank (2019) herein. According to the assumptions of World Bank (2019), it has been deduced that by 2030, more than World’s 90% poor shall live in Africa (Fig. 9).

From the abovementioned Fig. 9, it could be seen that as a whole the poverty rate of Africa has reduced but due to extreme population growth, the number of African people living in a economically dearth situation, has increased substantially. Also, if we critically analyze the abovementioned data, it could be seen that by World’s 90% poor living in Africa does not necessarily mean that the number of poor people is increasing in Africa but it is not decreasing. While all of the other less developed and developing countries are growing with the help of development aid and foreign aid, the situation of African economy is at a stagnant situation. The development aid is showing very minimal marginal change in the GDP of the African countries and the same has been ascertained from the Nigeria case study, discussed in chapter 4 herein. As it has been ascertained by Moyo (2009), it is not the foreign aid or the development aid, provided by the Western developed countries that are at fault but the internal framework, institutional corruption and bad governance compounds to the problem herein. According to Park (2019), the one of the main issues of the African continent is the misuse of the foreign aid and the systematic corruption herein.

5.0.1 Critical Analysis with reference to Nigeria as a case study

As it has been concluded and stated in Chapter 3 & 4, Nigeria is a great example to ascertain to root problems that all of the African countries face. Thus, we are having a critical discussion in reference to the Nigeria case study and the several empirical findings on Nigeria economical growth. The case study of Nigeria presents a complicated paradox which reflects the situation of Africa as a whole. Nigeria, being the biggest and the poorest country of Africa, has been the perfect case for this study – “The poor citizens of a rich country” (World Bank, 1996). This analogy completely sums up the picture of the whole Africa at once. Being one of the top countries to get development aids and foreign aids from different countries, the huge population of Africa who are still facing the scarce economical condition despite such huge development aid is astonishing (UNDG, 2019). As it has been ascertained in chapter 4 already, the empirical findings on establishing a connection between foreign aid and Nigerian economical growth is one of the essential studies that most of the African countries are facing currently, especially the Sub-Saharan countries. The corruption rate in Nigeria is extremely high. According to current date provided by Transparency International (2020), the current corruption rate in the public sector of Nigeria stands at 44%. Also, from the discussed empirical findings, it can be said that all of the researchers have agreed on the point that Nigeria has a corruptive internal system along with bad governance and poor institutional framework is visible as well. Also, the lack of right policy imposition is another reason why Nigeria could not utilize the development aid or foreign aid she has received for so long. The money in the form of aid comes and it often gets wasted in the hands of the governmental officials or it is often spent on non-aided projects. While some of the researchers have blamed the conflicted interest equation of the donor country for the wasted aids, it can also be seen from critically analyzing chapter 4 herein, it is only 1 out of 10 researchers who have marked the donor country as the bad guy. It is essentially the poor corruption and the institutional framework that has restricted Nigeria from working towards a better economical growth in the long run (Duru et al, 2020). Thus, in reference to the Nigeria case study, it can be concluded that the development aid is not working in proper way to stimulate a positive economical growth in Africa. As it has been assessed from the Nigerian case study, it is inherently the internal system of African that is to be blamed herein.

5.2 Recommendation

From the findings that has been collected from the Nigeria case study, the below mentioned recommendations have been suggested. The development aid or foreign aid necessarily aids the governmental sector or the macroeconomics of Africa. The effectiveness of development aid in Africa, as we can observe from the Nigerian case study, is essentially contingent to the macro-economical policy imposition. African countries do not have a well-built private sector to support or challenge the governmental sector herein. Thus, the first and foremost step that Africa or individual African countries could take is to enhance the macroeconomic policies and make space for new ventures to come in and take shape. The Nigerian case study essentially provides us with the hint that Africa needs to make stricter policies and laws on distributing the foreign aid and to control corruption at different levels of the government. African countries should also adapt to sound and stable macroeconomic policy to ensure domestic savings. The domestic saving utilization shall keep the foreign aid in place and it will be put to projects for which it was intended to. Also, the domestic saving policy shall bridge the gap of saving-investment and the government can finance both public and private enterprises with such investment schemes. Also, it had been pointed out by Duru (2020) in the Nigerian case study that the development aid worked in short term or short run goals but it never had enough stability to benefit a country in the long run. However, with the domestic saving policy implementation, the government can use the foreign aid successfully in the long run as well. Also, it had been pointed out by Agunbiade & Salam (2018) that foreign aid has always negatively impacted the economical growth of Africa due to the presence of corruption and bad governance. Thus, in order to utilize the most of the foreign aids, African countries need to focus more on stabilizing the management process and align symmetrically with the coordination process as well. It is perceptive from the Nigerian case study that Africa has an ample ground to be benefitted from the foreign aids but the proper revitalizing programming of the development aid is extremely necessary. Also, the countries need to reevaluate their existing economical structure and strive at reforming all of the sectors at once. The development aid can be used in this process rather than spending it or projecting it towards unnecessary projects that does not provide any fruitful results herein. Also, formulating sound fiscal system shall aid in nurturing the foreign aid sector better as well.

REFERENCE LIST

Abuzeid, F. (2009). “Foreign Aid and the ‘Big Push’ Theory: Lessons from Sub-Saharan Africa”. Stanford Journal of International Relations, 9(1)

Abas, M. A. (2019). “Public Policy and Governance: Theory and Practice.” Global Encyclopedia of Public Administration, Public Policy, and Governance, , 1 - 6.

Agunbiade, O. & Salam, M. (2018). “Impact of Foreign Aid on the Economic Development of Nigeria: 1986 -2016”. Journal of Economics and Sustainable Development, 9(18), 69-80

Andrews, N. (2009). “Foreign aid and development in Africa: What the literature says and what the reality is?” Journal of African Studies and Development, 1(1), 8-15

Arndt, C., Jones, S. & Tarp, F. (2007). “Aid and Development: the Mozambican Case, In Lahiri, S. ed., Theory and Practice of Foreign Aid.” Frontiers of Economics and Globalization, Amsterdam: Elsevier, 1(1), 45-60

Bakare, A. S. (2011). “The Macroeconomic Impact of Foreign Aid in Sub-Sahara Africa: The Case of Nigeria.” Business and Management Review, 1(5), 24 – 3

Balakrishnan, R. (2013). “Right to Development and Global Governance: Old and New Challenges Twenty-Five Years On.” Human Rights Quarterly , 35 (4), 893-909

Bhattarai, B. P. (2005). “The effectiveness of foreign aid: A case study of Nepal.” School of Economics and Finance, University of Western Sydney, Sydney, Australia.

Burnside, C. & Dollar, D. (2000). “Aid, Policies and Growth.” The American Economic Review, 90(4), 847 – 68

Campbell, H. (2017). “The United States and Security in Africa: The Impact of the Military Management of the International System.” Africa Development / Afrique Et Développement, 42(3), 45-71

Chukwuemeka, E. et al (2014). “Foreign Aid to Nigeria and Domestic Obstacles: A Review of Anambra State Education Sector.” Africa’s Public Service Delivery and Performance Review, 2(18) 52-78

Daniels, K. (2019). ‘Introduction to employment law: fundamentals for HR and business students’. 5th edn, London: CIPD - Kogan Page.

Easterly, W. (2005). “Reliving the ‘50s: The Big Push, Poverty Traps, and Takeoffs in Economic.” Journal of Economic Growth, 11, 289-318

Ezeani, E. (2012). “Economic and Development Policy-Making in Nigeria.” Journal of African Law, 56(1), 109-138

Graycar, A. & Sidebottom, A. (2012). “Corruption and Control: A Corruption Reduction Approach.” Journal of Financial Crime. 19(4), 384-399

Kirsty Williamson, G. (2018). Research Concepts: Mixed Methods Reasearch. In a. G. Kirsty Williamson (Ed.), Research Methods: Information, Systems, and Contexts. Cambridge: Chandos Publishing.

Lola et al. (2017). “China’s Aid and Oil­for­Infrastructure in Nigeria: Resource­Driven or Development Motive?” Contemporary Chinese Political Economy and Strategic Relations: An International Journal, 3(3), 1197-1235

Nwosu, Union. (2018). “Nigeria & Foreign Aid.” A Thesis Presented To The Department Of Economics, The University of Sheffield

Okon, E. O. (2012). Five Decades of Development Aid to Nigeria: The Impact on Human Development . Journal of Economics and Sustainable Development , Vol.3 (No.1), 32 - 42.

OECD, (2016). ‘DAC List of ODA Recipients for 2014, 2015, and 2016’

Organization for Economic Corporation and Development (OECD) (2009b). ‘DAC News: Development Aid 2008.’ OECD: Paris.

Park, J. (2019). “Assessing the Role of Foreign Aid, Donors and Recipients in: Re-Inventing Africa's Development.” Palgrave Macmillan, Cham. 1(2), 37-60

Ramalingam, B. (2015). “Aid on the Edge of Chaos.” 2nd edn, Oxford: Oxford University Press

Thomas Carothers, D. D. (2013). Development Aid Confronts Politics. Washington D. C.: Canegie Endowment for International Peace.

Thomas G. Weiss and Ramesh Thakur. (2010). Global Govenance and the UN: An Unfinished Journey (First ed.). Bloomington: Indiana University Press.

UNDP. (2020). “Human Development Report 2020: The next frontier, Human development and the Anthropocene.” New York: UNDP

US-Aid (2021). “United States Announces Nearly $104 Million In Additional Humanitarian Assistance In Response To The Ongoing Crisis In Nigeria.” Press Release

Ugur M, Dasgupta N (2011). “Evidence on the economic growth impacts of corruption in lowincome countries and beyond: a systematic review.” London: EPPI-Centre, Social Science Research Unit, Institute of Education, University of London.

World Bank (2014). “Philippine Economic Update Pursuing Inclusive Growth through Sustainable Reconstruction and Job Creation.” Poverty Reduction and Economic Management Unit Philippine Country Office East Asia and Pacific Region, Report No. 83315-PH. World Bank