UAE’s foreign aid always exceeds UN target
Image Credit: Ador T. Bustamante © Gulf News

  • The UAE has established a reputation of being an efficient and responsible aid donor.
  • In 2017, the UAE was ranked the world’s largest donor in development aid relative to its national income.
  • Gulf aid has over the years largely shifted from supporting large-scale projects to economic infrastructure programmes.

While the UAE joined the Paris-based Organisation for Economic Cooperation and Development’s (OECD) Development Assistance Committee (DAC) in 2014, it is still considered a non-DAC donor.

That means that it operates outside of the OECD country donors and falls under what is conventionally referred to as "non-traditional" donors.

The UAE has been contributing and supporting international development programmes for decades.

As with several other GCC donors, it has regularly exceeded the UN target of 0.7 per cent of its annual GNI (Gross National Income) allocated as development assistance.

In 2016, the UAE spent Dh15.2 billion ($4.2 billion) in development assistance. And in 2017, the UAE was ranked the world’s largest donor in development aid relative to its national income.

Despite oil price fluctuations, Gulf leaders have stood by their commitment to some of their poorer southern neighbours in recognition of their shared history, their governing principle of tolerance and their focus on solidarity and charity.

The UAE along with other Khaleeji donors have increasingly prioritised the so-called South-South development cooperation and placed a heavy emphasis on humanitarian assistance.

Gulf aid has over the years largely shifted from supporting large-scale projects to economic infrastructure programmes that focus on energy and transport. The GCC countries have also been increasingly using their foreign aid within the Middle East and Asia as a catalyst for promoting private sector investment.

The underlying goal is to strengthen local economies so as to stabilise these respective countries, politically and economically.

By strengthening an ally economically, the hope is that political stability will follow suit and that in the long run the respective relationship will be mutually beneficial.

UAE’s unique reputation

Another basic feature of the UAE foreign aid is that the country frequently offers ‘untied aid’ as opposed to tied aid to recipient countries.

Tied aid is the practice of giving aid to a country with the stipulation that it has to be used to purchase goods and services from the donor country.

Tying aid is less efficient as the recipient country receives less value for their money since resources cannot be used to attract a competitive tender.

Gulf states have historically also been hesitant about channelling their aid contributions through international organisations and other multilateral agencies that tie their aid flows to political performance. However, the UAE in particular has often relied on the Red Crescent societies as a platform to disburse its humanitarian assistance.

While the UAE has established a reputation of being an efficient and responsible aid donor, this cannot be said about the global concept of foreign aid, in general.

The verdict on whether foreign aid in general has been efficient and successful is mixed.

Foreign aid has not always promoted economic growth and socioeconomic development in the less developed countries. There are several reasons why that is the case.

For one, specific donor countries have repeatedly employed a single ‘grand strategy’ of imposing development in underdeveloped countries, instead of tailoring aid programmes to ensure that feedback is generated on whether the aid is working.

Second, providing aid to potentially corrupt developing country governments greatly reduces the effectiveness of aid.

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A significant level of corruption in various cases has led to foreign aid being wasted or eaten up by certain regimes siphoning off some of the money for personal use or to support elite groups. In the context of weak institutions and low paid civil servants, everyday bribes can become endemic, increasing inefficiency while undermining the trust in public institutions.

Third, the number of official donors and agencies worldwide is approaching the 300+ mark. It is often the case that many donors operate in the same country, many providing identical skills and services.

Donors tend to compete with each other to fund projects and programmes. Different donors require recipient countries to comply with different regulations and procedures, and they attach an array of conditions to the aid that they give. This leads recipient governments having to allocate valuable time and scarce resources to interact with donors.

Development impact

Much of the foreign aid is experimental and considering each unique environment to which much of the aid is disbursed, it would be unrealistic to expect aid to translate unproblematically into larger positive results.

There are some steps that can be taken to improve the development impact of aid in various countries. First off, well designed programmes are needed that involve close coordination among the donor, the international aid institutions and respective government institutions.

International aid can at times also be directed in form of micro-finance, with the provision of small loans to individual farmers and businesspeople and in particular women.

It is imperative that countries disbursing foreign aid align themselves with the broader UN Millennium Goals. While the implementation of the UN Millennium Goals has produced a mixed record, significant progress has been made (primary education, combating Aids and malaria, ensuring access to drinking water, and reducing African child mortality rates).

There is, however, still plenty of work to be done to significantly reduce poverty. Lastly, institutional reform in technical, managerial and administrative ways is imperative, since it improves bureaucratic competence and reduces corruption.

Dr. Kristian Alexander is assistant professor in the College of Humanities & Social Sciences at Zayed University, Abu Dhabi.