A Critical Analysis Of The Factors For The Low Impact Of Foreign Aid On The Socio-Economic Development Of Nigeria, 1960 – 1985

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A Critical Analysis Of The Factors For The Low Impact Of Foreign Aid On The Socio-Economic Development Of Nigeria, 1960 – 1985


Abstract


Background and Objectives. Foreign aids as an essential ingredient for socio-economic development of countries like Nigeria, has promoted huge amount of contribution offered by international donor agencies, particularly, the WHO, to Nigeria’s health sector, especially in Bauchi State. Therefore, it is in view of this, that this study aims to examine the role of WHO as international donor agency in the health sector of Bauchi local government, in promoting socio- economic development of the area. Methods. This research study set to find out the low impact of foreign aids on socioeconomic development in Nigeria with special focus on role of the WHO as donor agency within Bauchi Local Government Area (LGA). Results. A review of relevant literature and the necessary empirical descriptive analyses revealed that relationship was observed between foreign aid and socio-development in Nigeria. And even larger measles campaign is planned for more, Vaccinated 40 million children in Nigeria through the Global Polio Eradication Initiative supporting the Government of Nigeria, with more vaccinations planned, Rapidly expanded and strengthened communicable disease detection and response to more than 360 health facilities, Conducted a rapid health facility assessment in 359 health facilities to understand the health needs and Supported 24 mobile health teams spread across 774 local government areas (WHO, 2016). Conclusion. Government policies should go in line with the donor policies especially in health care sector, in order to promote effective health care service delivery in the region.


Chapter One


Introduction

1.1 Background of the Study

Developing countries are characterized by resource starved economies, specifically capital-related. Capital to boost economic growth and welfare is largely inadequate domestically, which consequently warrants the need for external capital. The only external capital readily available to support development undertakings have to come from foreign aid (Iyoha, 2005). Therefore, According to Kolawole (2013) Nigeria is a resource-rich country, with over thirty different minerals, including gold, iron ore, coal and limestone. After a robust economic growth in the average of 7.5 per cent growth experienced over the past decade, its economy slowed down in 2012. Despite the robust economic growth, unemployment rate in the country yet increased from 21 per cent in 2010 to 24 per cent in 2011. Also, poverty remains widespread, with a headcount that declined marginally from 48 per cent in 2004 to 46 per cent in 2010 (Kolawole, 2013).

Furthermore, the existence of foreign assistance has been on the global scene as it has been in existence since the creation of national states and republics (Ouattara, 2006). The developed or rich countries have always assisted the developing or poor countries to achieve similar achievements to provide livelihoods for their citizens. There have been different views in terms of the effects of foreign aid on the recipient country (Ouattara, 2006). The history of foreign aid can be traced back to the 1940s following the destruction that was caused during the Second World War. Some of the post Second World War challenges were the collapse of the international economic systems characterized by shortage of capital required for infrastructure reconstruction (Ouattara, 2006). In the past four decades, however, there has been an increase in foreign aid towards developing countries (Ouattara, 2006).

Meanwhile, four decades after Independence in 1960, Nigeria remains a poor country with a per capita income of US$260 in 2000. At the dawn of the Third Millennium, approximately 70% of the population still lived on less than US$1 a day (about 84 million people), an indication of extreme poverty (Ogundipe, 2013). Real GDP growth has remained sluggish, averaging 3.5% per annum since 2000. It requires an annual GDP growth rate of 7-8% in order to halve the number of people in poverty by 2015, and this translates to an investment rate of more than 30% per annum (Ogundipe, 2013). In addition, the country faces daunting challenges of re-building a country badly damaged by decades of military misrule and a fragile democracy. There is tremendous pressure on the government to deliver some ‘democracy dividends’. Furthermore, there are the threats of preventable diseases such as malaria, HIV/AIDS, and Tuberculosis (Iyoha, 2005). Nigeria is also a highly indebted country with total external debt exceeding US$32 billion in 2003. The debt service burden remains crushing (Iyoha, 2005). Available data from the Debt Management Office (DMO) shows that Nigeria’s total debt stock as at March 2017 stood at N19.16trn, representing an increase of 10.37% from the December 2016 figure of N17.36trn. This also represents growth of 153.63% from N7.55trn in 2012. A breakdown of the debt stock shows that external debt accounted for 22.08% (N4.23trn), while domestic debt stock accounted for 77.92% (N14.93trn). The increase in the total debt is attributable to the following factors: the need to fund infrastructure and to supplement the declining government revenue. Many analysts have argued that the increase in government’s appetite for borrowing has crowded out the private sector (Debt Management Office DMO, 2017).

Clearly, Nigeria would find it difficult to attain the Millennium Development Goals without massive assistance from Development Partners in the areas of Aid, Trade and Debt relief (African Forum and Network on Debt and Development AFRODAD, 2005). Therefore, for Nigeria to benefit more from foreign assistance in the form of aid, the donor agency like World Health Organization (WHO) must be convinced of Nigeria’s effectiveness in management of the aid. This is important because much of the Official Development Assistance (ODA) inflows in Nigeria by-pass national budgets (Iyoha, 2003). In Nigeria, the aid fund or facilities goes directly to the Ministries, Department or Agency (MDA) that uses the fund or facilities. This is contrary to what happened in other Sub Sahara African Countries such as Kenya and Ghana in which foreign aid is treated as part of the budget (Eregha, 2009). In addition, the Senate (in Nigeria) has warned against the disbursement of foreign aid coming into the country without National Assembly’s involvement. The lawmakers are now insisting that such funds must henceforth be captured in the nation’s budget process for the purpose of tracking its flow and disbursement into Nigeria’s critical sectors (Eregha, 2009). The idea is that by-passing budget will result in timely release of the aid to the critical sectors of the economy. This is envisaged to make aid effective (untimely release of foreign aid fund due to budget delay in developing countries can lead to the poor performance of the projects in which aid fund is designed (Njeru, 2003). Another reason for by-passing the budget is the fact that they want to ensure that aid money is not diverted to non-aided projects in the country (Njeru, 2003).

Moreover, World Bank (2005) reports that Iraq was the top recipient of development aid in 2005 followed by Nigeria. However, this is due to the significant debt relief deals that were granted to these nations that year – when donor countries write off a portion of a recipient country’s debt, it is counted as ODA from the donor country. This explains high proportion of aid that went to Nigeria in 2005; Nigeria was granted debt cancellation of about 19 billion US Dollars. This form of aid is expected to have developmental impacts in Nigeria as the money saved through the debt forgiveness was channeled into meeting MDGs in Nigeria (Alabi & Adam, 2011). So this fund is expected to have a higher impact on MDG focused sectors such as education, health and agriculture than other non-MDG focused sectors. Whether MDG focused sectors were more impacted by foreign aid or not needs be supported by evidence that will warrant a study of this nature (Alabi & Adam, 2011).

Furthermore, the pre-colonial economy of Nigeria was highly diversified in nature. Apart from the people’s traditional economy which was agriculture and associated activities such as hunting and fruit gathering, trade and Commerce formed part of the nation’s means of livelihood (Erinosho & Osunkoya, 2013). However, transcending these economic activities were local crafts and industries like soap making, cloth weaving, blacksmithing and pottery production (Erinosho & Osunkoya, 2013). The period of hostilities also had a devastating blow on the economic production of Nigerians. According to Erinosho and Osunkoya (2013), the local producers and farmers were forced to stop production due to the incessant raids for slaves and foodstuffs. Nonetheless, the euphoria of independence that greeted Nigeria in 1960, call for a number of graduates to fill the vacuums created by the outgoing Colonial masters. So, immediately after 1960, the nation relies completely on education to move the nation forward. Hence, education has to be planned so as to meet the manpower need of the nation. Therefore, Manpower Requirement Approach (MPRA) was adopted and adapted to the Nigerian situation (Erinosho & Osunkoya, 2013).

As a matter of fact, Socio-economic development is a compound word with three different important words. These include; Society, economy and Development. It is relevant to define what socio-economic development connotes, but before this is done it is important to define what economic development denotes. According to Sen (1983), economic development is a policy intervention endowed with aims economic and social well-being of people, economic growth is a phenomenon of market productivity and rise in GDP. According to Uju and Joy (2014), socio-economic development is the process of identifying both the social and economic needs within a community, and seeks to create strategies that will address various issues and needs in ways that would affect the society over a long period of time. Sen (1983) posits that Socio-economic development is the process of social and economic development in a society, any programme that creates sustainable access to the economy for its beneficiaries. Uju and Joy (2014) concluded that the definition given by Sen (1983) above, tries to emphasize that contributors should concentrate on providing sustainable benefits for her citizens within her ambits. Therefore, empirical evidence of impact of foreign aid in different sectors of economy in Nigeria that adopt different aid management (utilization) system will be of interest to donors and other aid recipient countries in Africa (Njeru, 2003). Consequently, According to Oshobugie et al (2011) Foreign aid means economic, technical, or military aid given by one nation to another for purposes of relief and rehabilitation, economic stabilization, healthcare or for mutual defense. Some experts charges that aid has enlarged government bureaucracies, perpetuated bad government, enriched the elite in poor countries, or just been wasted. Other argues that although aid has sometimes failed as alleged, but at the same time has supported poverty reduction and growth in some countries and prevented worse performance in other (Oshobugie, 2011).

Therefore, Foreign aid can have positive effect on economic growth, through public expenditure if properly channeled to the productive sectors of the economy (Odusanya, Abidemi, Abidemi, Ibrahim, Olawale, Logile, Lateef, & Akanni, 2011). Also, Clemes and Gani (2003) argues that there was an effect of aid on human development, which was found in health and education and also showed a significant correlation in terms of human development among the lower-middle countries. The Gross Domestic Capital is mostly associated with economic growth and ignores several issues of development such as standard of living, levels of education and health (Clemes & Gani, 2003). Whitaker (2006) debate on the effectiveness of foreign aid on economic growth; he argues that aid has a positive effect on economic growth, with even more impact in countries with sound economic and trade policies. Thus, foreign aid causes corruption, encourages rent-seeking behavior, and erodes bureaucratic institutions. However, a renewed interest in explaining cross-country economic growth emerged in the early 1990s, with numerous studies attempting to answer the foreign aid question. To date, however, there is no consensus among scholars as to the actual effects of foreign aid on economic growth. There have been several prominent studies which find a causal link between foreign aid and economic growth, such as (Burnside & Dollar, 2004). They found that foreign aid enhances economic growth, so long as “good” fiscal policies are in place. These policies can include maintaining small budget deficits, controlling inflation, and being open to global trade (Burnside & Dollar, 2004).

Furthermore, WHO as donor agency of foreign aid to Nigeria, its top priority is to significantly reduce rates of death and diseases in Nigeria. However, WHO have contributed a lot in Nigerian health sector with support of Ministry of Health. These comprise; delivering essential lifesaving health services to people, gathering and analyzing health information to guide actions, preparing for and responding to disease outbreaks and coordinating the Health Sector together with the Government of Nigeria. Moreover, WHO has supported the Nigerian Ministry of Health in developing the overall Health Sector response strategy, Vaccinated more than 60, 000, 000 children against measles annually (WHO, 2016). And even larger measles campaign is planned for more, Vaccinated 40 million children in Nigeria through the Global Polio Eradication Initiative supporting the Government of Nigeria, with more vaccinations planned, Rapidly expanded and strengthened communicable disease detection and response to more than 360 health facilities, Conducted a rapid health facility assessment in 359 health facilities to understand the health needs and Supported 24 mobile health teams spread across 774 local government areas (WHO, 2016).
Accordingly, WHO also played a role to the development of Bauchi state health sector with the support of Bauchi state Ministry of Health (WHO, 2016). These roles including Shipped 10 Interagency Diarrhoeal Disease Kits; these will provide treatments for 1000 severe cholera cases, 4000 moderate cholera cases, and 1000 adults and 1000 children affected by dysentery. Secondly, provided 7 full Interagency Emergency Health Kits (IEHK) to provide essential medicines and supplies for 70 000 people for 3 months. Thirdly, delivered 15 500 malaria rapid diagnostic tests with more plans for greater malaria response and Trained 89 local health staff to conduct the HeRAMS approach (Health Resources and Services Availability Monitoring), and assessed the availability of key health services in all health facilities across Bauchi State. WHO also trained 6 new hard-to-reach teams of 6 workers each offering a basic health package to nearly 750 000 people in local government areas (LGAs) in Bauchi State and trained health workers to serve some 266 000 people in the communities (WHO, 2016).


1.2 Statement of the Problem

Foreign aids as an essential ingredient for socio-economic development of countries like Nigeria, has promoted huge amount of contribution offered by international donor agencies, particularly, the WHO, to Nigeria’s health sector, especially in Bauchi State. However, many studies on Bauchi LGA of Bauchi State do not seem to appreciate or rather assess the impact of such efforts, while others are not even aware of its contributions. Therefore, it is in view of this, that this study aims to examine the role of WHO as donor agency in the health sector of Bauchi local government, in promoting socio-economic development of the area.


1.3 Objectives of the Study

The following are objectives of this study:

  1. To explore the impact of foreign aid on socio-economic development in Bauchi Local Government Area of Bauchi state, Nigeria.
  2. To examine how foreign aid affects critical sector like Health in Bauchi Local Government Area of Bauchi state, Nigeria.

1.3 Research Question

The research questions of this study are as follows:

  1. To what extent has foreign aid promote economic growth in Bauchi Local Government area of Bauchi state, Nigeria?
  2. How has foreign aids impacted critical sector like health in Bauchi local Government Area of Bauchi state, Nigeria?

1.4 Significance of the Study

The significant of this study is of two-fold which are intellectual and practical;

Intellectually, the research will reflect findings which will be of great help to other researchers on the topic impact of foreign aid on Nigeria socio-economic development relating to world health organization and other related topic. Practically, the research will equally be beneficial to Non-Governmental Organizations (NGOs), scholars, researchers and government agencies on foreign aids related issues.

Therefore, it will assist them in their search of effects of foreign aid in health services delivery and socio-economic development.


1.9 Definition of Terms

Foreign Aids:

Is a voluntary action which is dependent on the recipient country from a donating country, governments, private organizations, individuals, which are for providing support to the recipients’ economic growth.

Socio – economic Development:

Is the process of social and economic development in a society. Socio-economic development is measured with indicators such GDP, life expectancy, literacy and level of employment. Changes in less tangible factors are also considered, such as personal dignity, freedom of association, personal safety and freedom from fear of physical harm, and the extent of participation in civil society. The general idea is to find ways to improve the standard of living within the area while also making sure the local community is healthy and capable sustaining the population present in the area.

Development:

A process of developing or being developed or is a progressive movement of assertion from low to the higher stage and from small to more complex situation (V. I. Lennin, 1967). According to Anderson and Widrow Wilson defined Development as a process through which people’s physical or material, social or organizational, motivational or attitudinal vulnerabilities are reduced and capacities are increased.
Developed Countries: is a sovereign state that has a highly developed economic and advance technological and infrastructure, relative to other less industrialized nations

Developing Countries:

The term used for any nation with a weak industrial base, a low per capita income, and low gross national product.

Less-Developed Country:

Is a situation where the human and socio – economic potentials of a given society have either been extremely exploited to the detriment of its inhabitant or have not been fully or optimally harnessed by the government for better and quality living of its citizens. According to Frank; underdevelopment refers to an active process of distortion, characteristics of the relatively modern fate of the third world countries.

Underdeveloped Countries:

Is a sovereign state with a less developed industrial base and a low human development index relative to other countries. According to Alanana (2006), underdeveloped countries are those countries that have not sufficiently developed; this status of insufficient development was acquired under certain historical circumstances. These historical conditions include centuries of slavery, colonialism, neocolonialism and imperialism.


1.10 Chapter Outline

This research work is divided into five (5) chapters:

  • Chapter one contains background of the study, statement of the problem, objectives of the study, research question, significant of the study, literature review, method of data collection, sampling, theoretical framework, framework for analysis, definition of terms and chapter outline.
  • Chapter two deals with foreign aids and the role of World Health Organization in health services delivery in Nigeria.
  • Chapter three discusses the historical development of World Health Organization and socio-economic development in Nigeria.
  • Chapter four presents data analysis and discussion
  • While chapter five contains summary, conclusion and recommendation.

Chapter Five


Summary, Conclusion and Recommendation

5.0 Introduction

This chapter discusses the summary of the study, conclusion of the work and recommendations on the low impact of foreign aids on Nigeria’s socio-economic development. The chapter also, highlighted policy implication and as well as suggestion for further studies.


5.1 Summary

This research study set to find out the low impact of foreign aid on socio-economic development of Nigeria with special focus on role of world health organization as international donor agency within Bauchi local government area of Bauchi state. In order to achieve the objectives, dependency theory was the theoretical framework for the study. In the framework for analysis, foreign aid from World Health Organization (WHO) was used as a proxy for socio-economic development. The explanatory variables used include internal and external determinants, internal determinant consist of Health Ministry, Health problems and inadequate funding, while the external determinant comprises donor policies and finance/fund.

After a review of relevant literature and the necessary empirical descriptive analyses, relationship was observed between foreign aid and socio-economic development in Nigeria. World Health Organization is one of the donor agencies in Bauchi state and Nigeria in general, especially in health sector. The strong links between socioeconomic factors or policies and health were documented in the World Health Organization (WHO) Commission on Social Determinants of Health report. Yet even when health and health equity are seen as important markers of development, expressing the benefits of social determinants of health interventions in health and health equity terms alone is not always sufficiently persuasive in policy settings where health is not a priority, or when trade-offs exist between health and other public policy objectives. Previous research has shown that increased attention to policies across sectors that improve health and health equity requires better preparation with regard to knowledge on the economic rationales for interventions, and how intersectoral policies are developed and implemented (WHO, 2006).

WHO as donor agency of foreign aid to Nigeria, it’s top priority is to significantly reduce rates of death and diseases in Nigeria. However, WHO have contributed a lot in Nigerian health sector with support of Ministry of Health. These comprise; delivering essential lifesaving health services to people, gathering and analyzing health information to guide actions, preparing for and responding to disease outbreaks and coordinating the Health Sector together with the Government of Nigeria. Moreover, WHO has supported the Nigerian Ministry of Health in developing the overall Health Sector response strategy, Vaccinated more than 60, 000, 000 children against measles annually (WHO, 2016). And even larger measles campaign is planned for more, Vaccinated 40 million children in Nigeria through the Global Polio Eradication Initiative supporting the Government of Nigeria, with more vaccinations planned, Rapidly expanded and strengthened communicable disease detection and response to more than 360 health facilities, Conducted a rapid health facility assessment in 359 health facilities to understand the health needs and Supported 24 mobile health teams spread across 774 local government areas (WHO, 2016)


5.2 Conclusion

This research work examined the impact of foreign aids on Nigeria’s socio-economic development. According to Burnside and Dollar (1997), the positive impact of foreign aid on socio-economic development in Nigeria is as a result of having good fiscal, monetary and trade policies, thus, the introduction of economic policies into its economic equation. This was included, to see if aid was allocated into the country in favour of good policies. It is evident that foreign aid has a positive relationship (or impact) on socio-economic development of developing countries including Nigeria. But this could show a different result when the countries are sampled individually, such that, though aid may be positively related to socio-economic development based on some macroeconomic factors. The case of foreign aid and socio-economic growth and development have proven to be a continuous learning process, in that, while some studies base their findings on macroeconomic factors such as economic policies, others have recommended the use of human well-being factors such as infant mortality, literacy, life expectancy and employment level (Burnside and Dollar 1997; Fayissa and El-Kaissy 1999).

Good health is a human right and a measure of human well-being. It is also a driver of growth and development: investments in health have positive economic returns. During the period 1965-1990, health and demographic variables accounted for as much as half of the difference in growth rates between Africa and the rest of the world. Healthier populations and disease eradication can also help to attract private investments and encourage tourism. Similarly, broader economic policies and government-wide reform programmes can have a profound impact on the functioning of the ministry of health and the delivery of health services. Yet health issues are rarely taken into account when such programmes are designed and implemented, and the contribution of health professionals to these processes is usually limited. There are good reasons for this: lack of capacity within already overstretched ministries of health; no tradition in oversight ministries (such as finance and planning) of consultation with line ministries; and no clear mechanisms for consultation (WHO, 2016).


5.3 Recommendations

This study has come up with the following recommendations:

  1. Government should ensure that policies and programmes are made in order to build and strengthen institutions so that aid can be more effective, because its effectiveness depends on the presence of strong and reliable institutions.
  2. In order for the foreign aid to have significant and positive impact on the socio-economic development, there should be transparency and accountability on the side of government on how to utilize aid received from the international donor agencies.
  3. Foreign aid should always be channel to the more critical sector like health, because a healthy society is a wealthy society.

5.4 Policy Implication

This aspect highlighted some of the implications of government policies on foreign aid.

  1. There should be policy that would serve as a road map on how to effectively spend the financial contribution or assistance that may come as foreign aid, in order to improve the socio-economic development of Bauchi Local Government.
  2. Government policies should go in line with the donor policies especially in the health care sector, in order to promote effective health care service delivery in Bauchi Local Government.
  3. There should be a policy that would bring about mutual understanding and negotiation between Bauchi State Government and international donor agencies, so as to achieve the socio-economic development needed in the area and the state at large.

5.5 Suggestion for Further Studies

  1. There is still room for further research and it is advisable that the research can be undertaken on Sectoral analysis on the impact of foreign aid in Nigeria.
  2. Quantitative method should be adopted in terms of research methodology.
  3. Mixed method can also be used which combines both qualitative and quantitative research design.

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