8 Reasons Why Foreign Aid Fails

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Every year, billions of dollars are given by rich countries in foreign aid. International aid can be financial loans or grants, humanitarian assistance or military aid. Foreign aid is given to help a country, or its population, overcome crises or lift itself out of poverty.

The idea behind foreign aid is commendable. However, many people feel it has failed in its objective.

Critics state that billions in foreign aid, and assistance that has been given over decades, has not succeeded in creating long-term benefits for developing countries. There is some truth in this. But why does foreign aid fail? And what are the main factors that result in international aid not achieving lasting change for the poorest people in the world?

Aid is Often Mismanaged

The first reason why foreign aid fails is because of mismanagement. International aid has the admiral goal of trying to assist poorer nations to develop and defend themselves. However, although huge sums of money are donated, mismanagement means a significant portion of aid spending fails to achieve this goal.

Mismanagement of foreign aid is at multiple levels, and this contributes to its lack of success.

Misspent funds and ill-conceived aid projects by donor agencies can fail to achieve lasting impact. Over ambition and lack of planning by organisations tasked with implementing aid projects can further contribute to aid not achieving its aim. Mismanagement by governments of developing countries can also compound the failure of international aid.

There are many reasons why mismanagement of foreign aid results in its failure. These include misunderstanding the needs of beneficiaries and recipient governments, a focus on strategic aims of the donor country and a lack of capacity in implementing agencies to effectively deliver aid.

Across all types of foreign aid, mismanagement is perhaps the most common reason for not succeeding.

The inability to effectively manage international aid can be seen in many ways. It includes misdirecting resources, hiring the wrong staff, lacking the expertise needed to effectively deliver projects, not having a strong understanding of the context, or failing to grasp the beneficiary’s actual needs. All, or any of these, types of mismanagement can mean that a foreign aid project fails completely.

There Are Too Many Delays

The second reason why international aid can fail is because it is delayed. When aid is needed, be it to respond to a humanitarian crisis, provide military assistance or help people get out of poverty, it is almost always needed fast. Delays mean there is a longer time before help is received and, in many scenarios, this results in more death, hardship and deprivation. Aid must be delivered at the right time, as well as in the right way, if it is to succeed.

There can be many causes for delays in implementing aid projects. Examples such as logistical, financial, technical, or bureaucratic delays all result in aid projects being less effective than they should be. Delays can also be caused by a lack of clear information about how to respond to a crises or development in a military situation.

Whatever the cause, a delay to receiving international aid can significantly reduce its impact.

Many foreign aid projects are too cumbersome, procedural and require too many resources to administer. Although strong controls are needed to prevent corruption and ensure donor money is used correctly, a more steam-lined system needs to be implemented if international aid is to succeed. Delays in aid projects reduce their effectiveness, cost lives, and increase wastage, all contributing to its failure.  

Examples of how delays in providing foreign aid can result in its failure can be seen in many humanitarian interventions where supplies are delivered too long after the crises hits. Another example of the slow response of international aid is recipient armies not receiving up-to-date equipment or training needed to combat instability or terrorism. These kinds of delays massively reduce the good work aid can do.


An important reason why foreign aid fails is because of corruption. The aim of international aid is to help people and governments of poorer countries lift themselves out of poverty, develop effective institutions, ensure security, and address crises and disasters. Corruption plays a role in preventing all of these and is a major reason foreign aid does not achieve its objectives.

Each year, billions of dollars are given by developed countries in foreign aid through loans, grants, humanitarian assistance and military aid. It isn’t actually known how much aid spending is lost to corruption but is likely to be hundreds of millions of dollars.

The loss of aid to corruption is a major reason it fails because it reduces the impact aid can have on citizens and governments that need it.

Sadly, there is corruption at almost all levels of international aid, from donors, to aid agencies, to recipient governments, to local NGOs. Some countries have done a better job of tackling corruption, however, a significant portion of aid spending it given to some of the most corrupt countries in the world. This makes sense because these countries are poor, but also increases the risk of aid being syphoned and failing to achieve its aims.

Corruption is foreign aid can be a major reason why it fails. However, it should not be used as justification to reduce aid spending, but rather as motivation to create more accountable systems and processes that reduce corruption and ensure international aid helps the most people it can.

Lack of Good Governance

Good governance is defined as a countries ability to manage its institutions, conduct public affairs, and allocate collective resources effectively. Essentially, its how well ran, and how accountable, a countries government is. For foreign aid to succeed, it requires good governance.

Aid projects often fail because local and national governments of the recipient countries simply are not run well.

Most international aid is donated to countries that lack good governance. Basically, countries that have strong, accountable, and effective governments don’t really need aid. However, it does man that many aid projects fail because of a lack of well ran government institutions.

For foreign aid to better succeed, resources should be dedicated to improving governance in developing countries.

The issues poorly ran states have with receiving and administrating aid are widespread. A lack of good financial, logistical, planning and resource allocation skills among staff reduces the likely-hood that aid will go where it is needed. A lack of accountability in government bodies also means aid is often not used where it could do the most good.  Limited capacity among local and national governments can also means aid projects fail.

Good governance can be an extremely hard thing to address. This why although there is widespread understanding of the impact of poorly ran government institutions among recipient nations and their impact of foreign aid, little has been done to improve it. However, until developing countries can create inclusive and accountable institutions, international aid will continue to have a limited impact.

Foreign Aid Can Create a Dependency

Foreign aid is often criticised because it can create dependency. The overall objective of international aid is to lift people out of poverty, help people affected by disasters, assist developing country governments to run more effectively and help poorer nations defend themselves. Foreign aid is not supposed to be a long-term strategy but short-term assistance to help poorer nations develop. If it creates a dependency, then it has failed.

There are many ways that international aid can create a dependency. Communities that receive aid may fail to develop economically as they get accustom to receiving aid for free. Giving aid can disincentivize people to better their situation as they begin to rely on the assistance. As a result, aid can actually cause a lack of development, which goes completely against what it is supposed to achieve.

Another way that foreign aid can create a dependency is for governments that receive international assistance to fail to develop. Essentially, what happens at the community level is magnified at government level – because outside assistance is given, there is less incentive to reform, address difficult challenges or wean off the given financial assistance.

Foreign aid should not be used as a long-term strategy by either donors, recipient communities or developing country governments. However, too often aid is seen as the status-quo. This represents a significant failing of international aid.

Too Much Aid Is Wasted

A big reason why international aid fails is because of the amount of money that is wasted. Although a lot of foreign aid money reaches its intended beneficiaries and does good, too much is not used correctly and goes towards staff, projects, resources, and organisations that simply don’t reap enough benefit. There is too much waste in the aid sector, and this is a reason it can fail.

There is debate over what constitutes a waste of aid money. However, it should be agreed that funds that are not used to assist people, organisations, or governments in need, or used to operate organisations and projects that directly help these beneficiaries, is wasted.

How exactly foreign aid is wasted is subjective, but everyone agrees there is wastage, and too much of it.

International aid funds that are not used properly, or material and resources that is dedicated incorrectly and do not achieve their final use all contribute to the failure of foreign aid. Although many donor agencies, international NGOs and other aid organisations are making attempts to tighten up and reduce wastage, it’s a sad fact that still too much aid is mis-directed

There are many reasons why foreign aid is wasted. Examples include procuring items too slowly that are then no longer needed, supplying items that are not suitable in the local context, or running projects that donor’s see as important, but recipient’s government or beneficiaries don’t think they require.

If international aid is to succeed, less needs to be wasted.

There Is a Lack of Localisation

The term localisation in the aid sector means putting power over decision making in the hands of the people who receive aid. People who live through crises, or a are experiencing poverty, inherently know best about how to help themselves.

A major reason foreign aid fails is because too much of the decision making is done away from the recipients, often by the donor agencies or NGOs based in the West.

A key part of localisation is giving funds to, and empowering, national NGOs and civil society organisations in countries that receive aid. Right now, huge amounts of aid money go to international NGOs and UN agencies – far removed from the daily lives of people aid is supposed to help. Local NGOs and grassroot organisations need a high proportion of funding for aid to succeed, as they are imbedded in the communities it aims to benefit.

Currently, the aid sector talks big about localisation, but in practice fails to deliver. The Grand Bargain – an agreement signed between major international NGOs and donors at the World Humanitarian Summit in 2016, was supposed to commit donors and NGOs a larger per cent of humanitarian and development funding being given to local organisations. So far, this hasn’t really happened. It represents a major failure of foreign aid.

Almost all aid NGO and donors agree that localisation is key if foreign aid is to succeed. However, as money and power lie with these organisations, it is proving hard to them to give it up. Although there are challenges in directly providing more foreign aid locally, it is vital if we are to see aid have a greater impact.

Aid Is Not Provided Where It’s Needed Most

A final reason why foreign aid fails is because it is not given where it is needed most. Currently, the countries that receive the most in international aid from the United States, the largest aid donor are:

  • Israel
  • Egypt
  • Jordan
  • Afghanistan
  • Kenya

However, the countries that have the highest rates of poverty in the world and are most in need of foreign assistance are:

  • Democratic Republic of Congo
  • Mozambique
  • Uganda
  • Tajikistan
  • Haiti

This demonstrates a significant failure of foreign aid. Too much aid funding is given to countries that, although in need, are not the most in need. Simultaneously, not enough international aid is directed to countries that most urgently need help.

There are several reasons why foreign aid is not given in the quantities needed to the countries that require it the most. The main reason is because rich countries use their international aid budgets strategically, meaning a significant amount of aid money goes to countries they see as important to their own interests.

An example of how foreign aid is given strategically by developed countries is how much military aid is given to Israel.

Another example is how countries with security risks that can threaten the West, such as Iraq and Syria, also receive a lot of aid funding. Although these countries are definitely in need, this shows that countries that are not strategically important to the West, such as Tajikistan, do not receive a lot in aid, although they desperately need it.


Duncan is the founder of Humanitarian Careers. With over ten years experience in the aid industry across fifteen countries, Duncan set-up Humanitarian Careers to help people launch their own career in international aid.