relation to the kind of donor, foreign aid has two major sources; Bilateral
2.5.1. BILATERAL AID
aid is simply all Official Development Assistance provided by an official
bilateral donor (state or local government) directly to the government of a
developing country. Simply put, this is money which is directly given from one
government to another. That is, capital flows from a developed country to a
developing country. According to Nwoke(), bilateral aid can be given in various
forms; development loans, military cooperation, technological assistance and so
on. This type of aid is usually for long term development projects to promote
democracy, economic growth and stability. Bilateral aid is most often tied aid.
For instance, the Abuja-Kaduna railway project currently under construction;
one of the conditions given by the Chinese government who are the chief donors
to this project is that Chinese products or companies should be used (such as
CCECC which stands for China Civil Engineering Construction Company as the
construction company in charge of this project). Examples of countries which
share strong bilateral ties with Nigeria and have provided aid to the country
are USA, China, members of European Union and so on.
USA Bilateral Relations
Within the years of 2010-
2015, Nigeria received a total of $3 billion grant from the United States
government. This covered military assistance, anti-terrorism, defense and
security, global HIV/AIDS Initiative, Global Health and Child Survival,
Development Assistance, etc.
During the Chibok girls’
crisis of 2014, United States government offered technical assistance and
expanded intelligence sharing assistance to the Nigerian government.
China Bilateral Relations
In 2013, a loan of
$1.1billion was given by the Chinese government to the Nigerian Government.
From 2000 – 2015, there
are over 40 Chinese development projects in Nigeria. These are in line with
$984 million was given by
China to support the Zungeru hydroelectric power project in Niger state which
is at 50% completion.
$500 million was given by
Chinese government for Abuja-Kaduna Railway project which is at 75% completion.
UK Bilateral Relation
The United Kingdom
provides an annual grant of £250 million to Nigeria.
In 2015, UK gave £140
million in aid in order to support Nigerian energy privatization.
In 2013, the UK also gave
£275miillion in supporting health, education and poverty reduction programmes.
Japan Bilateral Relation
From 1998 till date, the
Japan government has implemented over 148 projects in aids in Nigeria.
In 2013, a total of $14.8
million was spent by the Japan government in building 317 classrooms with 308
toilets to accommodate 12, 680 pupils in Kano state while, $8.5 million was
spent in building 325 classrooms in Oyo state.
In December, 2015, the
Japanese government helped to build a bridge across River Usman in Abuja.
Spain has also given foreign aid to Nigeria by
building Photovoltaic Electricity Plant to generate 100 Megawatts in Kano
state. But, the largest international aid contributor to Nigeria is the Paris Club of Creditors which is made
up of 19 permanent members of which the G-8 is part of. Some of the examples
listed above are also members of the Paris Club. It is an informal group of
creditor countries who aim at coordinating debt policies in an effort to find
sustainable solutions for debtor nations with payment difficulties. Another
contributor is the London Club of
Creditors which is also an informal group similar to the Paris Club. The
difference between the two is that while the Paris Club is a public lender, the
London Club made up of private creditors.
2.5.2 MULTILATERAL AID
type of aid comes from several governments and organisations and is usually
arranged by an international organisation such as the Bretton Woods institutions,
World Trade Organisation and the United Nations. They are key actors in giving
foreign aid to Nigeria along with OECD (Organisation for Economic Cooperation
and Development) and DAC (Development Assistance Committee)
Bank – this is the globally recognised as the
most important source of financial aid to developing countries. It is therefore
one of the biggest donors of foreign aid to developing nations like Nigeria.
The World Bank promotes long term economic development and poverty reduction by
providing technical and financial support or implementing large infrastructural
projects such as water systems, road networks, health centres, electricity
(power) supply and the likes. This organization also has affiliate agencies
under it that also render aid to recipient countries. Some of them include;
International Development Association (IDA) and International Bank for
Reconstruction and Development (IBRD), International Financial Corporation
(IFC), Multilateral Investment Guarantee Agency (MIGA).
Nations – the UN is a principal actor in giving
foreign aid to developing nations across the world. Nigeria is no exception to
this. There are certain agencies under the UN specifically designed to be in
charge of distribution of development aid. These agencies include the United
Nation Development Programme (UNDP) and United Nations Conference on Trade and
Development (UNCTAD) to mention a few.
Monetary Fund (IMF): the IMF performs three
basic functions which include surveillance, technical assistance as well as
financial assistance. Nigeria has been a member of the IMF since her
independence and has greatly benefitted from the IMF in areas of her
macroeconomic policies. These
policies include public sector budgets, managing interest rates, money and
credit and exchange rates; and financial sector policies. Nigeria was the first
country to have a Policy Support Instrument program of the IMF approved in 2005
which complemented the then National Economic Empowerment and Development Strategy
(NEEDS) of the country. This was just the beginning of the relationship between
Nigeria and the IMF which has been a major contributor of foreign aid to the
nation over the years.
§ African Development Bank
(AfDB) – this is Africa’s version of the World
Bank. It performs similar functions to the World Bank but on a smaller range as
it only covers economic challenges within Africa. Nigeria has also greatly
benefitted from the AfDB and is still benefitting from this organisation. Some
examples of these benefits include the US $100 million Line of Credit (LOC)
given by AfDB for Guarantee Trust Bank, Nigeria in June, 2010. In March 2011,
AfDB contributed US$34.3 million for public private partnership in
infrastructure sector development in Nigeria, particularly in the power and
transport sectors. Also, in May 2011, US $200million was given by AfDB for
Nigerian Export-Import Bank (NEXIM).
Of the two, multilateral aid is often the preferred
source of foreign aid as most of these organisations are made of member states
but work as independent bodies that often give untied aids to recipient
countries. The IMF and World Bank place very stiff conditions on loans given
that borrower-countries must satisfy to be able to enjoy their credit