Tuesday 17 October 2017
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Blog - Zakah in Action

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Aid flows are up, but distribution to poorest countries slows down

The countries in most need, 45 million people, are Muslim
The countries in most need, 45 million people, are Muslim. Photo Shafiq Morton

WORLD DEVELOPMENT aid reached a new peak of US$ 142.6 billion in 2016, an increase of 8.9% from 2015 after adjusting for exchange rates and inflation. However, on analysis, aid flows to poorer countries actually diminished.

A report by the Organisation of Economic Co-operation and Development [OECD] saw aid payments rise on refugees in donor countries boosting the percentage by 1.8%. This was according to official data collected by the OECD Development Assistance Committee [DAC].

But despite this numerical progress, the 2016 data shows that country-to-country, aid to the least-developed states has fallen by 3.9% in real terms from 2015. Aid to Africa has fallen 0.5%, as some DAC members have backtracked on commitments to reverse past declines.

Official development assistance [ODA] from the 29 DAC member countries averaged 0.32% of gross national income [GNI], up from 0.30% in 2015, as aid volumes rose in most donor countries. Measured in real terms – correcting for inflation and currency fluctuations – aid has doubled by 102% since 2000.

The Global Humanitarian Assistance Report, an organisation that also monitors world aid, has reported that international humanitarian assistance has increased for the fourth consecutive year.

It estimates growth at 6%, the growth in humanitarian assistance between 2015 and 2016 being considerably smaller than in the previous three years, the slowdown – in part – caused by a 24% decrease in funding from governments in the Middle East and north of the Sahara.

Decreases were largely driven by a 50% reduction in reported contributions from the Government of Kuwait, as well as reduced funding from Qatar [down 57%] and Saudi Arabia [down 26%].

Contributions from some European governments grew by 25% between 2015 and 2016 with Germany, contributing an additional US $1.4 billion [an increase of 109%], Belgium [58%], Denmark [51%] and France [41%].

Another organisation, Development Initiatives, has estimated that over 164 million people were in need of international humanitarian assistance during 2016, another year of numerous conflicts and natural disasters.

Over a quarter of those in need were living in just three countries: Yemen [21.2 million], Syria [13.5 million] and Iraq [10.4 million].
Furthermore, five countries received more than half of all aid funding [54%]: Syria, Yemen, Iraq, South Sudan and Ethiopia. They were all suffering severe crises with the largest populations in need. They have also all been in receipt of significant levels of humanitarian assistance for extended periods.

According to Development Initiatives, poverty, crisis and risk [through conflict and instability] were intrinsically linked. An estimated 87% of people living in extreme poverty were resident in countries that were considered environmentally vulnerable, fragile, or both.

The Official Development Assistance index for 2016, a measure developed by the Organisation of Economic Co-operation and Development in 1969, shows that developed countries spend miniscule amounts on foreign aid compared to their GDP. Sweden, for example, tops the list at 1.40%.

The US, one of the top three economies in the world, spends less than 1% of its federal budget on foreign aid, according to Senator Marco Rubio.

However, this still adds up to a significant US $ 35 billion, 17% of it spent on military aid to Israel [3.1 billion], Egypt [1.2 billion], Iraq [300 million], Jordan [300 million], Pakistan [280 million] and Lebanon [75 million]. Significantly, five of these countries have majority Muslim populations as have the three countries demanding the most amount of aid – Syria, Iraq and Yemen.

Of interest is that there are no agencies tracking the charitable spin-offs of Islamic finance – such as Zakah, Awqaf and Sadaqah. Islamic Finance is believed to be currently worth US $ 2 trillion globally with Islamic Banking growing faster than conventional banking.

According to the website, islamicfinance.com, the value of the Islamic financial sector is estimated to increase to US $3.4 trillion by end of 2018.

Fragmentally, there are statistics – for example, the UAE has about US $ 135 billion in sukuk and India’s Awqaf is worth US $ 15. 3 billion – but there is a need to harness things to measure not only the real influence of Islamic finance on aid distribution, but to truly understand the underlying potential of poverty eradication and infrastructural development in deprived and war-torn countries by Islamic instruments.

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