Foreign aid and development in Nigeria: a political and economic perspective

Oyedele Opeoluwa Janet ORCID: 0009-0006-1007-8735 Graduate student; Department of Theory and History of International Relations; P. Lumumba Peoples' Friendship University of Russia Miklukho-Maklaya str., 15, sq. 171, Moscow, 117198, Russia oyedeleopeoluwajanet01@gmail.com Other publications by this author

Yao Nikez Adu Doctor of Law Associate Professor; Department of Theory and History of International Relations; P. Lumumba Peoples' Friendship University of Russia Miklukho-Maklaya str., 6, Moscow, 117198, Russia adu_ya@pfur.ru Other publications by this author

introduction

Nigeria, Africa's most populous country, has received significant foreign aid over the years. According to the World Bank, in 2023 alone, the country received more than $4 billion in official development assistance ^[1].

The flow of foreign aid reflects the efforts of the Nigerian Government to address acute socio-economic problems such as poverty, inadequate healthcare and lack of infrastructure. However, scientists have been discussing the impact of foreign aid on the country's development for many years, as Nigeria continues to face various political and socio-economic challenges.

At the center of this discussion is the complex relationship between the dynamics of foreign aid and Nigeria's political economy.

Figure 1: Censored population ratios in Nigeria. Received from: https://www.undp.org/nigeria/publications/nigeria-multidimensional-poverty-index-2022 ^[2].

Scientists argue that inefficient public administration, systematic corruption and poor management of funds allocated for development hinder the achievement of significant results in key areas ^[3].

The main reason for failures in the development of Africa is often not a lack of funding, but the lack of an effective management model that could ensure high-quality development and improve the lives of the population ^[4].

In addition, Ilora and Ngwakwe (2021) note that although sub-Saharan Africa has long been dependent on external aid, there are insufficient concrete examples of economic progress in the region due to this aid ^[5].

Despite forecasts that aid to sub-Saharan Africa should boost economic growth and reduce poverty, the situation in the region is not in line with expectations. Sub-Saharan Africa continues to have the highest levels of poverty and the lowest economic growth rates compared to other regions of the world.

Figure 2: Net official development assistance received (current US dollars) Niger and India. Received from: https://data.worldbank.org/indicator/DT.ODA.ODAT.CD?locations=NG ^[6].

According to Ajakaye and Nkube (2020), political factors have a significant impact on the distribution and use of foreign aid intended for the implementation of infrastructure projects, which leads to an uneven distribution of funding between regions ^[7].

The study by Agunbiade and Mohammed (2017) also notes that corruption and poor management of foreign aid are the main reasons why the influx of foreign aid does not bring economic benefits to Nigeria ^[3].

The uneven distribution of resources and assistance exacerbates regional inequalities and hinders the achievement of the country's balanced development goals.

In addition, there are difficulties associated with the distribution and management of foreign aid.

The history of Nigeria's military administration, political instability and the predominance of patron-client networks have created conditions in which personal interests and power structures have a significant impact on the allocation and use of resources allocated to assistance. This led to a diversion of funds from development goals and made it difficult for Nigeria to advance ^[1].

An in-depth political and economic analysis is required to understand the impact of foreign aid on Nigeria's economic growth. This article provides a new perspective on the complex dynamics of aid delivery conditions in Nigeria through an analysis of the relationship between aid flows, institutional structures, and government structures.

In the context of a developing country striving to realize its full potential, this article aims to initiate a discussion on foreign aid management, transparency, and sustainable development. The article presents a comprehensive analysis of the opportunities and challenges associated with the use of foreign aid.

METHODOLOGY

This study examines the impact of foreign aid on Nigeria's development in the context of its political economy. The work uses various analytical approaches, including case studies, theoretical foundations, and a thorough literature analysis.

The research is based on a political economy approach that emphasizes the interaction of political, economic and social factors in determining development outcomes. Important factors determining the country's growth trajectory are the distribution of power and resources within society, as well as the institutional framework governing these processes ^[8].

A politico-economic approach is used to study the impact of the political situation in Nigeria, which in the past was characterized by military rule, patronage systems and power relations, on the distribution and use of foreign aid funds. The article presents the results of detailed case studies aimed at studying the features and complexities of the assistance process in Nigeria.

In addition, the article provides a comprehensive analysis of existing research on foreign aid and development in Nigeria in order to integrate the findings into the context of a broader scientific discussion.

Research conducted by academics such as Ajakaye and Ncube (2020) examining the impact of aid on specific sectors such as infrastructure and healthcare highlights the importance of institutional and governance issues in determining the success of aid projects.

These studies will provide an in-depth analysis of existing problems and a solid foundation for future research.

The article contributes to the debate on foreign aid management, accountability, and sustainable development by offering a comprehensive understanding of the complex relationship between foreign aid and Nigeria's political economy.

CONCEPTUAL CLARIFICATION

Development is a comprehensive social process aimed at transforming countries with a low level of economic development and gradual socio-cultural transformation into dynamically developing countries characterized by consistent economic growth and political and social changes that raise the standard of living of every person in society ^[9].

The concept of development is abstract and more difficult to understand than physical phenomena ^[10]. The development of human society includes changes in broader qualitative indicators such as poverty, inequality, self-esteem, dignity, happiness, democracy and freedom, as well as changes in more tangible indicators such as GDP, GNP, individual income and wealth, as well as local and international investments ^[11].

Development is often viewed as a process occurring exclusively at the national level and narrowly identified with economic growth ^[12]. The Human Development Index was developed by the United Nations Development Programme (UNDP) in response to the realization in the late 1980s of the limitations of generally accepted economic indicators of growth.

This dimension includes three aspects of development related to human well-being: life expectancy and quality of life, level of education and standard of living ^[13].

To assess these aspects, UNDP selected four quantitative indicators:

· Life expectancy at birth

· Adult literacy rate (as a percentage of the population aged 15 and over);

· The total coverage rate of primary, secondary and higher education (in percent);

· GDP per capita.

Figure 3: 10 main ideas for human development in 2023/2024 Received from the website: https://hdr.undp.org/data-center/country-insights#/ranks ^[14].

Figure 4: Human Development Analysis 2023/2024 — Obtained from: https://hdr.undp.org/data-center/country-insights#/ranks ^[15].

Official development assistance (ODA) is government support aimed at improving the well—being and economic growth of underdeveloped countries. It does not include loans and credits used for military purposes.

Assistance can be provided on a bilateral basis, through multilateral organizations such as the World Bank or the United Nations, or directly from donor to recipient. The forms of assistance include grants, concessional loans, and technical support ^[16].

Foreign aid is one of the key policy instruments of developed countries that contribute to improving the well-being of the population of developing countries and stimulating institutional and economic growth ^[17]. It has been provided since the end of World War II to support economic development and improve the lives of poor countries. Developing countries have actively used foreign aid as a tool to bridge the gap between them and more developed countries. This assistance takes a variety of forms: loans, bilateral grants, food aid, emergency measures in emergency situations, infrastructure financing, multilateral grants, concessional loans and technical support ^[18].

THE THEORETICAL BASIS

The theoretical framework, based on the concept of official development assistance (ODA), serves as the foundation for understanding the impact of foreign aid on Nigeria's political economy. According to the OECD definition, official development assistance is a form of government financing designed to enhance the well-being and economic growth of developing countries. This program provides financial and technical resources to address key socio-economic issues, making ODA an essential tool for promoting sustainable development in recipient countries such as Nigeria ^[19].

Moreover, the theoretical basis of ODA is consistent with global goals, such as the United Nations requirement that rich countries allocate 0.7% of their GDP to ODA. This goal highlights the desire of the international community to provide organized assistance to developing countries, including Nigeria ^[20].

The Development Cooperation Report (DCR) on Nigeria provides a valuable example of how ODA is distributed and used in the country based on real-world examples. The DCR covers the structure of foreign aid flows, sectoral distribution, and issues related to aid effectiveness, providing a comprehensive picture of how ODA affects Nigeria's development environment ^[21].

However, there is a theory that can explain the problems associated with corruption and the inefficient use of aid funds in Nigeria. Institutional theory focuses on how local institutions influence aid effectiveness. She argues that countries with institutions that support property rights and promote long-term economic growth are more likely to benefit from aid ^[22].

According to institutional theory, problems with governance and corruption in aid funds in Nigeria arise from the poor quality of national institutions and lack of transparency in the distribution and use of foreign aid. The effectiveness of the Subsidy Reinvestment and Empowerment (SURE-P) Program and the Millennium Development Goals (MDGs) has been limited due to reports of corruption and misuse of budget funds ^[23].

In order to ensure the effective and transparent use of aid funds, the theory also emphasizes the importance of institutional competence and coordination between various government agencies and development partners ^[23]. The lack of such competence and coordination in Nigeria has led to the misappropriation of aid funds, increased regional inequality, and undermined the country's efforts to achieve sustainable and inclusive development ^[24].

Notably, institutional theory offers a solid foundation for understanding how institutional factors influence the effectiveness of foreign aid in Nigeria. To ensure the rational and accountable use of funds, the article highlights the importance of strengthening the institutional framework, improving data collection and monitoring systems, and facilitating interaction between the Government, civil society, and foreign donors.

The purpose of this article is to analyze the impact of foreign aid in Nigeria, assess its alignment with national priorities, and explore ways to increase transparency and accountability to maximize its potential for sustainable development. The research is based on the theoretical principles of official development assistance (ODA) and is consistent with international objectives, such as the Sustainable Development Goals formulated by the United Nations ^[25].

LITERARY REVIEW

Scholars have shown considerable interest in studying the impact of foreign aid on Nigeria's economic growth, especially in the context of political economy. The main issues of discussion relate to the effectiveness of aid in promoting sustainable development.

A number of studies conducted by development economists examine the relationship between economic growth and foreign aid inflows. Studies like the one conducted by Asatullayeva and co-authors (2021) have revealed certain patterns in articles discussing the quantitative impact of aid on economic growth. However, a wide range of situations in recipient countries and differences in methodological approaches make it difficult to reach consensus among scientists on the effectiveness of aid ^[26].

Despite this, the Paris Declaration, named after a conference held in Paris in 2005 that brought together more than 100 industrialized and developing countries, provides not only a list of general guidelines, but also a specific action plan to improve aid and its impact on development. The declaration provides performance indicators for evaluating success and a number of specific benchmarks for implementation. Global oversight is also required ^[27].

The agreement sets out five fundamental principles governing the provision of international assistance to improve its quality and impact on development. The principles of the declaration - responsibility, coherence, harmonization, results-based management and mutual accountability - subsequently became fundamental in development cooperation, forming a framework for aid effectiveness.

The first principle, responsibility, emphasizes the importance of developing countries' initiative in defining their own development goals and methods. The strategy recognizes that local responsibility is crucial to ensure that assistance is tailored to the unique needs and circumstances of a particular country. The Paris Declaration calls for joining forces and a sustainable approach to development that gives poor countries the opportunity to determine their own development procedures.

The second principle, coherence, emphasizes the importance of aligning aid from organizations and donor countries with the recipient country's development goals and plans. The idea is that aid is most effective when it meets national priorities and uses local processes rather than imposing external solutions. Donors can be confident that their assistance is effective and targeted, contributing to the long-term development goals of the recipient country, while coordinating their assistance with national strategies.

Harmonization is the third principle emphasizing the value of coordination and cooperation between countries and donor organizations. This principle recognizes that an increase in the number of programs and organizations providing assistance can lead to confusion, inefficiency, and duplication of efforts. Harmonization is necessary to ensure that assistance is delivered clearly and effectively.

Donors can reduce transaction costs, increase productivity, and enhance the overall impact of their support by coordinating their efforts.

The fourth principle, results-based management, highlights the need for donors and developing countries to focus on obtaining and evaluating results. This principle recognizes that assistance produces the best results when it is planned to achieve specific, quantifiable, and achievable goals. Monitoring and evaluation are necessary to ensure that the assistance is having the desired effect. The Paris Declaration calls on developing countries and donors to take responsibility for the results of their assistance, as well as to cooperate in achieving common development goals.

In conclusion, the Paris Declaration on Improving the Effectiveness of Foreign Aid is a large-scale document that opens the door to more effective use of foreign grants. Recognizing the importance of responsibility, coordination, harmonization, results-based management and mutual accountability, the declaration offers developing countries and donors a plan of cooperation aimed at achieving common development goals.

Through a number of local projects, it is possible to clearly see how foreign aid contributes to Nigeria's economic growth. For example, the National Food Security Program (NPFS), made possible by aid, aims to increase food security and improve agricultural practices. However, some analysts argue that despite the increase in agricultural production in some areas, problems with corruption and governance have limited the overall effectiveness of the program.. The discussion of aid effectiveness is made even more difficult by Nigeria's socio-economic and cultural background. In their analysis of the manufacturing sector, scientists Afolabi and Laseinde note the importance of macroeconomic stability and socio-economic infrastructure ^[28].

Adisa and Fadeyi argue that cultural factors such as corruption, poor governance, and over-reliance on Western ideals have contributed to exacerbating socio-economic problems in Nigeria that foreign aid has failed to effectively address ^[29].

From the point of view of political economics, governance is a key factor. The scientific literature on macroeconomic stability, poverty reduction, and service provision focuses on governance issues in Nigeria that hinder development efforts ^[30].

The success or failure of aid-funded initiatives largely depends on the ability to manage them effectively and on the quality of public services. For example, the Niger Delta Development Commission, created with the help of foreign donors, has faced criticism for its inefficiency due to governance problems.

The research suggests a more sophisticated approach to resource allocation and management, which can help solve the listed management problems.

discussion

When discussing the impact of foreign aid on Nigeria's economic development from a political economy perspective, it is important to consider many aspects of its effectiveness. Empirical analysis shows that the results may be ambiguous.

For example, Chukwuemeka and Nzevi (2021) concluded in their study that although the World Bank's agricultural program in Nigeria has some success, their number is small ^[31]. These scientists believe that a significant increase in yields can be achieved by hiring qualified specialists to train farmers in modern agricultural technologies.

However, speaking about the effectiveness of foreign aid, it is impossible not to mention the problems with governance in the country.

Political factors such as corruption and poor leadership have been cited as the main causes of the socio-economic crisis in Nigeria. This crisis is characterized by high levels of poverty, inflation, and unemployment (Fadeyi and Adisa, 2012).

The foreign aid program should take these features into account in order to create conditions conducive to sustainable development. This idea is supported by a study by Afolabi and Laseinde (2019), which notes that government initiatives to support socio-economic infrastructure and ensure a stable macroeconomic base are important elements that can be used to provide foreign aid to empower Nigeria's manufacturing sector ^[28].

To ensure close cooperation between foreign and national institutions, it is necessary to solve these structural problems. Only then will assistance be able to successfully support development.

Nigeria's experience in the field of aid shows that effective management and allocation of funds is no less important for development than their receipt.

As noted by Asatullayeva and co-authors (2021), the effectiveness of foreign aid in economic development has been questioned due to differences in results recorded in different recipient countries ^[26]. These differences are usually attributed to the requirements for assistance and the ability of the host country's institutions to successfully implement projects funded by this assistance.

These ideas are supported by real-world examples, such as the success of the Niger Delta Development Commission and the National Food Security Program. Although some regions have been successful in reducing poverty and increasing agricultural productivity thanks to foreign aid, the overall results have been uneven. This was mainly due to the inefficient use of financial resources and differences in the quality of regional governance ^[32].

From a political economic perspective, a thorough review of government structures and procedures is needed to ensure sustained progress in Nigeria. The effectiveness of foreign aid largely depends on management difficulties, which can range from bureaucratic efficiency to openness.

Strong institutional frameworks are needed for effective management and distribution of aid. The limited achievements of the Niger Delta Development Commission due to administrative difficulties are proof of this ^[33].

The governance structure of the country also influences the distribution and use of aid between different sectors and geographical areas of Nigeria. For example, despite large investments in foreign aid, the energy sector continues to face power outages and budget deficits, which are associated with management inefficiency ^[34]. In order for foreign aid to effectively contribute to the development of Nigeria's energy sector, reforms must be implemented to address structural weaknesses.

When it comes to the impact of foreign aid on Nigeria's economic growth, the relationship between policy and actual action should be considered. Although financial support from abroad is of great importance, it is also necessary to implement internal transformations that will improve the business climate, stimulate industrial growth and promote human development.

Even with significant aid inflows, structural constraints such as outdated infrastructure and low educational standards continue to be serious obstacles to economic growth and development ^[35].

The political economy approach also draws attention to the close relationship between national political ambitions and the initiatives of foreign donors. The goals and requirements that donor countries and international organizations often put forward as part of aid packages do not always correspond to the recipient country's development priorities. Therefore, it is crucial to agree on terms of assistance that will be consistent with Nigeria's strategic objectives. This will maximize the volume of foreign aid and turn it into real benefits for development ^[29].

In conclusion, it is important to note how the volume of aid is changing globally and what prospects await Nigeria in the future. Traditional ideas about dependence on external assistance are being questioned due to the emerging trend towards the development of partnerships, which are becoming increasingly important.

This opens up new horizons for investment in innovation, capacity building and knowledge sharing. Nigeria's new foreign aid strategy may be aimed at creating long-term sustainable development paths rather than just providing short-term financial support.

Thus, in order for foreign aid to have a more positive impact on Nigeria's development, it is necessary to improve governance, align donor goals with national development strategies, and implement institutional and policy reforms. Only then will the country be able to make full use of foreign aid, combined with domestic resources and policies, to achieve transformative and sustainable development.

conclusions

This article examines the current problems related to corruption and the irrational use of funds allocated as part of foreign aid for the development of African countries.

One example of such a problem is the Subsidy Reinvestment and Empowerment Program (SURE-P), created to channel savings from fuel subsidies to development projects. However, allegations of corruption and misappropriation of funds have cast doubt on the effectiveness of this program.

In addition, cases have been repeatedly reported where government employees embezzled money intended for development and used it for their own personal purposes. For example, Nuhu Ribadu, the former head of the Nigerian anti-corruption agency, stated that previous administrations had embezzled more than $405 billion intended to provide development assistance to the country ^[36]. Unfortunately, due to cases of misappropriation of funds, aid does not always reach those who need it the most. This, in turn, leads to an increase in poverty and inequality in the country.

Another major problem is the lack of transparency and accountability in the distribution and use of foreign aid. Ayakaye and Nkube (2020) noted that due to the unclear nature of aid distribution and the lack of reliable monitoring and evaluation mechanisms, it is difficult to monitor the effectiveness of foreign aid and ensure that it meets the country's development priorities ^[7].

The example of the Millennium Development Goals (MDGs) in Nigeria provides a clear illustration of the results of poor governance and lack of accountability. Assistance resources were not directed towards achieving the desired results ^[37]. As Nigeria approaches the target date of 2030, it becomes clear that none of the Sustainable Development Goals have been achieved.. Despite the deterioration of the situation caused by the COVID-19 pandemic, most indicators reflecting progress towards achieving the Sustainable Development Goals already had negative dynamics before the global crisis.

In Nigeria, given its uneven progress towards achieving the Sustainable Development Goals and its inability to achieve the Millennium Development Goals, which have similar aspirations, the prospects for achieving the SDGs by 2030 look bleak ^[38].

This article also highlighted how the political situation in Nigeria affects the effectiveness of using foreign aid for national development. As a result, aid is being misused, exacerbating regional inequalities and jeopardizing the country's efforts to achieve inclusive and sustainable development.

The main obstacle to the successful implementation of foreign aid projects in Nigeria was identified as the lack of institutional competence and coordination between various government departments and development partners.

To ensure the efficient and transparent use of aid resources, the scientists emphasize the need to strengthen the institutional framework, improve data collection and monitoring systems, and strengthen cooperation between the Government, civil society, and international donors.. It was noted that high-quality institutional procedures and developed sub-sectors of the receiving country contribute to its economic growth. Recipient countries should have policies and practices that ensure an effective institutional framework. This can reduce the negative impact of fluctuations in aid volumes on economic growth.

In particular, recipient countries can contribute to political and economic stability, create a strong legal system, fight corruption, and increase the credibility and accountability of their citizens ^[39].

To address these complex issues, a comprehensive and coordinated strategy is needed, which includes institutional capacity-building, policy reforms, and creating a more favorable political and economic climate for the effective use of foreign aid in Nigeria.

PROPOSED SOLUTIONS

This article raised issues related to foreign aid in Nigeria. Below are some suggestions for solving them.:

1. Reform of the humanitarian aid sector. In order to improve the effectiveness of assistance to African countries such as Nigeria, it is necessary to reform the humanitarian aid sector. This will make it possible to use aid resources more effectively and direct them to their target recipients. Reform may include increased accountability, transparency, and management effectiveness.

2. Improving institutional quality and governance. The importance of strong institutions and sound governance for the effective use of foreign aid is emphasized. To ensure the effective use of funds allocated for sustainable development, it is necessary to strengthen the governance system, fight corruption and increase transparency.

3. Increasing the predictability of financial support. One way donors can increase the predictability of financial support is to use a long-term framework for future promises. Recipient countries such as Nigeria can benefit from improved budget planning and reduced uncertainty about financial support flows by being informed about the future trajectory of disbursements.

4. Promoting sustainable development. To increase the flow of foreign financial support, the Nigerian Government must continue the reforms that are currently underway in several areas of the economy. The aim of these reforms should be to eliminate any negative effects of foreign financial support while stimulating rapid growth and development.

5. Facilitating the transfer of expertise and technology. Using foreign aid to help Nigeria gain technical knowledge and transfer technology from more developed countries. Developing the country's potential and implementing advanced management practices can lead to long-term economic growth and development.

6. Encouraging small and medium-sized businesses (SMEs). Providing official development assistance (ODA) to small and medium-sized enterprises in Nigeria to overcome challenges such as lack of financing, poor infrastructure, and unfavorable government regulation. ODA can help companies expand and thrive by strengthening their capacities.

These solutions, which focus on capacity building, sustainability, governance, and transparency, are designed to address the challenges of foreign aid in Nigeria and optimize its beneficial impact on the country's growth trajectory.

conclusion

This article examines the results of research and discussions conducted by academics and policy makers regarding the impact of foreign aid on Nigeria's economic growth. Special attention is paid to the analysis of the complex dynamics of the interaction between these two factors.

To gain a deeper understanding of the opportunities and challenges associated with foreign aid in the context of the political and economic situation in Nigeria, an analysis of the scientific literature and real-world examples related to foreign aid and country development was conducted.

The article highlights the importance of effective management of foreign aid in Nigeria to ensure sustainable development. However, reality shows that foreign aid can face a number of challenges, such as corruption, poor resource management, and the influence of patronage networks. These problems are compounded by a lack of transparency and accountability in the allocation and use of foreign aid, which hinders the achievement of sustainable and inclusive growth in the country.

The author suggests a number of solutions to overcome existing problems, such as restructuring the scope of assistance, improving the quality and efficiency of management, ensuring predictability and sustainability of assistance, facilitating technology and expertise transfer, and supporting small and medium-sized businesses.

These initiatives aim to link foreign aid to Nigeria's development priorities and involve the local population in the development process. They are aimed at creating conditions conducive to the effective and equitable use of aid.

Cooperation between Nigeria, policy makers, development partners, and civil society organizations is needed to implement these proposals and address structural challenges limiting aid effectiveness.

Nigeria must strive to realize its full economic and social potential, as well as leverage foreign aid opportunities to promote sustainable development, which requires increased transparency, accountability, and institutional capacity-building.

Nigeria's long-term prosperity and well-being require research and policy interventions aimed at good governance, institutional reforms, and alignment of foreign aid with national development goals.