CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO RESEARCH ISSUE

Since the implementation of the most successful and best-known aid program for the European countries in the aftermath World War II, the Marshal Plan, development aid have been increasingly receiving more attention. During the past years, the aid background has changed many times. Especially, the last two decades have brought various important changes, which have moved the aid program in new and interesting directions (Mavrotas, 2009). The progress of development aid since 1990 has moved much further, surpassing previous advances in global poverty reduction. According to Organization for Economic Co-operation and Development (OECD) report, this generation has been the world’s most fortunate – across all regions – in terms of poverty reduction (OECD, 2014: 15 ). Foreign aid flows from developed to developing countries have been hailed as the solution to world poverty. However, the notion that holds that any aid is beneficial to any country no matter the circumstances demands further examination.

 The recent years have perceived an invigorated interest in the aid issues and reducing the poverty in developing countries. This topic became analysed in various fields among different people. Over the years the contribution of aid have brought different results: some of receiving countries became depended on the aid, some of them shifted from receivers to the donors; other made cooperation and etc.. However, recent facts have showed that despite huge amount of development aid sent over the years, there are still some countries in the world, which are struggling with the issue of extreme poverty (Word Bank, 2013). Most of them are in Africa, even though, according to the Official Development Assistance around 46 per cent of the development aid goes to this continent (OECD, 2013).

To improve the European Union (EU) development aid activities and the effectiveness of delivering it, the Development and Cooperation – EuropeAid was established (European Commission, 2014A). It is a new Directorate–General (DG) responsible for designing EU development policies and delivering aid through programmes and projects across the world (Ibid.). EuropeAid tries to promote good governance, human and economic development and tackle universal issues, such as fighting hunger and preserving natural resources (Ibid.). Still, it is not enough to send the aid. The issue of incapability of receiving countries to manage the aid efficiently is becoming one of the biggest challenges for EuropeAid. In regards to this, building good governance in a developing country is one of the key factors for successful and efficient aid delivery.

The issue of development aid effectiveness to Africa is being highly discussed by politicians, economist, social scientists and many other people interested in development aid field. Various scientists are publishing more and more literature considering Africa’s development in the recent decades, which includes the arguments why delivery of development aid in a convenient way is failing. Some of them claim that the aid is not specified to the most necessary areas; other criticize that the donors are not monitoring the usage of aid in receiving countries or that neoliberal perspectives fail to recognize the political dynamics underlying aid distribution and how recipient governments use it (Meyer, 2012). The government and corruption became the potential factors for influencing the development growth and reduction of poverty in some of African countries (European Commission, 2013). Such guess emerged from the fact, that government is the main actor in the country’s management and setting the regulations and policies (European Commission, 2014). According to EuropeAid notions, the poverty reduction cannot be achieved without a government able to serve the public interest effectively by being accountable to its citizens and respecting the rule of law (Ibid.).

 In regards to the presented material, this thesis will try to investigate on the governance in developing country, its activity and possible influences to development aid efficiency in reducing poverty. As Africa is a huge continent with the countries with different backgrounds, the research will focus to analyse this issue in the case of Nigeria.  It is most populous country in Africa, with plenty of natural resources, growing economy and at the same time having the largest amount of people living in poverty. The possible reason for such paradox could lie behind the governance of the country. While collecting empirical data and applying theoretical approaches, the aim of this research will be to analyse the influence of Nigeria’s government to the development aid and the EuropeAid efforts to deliver effective aid and reduce the poverty in the country. 

1.2.         Problem Formulation & Research Question

This chapter will provide a clear indication of where the primary focus of this project is centered and what facts led to raise a specific question.

From 2011, when Development and Cooperation- EuropeAid has been established, it became responsible for defining EU development policy as well as ensuring the effective programming and implementation of aid. The ultimate aim of EuropeAid is to reduce poverty in the world, ensure sustainable development and promote democracy, peace and security (European Commission, 2013). Moreover, it is also working on creating policies to achieve these objectives as well as being responsible for implementing the EU’s external aid instruments (European Commission, 2013). Development and Cooperation – EuropeAid is being recognized as taking an important role considering the aid to the developing countries. The new structure of EuropeAid allows the European Commission to talk with one voice on development and cooperation issues (European Commission, 2013). This is one of the reasons, why it was chosen to be included in the thesis. The effectiveness of its activities is very important in reaching the goal of reducing poverty of the world and more importantly in the continent with the biggest poverty level – Africa. As it was mentioned in the introduction, this continent is receiving almost half of the total foreign development aid. In the last five decades, donors allocated in excess of one trillion dollars in aid to less developed countries, with the belief that these funds will help decreasing poverty (Meyer, 2012).  However, despite all the funds and increasing opportunities for better aid delivery, the poverty level in some of developing countries is still under extreme conditions (World Bank, 2014).

As it was mentioned before, to analyse the reasons of development aid effectiveness failure, the African continent was chosen. Africa is a special case as its countries have received huge aid over four decades with no obvious progress. As the whole region is a large case, this thesis will focus on a specific country with interesting background - Nigeria. This country has been one of the richest 50 countries in the early 1970s, however, as various social indicators have declined, it became one of the 25 poorest countries of the twenty first century (Okon, 2012: 32). It is phenomenal that Nigeria is the largest oil producer in Africa, has the largest natural gas reserves on the continent, was the world's fourth leading exporter of liquefied natural gas in 2012 and at the same time hosting the largest number of poor people (U.S. Energy Information Administration, 2013 : 1). While seeing the economic growth in the country probably most of the people would think that the poverty is also being reduced. However, it is not in the case of Nigeria. Despite a strong economic record of accomplishment, population’s poverty is still significant. To reduce the poverty in this country, it will require strong non-oil growth and a focus on improving government and human development (Word Bank, 2013). The country is having big government budget, beside that it is getting development aid from a donor countries. Moreover, the country has announced democracy more than 13 years ago, but probably still facing the problems with government, that should work on the civil society needs.

The statement of Commission for Africa could support such contemplation:  "The issue of good governance and capacity-building is what we believe lies at the core of all Africa's problems" (Court, 2006:1).  To reach the reduction of poverty African countries, in this case Nigeria must follow country steps in good governance, democracy, fighting corruption, etc. Government and political elites corruption constitutes the major problem in most of the developing countries (Bauhr & Nasiritousi, 2011). The relationship between governance and development has risen up the international policy agenda (Overseas Development Institute, 2006). Lately, more and more cases of development assistance are often regarded as supporting corrupt recipient governments and dimissing the real aid’s purpose. For example, Nigeria manages to pay country’s legislators the highest salaries in the world, with a basic wage of £122,000, nearly double what British MPs earn and hundreds of times of what country’s normal citizens do (Burleigh, 2013).  In regards to this, the reasons why most of African countries and in this case Nigeria are still facing the poverty problems, could be related with the government of  the country and its activities. Once again, one of the most important fact of  succssesful development aid is democracy and good government, that would be able to serve the society in effective way. Putting all the facts together, the research question of this thesis will be as follows:

“How Nigerian government influences effectiveness of development aid in the country and the efforts of Development & Cooperation - EuropeAid?”

Moreover, to put the investigation in proper perspective and to get the efficient and reasonable answer, the thesis will also investigate on the following sub-questions:

• What is the relationship between democratic governance and development aid (for a receiving country)?
• Is there democratic governance in Nigeria?
• How does EuropeAid approach development aid to Nigeria?
• How does Nigerian government approach to development aid and EuropeAid?

 Taking into consideration the research question, the main issue of this report is to find out how Nigeria’s government affects the development aid effectiveness and EuropeAid efforts to reduce the poverty. It is important to analyse such issue in order to provide more efficient development aid in the future and help developing countries to cope with the biggest problem while giving efficient aid to the most needed ones.  

1.3. Research Hypothesis

The research question stated above is concerned with a hypothesis referring to the logical construction of the investigation and process.

Every year EU is sending huge amount of development aid to fight against the poverty in Nigeria. The country is showing growth in its economic development and is one of the biggest oil exporting nations on the whole continent. Despite these facts, Nigeria is still one of the biggest “poverty nest” in Africa, as more than a third part of its population is living in a poverty. However, the living standards of governors and political elites in Nigeria does not show that its population is facing the biggest problems of poverty.  According to a German  diplomat Volker Seitz, who made his 17-year diplomatic career in Africa and wrote a book regarding development aid issue: “African leaders and elites are responsible for the problems in their countries, and not former colonial powers” (Vanhulle, 2013).  The statement of the article in political magazine claims: “African elites ignore poverty exacerbating the continent's problems” (Vanhulle, 2009). Beside the fact, that the government ignores the poverty, the activities of it show that it is destroying the effectiveness of development aid delivery. Many publications glimmer of titles about the corruption of political elites and development aid failures to reduce poverty in the country. Considering these facts, the main problem formulation and the sub-questions lead to the general hypothesis: 

The Nigerian government and elite influence negatively the development aid in general and the EuropeAid efforts in particular.

1.4. Scope and limitations

The scope of this research, considering the objectivity of the study and the elements of the process included, can be defined with different angles in order to answer the research question. As it was mentioned before, the case of Nigeria was chosen for this research. As Africa is a   huge continent, with the countries that differ from each other, the topic would have been too broad and too general if it would not be limited to one case. As the aim is to investigate on Nigeria’s government and the impacts of it, the author needs a careful selection of the scope to avoid ignoring important aspects of the problem formulation, while trying to ensure that the focus point remains. The problems concerning development aid effectiveness include many aspects and areas, but in this thesis, the focus lies on governance influence to the aid effectiveness. Two main actors were included in the research- the Nigerian government on the one hand and the EuropeAid on the other. As these are dynamic inter-related actions, the research will be limited on analysing more the Nigerian side. 

While focusing on the issue, there were possibilities to start from different perspectives.  However, in regards to the latest discussions of aids ineffectiveness and the governance importance, the focus of this project rests on what Nigerian government and elites are doing in relation to the aid effectiveness and EuropeAid objectives. In regards to this, the scope of this study will analyze internal factors more than external ones. By internal factors, it was meant the internal situation in Nigeria’s government. External facts are development aid and the efforts of EuropeAid for delivering it effectively. While investigating on both sides, there will be trying to test the negative influence of internal factors on external ones.

As most of scientific reports, this research also faces some limitations that cannot be avoided due to data or research focus. While analyzing this issue, it would have been also efficient to analyze the impact of EuropeAid to Nigeria’s government and political elites. However, because of paper limits and avoidance of being too broad, it is focusing only on the Nigeria’s government possible negative impacts on the development aid in general and to EuropeAid. Further, the report does not aspire to provide a comprehensive framework that encompasses a huge number of relevant theories. Therefore, theories such as development theory, structural functionalism, decentralization or governance theory that could also be applicable on the topic would be left out of the discussion.

         Another limitation is that the analysis will not cover all the aspects of EuropeAid activity on  aid contribution in different sectors and intervention areas. The paper considered focusing on the most important and relevant aspects to the issue such as democracy, democratic governance, anti-corruption and rule of law. This is the case, as studying EuropeAid program as a whole and including all the aspects they work on, would be too broad topic for a limited time and size of the investigation. The choice depended on the ideology, that developing country needs to have good government in order to achieve successful aid delivery and reduce the poverty. Moreover, the report is not focusing on analysing the basics of the development aid and why aid is needed in the first place in Nigeria as it is not consider being important for the problem field in this thesis.