The impact of Covid-19 on foreign aid

Vuniivi settlement in Lami, Fiji. Photo courtesy of Katherine Drakeford/United Nations Office for Disaster Risk Reduction

Suva-- Across the Global South, the Covid-19 pandemic has reversed years of socioeconomic progress, disproportionally harming poor people. Low- and lower-middle-income countries, in particular, are struggling more than ever to find the resources to support their citizens’ health and wellbeing at this time of crisis. Moreover, disruptions to trade, investment and remittances have caused a drop in international sources of development finance.

Foreign aid is therefore more important than ever. A growing number of studies has documented how aid has responded to the new dynamics at the local and national level. But what impact has the Covid pandemic had on foreign aid globally?

One of the first new trends to emerge after the Covid pandemic hit has been the increased focus on the health sector and on social assistance. Foreign aid clearly plays a key role in providing Covid-related medical care and supplies, including treatments and vaccines.

Social assistance has also proved crucial for mitigating the secondary effects of the pandemic and preventative measures such as lockdowns, which have pushed 100 million people into extreme poverty.

For the past decade or more, foreign aid had been placing increasing emphasis on long-term growth as a means of poverty reduction, including through spending on large-scale infrastructure projects.

With the pandemic, the pendulum has swung back towards meeting more immediate health and material needs.