chapter  9
Models to Support Entrepreneurship Activities in Developing Countries: The Role of Aid Agencies and Non- Government Organisations (NGOs)
Pages 15

The provision of international aid is a much debated subject. Countries have to develop in their own way, but the extent to which outside assistance is required for this to happen is hotly debated. There is broad agreement today that economic growth and wealth creation are essential to development and poverty eradication in poor countries, but few would argue that economic growth on its own is sufficient. Growth and development are seen to be constrained by skills gaps and shortages, infrastructure weaknesses and a lack of capital and foreign exchange. It thus becomes apparent that the low capacity and productivity of people and communities, and poor health and education are also critical as far as development is concerned. The pivotal role of the state in accelerating growth and enhancing the development process will be discussed more in Chapter 10. The government’s traditional role of providing basic health, education and infrastructure is not always fulfilled in developing countries. This suggests that aid agencies and NGOs may have to provide a wider range of services than those that contribute directly to economic growth. Ill-educated and hungry people do not make for a productive workforce. Financially poor governments do not have the resources to provide the necessary infrastructure for business to thrive. One of the major differences between official aid and the voluntary aid of NGOs is that most official aid goes to poor country governments whereas NGO aid either is, or has the potential to be, channelled directly to poor people and poor communities. In fact, many developed countries use NGOs to deliver aid through community-based programmes. Official Development Assistance (ODA) consists of financial flows to developing countries and multilateral institutions provided by official agencies, including state and local governments or

by their executive agencies. Each transaction must meet the following two criteria:

1 it is administered with the promotion of the economic development and welfare of developing countries as its main objective; and

2 it is concessional in character (Fuhrer 1994 p. 25, cited in Riddell 2007).