The Effects of War and Peace on Foreign Aid

Somalia has often been associated with the recurrent civil conflict hindering the development of the country. The breakdown of the government in 1991 led to severe clashes for power among the political forces. Notably, a considerable number of civilians have been displaced over the years, and the warlords diverted aid. Armed forces have clashed even in the capital, Mogadishu, consequently distracting the distribution of food aid while famine continues to rock the country. The election of a new leader seven years ago sparked optimism that peace would be restored. However, Somalia remains a split state comprising two independent regions, Somaliland and Puntland; one is ruled by Islamist groups, while transitional authorities govern the other.

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According to Ahmad (2012), through the infusion of significant amounts of foreign aid into the informal economy of Somalia, the local economy became greatly dependent on international interventions that virtually transform and dominate it. As soon as the international organizations set foot in Somalia, the intervention itself becomes the largest source of income for the locals. Considering that war has ravaged various cities in the land, the donations in the form of billions of dollars of project money shock the local market overnight. Guha-Sapir and Ratnayake (2009) assert that the high death rates have remained elevated since 2006, affecting foreign aid, particularly health interventions. The high rates result from a series of events such as the division within the transitional government and fierce fighting that has culminated in the existence of major NGOs. It is evident that the populations that are in need of aid in Somalia are located around specific regions such as the South. The main factor contributing to this need is the restrictions imposed on humanitarian aid access in the region.

The government utilizes the foreign aid that is often sent to Somalia to pay off a narrow constituency instead of supporting growth policies, thus, limiting long-term development (Strandow et al., 2014). Considering that aid is a significant sector of Somalia’s economy, some parts of the country’s economy have been stunted. Notably, the main problem is that the access to foreign aid raises a country’s revenue, which, in turn, solidifies the local currency. Consequently, the country’s exports become too expensive while manufacturing becomes less competitive in the international market; in the long run, the country’s development slows down.

Additionally, sometimes war periods cause foreign aid to be misappropriated on various stages on the way from the donors to the intended recipients. In the case of Somalia, the security conditions force donors to outsource the development projects to the international non-governmental organizations (NGOs) that, in turn, outsource them to other local NGOs. It is evident that the process entails the deduction of the original donations, and the projects are never attained fully in the long run. Further, foreign aid released to the government is always at the risk of being diverted into private hands, therefore, increasing the individual’s value of holding government power (de Ree & Nillesen, 2009). Consequently, the rebels expect to gain significant rents through capturing the center of state power. Notably, some of the other ways in which foreign aid can be diverted include theft, corruption, and the disruption of the local economy.

According to Nielsen et al. (2011), foreign aid can increase the possibility of violent armed conflict, essentially affecting the country’s ability to commit to an agreement that decreases war at present and into the future. For the recipients, all possible shortfalls in aid forces the authorities to minimize the side payments or military investments to preserve the peaceful status quo in the coming years. In some of the stable regions in Somalia, foreign aid has helped the country to reduce poverty. However, Somalia is still one of the most underdeveloped countries in Sub-Saharan Africa. Therefore, even though foreign aid has proved to help in economic growth, it is also evident that it makes less impact on 6the social indicators of life, including the mortality rate, literacy levels, and life expectancy.

Conclusively, foreign aid is often affected by peace and war in Somalia, thus leading to unintentional consequences in the conflict zones. Ultimately, Somalia proves to be an illustrative example of how large-scale foreign aid is affected by the informal economy and sometimes leading to the failure of the same state that it intended to help. After the country’s collapse in 1991, periods of chaos and brutal civil war, as well as famine, have attracted international attention while promoting various international interventions. Foreign aid is always well-intentioned, but the different circumstances that exist in the recipient nation usually undermine the actual objectives and aims of the aid.



Ahmad, A. (2012). Agenda for peace or budget for war? Evaluating the economic impact of international intervention in Somalia. International Journal67(2), 313–331.

de Ree, J., & Nillesen, E. (2009). Aiding violence or peace? The impact of foreign aid on the risk of civil conflict in sub-Saharan Africa. Journal of Development Economics, 88(2), 301-313.

Guha-Sapir, D., & Ratnayake, R. (2009). Consequences of ongoing civil conflict in Somalia: Evidence for public health responses. Plos Medicine, 6(8), e1000108.

Nielsen, R., Findley, M., Davis, Z., Candland, T., & Nielson, D. (2011). Foreign aid shocks as a cause of violent armed conflict. American Journal of Political Science, 55(2), 219-232.

Strandow, D., Findley, M., & Young, J. (2014). Foreign aid and the intensity of violent armed conflict.