Lendahand Blog


Foreign aid? There’s another way to stimulate economic growth worldwide

Providing emerging markets, especially in Sub-Saharan countries, with social, economic and humanitarian aid has been a top priority for the West since the ‘60s. The idea has always remained the same; donating large amounts of money will close the savings gap. However, research has shown that foreign aid doesn’t necessarily make for a better world. It can actually do more harm than good. How is Lendahand any different?

Is foreign aid hurting?

In Africa, 600 million people live in extreme poverty, whilst the continent receives $50 billion of international assistance per year. How is it still possible that so many people have to survive on less than €1,90 a day? It seems like foreign aid increases corruption, creating a mutual lack of trust between aid groups and communities. 

What is truly needed?

The Guardian estimates the scale of loss to fraud are “between 2% and 5% of an organization’s income.” To help prevent fraud, the newspaper advises “due diligence, timely auditing and local implementing partners.” These measurements will also “improve program quality and reduce waste.” We couldn’t agree more.

The strongest promoters of economic growth

Can economic growth be steered back in the right direction? We believe so. In most countries, small and medium-sized enterprises are the strongest promoters of economic development, innovation, and employment. These businesses make a substantial contribution to global employment, globalization, and a given country’s GDP. However, these SMEs often do not have the access to the financial assets that are required to contribute to this growth. Without funding, businesses are simply unable to scale up, hire extra employees, and contribute to the economic wellbeing of a country.

Bridging the gap

We believe we can bridge the gap in emerging markets to eradicate poverty. We cannot solve this problem overnight, but we can all make a small change in our daily lives to help entrepreneurs expand their businesses, stimulating economic growth and ultimately, ending poverty. Curious how? Download our Whitepaper; Funding the Gap today.

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