Foreign non-resident of the recipient country. For instance, American

aid comes in varied forms such as: 
support of projects of investment, budget support, technical assistance
of various projects, debt relief etc. Foreign aid is often given in tied or non-tied form. Foreign aid is said to be tied when such aid
(financial aid) must be spent on goods and services produced by the donor
country or group of countries specified by the donor. Whereas untied aid is aid
or assistance given to developing countries which can be used to purchase goods
and services in all countries.  There are
broadly two forms of aid which are loans and grants, FDI

– this can also be referred to as cash loans. It is the most common form of aid
received by developing countries like Nigeria from donors. Cash loans could be
used to address issues involving infrastructural development, job creation,
strengthening security in a nation as well as developing sectors of the
economy. They are required to be repaid with interest, however, on concessional
terms. There are two types of loans which are: Soft or hard loans. This simply means that if
aid is expected to be repaid in foreign currency, then it is a hard loan. But
if repayment will be done in the home currency, then it is a soft loan.

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– these are similar to loans. However, outright grants unlike loans do not have
any obligation of interest payment or anything else. They are simply given as
‘cash gifts’. Developing countries use grants for job creation and financing of
development projects. Although, grant-recipient countries may be occasionally
asked to purchase commodity or ‘consultancy services’ from the grant-donor

Direct Investment (FDI) – This is another form
of foreign aid. These are typically equity holdings of foreign assets by
non-resident of the recipient country. For instance, American companies may
engage in FDI by buying a controlling interest in a Nigerian company. FDIs are
also undertaken by multinational corporations such as Unilever Plc, Coca-Cola
and so on. It simply has to do with transfer of capital from rich countries to
developing countries in order to open up businesses. Apart from creating more
jobs for developing which is an economic boost, it is useful for developed
nations as well. In 2011, the total FDI given to Nigeria was US$ 8.9 billion.
FDI globally amounted to approximately $2 trillion dollars in 2015.

Advice/assistance – this form of foreign
aid involves the transfer of expertise, knowledge, technical and managerial
know-how from the donor state to the recipient. It is given through experts
from developed nations offering technical advice, training or educating
personnel of developing nations in certain areas of the economy or in handling
technical machines.


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