Aid organizations sometimes face a catch-22: donate much-needed medical or food supplies, addressing today’s need – but by doing so, aid poisons the market for future sales (people won’t pay for what they’ve received free in the past). The Washington Post recently published a controversial article on Niger’s free market policies in the context of an ongoing famine; the Center for Global Development released an excellent report on making markets for vaccines.

After reading these, I can’t help but think of A to Z, the Tanzanian company manufacturing long-lasting, insecticide-treated mosquito nets. Often, these kinds of nets are purchased by aid agencies and distributed free – tending to poison the market for them down the road.

I'm not saying that food and medical aid are bad, per se. By not sourcing locally, however, the aid community hurts local businesses. But what hurts them more is when consumers expect to receive these items free.

When it comes to vaccines, it’s more about creating research and development incentives. Food aid is an even trickier question. For mosquito nets, however, the technology exists – but consumers won’t buy them after receiving them for free. Who’s right, the aid agencies or the businesses? How do you balance short- and long-term needs? Are aid agencies unwittingly facilitating a cycle of poverty?

For more, you might check out the World Bank's Private Sector Development blog