AS A disclaimer, let me first take the opportunity to point out that while I am currently in a professional position that sees me managing the distribution of development funds, the following article is
not reflective of my post. The views on how aid, development and sustainability are my own views, developed after considerable experience working with the donor community.
Now, here is a scenario, and I ask you to bear with me on this one – there is a university-educated worker employed with a certain government ministry for a number of
|‘In the next few years,countries such as Guyana are going to have to be a lot more decisive and proactive in crafting a sustainable policy for the reception of development aid—the beggars will have to become choosers if they don’t want to become caught up in a further cycle of begging.’
years. The Government of Guyana receives a grant from an international donor organisation under which this worker is integrated in the execution of a programme geared at modernising the sector under which her ministry falls. Under the grant-funded programme, efficiency in the area in which she works rises from a decade-long ceiling of 45 percent to an unprecedented 90 percent, due largely to the implementation of a new MIT system and the procurement of assets such as new vehicles attached to the programme. Moreover, the employee’s salary rises some 400 percent to bring her closer to parity with her international counterparts working on the project. The first two years of the programme, the employee’s salary and benefits qualify her for a car loan, and when the project is renewed for another two-year cycle, the bank allows her to take out a home loan to build on the new high-income house lot she has recently purchased from the Ministry of Housing. A single parent, her two children graduate from high school and she enrols the girl in the law programme and the boy in medicine at the University of Guyana. As the successful donor-funded project is about to be renewed for another two-year funding cycle, the global financial crisis and a change in political leadership in the major donor country, causes the international donor to axe that programme. What are the possible outcomes for the employee and for the programme area within which she works?
I’ve seen the answer to that question time and time again working in the developmental aid sector and it is not a positive one; and I’m not alone - as I found out recently in researching for this article - in that perspective. In her article “Why Foreign Aid is Hurting Africa” published in the Wall Street Journal three years ago, Zambian economist, Dambisa Moyo, similarly spoke about how aid skews the local economic sector in unexpected ways:
“...what may appear as a benign intervention on the surface can have damning consequences. Say there is a mosquito-net maker in small-town Africa. Say he employs 10 people who together manufacture 500 nets a week. Typically, these 10 employees support upward of 15 relatives each. A Western government-inspired programme generously supplies the affected region with 100,000 free mosquito nets. This promptly puts the mosquito net manufacturer out of business, and now his 10 employees can no longer support their 150 dependants. In a couple of years, most of the donated nets will be torn and useless, but now there is no mosquito net maker to go to. They'll have to get more aid.”
Now, Dr. Moyo has a view of aid that is radical in that she proposes to reduce aid to virtually zero, and based not on a development programme but incidental to emergency needs, such as a natural disaster, for example. Her rationale is that with most African countries having donor funding represent up to 70 percent of government budgets, the reality is that not only are those governments relieved of the responsibility to perform properly, but it results in rampant corruption and the misappropriation of those funds with only a small percentage reaching the people of Africa.
As someone who has seen the tremendous good that properly managed development funds can result in, and who – as I stated in my disclaimer – is involved in the management of donor funding, I believe that her position is an extreme one and perhaps more intended to stimulate discussion. As a country that does not have the corruption issues (not that they are non-existent) of Africa, the problem still remains of how donor funding can result in a situation wherein certain sectors, and the local economy as a whole, is unsustainably inflated.
An alternate spin on the African net-maker story would see the net-maker being employed to supply nets by the programme, and expanding his business to meet the demand. The result would only be slightly different because when the aid eventually dries up, or is ‘strategically’ placed elsewhere. And the government employee in the earlier scenario, faced with supporting a mortgage, car payments and her children’s education costs is most likely going to start looking for a job out of the country that can pay her a similar salary. The repercussions for the sector is that it is now saddled with a new programme that it cannot run or execute by itself. It’s as if you give some remote hinterland village a computer that allows them to manage their sale of, say, indigenous craft, pay for a generator, satellite connection and train a local technician for two years, and then stop payment.
Conjecture aside, we are on the brink of facing such a scenario nationally in the not-too-distant future. America is not so much nearing a temporary fiscal cliff as it is facing an economy chasm, that it will take stringent and tough measures to get it out of, while Europe remains teetering on the brink of collapse. Whether we’re optimistic about the role of China or not, the reality is that there is only so much aid to go around and China already has commitments in Africa.
In the next few years, countries such as Guyana are going to have to be a lot more decisive and proactive in crafting a sustainable policy for the reception of development aid – the beggars will have to become choosers if they don’t want to be caught up in a further cycle of begging. Starting next week, I’m going to begin exploring some of the options that can be placed on the table with regard to how we can best manage aid as well as how we can adjust in the partial absence of it.