Tuesday, March 4, 2014

DONORS ARE BETWEEN A ROCK AND A HARD PLACE



Following President Yoweri Museveni’s signing of the Anti-Homosexuality law donor countries were falling over themselves to cut and re-evaluate their aid programs with Uganda in protest.

The debate on whether he should have signed or not will probably continue to the cows come home but you have to sympathise with the donor governments.

Aid is packaged as help from external donors to bridge our own financing gaps. So for instance we don’t raise enough tax to finance our health or education needs the donors cover the deficit so we can be healthier and our children go to school and they can they can show up their benevolence to their constituents.

What for obvious reasons is not highlighted is that aid is used to maintain influence over recipient nations, if we needed any proof of this the righteous indignation of the last week speaks volumes in this direction.

It’s a long story but this is how the aid industry works in a nut shell. Governments decide they will allocate a certain percentage of their budgets to aid, they dish out this money according to recipient nations budgetary or project needs.

Then things get interesting.

According to statistics from the Organisation for Economic Cooperation and Development (OECD) donor countries retain as much as nine in every ten dollars in aid disbursed in the case of Greece. Japan comes in as the country that retains least aid at seven percent.

The aid that stays in donor countries is mainly spent on administration – hiring and procurement, student scholarships, refugee costs, development awareness activities and debt relief.

One need not wonder about the back scratching that takes place in awarding tenders and employment during this process. So there is a local constituency to be serviced with this aid money at home.

In the recipient country a significant amount goes on administrative costs, meaning fat salaries and hardship for aid workers, both local and expatriate and brand new four wheel drives to whiz around the ”pot hole” ridden Kololo avenues.

So there are a lot of voters in the donor communities who would not appreciate rocking the aid gravy train.

In the recipient countries too, contrary to the analogy of leaders roaming foreign capitals begging bowl in hand often times this aid is actually unsolicited and woe onto the country that deigns to refuse the aid.

A few years ago Uganda was criticised for refusing more aid to the health sector. Uganda argued that the amount of aid being proposed would disrupt the delicate macro-economic balance of the country negating any gains the money may have brought. Government officials were vilified as baby killers and worse.

Beyond the altruist function of helping government pay for services it can’t handle on its own, aid is also a tool of influence with poor countries. A threat to pull the plug on aid or even the promise of more aid in the future is often enough to keep the political elite of these poor country dancing to the pipers tune.

And this is where the donors probably need our sympathy, where you can see their dilemma.

On the one hand their moral rectitude dictates that they should deprive countries who do not live up to their high standards of good and bad, while on the other hand to make them pariahs would be to forgo the aforementioned influence.

No country is inconsequential.

When George W. Bush cobbled a coalition of the willing to attack Iraq he roped in the obscure island republic of Palau to make up the numbers.

Donor nations are also reluctant to sever engagement with developing nations because no sooner have they rolled back their engagement than another donor nation jumps in to fill the gap – and we are not talking about China or India.

Images of diseased, malnourished African children on foreign TV are useful to justify to their tax payers deploying their money to help human beings in need, the  real reason however is often to maintain influence over foreign nations for strategic reasons – political and commercial.

The current standoff will put this thesis to the test.

If they are truly appalled by our lack of respect for human rights and feel this overrides any other of their interests there will be a scramble for exits, but if as suggested, there is more at stake to them, they will huff and puff for a little while longer before settling down to the serious business of furthering their own national interests.


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