The aid business: phantoms and realities

Ehsan Masood
17 July 2006

It doesn't happen often. But I feel the nerves beginning to stretch when a piece of research in the field of technology and development makes national news.

I shouldn't of course. After all, it is healthy for the public to see a different side to development (other than images of drought and famine). But when "research" is little more than an opinion that someone in a position of influence wants you to hear, that becomes a problem.

Take a report, Real Aid 2: Making Technical Assistance Work, published on 5 July 2006 by the Johannesburg-based charity Action Aid International on technical assistance to poor nations. The report, written by the group's senior policy officer Romilly Greenhill, made headline news, and was featured in BBC's flagship news-analysis programme Newsnight.

The report's key claim is that half of the $79 billion earmarked as aid for developing nations will not reach the poorest; Action Aid calls most of this "phantom aid" because it will be spent inside donor countries on their own researchers, on consultants paid inflated sums of money, or on technical assistance. Phantom aid also has the effect of reinforcing (rather than reducing) a recipient's reliance on foreign technology or skills, the charity believes.

Action Aid says that some of the biggest donors (such as the United States and Japan) come top of the league table for phantom aid. And it is calling on them to rethink their aid policies. It wants citizens and governments in poor countries to decide how the money should be spent, with the donor playing a more supporting role.

Ehsan Masood is project director of The Gateway Trust. He writes for New Scientist and Prospect magazines and is a consultant to the Science and Development Network

Also by Ehsan Masood in openDemocracy:

"British Muslims must stop the war"
(August 2005)

"The globalisation of Islamic Relief"
(November 2005)

"Why the poorest countries need a WTO"
(December 2005)

"Bush’s 'war on science' through the microscope"
(January 2006)

"Alexandria’s bridge" (February 2006)

"Language: a toolkit for life on earth"
(March 2006)

"The rocky road to citizen rule"
(April 2006)

"Measuring miracles" (April 2006)

"The light of education: blind children's best buys'" (May 2006)

"Ziauddin Sardar: paradise lost, a future found" (May 2006)

"A post-imperial diplomat" (May 2006)

"Israel and the bomb: don't ask, don't tell" (June 2006)

"Muslim Britain: the end of identity politics?" (July 2006)

The wrong target

It would be churlish to deny that some of what Action Aid says is absolutely true. For decades, a higher proportion of aid has gone to middle-income developing nations for no other reason than the fact that they have the infrastructure to absorb it. Action Aid is also right to draw attention to the fact that unless aid agencies work within the grain of opinion in recipient countries, their money and their efforts will end up being wasted. If you suggest change that is too hasty or expensive, or too radical a departure from the status quo, the improvement you are trying to secure is unlikely to last beyond the end of the project-funding cycle.

But Action Aid's expectation that aid agencies funded by taxpayers will not wish to have a strong say (even to impose conditions) in how their money is spent amounts to naiveté, if not an endorsement of "bad democracy". If, as a British citizen, I have a say in how my government spends money on healthcare, education, or crime-reduction, there is no reason why I and millions of other citizens should be excluded from the process of deciding how development aid should be allocated.

Even the more benign donors attach conditions to their development aid; and choose their recipients based on what they regard as priority areas for spending. A priority area, for example, might be to give a large amount of unrestricted finance to a big organisation with a long-term track record of success in its field (as is the case with the Italian government's funding of the Academy of Sciences for the Developing World). The government may choose to remain relatively hands-off, but it still amounts to targeting spending on the part of the donor.

Ultimately, it ought to be up to recipient organisations and governments to decide whether an offer of aid matches their own domestic development priorities. If it doesn't, then ideally the aid should be declined. Unfortunately, what happens all too often is that a country will accept an offer of aid when both donor and recipient know deep down that it isn't appropriate.

In addition, Action Aid could do well to rethink its criticism of the spending of aid money inside donor countries. International development tends to be an automatic priority for NGOs, for organisations involved in disaster relief and for a very small sector of government. But exhortations to shame and guilt about the plight of the developing world are unlikely to work for the majority of populations who must be energised about global inequality in other ways if they and we together are to genuinely start making a difference. They need incentives, such as the British government's development partnerships in higher education programme (Delphe), which offers grants to university researchers who can team up with counterparts in the developing world to explore research-based solutions to underdevelopment.

In the majority of the poorest developing countries, spending on research is at least an order of magnitude lower than it is even in the countries of eastern Europe. Policy research is perhaps in an even worse state. Many countries have universities that are badly underfunded. They want scholarships for their students, research grants, and the possibility of joint projects with researchers in richer countries. None of this will happen unless researchers from the developed world are given extra resources by their governments, or by philanthropic outfits such as the Bill & Melinda Gates Foundation.

Look south

In its report, Action Aid presents several examples where technical assistance has failed. But what about the successes? It would have performed a better service by also mentioning a few examples of technical assistance funded by international donors that have led to the building of long-term capacity in research and knowledge in the developing world.

Such examples do exist. They include several prominent institutions, of which these are just four:

  • the International Centre for Insect Physiology and Ecology (Icipe) in Nairobi, founded by Thomas Odhiambo (1931-2003) and a world leader in the control of pests in African agriculture
  • the African Centre for Technology Studies (Acts), founded by Calestous Juma, also in Nairobi
  • the Bangladesh Centre for Advanced Studies (BCAS) in Dhaka, founded by Saleemul Huq and Atiq ur Rahman
  • the Sustainable Development Policy Institute (SDPI) in Islamabad, founded by Tariq Banuri

All four institutions – and there are many more – have long survived the departure of their founders and are still going strong.

What these examples have in common is the fact that they were founded by individuals from within developing countries but are funded by aid from richer nations. You could say that this validates Action Aid's view that successful technical assistance comes mostly by donors listening to people from inside developing countries.

But, allowing for the fact that no donor-recipient relationship will ever be perfect, there is room for the opposite point of view as well. Indeed, Action Aid itself provides a good example of this. One of the most significant areas in which targeted western technical assistance has made a difference in recent years is in the work of civil-society groups. Strengthening civil society in the developing world is a priority for donors such as the British government, and this has allowed organisations such as Action Aid (whose biggest donors includes this government) to make the transformation from a charity with origins in Britain to a major global player.

As with McDonald's and Tesco, the citizens of developing countries were never formally asked if they wanted Action Aid, Greenpeace or Oxfam. Their presence was considered by the NGOs and the donors to be a good thing. They are creating jobs, setting a much-needed benchmark for salaries and employment conditions and helping to raise standards in the civil-society sector overall. They are learning, but they are also responding to the needs around them, and at the same time injecting new thinking into the local development scene.

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