Aid funds and

Opinion

Aid funds and how they work

As greater accountability is demanded of donor coun tries, developing nations are told to make do with what they have

One of the first questions asked of me on my return from the recent World Social Summit in Copenhagen, Denmark, was: “Did we get anything out of it?”

In a way, it was a difficult question to answer because, for us in the Pacific, unless the result is immediate and tangi ble, it is of no value.

Reports from the summit stated that developing countries received about US$l.4 trillion in official development assistance (ODA) in the last 35 years.

Considering the world’s population is only 5.5 billion that seems more than enough to go around.

But Pacific countries, whose participa tion was co-ordinated by the Noumea based South Pacific Commission with technical support from the South Pacific Forum Secretariat and the University of the South Pacific, learned something about aid assistance and why many eco nomic activities remain stagnant.

Statistics abound on the fact that there is little to show for (in terms of economic activities) the huge injection of funds by donors. In the case of Pacific island coun tries, aid flow in the last 10 years did lit tle to fire up economic activities in the region. According to reports by the World Bank and the International Monetary Fund, Pacific economic activity grew by a mere 0.1 percent in that period. By com parison, other island regions of the world recorded much higher growth rates. To encourage economic growth, experts insist some painful structural adjustments are in order.

Critics have shot back, saying austerity measures promoted by the World Bank need to be overhauled and urged the UN to ensure the bank was accountable for its policies. One of the critics, British aid organisation Christian Aid, told the sum mit the bank’s structural adjustment poli cies “had deepened poverty in Zambia and Zimbabwe - the countries once con

sidered models for African development”.

For the Pacific, the issue of aid and its implementation raises more questions than it answers. For instance, where was all the money spent? Why did the “large injection” of and funds fail to produce the goods? And, most importantly, is there a need for change?

Where did the US$l.4 trillion given by donors in ODA over the last 35 years go?

The Pacific did not receive all this money.

But, as developing countries, we did get some of it. Just how much no one knows.

According to Terra Viva, an indepen dent newspaper which publishes at major UN conferences, ODA is not working because much of the aid funds has ended up back in the hands of donors. For instance, a study in Bangladesh found 75 percent of aid since independence 25 years ago went back to pay for experts, consultants and equipment from donor countries.

Other studies have established that some of the bigger aid donors to the Pacific follow a similar pattern in distrib uting their ODA, Terra Viva said.

In the case of one country, 65 percent of its aid assistance in 1992 was spent in the donor country. Only 35 percent left the shores of this donor, the newspaper said.

In another case, a donor spent 90 per cent of its aid money on the usual ele ments - experts, consultants and equip ment at home. If at all, only 10 percent of total funds got to the recipient country.

According to Western Samoa’s ambas sador to the United Nations, His Excellency Neroni Slade, “Well over 90 percent of this money was spent on for eign consultants who go to developing countries in the name of national capaci ty building,” he told last year’s UN Global Conference on the Sustainable Development of Small Island Developing States in Barbados.

So where does the future of the region’s small island states lie? Is it in global trad-

ing arrangements being administered by the World Trade Organisation? Or is it in more aid? Debates on these and related questions will probably go on forever.

As part of its mandate, the South Pacific Forum Secretariat is pursuing “strength ened linkages” with external trading blocs and others within the Pacific Rim. It is hoped that through this, the long-term beneficiaries will be the people of the Pacific.

For now, however, the reality is that the official development assistance barometer will continue its downward slide as tax payers demand more accountability from their governments on how their tax dollar is being spent. One thing is clear. Dogged by donor fatigue, they have made it clear that no more new or additional resources would be coming. Instead, developing countries have been told to make do with the level of aid they are receiving now.

Nowhere has this message been clearer than in the outcomes of UN-sponsored conferences such as the Earth Summit in Rio De Janeiro in 1992, the Global Conference on Sustainable Development of Small Island Developing States in Barbados, the UN Population and Development Conference in Cairo and the UN World Summit on Social Development in Copenhagen this year.

The situation facing many developing countries is likely to worsen as a result of the failure of the developed world to live up to pledges they made at the Earth Summit. There, the richest, market-orient ed countries pledged to provide 0.7 per cent of their Gross National Product in aid to developing countries.

According to UN secretary general Dr Bhoutros Bhoutros Ghali, only four - Norway, Sweden, Denmark and the Netherlands - have met or exceeded this target. Others have fallen behind.

Increases in official development aid from countries such as Japan had been offset by decreases from others. ■

From

Alfred Sasako

at the Forum Secretariat