[Ugnet] Why Those who steal aid funds will enter heaven: EAR TO THE GROUND:-Charles Onyango-Obbo

Tue, 06 Sep 2005 22:09:17 -0700

OPINIONS & COMMENTARIES
EAR TO THE GROUND | Charles Onyango-Obbo
 
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Why those who steal aid funds will enter heaven  
September 7, 2005

The Global Fund to Fight Aids, Tuberculosis and Malaria suspended more than $150m (Shs 273bn) of its grant to Uganda, after some of the $45m it had handed out earlier was chewed.

Writing in these pages on Sunday, Andrew Mwenda argued that the suspension is not a corrective measure, but a public relations exercise.

“The act of suspension is what makes it possible for the Fund to continue its ‘aid’…That is why the Fund ‘suspended’ (as opposed to ‘cancelled’) the grants pending certain ‘reforms’ by the government of Uganda before it can ‘resume’ more aid disbursements”, he wrote.
This is because the aid industry’s main interest is to keep itself in business.

But this is just the middle of the story.
We need to also look at the beginning, and the end.
We are familiar with the “politics of aid”.
Donors use it to buy international influence; to keep their nationals employed; to help domestic companies sell goods in cases of tied aid; and in some instances to alleviate poverty, because such a world is more stable - that means donor countries get fewer illegal immigrants, for example.
The principal reason for aid, however, is first and foremost domestic.

It is the “economics of aid” that is the most critical, and least discussed factor.
The “economics of aid” agenda is set sometimes not even by governments as such, but what for lack of a better world we shall call The Establishment - the powerful economic interests in rich countries that are the real power behind the throne.

The Establishment’s best interests are served when the aid is stolen, and not well used.
Aid, in the view of dissident economists, is given to stabilise domestic economies, not to help the poor in Africa or Asia.

Rich economies could spend the money they give in aid to invest in more jobs, or spend in large public works that put money in many people’s pockets.

However, if everyone were employed, salaries would be too high because you can’t threaten someone who demands for more money with a sack.
If you sack him, you won’t have another person to replace him.

The result would be that since everyone has a job and good pay, demand would drive up inflation, and your goods would be too expensive to compete abroad.
And your economy would be kaput.

Alternatively, awash with cash, the government could build enough hospitals for everyone, and every citizen would get free medicine.
Then it could throw in free public transport, and afford a big tax cut.

One of the many results would be very little demand for credit, so banks would have to charge very low interest rates, and soon the financial system could collapse.
Aid money is actually “bad” money, that the rich countries get rid by sending to poorer nations so that they might create the right balance at home.
That is why the question of “aid absorption” is a big issue.

If you can’t use the money they give you, the donors get angry because it will mess up things if they took it back home.

If this money is stolen, as is the custom in Uganda, it could endanger the credibility of the giving industry, but at the end of the day the recipient country will still get it.

Those that lose the money, like Robert Mugabe’s Zimbabwe, do so only because they beat up and jail opposition politicians, and seize farmlands.
The next problem for aid is that if it works, it causes an even bigger problem.
Assume that Uganda got Shs100 billion a year to bring water to the poor.

If it used all that money well every year, in about five years everyone would have clean water. That means that in the sixth year, it wouldn’t need the Shs100 billion.

That creates a problem for the donor country, because what will it do with the “surplus” that it was getting rid, now?
Therefore, to ensure that the water money keeps coming, it must leak so that instead of, say, 750,000 people getting clean water a year, only 100,000 do.
It is almost necessary that corrupt officials eat the money for water for the other 650,000.

But because donors have to think not just of the economic, but political issues back home, the corrupt need to do a good CYA (cover your ass) so that the thieving isn’t apparent otherwise voters back home will be up in arms.
This is where the Project Monitoring Unit handling the Global Fund money failed.

Without corruption, the aid industry as we know it today would be in the intensive care unit.
Without inefficiency and waste, it would collapse.
And if recipients changed their beggar mentality and begun working hard to create wealth, donor economies would be in crisis.

Corruption and waste, the two things we otherwise think undermine aid, are actually very essential for the survival of the aid industry as we know it.

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