$20bn aid for the poor go to consultants

No less than a quarter of annual development aid -- about 20 billion dollars -- is being used by donor countries to fund technical assistance of sometimes dubious worth, says ActionAid International in a new report.

The report notes, “High salaries paid to expatriate advisors can also cause significant resentment among counterparts and the public in the south.”

“In the Ghana education service headquarters, government officials receive about $300 a month, what a relatively inexperienced Ghanaian consultant could expect to earn in a day, and a foreign consultant in a few hours,” it adds.

Perhaps more alarmingly, however, these high-priced advisors may fail to deliver lasting benefits.

The study, titled 'Real Aid 2', was launched Wednesday by the Johannesburg-based non-governmental organisation. As with last year's 'Real Aid', it examines how development funding is spent.

Almost 90 percent of funds from some of the major donors has been described by the report as “phantom aid”, never reaching the target. Global aid expected this year is $87 billion.

But, this is only about 0.1 percent of the national incomes of the donor countries combined.

According to the report, based on 2004 data, it typically costs about $200,000 a year to keep an expatriate consultant on staff. School fees and child allowances account for more than a third of this expense, which could be reduced with greater use of local advisors.

“Money is being spent on consultants who are earning up to $1,000 a day,” Caroline Sande Mukulira, South Africa country director for ActionAid International, told reporters Wednesday.

The report also mentions a former UK-funded consultant's claim that their daily take-home pay in Sierra Leone was the same as the monthly salary of the auditor general.

'Real Aid 2' cites the case of the Bagamoyo irrigation project undertaken in Tanzania with Japanese support, where farmers were trained in the use of pumps supplied by the Japanese, in the 1990s. As a result of the rising cost of diesel and the lack of local expertise to maintain the machinery, the project's success has been limited.

In addition, says ActionAid, technical assistance is often far less neutral than the term would imply.

“[donors] continue to use technical assistance to police and direct the policy agendas of developing country governments, or to create ownership of the kinds of reforms donors deem suitable,” notes the report.

“Donor funded advisors have even been brought in to draft supposedly 'country owned' poverty reduction strategies.”

Technical assistance that is too expensive, or ineffective, amounts to “phantom aid,” observes ActionAid -- as opposed to the “real aid” of the report's title, which leads to discernible improvements in poor nations.

The report also identifies other trends that turn real aid into phantom aid; these include counting debt cancellation as aid, requiring aid to be spent on goods and services from donor countries irrespective of whether these offer the best value for money -- and poor donor co-ordination of aid.

“Between 2005 and 2006 80 percent of all contracts awarded by DfID (Britain's Department for International Development) went to UK (United Kingdom)-based firms. In their rhetoric, they will say the money went to aid. In reality, the money remained in the UK,” said Mukulira, who also took issue with refugee-related domestic costs that certain rich countries catalogue as aid. “Switzerland and Austria are particularly notorious. When you see figures from their aid budget, 15 percent of it is spent on refugees living in their countries.”

All in all, ActionAid estimates just under half of all aid to be phantom aid. According to 'Real Aid 2', the inefficiency of technical assistance is “an open secret within the development community.” Still, says Moreblessings Chidaushe of the Harare-based African Forum & Network on Debt & Development, an NGO, poor nations are struggling to change the way funding is administered.

“It is difficult for poor countries to negotiate the type of aid they get; it's lack of resources. Either you take it or you leave it. If you take it, you take it with conditions. If you don't, you end up with nothing,” she told IPS Wednesday.

ActionAid proposes a number of solutions for this situation, notably that developing nations make their own determinations of what technical assistance they need.

Recommendations to donors include a call for them to make as much use as possible of the resources in poor countries targeted for assistance, rather than looking abroad.

As the report's author, Romilly Greenhill, notes in a statement, “Aid needs to help the poorest, not line the pockets of western consultants.” “Too much aid continues to be designed and managed by donors. It is tied to their countries' own firms, is poorly coordinated and is based on a set of assumptions about expatriate expertise and recipient ignorance.”