Time magazine (June 25 – July 2, 2007 Issue, pp.58-59) has beautifully put it and it bears repetition here:
One third of food aid budgets or roughly $600 million, never reaches the intended recipients and is instead swallowed by costs in donor countries, according to OECD. That is because only 15 % of the donated food is sourced locally, even though plentiful grains may be harvested just over the mountain from famine stricken areas. Almost all US food aid, by law, must be grown and processed at home. U.S. agribusiness, which receives subsidies for growing such crops, and the US shipping industry profit from the arrangement. But transporting California rice to a rice growing country like Cambodia makes little sense. When the food finally arrives - often too late to feed those most vulnerable - the influx of foreign products can wreck havoc on the local market, depressing prices just when farmers need income to feed themselves. As an alternative, economists like Nobel laureate Amartya Sen suggest rich countries send cash, which in many cases may flow into needy economies more quickly and efficiently than food aid.
Often when the question of giving discretion to donor recipient countries comes, the bogey about leakages is raised. But that I think is unfair. If you have no faith in the aid-receiving countries, don't give aid. Period. But once you have given aid, it is best to leave it at what I stated earlier.
Dr. Amitava Mukherjee is the Regional Adviser on Poverty Reduction for the United Nations Economic & Social Commission for Asia and the Pacific.
Comments
Re: Improving Aid Effectiveness
European governments have signed up to a global declaration on aid effectiveness and committed to additional targets in an EU action plan on harmonisation. Yet too much aid money does not respond to the needs of poor people in developing countries or is delivered in an inefficient way that hinders rather than enhances recipient governments’ ability to manage revenues.
With aid likely to become more European-dominated, Eurodad is focussing attention on the responsibilities of European governments, both directly and through international institutions. Eurodad will be working with other NGOs to monitor and campaign for EU Governments to live up to their commitments to ensure better quality aid in the next five years.
Eurodad’s role includes analysis of changing mechanisms for aid delivery such as the shift towards more budget support, monitoring official donor progress on their commitments made in the Paris Declaration, including coordinating civil society research on progress and impacts on the ground and advocating for a more representative and legitimate aid architecture.
In September 2007 Eurodad agreed to act as the European focal point for the Reality of Aid network, a global collaboration on aid tracking. For the latest on aid effectiveness see below and also the new BetterAid blog and site which Eurodad has established with colleagues in other NGOs.
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