Essay on biases in overseas aid transfers
A vitally important issue observed in a number of studies on aid programmes was the presence of different biases including but not limited to choice of countries, sector or sub-sectors of activity as well as the designs of aid projects.
One of the fist kind of biases was found in aid allocation, such as choosing a small country, or a group of small countries at the cost of large nations. Examples to this respect may be observed in the aid allocation to the small countries of Cape Verde and Vanuato, each of whom received 314 USD and 223 USD per person respectively. In direct contrast, the West African nation of Togo received only 29 USD per person. The said aid figures are those of 1998. The extremely high aid allocated to the micro-economies of Cape Verde and Vanuato were in spite of the fact that each nation enjoyed per capita income of more than 1000 USD. Similarly, aid provided to some of the most densely populated countries in the world too was sufficient evidence that there was a definite bias in the allocation of aid for poverty reduction. Examples to this respect may be observed for the countries of China and India, each of who received only 2 USD per person in the same year of 1998.
In choosing a smaller nation compared to a larger nation for dispersing aid for poverty reduction measures, one also observes a certain set of commercial as well political consideration which have been noted to directly interfere in the flow of aid.
For example, political considerations can well be observed in most, if not all the aid emerging from the United States of America for countries of the Middle East. Studies carried out by McGillivary and White in 1993 showed that Israel, Jordan and West Bank, and Gaza each received USD 179, 89, and 219 per person respectively. Thus, confirming that political considerations played an important role in the allocation of aid. (McGillivary and White, 1993)
Another type of bias, one that favoured sectors and regions too has been observed to interfere and play an important role in the allocation of overseas aid, somewhat directly affecting the principle issue of aid for poverty reduction. In favouring sectors and regions, the aspect of commercial pressure too played its due role, as is evidenced from a World Bank aid project in Ghana. In this respect, studies carried out by Sowa and White in 1997 revealed that a World Bank infrastructure project in Ghana witnessed a number of bi-lateral agencies lining up to share and co-finance the construction of highways. In contrast, not a single agency or individual came forward to finance a rural feeder road project, where labour-intensive techniques were to be used and the respective project opened up work opportunities for women. (Sowa and White, 1997)
The Affect on Basic Services of Health and Education
The results of the above biases, whether political or commercial more often than not affect the basic services of education and health. Though either or both of health and education may not be the only areas of interest for the larger poor populations, they are certainly important players in the poverty reduction measures.
A brief on the statistical figures as reported by DAC shows that both health and education were only allocated a meager 0.4 percent of the total aid, which increased slightly by 2.1 percent. These figures were far behind the 20 percent as proposed by the United Nations Copenhagen Summit. The said Summit had proposed that a 20 percent share from government spending, and another 20 percent of aid should be allocated to both the basic services of health and education.
Another vital factor, that of project design for any given aid project revealed that most if not all project designs excluded the larger poor populations, while the poorest segment were totally ignored. Then there is the area of credit schemes, which when offered as measures for poverty reduction more often than not require a user fee. The demand for a user fee for any credit scheme automatically restricts aid for the poor segments. Even if there are exemptions in the offered credit schemes, they are marred by corruption, thus failing in its primary objective of assisting the poor. This is aside from the in-efficient handling, and ‘mis-targeting’ of credit schemes, again raising and imposing additional costs on service, a phenomena commonly observed in a number of third world countries.
From the above discussion and literature review, one may thus observe that majority of the arguments ostensibly go against aid-financed projects or activity aimed at poverty reduction; as also making no difference in the lives of the larger poor populations across the globe. This has resulted in majority of donors shying away from projects which require resettlements on a huge scale, a disruption in the lives of the poor segments, loss of existing employment, not to mention the cutback on the vital areas of health and education (Holdcroft, 1978). Even though the vital important areas of water and sanitation services attracted significant proportions of aid resources, these areas too were found to be beneficial for the well off, instead of targeting the poor segments. A prime example to this respect was observed in an aid package for Nicaragua’s water and sanitation services, where-in a major 60 percent of the social funds were utilized for the better off segments of the populations, and not the poor, as should have been the case. (Rawlings et al, 2000:22)
The above discussions have also clearly made distinctions between direct aid and indirect aid for poverty reduction by both the donor nations and agencies alike. Accordingly, direct aid is one where all the projects and activities are directed at the poor segments, while indirect aid calls for placing the requisite set of conditions for reducing poverty including, but not limited to economic, political or social conditions. The latter or the indirect means of providing aid has thus become a common module, as it aims at assisting the poor. Yet, indirect aid as compared to direct aid calls for the creation of a truly ‘enabling environment’ taking into account the utility of channels for each respectively.
To end the emerging dilemmas of direct and indirect aid channels as well as other issues in the overseas aid for poverty reduction, donor nations and agencies alike have adopted a number of modalities and classification criterion through which aid is dispersed for poverty reduction. These include, for example strategies, which bring about improvements in the lives of the poor, provide for requisite opportunities and basic services including health and education. In similar context, donor nations and agencies have also made certain distinctions for providing aid, so that the same are dispersed and utilized for the original purpose of poverty reduction. These distinctions include among other enabling actions, inclusive actions, enhancement of employment opportunities and provision of general and basic services such as health, education and sanitation services; thus the aim is to leave a direct impact on the lives of the poor segments of population. (German and Randell, 1995;Killick et al., 1998; and White, 1996)
Tags: Africa, african nation, aid projects, biases, government, poverty reduction, UN
