Unaccountable aid good for donors, bad for the poor

By Tim Bruckner

President Obama says “mutual accountability” will now underpin America’s foreign aid. He called on rich donor nations at the recent Millennium Development Goals (MDG) summit to “commit to the same transparency that we expect of others.”

It will not be easy: Transparency and accountability are fashionable mantras in the aid industry, but the actions of the U.S. Aid for International Development (USAID) program and other donors do not live up to the talk.

The aid industry faces a growing chorus of critics who argue that international aid lacks transparency and is often ineffective at best and harmful at worst. In 2005, in the Paris Declaration on Aid Effectiveness, and again in the 2008 Accra Agenda for Action, donors recognized that “transparency and accountability are essential elements for development results.” But donors, including the U.S., have failed to meet those promises.

In 2008-2009, I coordinated the aid-monitoring program of Transparency International Georgia, at a time when the Republic of Georgia was slated to receive billions of dollars in aid after its brief war with Russia. In our work, we discovered the huge gap between what donor representatives say at global summits and what donor officials do on the ground.

The Georgian government built thousands of new homes for people displaced by the 2008 war and donors generously supported the effort. Very soon, however, some of these houses needed repairs because of poor construction and the new occupants were confused about who was responsible for fixing their warped floors and leaking roofs. Even today, the complexity and opacity of donors’ financing arrangements makes it impossible to trace which donor is responsible for which house. Donors’ lack of transparency directly hurts the poor.

Worse, opacity is often an actual policy: in a recent statement, InterAction, an association of aid and development organizations, revealed that donors sometimes require charities to keep confidential the amount of taxpayers’ money they receive. USAID recently confirmed that it regards grants given to charities for development projects as confidential information: It refuses to release budget details even in response to formal U.S. Freedom of Information Act requests. In one case, USAID released a budget that had been so severely inked out that even the identity of the grantee remains unknown.

Whenever donors congregate in front of cameras and promise to become more transparent, we must remember that the aid industry itself has a strong vested interest in keeping aid opaque. Closed doors shield donors and their contractors from criticism by the media, taxpayers at home and poor people abroad.

If you cannot discover which donor agency financed your new leaky home, you cannot criticize that agency publicly and taxpayers remain oblivious to their wasted dollars. If you cannot see how much money a charity received or how that money was meant to be spent, you cannot tell whether your community is receiving its fair share of funds or whether project workers and the village boss are lining their pockets with money destined for the poor. Such opacity serves the interests of donor officials, charities, local politicians and construction companies alike.

When aid is wasted, stolen or misspent, those responsible can simply walk away, dodge responsibility and leave the poor to pick up the pieces. President Obama told the September MDG meeting that this is about to change: “We’ll insist on more responsibility — from ourselves and others.” But first he has to realize that the interests of the aid industry and those of the poor are not always the same.

Tim Bruckner is the former aid monitoring coordinator of Transparency International Georgia. He is currently completing a Ph.D. on aid accountability at the University of Bristol, in England. The views here are those of the author, and do not necessarily reflect those of TI Georgia.