Where goes money from aid agencies, international development banks to Africa?

Where goes money from aid agencies, international development banks to Africa?

Every year, aid agencies and international development banks provide US$125 billion a year in aid to national governments in Africa, Asia and Latin America, the International Institute for Environment and Development (IIED) reported this week.

Most of this aid is destined to fund poverty and development projects to alleviate suffering and misery among communities, mostly living in the very remote places in these parts of the world.

But despite the money flowing in every year, the situation does not seem to be improving on the ground. Many continue to ask this question over and over again: why?

Because state corruption and bad leadership are common in these areas, the finger is quickly pointed to government people, this includes heads of state, ministers and other civil servants.

While some observers believe that there is 80% of chance that the money is being used for other purposes other than it was initially destined, the IIED said this week threw an unexpected bomb, blaming saying that donors’ lack of consultations is also one of the main causes of this aid fiasco.

“Donors rarely consult with those communities about the aid they will provide, IIED’s Dr David Satterthwaite said in a statement. “Nor are the projects they fund accountable to the urban poor. The result is often bad projects that fail to meet local needs,” he added.

Satterthwaite said the other problem is that aid agencies were not set up to work at the local scale at which problems exist. To save staff costs, donors prefer to fund fewer large-scale projects than many smaller ones, he said.

 He said that another way is possible, describing how Urban Poor Fund International and the Asian Coalition for Community Action were set up to support slum or shack dwellers to drive their own development, with the funding and its use accountable to them. He made these revelations during the TEDx Talk he gave last month in Germany.

The Urban Poor Fund International is managed by Slum/Shack Dwellers International, a network of more than 30 national slum/shack dweller federations, the IIED reported.

It has supported over 200 000 households to build or improve their homes and to get tenure of their house plot and hundreds of other initiatives. The Asian Coalition for Community Action (ACCA) has funded more than 1 000 community initiatives in 168 cities.

 Both funds are affecting the way city governments work, empowering low-income communities to raise more funds and work in partnership with authorities to develop their settlements and improve living standards.

There are now over 100 formal memorandums of understanding between federations and local governments, and thanks to ACCA there are now a hundred city-based funds that groups of savers from informal settlement co-manage with municipal governments, the London-based NGO said.

 Furthermore, Satterthwaite pointed out that the funds have achieved all of this with just US$35 million, a tiny sum when shared across so many countries, cities and communities.

 “Imagine if just one per cent of aid — US$1 billion — was spent this way. We would truly transform our cities,” he said.

Photo: The face of poverty in Sri Lanka. Credit: Gerry Popplestone

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