Monday, March 06, 2006

Millions of dollars worth of aid money is being wasted

*BBC NEWS*, February 26, 2006

"Millions of dollars worth of aid money is being wasted" Ashraf Ghani: "More
than 90% of the more than $1bn that was spent on about 400 UN projects in
Afghanistan in 2002 was a waste of money" By Toby Poston, BBC News business
reporter As more than 5,000 British troops are being deployed in
Afghanistan, it is becoming clear that the dire security situation is just
one of many obstacles that hold back reconstruction efforts.

True, security is a major worry for aid agencies, who saw 30 of their
workers die last year.

But in some cases, the agencies' wasteful bureaucracies are also holding
back efforts to rebuild this war ravaged country, according to Ashraf Ghani,
who has written a report on international development and post-war
reconstruction, sponsored by the Overseas Development Institute (ODI).

As chancellor of Kabul University and Afghan finance minister between
2002-2004, Mr Ghani's word carries some weight.

When he says millions of dollars worth of aid money is being wasted, both
donor nations and aid agencies take note.

Complete waste of money Mr Ghani believes the Afghan government could build a school for about $40,000 (£23,000), a fraction of the $250,000 cost racked up when one
international aid agency took on the task of delivering 500 schools.

The difference would arise because the Afghan government would use locally
hired contractors, while the aid agency spent 80% of its funds on hiring
external technical assistants, he explains.

Another case of money being wasted was the reconstruction of the road
between Kandahar and the capital Kabul, which the government estimated would
cost $35m.

It was eventually built by USAID and ended up costing more than $190m, Mr
Ghani says.

Moreover, these are not isolated cases, Mr Ghani insists, as he estimates
that more than 90% of the more than $1bn that was spent on about 400 UN
projects in Afghanistan in 2002 was a waste of money.

More harm than good But the billions of dollars of aid pumped into Afghanistan over the past four years have not merely been wasted; the cash injections might even be
doing more harm than good, Mr Ghani suggests.

The country's 280,000 civil servants earn an average wage of $50 per month,
while approximately 50,000 Afghans work for aid organisations where support
staff earn up to $1000 a month.

"Within six months of starting my job as finance minister, my best people
had been stolen by international aid organisations who could offer them
forty to a hundred times the salary we could," Ashraf Ghani says. In
particular, it has been damaging to the government and its ability to build
law and order and deliver public services, he says.

With more than 2,400 national and international aid agencies and other
non-governmental organisations (NGOs) registered in the country, the
government is finding it hard to hold on to its staff, Mr Ghani says.

The country's 280,000 civil servants earn an average wage of $50 per month,
while approximately 50,000 Afghans work for aid organisations where support
staff earn up to $1000 a month.

"Within six months of starting my job as finance minister, my best people
had been stolen by international aid organisations who could offer them
forty to a hundred times the salary we could," he says.

Lucrative work ODI workers on the ground say Mr Ghani has a point.

They say Afghanistan is brimming with expensive foreign contractors and
consultants who are often duplicating or replacing work that could be
carried out by the government.

"There is a tendency for UN agencies and non-government organisations to
rush in with thousands of small projects, each requiring international staff
and drivers," says Clare Lockhart, a research fellow at the ODI and a former
advisor to the Afghan finance ministry.

These experts cost far more in overheads like living expenses and
repatriation costs than in actual fees for their services, but with further
lucrative work in the pipeline, it is not in their interests to pass on
their skills to their Afghan counterparts, Ms Lockhart explains.

An inquiry by the US daily, the Washington Post (Nov.20, 2005), has
discovered serious flaws in the US efforts to rebuild Afghanistan,
suggesting that corruption and inefficiency caused millions of dollars to be
wasted on useless projects. Nevertheless, she also points out that some
projects, for example like the National Solidarity Programme, are worth
copying.

The programme has seen hundreds of millions of dollars delivered straight to
local communities, thus enabling 13,000 villages to plan and manage their
own reconstruction and development projects, she says.

Corruption Critical voices, such as Mr Ghani's, have helped ensure that in future
Afghanistan's own government and people will gain greater control over how
aid money is spent.

Early this month, the launch of the Afghan Compact initiative saw more than
$10.5bn in aid pledged to Afghanistan over the next five years, as part of
an agreement where both the Afghan government and its outside backers must
benchmarks progress in areas such as security, economic development and
better government.

In the UK, the Department for International Development is paying 70% of
this year's £100m aid budget direct to the Afghan government, making it the
largest donor to it's core budget.

The funds are not earmarked, and there are firm commitments to deliver the
funds for at least three years hence. This gives the Afghan government the
chance to plan ahead.

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