• Does the Philippines get its fair share of ODA?

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    MIKE WOOTTON

    MIKE WOOTTON

    I see that the UK government is cracking down on the use of overseas aid monies. The United Kingdom contributes about UKL12 billion (P840 billion) in overseas aid, the second-biggest amount [after the United States]of 29 OECD countries on the Development Assistance Committee. The amount of aid to be provided by the Organization for Economic Cooperation and Developmentcountries has been set by the United Nations at 0.7 percent of each nation’s Gross National Income, but not all member-states manage to achieve that. Of the total, 40 percent go to multilateral organizations such as the World Bank and Asian Development Bank; the other 60 percent go directly to foreign governments. It is a legacy from colonial times. The UK government was the biggest single aid provider giving UKL77 million (P5.4 billion) to the Philippines in respect of Super Typhoon Yolanda effects, an engagement viewed as a great success by the donor.

    The reason that the UK government has become upset about the use of development aid is that it has just rather belatedly realized that much of the money is either siphoned off by corrupt officials in recipient governments, wasted by inefficiencies on the ground or simply spent without too much notice being taken of value for money.

    A report by the UK government Independent Commission for Aid Impact (ICAI) says British aid is actively encouraging corrupt practices, such as bribery. In one scheme, Britain invested millions in helping tackle police corruption in Nigeria, only for locals to say that police were even more likely to accept bribes afterward. In another, people ended up being encouraged to forge documents to gain grants in Nepal.

    That overseas assistance monies are prone to just vanishing as well as being ill-used should be no surprise to anybody. The countries thatreceived most UK aid in 2014 were Bangladesh, Ethiopia and Pakistan. As noted above, Nigeria has for a long time been high on the list of aid recipients. It is also worth noting that Syria, a nation with which nobody except Russia will partner[because of its awful human rights record]in order to fight the evil ISIS, received about UKL125 million (P8.75 billion) in UK government aid in 2013.

    It is also true that of so-called development aid monies, only about 50 percent aremade available in terms of actual cash, and that aid has often come with strings attached for the developing nations:

    • Aid is often wasted on conditions that the recipient must use overpriced goods.

    • Most aid does not actually go to the poorest who would need it the most.

    • Aid amounts are dwarfed by rich-country protectionism that denies market accessfor poor country products, while rich nations use aid as a lever to open poor country markets to their products

    • Large projects or massive grand strategies often fail to help the vulnerable as money is frequently just embezzled away.

    So although the intentions behind overseas development assistance are good, in practice ODA is used more as a political pawn than something that actually helps the poor in less developed economies. Even though its stated purpose is exactly that.

    It seems fairly clear that the business of ODA has for a long time failed to deliver results it was set up for. It funds plush offices and high salaries for its administrators who are encouraged to use time-consuming academic rigor in their evaluation of needy causes worth supporting. It creates trade dependencies that otherwise would not exist. And actual cash money that does get through the funnel is available to unscrupulous officials for them to buy helicopters, expensive new cars, houses and to fund their mistresses.

    The amount of overseas development assistance coming to the Philippines was just over US$1 billion (P44 billion) in 2013. Japan led the field followed by the US, Australia, Canada and the UK. This amount is really miniscule as a percentage of the nation’s Gross Domestic Product or GNI and represents about $10/person. Aid for Madagascar was $30/person, Vietnam $45/person, Myanmar $70/person, Mexico $7/person and Peru $18/person.

    On the Human Development Index the Philippines ranksNo. 117 out of the 187 nations listed. Vietnam is at No 121. This could lead you to think that the Philippines is getting less than its fair share of overseas development assistance. Is this because of the “stellar” economic performance of the country (slowing down a bit now mind you) as much trumpeted, or could it be that the donor nations think that there is a higher probability of the money vanishing here than in many other places, or even perhaps that the Philippines is sufficiently enlightened as to refuse aid on the grounds of the unwelcome trade ties it can engender?

    Aid money allocations are agreed by heavyweight politicians at high-level international forums. Once set, then the money has to be spent in order to meet the agreed targets. Frequently, the donor countries don’t have much idea on how to spend the aid, despite efforts of their highly paid secondees in-country and in the multilaterals, with the result that it is poorly utilized and does little or nothing toward relieving poverty or having any long-term impact on improving less developed economies.

    The Philippines needs as much overseas development assistance as it can get. It can benefit a lot from free advice provided as aid by the developed OECD economies, particularly in those areas that it doesn’t really like to admit a need for good advice:privatization, regulatory capture, corruption and decent long-term job development. But please don’t ask for cash (people may think it will vanish), just ask for good practical advice [and try to take it]. It may just make a helpful difference in relieving poverty and taking the nation forward.

    Mike can be contacted at mawootton@gmail.com.

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