Is foreign aid effective?

To accept handouts for one's needs is injurious to pride - be it for an individual or nation. When poverty was grinding, Bangladesh and other similarly placed countries swallowed it by accepting foreign aid in large dollops. The debate as to whether aid really helps countries grow is not settled yet. This is on top of what development really means. Economic growth per se takes a partisan approach to progress. Fortunately, Bangladesh, on its way to self-sufficiency, is in a position to wean itself away from most types of foreign assistance. Now we ought to limit ourselves to multilateral help.

At a time when donors are cutting back on aid, we should be choosy. We still receive substantial multilateral and bilateral aid for which development cooperation is a fashionable moniker. Whether aid is being used effectively is a legitimate question for both donors and recipients. Even the respected World Economic Forum (WEF) has waded into the debate. Increased flow of information, lessened opacity and increased ethical awareness have helped.  

Recipient countries build up vast machineries to suck up aid. The Economic Relations Division (ERD) is an example. Highly trained mandarins man this uppity wing of the Ministry of Finance. Liaising between donors and Bangladesh government is their main function. Officers in other ministries/departments vie for a coveted posting, where foreign trips are a perk. It won't be out of turn to mention that rent-seeking behaviour has taken hold amongst our intelligentsia duly complemented by a servile attitude shown by the less-educated. It is hard to brush-off odious sounding 'only for foreigners' signs in our neighbourhoods.

Official Development Assistance (ODA) was born in 1928 in Great Britain. Then the beneficiaries were the, who did not have a voice about the nature, scope and aims of aid (or was it alms?). The USA followed in the 1950s. It is not hard to imagine that, in the height of the cold war, when developing countries were mere pawns, aid became the handmaiden of foreign policy. Pakistan's largesse, including substantial military aid, came from the US. Unstable Afghanistan receives a goodly amount from the West. India and Cuba were favoured by the Soviet Union. There is almost a parent-child relationship between China and N. Korea.

Aid comes in many shapes and forms-tied or un-tied, loans or grants. There is project aid, programme support and technical aid. A complaint we kept hearing in the past was that a large chunk of aid was gobbled up by fat salaries of foreign 'experts'. In project aid, machinery and equipment had to be procured from donor countries. In effect, charity was re-cycled but the donors scored brownie points.

Bangladesh boasts an impressive number of 'development partners'. The bilateral list includes Pakistan. We are aghast. We believe that little by little, bilateral help chips away at sovereignty. Dependency is so ingrained in our character that the slight barely registers. Because we have ceded enough already from 1972 to date it is time to jettison bilateral aid altogether.

We exhort our kids to become financially independent; does the same principle not apply to our polity? Our imminent graduation to middle-income country status should propel us toward self-reliance. A wholesale change in our national mindset is required. Necessity will spur home-grown innovation. The manufacture and use of geo-textile to arrest river erosion comes to mind. Dr. Sadiq Ahmed, an economist, states that only well-meaning palliative measures cannot fight poverty in places like Kurigram.

Recently, the ERD has set up the Aid Information Management System (AIMS), for greater transparency. Among its aims are better coordination of aid and its management. There is scope for improvement in the layout of the web-page and user-friendliness. A cursory look makes it clear what an enormous amount of government's time is consumed by record-keeping, a good example of opportunity cost.

Good initiatives can be traced to the Development Assistance Committee (DAC), an informal group co-opted from the Organisation for Cooperation & Economic Development (OECD). Born in 1961, DAC became interested in transparency and accountability issues, perhaps with an eye on their own constituents. Subsequent high-level meetings took place in Paris (2005) and Busan (2011) to imbibe above-mentioned values in aid operations. International Aid Transparency Initiative is a result. This is ongoing and other welcome moves are afoot. Notably, channels of communication have always been open among donors.  

To add to the debates and criticisms mentioned above, Third World problems do not bother people on the right. Left-wing firebrands decry a dependent relationship. Disaster and humanitarian aid are, of course, above the fray.

In conclusion, the ERD should ensure that aid is in conformity to perspective plans (e.g., Poverty Reduction Strategy Paper or, PRSP and medium term macroeconomic framework) and Annual Development Programme (ADP). 

The writer is Part-time Faculty, United International University. 

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