Tuesday, 30 August 2011

EU ambassador wants to increase budget support to corrupted Ugandan government

The Uganda Revenue Authority is listed as the seventh most corrupt institution in the region

The ranking of key public service delivery agencies, for instance the police, judiciary, immigration departments, local authorities, power utility companies, water ministries and hospitals shows that the public service in East Africa is riven with corruption.
Transparency International

The new European Union ambassador to Uganda, His Excellency Roberto Ridolfi has given an "exclusive interview" to the Ugandan Sunday Monitor. In the interview the European top diplomat defended direct budget support to the Ugandan government and called aid critics "a little bit obsolete":

The EU is a big donor to Uganda but what do you have to say to foreign aid critics who argue that aid simply makes recipient countries lazy and dependent?

Critics of aid should know a little bit more on aid. I would say not aid but development cooperation. A bunch of us with some experience in economics we know the detrimental effect of subsidies, grants, give-outs. But we know the good program approach in agriculture, infrastructure, energy, health, and education can assist the government to internalize the good use of resources and therefore delivery good results. The image of aid critics you are reporting to me today is a little bit obsolete. It is something they were saying 45years ago. We have done a lot of calculations and I can tell you without aid, the situation in many countries would be much, much worse. Yes, aid is not perfect. But you have to imagine today a country like Uganda has benefited a lot from aid, not only in terms of money but in terms of governance.
What sort of interventions if any has the EU put in place to bolster a shift in the status quo?

Budget support. I hope to release the tranche of budget support for 2011/2012. We have done our due diligence and I think that should help both in terms of Euros entering the system and solidity of the treasury.

Read the entire article here

Reality check:

Budget support:

Last August, the EU sent out a press release, proudly announcing that it had just released 23 million Euros of budget support to Uganda. Five months later, we learned that the Uganda government is broke because the coffers were drained to fund President Museveni’s re-election campaign. This is not to even mention the millions of Euros and Pounds that were given by the 12 or so other budget support donors in Uganda.

In the chart below, you can see the the European Commission increased the amount of funding it gives through General Budget Support from 0% to 42% over the last 12 years (the 10th EDF – European Development Fund – goes from 2008 – 2013)
Budget Support Dollars are Easier to Steal
Once the donor dollars make it into government accounts, it is extremely difficult to track it, or to stop it from disappearing. European donors know full well that their money was taken and used in this election, and even before that they were aware of a certain amount of it getting siphoned off. Donor countries simply have to make a calculation as to how much corruption is acceptable. I have a feeling, though, that the taxpayers who actually contributed the money might have a different standard for what is “acceptable.”

Read the entire article here

The effects of aid:

It is one of the great conundrums of the modern age: More than 300 million people living across the continent of Africa are still mired in poverty after decades of effort -- by the World Bank, foreign governments and charitable organizations -- to lift them out if it. While a few African countries have achieved notable rates of economic growth in recent years, per-capita income in Africa as a whole has inched up only slightly since 1960. In that year, the region's gross domestic product was about equal to that of East Asia. By 2005, East Asia's GDP was five times higher. The total aid package to Africa, over the past 50 years, exceeds $1 trillion. There is far too little to show for it.

Dambisa Moyo, a native of Zambia and a former World Bank consultant, believes that it is time to end the charade -- to stop proceeding as if foreign aid does the good that it is supposed to do. The problem, she says in "Dead Aid," is not that foreign money is poorly spent (though much of it is) or that development programs are badly managed (though many of them are). No, the problem is more fundamental: Aid, she writes, is "no longer part of the potential solution, it's part of the problem -- in fact, aid is the problem."
In a tightly argued brief, Ms. Moyo spells out how attempts to help Africa actually hurt it. The aid money pouring into Africa, she says, underwrites brutal and corrupt regimes; it stifles investment; and it leads to higher rates of poverty -- all of which, in turn, creates a demand for yet more aid. Africa, Ms. Moyo notes, seems hopelessly trapped in this spiral, and she wants to see it break free. Over the past 30 years, she says, the most aid-dependent countries in Africa have experienced economic contraction averaging 0.2% a year.
Given that aid has been, in Ms. Moyo's words, "an unmitigated political, economic, and humanitarian disaster," why has it continued? One reason, she says, is that there about 500,000 people "in the business of aid," and their livelihoods are dictated more by the size of their lending portfolios than the effectiveness of their programs.

Read the entire article here


It is worth noting that the EU top diplomat in Kampala is openly propagating for more budget support, in spite of the fact that the Ugandan government went broke last year because the money had been spent on president Museveni´s re-election campaign. Neither is ambassador Ridolfi´s criticism of aid critics very convincing. But His Excellency is an excellent (and highly paid) representative of the 500,000 people "in the business of aid". 

One wonders, how long will the European taxpayers accept this enormous waste of money while at the same time facing all kinds of austerity measures at home?

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