G8 news

Phantom aid

LESS THAN 40p in every pound of aid ‘donated’ by Western countries goes on trying to eradicate poverty in the ‘developing’ world. Who benefits most? The ActionAid charity says it’s “well-heeled consultants and companies in the west.”

Even the World Bank admits that $20 billion out of the total global aid spending of $50 billion was creamed off by consultants. ActionAid estimates that 61% of aid flows were "phantom" rather than "real” – aid from the USA and France is almost 90% phantom. It lists some ways that aid is used to bolster companies in the ‘donor’ nation’.

These include “runaway spending on overpriced technical assistance from international consultants” and “tying aid to purchases from donor countries' own firms” and using “aid spending on immigration services”.

Most of the world’s richest countries only spent 0.25% of their national incomes on aid. That shrinks to below 0.1% when "phantom" aid is removed. 86 cents in each dollar of US aid is phantom. Much of it is tied to buying American goods and services.

Britain flies in foreign consultants to ‘advise’ poor countries. They are paid $18,000-$27,000 (about £9,900 -£14,800) a month in Vietnam, compared with $1,500-$3,000 for local experts. Many of these advisers are telling impoverished countries to buy products from the donor country and privatise all their facilities.