‘Phantom aid’: why technical assistance is ineffective, over-priced, imposed and outdated

In 2005 the international community promised unprecedented levels of aid. It is doubtful that rich countries will deliver on their promises. Also, between a quarter and a half of all aid is in the form of so-called technical assistance – consultants, research and training – despite evidence that this is often ineffective and can weaken local capabilities.

A report from ActionAid International reviews aid distribution since the commitments made by the G8 leaders in Gleneagles, Scotland and the subsequent United Nations World Summit. The author notes that even if all the promises made in 2005 are met, donors will only give an average of 0.36 percent of national income by 2010 – half of the 0.7 percent target level. The world’s richest and largest economies donate the least.

Official figures exaggerate the generosity of rich countries. Some US$37 billion – roughly half of global annual aid – is ‘phantom aid’, not genuinely available to poor countries to fight poverty. Much official aid is allocated to serve the geopolitical and commercial priorities of donors. Donors may announce debt relief and subsequently count this as ‘aid’. Thus in 2004 ‘real aid’ levels were only 0.14 percent of donor income, far from the headline figure agreed upon.

Technical assistance, a major part of most aid programmes, is overpriced and under-evaluated. Donors continue to insist on technical assistance components in most programmes they fund. Many use technical assistance as a lever to direct the policy agendas of developing country governments and have, at times, even used their own consultants to draft supposedly ‘country-owned’ poverty reduction strategies.

Assumptions about recipient ignorance lead to massive spending on western consultancies:

• Posting an expatriate consultant to a developing country – adding up salaries, transport, accommodation, school fees and child allowances – typically costs around US$200,000 a year.
• A foreign consultant in Cambodia typically costs US$17,000 a month while local civil servants earn US$40.
• In Ghana even relatively inexperienced consultants earn more in a day than their government counterparts do in a month.

Political support for aid cannot be sustained without clear progress and far-reaching changes to how aid is planned, managed and delivered. Real progress on poverty requires more real aid.

ActionAid calls on donors to:

• abandon the assumption that western experts always have the best ideas about reducing poverty 
• stop using technical assistance as a way of influencing policy choices and give developing countries the chance to come up with their own plans to build skills and capacity in the way that suits them
• pledge predictable, untied finance to support locally developed plans, including allowing developing countries to spend the money on other priorities
• make maximum use of country systems, including for procurement, financial management and reporting for all aid, including technical assistance
• be fully transparent, and encourage parliaments, the media and civil society to hold both donors and recipient governments to account.

Source(s):
‘Real Aid 2: Making Technical Assistance Work’, ActionAid International, by Romilly Greenhill, Jesse Griffiths, Patrick Watt, and Jasmine Burnley, 2006 (PDF) Full document.

id21 Research Highlight: 12 April 2007

Further Information:
Romilly Greenhill
ActionAid International
PostNet Suite #248
Private Bag X31
Saxonwold 2132
Johannesburg
South Africa

Tel: +27 (0)11 880 0008
Fax: +27 (0)11 880 8082
Contact the contributor: romilly.greenhill@actionaid.org

Actionaid International

Other related links:
'Should donors give aid to developing country budgets?'

'In development it is money that matters'

GSDRC topic guide on Aid instruments & aid effectiveness

Aid Effectiveness – Opening the Black Box, Working Paper from the World Bank (PDF)

Research Papers from the World Bank Aid Effectiveness Research Group