August 27, 2009

PakGov: Admin Costs Consume 50-55% of U.S. Aid

What are we to do with this?

Shaukat Tarin, Pakistan’s finance minister, has urged the US to channel its assistance through Pakistani agencies instead to save on high intermediation costs incurred by US counterparts. ...


“Whatever aid [the US is] giving must have full impact on the ground which is why they should route as much of this aid through our agencies than their own agencies,” Mr Tarin said in an interview with the Financial Times. “Frankly, we only receive almost 50-55 per cent of the aid, 40-45 per cent becomes expenses [because of intermediation costs by the US].”

On the one hand, I have a great deal of sympathy for the Pakistani finance minister. There can be no question that much Western aid to the developing world is eaten up by administrative costs or goes back into the pockets of well-meaning but highly-paid Western aid workers (and by "highly paid" I mean in comparison to most local hires). On the other hand, that same aid Shaukat Tarin is talking about was not generated by black magick. It is provided by U.S. tax-payers, all of whom have the right to know how their aid is being spent.* Between corruption and a difference in U.S. and Pakistani threat perceptions, the United States is understandably wary about where, exactly, all that money is going. Quite often this blog just poses questions unsure of the answer, and this is one of those times. So I look forward to hearing from the readership on this one.

*Tax-payers, and our Chinese creditors.