Aid for the poor, not for the consultants

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ActionAid International, the South African NGO and watchdog, has released a new report, Real Aid 2, criticizing what they call an excessive use of highly-priced consultants by development agencies:

One quarter of the aid provided by rich countries - or $20bn a year – funds expensive and often ineffective western consultants, research and training instead of going directly to the people who need it most… Expatriate consultant typically cost around $200,000 a year with more than one third of this spent on school fees and child allowances – spending which would not be needed if local consultants were used.

In Cambodia, for example, consultants fees were $17,000 a month while government salaries were only $40. In Ghana, even relatively inexperienced consultants earned per day what government officials earned in a month. In Sierra Leone, according to one former UK-funded consultant, daily take-home pay was the same as the Auditor General’s monthly salary.

The numbers are striking, but the real issue is not really high salaries. If we believe that the consultants are the best at what they do and that their work is second-to-none, then often the costs will be worth it and the greatest development impact will be achieved. The key thing is that we have the evaluation mechanisms in place to make sure that they are worth their costs and that our procurement mechanisms are fair and transparent. Many of these consultants may very well not be worth what they are getting.

The real reason why it is so important that we hire more local consultants is not to save money, but rather to teach and train the experts and practitioners that are necessary for reforms and programs to survive once consultants move on. (Not to mention that locals will often have a better grasp of realities on the ground.) Another challenge of the aid curse is that frequently highly skilled workers, such as doctors and lawyers, quit their jobs to become drivers and secretaries at donor offices due to the inflated salaries. This is especially a problem when aid siphons off good workers from the government who are “poached” by large donor projects.

The ActionAid report also claims that almost half of all aid fails to directly target the poor – or what they call phantom aid.

See the related story from which I stole this post’s title. Also see a previous post on the staffing challenge in Aceh.

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