Canadian International Development Agency

Canada’s foreign aid spending not getting to needy: report

July 26, 2006

Hundreds of millions of dollars in Canadian aid isn’t getting to the people who need it, and is instead paying Western consultants and administrative costs, suggests a new report.

About $1 billion of the $3.74 billion Ottawa spent on international assistance in 2004-2005 didn’t reach those in need, says the international development agency ActionAid.

The group estimates almost half of all global aid — $37 billion US — is “phantom aid,” or aid that doesn’t make it to those in need because it pays for related expenditures.

Among other areas, phantom aid is spent on expensive consultants, admin costs, research, training, and poor donor co-ordination.

The report criticizes Canada for overspending on administrative costs connected with aid, such as housing and transport. Spending more than eight per cent on administrative purposes is excessive, says ActionAid.

“Canada and the U.K. are found to be the worst offenders in terms of their admin costs,” said the report.

Canada is also among the worst of worldwide donors in tying aid to goods and services from their own countries, says the group. Tying aid denies local contractors the opportunity to develop their skills and increase local employment, says ActionAid.

“The U.S., Italy, Canada, Greece, Spain and Austria remain the worst culprits in terms of aid tying,” said the report.

“In contrast, Ireland, the U.K. and Norway have fully untied their aid.”

A senior official at the Canadian International Development Agency, which administers the spending, defended the tied aid, saying many countries ask for Canadian experience.

Much global aid is spent on Western consultants, said the report, with some earning fees of up to $200,000 US per year for services, child allowances, rent and living allowances.

The organization is urging donor countries to hire local experts.

Foreign consultants in Cambodia charge advisor fees of $17,000 per month, said the report, compared to the $40 a Cambodian government employee earns per month.

The G8 countries are the “meanest and lowest quality donors,” said the report.

Once “phantom aid” has been discounted, the U.S. gives $25 per person each year in aid, while Canada’s total comes to $50 per person.

In comparison, says the report, Norway delivers $375 per person per year, while Ireland contributes roughly $125 per person.

With files from the Canadian Press.

Read the original story here. [PDFver here]

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