Tuesday, March 25, 2008

40% of aid to Afghanistan goes to consultants: report

40% of aid to Afghanistan goes to consultants: report

Pledges fall short amid staggering inefficiency, waste

Tom Coghlan, The Daily Telegraph; with files from Agence France-Presse

Published: Tuesday, March 25, 2008

KABUL - Nearly half the $15 billion in foreign aid given by Britain, the U.S. and other countries to rebuild Afghanistan since 2001 has been spent on consultants and contractors, according to a report by aid agencies released yesterday.

The report by the Agency Co-ordinating Body for Afghan Relief (ACBAR), which represents 94 aid agencies, reveals staggering levels of inefficiency and waste within both the international aid effort and the Afghan government.

The report's author, Matt Waldman, from Oxfam, estimates that $6 billion, approximately 40 per cent of the total given, has been spent on consultants, mostly private security contractors. The same sum would fund the entire Afghan education budget for the next 20 years.

The report also warns of the danger of corruption, claiming that Afghan officials have no records of how $5.3 billion was spent.

Many of the nations that pledged money after the fall of the Taliban, have failed to deliver, with the report finding a $10-billion shortfall in the money pledged.

Some nations such as the U.S., Britain, Japan, Germany and Canada have made major donations. But other wealthy western nations are accused of having made "scant" financial contributions. France ($80 million) and Spain ($26 million) are highlighted as having been notably miserly.

The U.S. is the biggest donor to Afghanistan, but it also has one of the biggest shortfalls, with the Afghan government saying it delivered only half of its $ 10.4-billion commitment between 2002 and 2008, ACBAR says.

British officials say that country has spent $990 million specifically on reconstruction, with a further $220 million in the coming year.

The British government also insists that 80 per cent of its aid goes through the Afghan government so that it will be capable of managing its own affairs in the future.

However, a prominent Afghan MP, Shukria Barakzai, claimed: "This report is wrong, the situation is worse than this. In every dollar, only 11 cents is going to Afghans. The rest is returning to the West."

"Increasing insecurity and criminality is jeopardizing progress in Afghanistan," the report says.

"With low government revenues, international assistance constitutes around 90 per cent of all public expenditure in the country," it says.

"Thus how it is spent has an enormous impact on the lives of almost all Afghans and will determine the success of reconstruction and development."

Among thousands of refugees displaced by fighting in Helmand and camped on the edge of the capital Lashkargar, this week, the Telegraph found deep pessimism.

"Some NGOs are working really hard, but they are only helping a few people," said one man, named Rahmatullah.

"Don't mention President (Hamid) Karzai. We hate him. Every Afghan should be a millionaire, but where is the money?"

Report: Afghan aid money spent on high salaries, living costs

March 25, 2008 9:52 AM

KABUL, Afghanistan (AP) - Too much money meant for Afghanistan aid is wasted, with a vast amount spent on foreign workers' high salaries, security and living arrangements, according to a report from humanitarian groups published Tuesday.

The prospects for peace in Afghanistan are being undermined because Western countries are failing to deliver on aid promises - and because much of the aid money they do send is going to expatriate workers, according to the Agency Coordinating Body for Afghan Relief, an alliance of 94 international aid agencies.

Since 2001, the international community has pledged $25 billion in help but has delivered only $15 billion, the alliance said. Of that $15 billion, some 40 percent of it - or $6 billion - goes back to donor countries in corporate profits and consultant salaries, the report found.

''A vast amount of aid is absorbed by high salaries, living, security, transport and accommodation costs for expatriates working for consulting firms or contractors,'' the report said. The costs are increasing with a recent deterioration in security, it said.

The cost of a full-time expatriate consultant working in Afghanistan is around $250,000, according to the group.

This is some 200 times the average annual salary of an Afghan civil servant, who is paid less than $1,000'' per year, the report said.

Amy Frumin, an international affairs fellow with the Council on Foreign Relations who spent a year in Afghanistan as an officer on a U.S. Agency for International Development reconstruction team, said blaming high expat salaries is unfair.

''You have to pay them good money to do that. They're still having trouble finding people to fill these positions. It's a dangerous place. Not many people are willing to risk their limbs,'' she said.

The report said that Afghanistan's biggest donor, USAID, the U.S. government's aid arm, allocates close to half of its funds to five large U.S. contractors and that ''it is clear that substantial amounts of aid continue to be absorbed in corporate profits.''

The five companies are KBR, the Louis Berger Group, Chemonics International, Bearing Point and Dyncorp International, the report said.

Donors, especially the United States, should ensure the primary objective of aid programs is poverty reduction and that they address genuine Afghan needs and build Afghan capacity, it said.

The report also said the United States has not delivered $5 billion worth of aid it pledged to help rebuild Afghanistan, and other donors have fallen short by about that same amount.

Jim Kunder, acting deputy administrator of USAID, said he recognized there are always concerns about the speed in which aid is delivered but he said the envisioned work is being done.

''The U.S. government is on track to provide the aid to Afghanistan that it pledged,'' Kunder said in a telephone interview from Washington.

He said the report didn't recognize that often much of the cash earmarked for projects isn't spent until the work is completed. Roads and schools are being built and the Afghans are being helped to create democratic institutions even though the final bills haven't come in, he said.

USAID said it had pledged $25.8 billion, and of that $17.4 billion has been spent or is in the pipeline. Kunder said the money has gone to a broad variety of projects, including ''supporting the national elections, constructing roads, reducing infant mortality by 22 percent, putting more than four million Afghan children in schools.''

Previous reports by aid groups have said the international community is spending far less aid money in Afghanistan per capita - and putting far fewer soldiers on the ground - than it has in previous conflicts.

In the two years following the U.S.-led invasion, Afghanistan received $57 per capita in aid, while Bosnia and East Timor received $679 and $233 per capita respectively, the ACBAR report said.


Associated Press writers Lindsay Holmwood and Kent Kilpatrick in New York contributed to this report.

AP-WS-03-25-08 1232EDT

Major donors failing Afghanistan due to $10bn aid shortfall

Forty per cent of aid spending returns to rich countries in corporate profits and consultant costs

The prospects for peace in Afghanistan are being undermined because Western countries are failing to deliver on their promises of aid to the tune of $10bn and because aid going to the country is used ineffectively, according to a new report written by ACBAR, an alliance international aid agencies working in Afghanistan.

The international community has pledged $25bn to Afghanistan since 2001 but has only delivered $15bn. The US is the biggest donor to Afghanistan but also has one of the biggest shortfalls - according to the Afghan governmentbetween 2002 and 2008 the US only delivered half of its $10.4bn commitment.

The same sources show that over this period the EC and Germany distributed less than two-thirds of their respective $1.7bn and $1.2bn commitments, and the World Bank has distributed just over half of its $1.6bn commitment. The UK pledged $1.45bn and distributed $1.3bn.

An estimated 40% of the money spent has returned to rich donor countries such as the USKabul and the international airport cost the US over $2.3m per kilometer, at least four times the average cost of building a road in Afghanistan.

Around 90% of all public spending in Afghanistan comes from international aid so the massive shortfall hinders efforts to rebuild infrastructure damaged by over two decades of war, and to ensure the widespread delivery of essential services such as education and health.

The report’s author Matt Waldman, Afghanistan policy adviser at international aid agency Oxfam, said: “The reconstruction of Afghanistan requires a sustained and substantial commitment of aid - but donors have failed to meet their aid pledges to Afghanistan. Too much aid from rich countries is wasted, ineffective or uncoordinated.

“Given the slow pace of progress in Afghanistan, and the links between poverty and conflict, the international community must urgently get its act together.

“Spending on tackling poverty is a fraction of what is spent on military operations.

“While the US military is currently spending $100m a day in Afghanistan, aid spent by all donors since 2001 is on average less than a tenth of that- just $7m a day.”

The report says a level of donor under-spending can be expected because of the lack of government capacity, large-scale corruption and challenging security conditions. But the size of the shortfall highlights theimportance of donors making concerted efforts to address these issues.

The report also shows that a disproportionate amount of aid follows the conflict and is being used for political and military objectives rather than reducing poverty.

Mr. Waldman said: “This is a short-sighted policy. There must be strong support for development in the south but if other provinces are neglected then insecurity could spread.”

Looking to the future of aid to Afghanistan, Mr. Waldman said: “The priority now is to increase the volume of aid and ensure it makes a sustainable difference for the poorest Afghans, especially in rural areas. Aid must address Afghan needs, build local capacities and help Afghans help themselves.”

ACBAR’s main recommendations are: through corporate profits, consultant salaries and other costs, vastly pushing up expenditure. For example, a road between the center of

  • Increased volume of aid, particularly to rural areas.
  • Transparency by donors and improved information flows to the Afghan government.
  • Better measurement of the impact, efficiency and relevance of aid.
  • An independent commission on aid effectiveness to monitor donor performance.
  • Effective coordination between donors and with the Afghan government.

Falling short: Aid effectiveness in Afghanistan

Report by ACBAR (Agencies Coordinating Body for Afghan Relief)

Increasing insecurity and criminality is jeopardizing progress in Afghanistan. With low government revenues, international assistance constitutes around 90% of all public expenditure in the country, thus how it is spent has an enormous impact on the lives of almost all Afghans and will determine the success of reconstruction and development. Given the links between development and security, the effectiveness of aid also has a major impact on peace and stability in the country. Yet thus far aid has been insufficient and in many cases wasteful or ineffective. There is therefore no time to lose: donors must take urgent steps to increase and improve their assistance to Afghanistan.

Falling short: Aid effectiveness in AfghanistanFalling short: Aid effectiveness in Afghanistan (pdf 1.6 mb)

Executive summary

Increasing insecurity and criminality is jeopardizing progress in Afghanistan. With low government revenues, international assistance constitutes around 90% of all public expenditure in the country, thus how it is spent has an enormous impact on the lives of almost all Afghans and will determine the success of reconstruction and development. Given the links between development and security, the effectiveness of aid also has a major impact on peace and stability in the country. Yet thus far aid has been insufficient and in many cases wasteful or ineffective. There is therefore no time to lose: donors must take urgent steps to increase and improve their assistance to Afghanistan.

Conclusions and recommendations

The impact of assistance to Afghanistan is heavily affected by the wider social, economic, legal, security and political environment; thus, reforms are required in many spheres in order to maximise aid effectiveness. Aid has made a significant difference to Afghan lives, but major weaknesses have severely constrained its capacity to reduce poverty. Thus, donors and the Afghan government should urgently adopt
the following recommendations.

Volume of aid In conjunction with steps to enhance its effectiveness, donors should increase the volume of development and humanitarian aid to Afghanistan, which is a fraction of military assistance.

Donors should seek to allocate more funds to the Afghan government (covered below) and to effective NGOs, fulfil aid promises, and provide more multi-year aid commitments. To avoid aid dependency, the government must strengthen efforts to increase domestic revenue.

Distribution of aid There needs to be a comprehensive and objective assessment of the reconstruction, development and humanitarian needs of Afghanistan’s provinces, and a corresponding reconfiguration of government and donor spending. Whilst insecurity undoubtedly increases the costs of delivering assistance, there needs to be a more equitable distribution of resources and a high level of support for areas with greater development and humanitarian needs.

Quality of aid Donors should ensure their aid programmes have the primary or ultimate objective of reducing poverty, and that they are demand-driven, address needs as identified by Afghans, build local capacity, and are accountable to Afghan citizens and government. More aid must be directed to projects that benefit people living in rural areas, and gender equality objectives should be a primary consideration in the design and implementation of all development activities. Each donor should institute an annual aid review to measure its performance in each of these respects, and to assess consistency with the Afghan National Development Strategy (ANDS). The revised ANDS and other donor–Afghan government development plans should incorporate prioritisation and sequencing, according to the comparative importance and magnitude of poverty reduction objectives.

Indicators of aid effectiveness Donors and the Afghan government should collectively agree on indicators of aid effectiveness, with correlative targets, measuring the impact, efficiency, relevance, sustainability, accountability, and Afghan ownership of aid, as well as the use of Afghan human and material resources.

Monitoring and accountability A national, independent commission for aid effectiveness should be established to monitor aid practices, identify deficiencies and make recommendations. The commission could issue an annual ‘report card’ for each donor, highlighting levels of achievement in respect of the proposed targets. Measures should be taken to strengthen downward accountability to citizens. Donors should provide funding for civil society organisations to carry out monitoring of aid flows and budget processes, which helps to ensure sustainable scrutiny of aid effectiveness.

Transparency Donors should publicly provide full information on aid flows; the Afghanistan Donor Assistance Database should be overhauled, updated and allow full public access to aid information.

Ownership and governance To maximize Afghan ownership of the development process, donors should seek to increase incrementally the level of aid provided to the government sector and to increase the volume of funds channelled to the core budget, especially the development budget component. To justify this, the Afghan government should take steps to:

• Improve budget execution capabilities, particularly implementing capacities of line ministries;
• Strengthen financial management and fiscal controls;
• Expedite public administration reform, especially in the civil service;
• Ensure rigorous implementation of the government’s anti-corruption strategy; enhance transparency; improve monitoring, oversight and audit; and streamline government processes and procedures; and
• Reform sub-national governance, de-concentrate centralised line ministries; build institutional and systems capacities at local level; and expand the participation of communities and civil society in designing, implementing, directing and monitoring development activities.

Coordination and alignment Donors should use existing mechanisms to improve donor-government coordination; the human and financial resources of both the Joint Coordination and Monitoring Board (JCMB) and UN should be strengthened for this purpose. Donors should provide the government with timely, comprehensive and accurate information on all aid flows, and ensure they are consistent with national and local development priorities, above all, the ANDS.

Donors should substantially increase support for sectoral programs, through mechanisms such as the Afghanistan Reconstruction Trust Fund, and thereby exceed the Paris Declaration target of 66% of aid delivered through such programmes. Donors should also increase the proportion of joint analytical work from one-third to two-thirds and ensure that at least half of donor missions are undertaken jointly. Procedures Donors should simplify and harmonize bureaucratic processes and procedures for project management; they should establish a working group for this purpose, with Afghan government and NGO

Technical assistance Donors should ensure that technical assistance (TA) is cost-effective, demanddriven, coordinated, aligned with national priorities, and focused on capacity building national staff. Pooled funds should be established by donors to oversee the provision of TA to specific ministries.

Contractors Donors should only use contractors who have a record of efficiency, and avoid multiple layers of sub-contracting. They should agree common rules or principles for contracting and tendering.

Provincial Reconstruction Teams PRTs must enhance the quality and impact of their assistance, ensure it is aligned with official national or local priorities and coordinate fully with state institutions. They should adhere to their mandate to facilitate the development of a stable and secure environment, and, in line with their interim status, they should be downscaled, with closure plans for those in comparatively secure areas. Donor funds should be re-routed from PRTs to local and national government, such as through the NSP.

Date of original publication: March 2008