Volatility in Aid Hampers Development

Not too long ago I was living in a large Southeast Asian city. There I had a chance to get to know "Supri" (name is changed to protect his privacy). Supri was a small time furniture carpenter with a very inconsistent customer base. We were new to the city and needed some furniture crafted. After looking at some photographs of his work, we decided to order some basic furniture pieces. In the midst of the negotiations, Supri asked for money in advance to help pay for his tools. It was confusing to me that a carpenter was lacking the tools required for his trade. But it had been a while since his previous order of furniture and he had to sell his tools to feed his family. As a result, each time he secures an infrequent furniture order, he has to start at square one, thus raising the cost of his products. This inconsistency was detrimental to his business and ultimately the welfare of his family.

In like manner, when a rural clinic in a back corner of a developing nation receives inconsistent funding, then it cannot serve the community from one year to the next. In the first year a sparkly brand new clinic is built with a fresh burst of donor aid. The new medical equipment gleams and fully salaried medical doctors and staff enthusiastically seek to bring medical attention where it is desperately needed. And when funding fails the next year, the doctors leave, nursing staff is laid off, regular maintenance suffers, and necessary medical supplies are not in stock. Even more detrimental is that the bright hopeful vision of this clinic dwindles into despair. Standards of medical care drop severely which impairs the ability to offer adequate medical services. In the off chance that there is a rise in donor aid in the third year and some of that money is allocated for the clinic, it must pretty much start from scratch all over again. Only this time it is a lot harder, doctors don't want to return to that clinic. Administrators of the money don't want to buy expensive medical equipment only to watch rust when the donor aid begins to ebb again.

A recent article in Foreign Policy, "Development's Great Depression", reports that a recent study has shown that aid to developing nations has been extremely volatile. These fluctuations often follow the increasingly frequent stock market panics or simply donor's emotional whims. According to this article, the moodiest donors are the Americans. The result of these donor mood swings is that the inconsistent aid hurts local developing economies more than helps.

How is this overcome? An obvious point is that we need to continue giving even in the midst of financial stresses. But there is another problem that I would like to mention. There is a tendency with development agencies to do big money projects with short time frames. This serves two purposes: 1) big projects sound really impressive in their websites, news releases, and promotional material; 2) being finished with these big project and ready to move on to new big projects calls for new donations. In other words, much of what most development agencies do has more to do with their own institutional advancement than true development. True development would tackle the health needs of that rural community very differently, but it means the agency would need to be willing commit to a long-term plan with steady funding. Donors need to learn more about what is involved in seeing a community develop to the point that it can overcome problems on its own and they take ownership for continued development in the future. Development agencies talk a good game. They talk a lot about working with local communities, developing sustainability, and making long-term change, but rarely are these organizations actually committed to the slow process involved in true development.

Yes, donor fickleness can impact development. But if development agencies were committed to true development, we might actually see some communities, even nations, climb out of their "developing" status.