Cost-benefit analysis: ‘Foreign aid not the problem’

‘Pakistan to become the largest recipient of UK aid by next year’.

LAHORE:

Speakers at a discussion about the costs and benefits of foreign aid on Friday agreed that simply spending foreign aid instead of using it to develop strong institutions reflected badly on Pakistan. They also said it was high time Pakistan straightened its act.

The discussion was organised by the Lahore University of Management Sciences (Lums), in collaboration with the American Pakistan Foundation and the British Pakistan Foundation.

“Would you help an addict who refuses to help himself?” asked Shahid Hafiz Kardar, a former State Bank of Pakistan governor, who argued that Pakistan had failed to come out of the economic crisis because of a lack of will on its part.

He was of the view that it was the ‘on-off’ pattern of foreign assistance that had made Pakistanis suspicious of the donor’s intentions. While it had helped ease financial difficulties, Kardar said, it had not aided reform, “An unintentional consequence of foreign aid is that it has delayed reform.”

Concerned about the current state of affairs, Kardar said no country in the world had “spare money” to fund a country of 180 million that lacked the will to reform itself. “We need clarity and so do our donors,” he said.

Adam Thomson, the High Commissioner of UK to Pakistan, talked about the “perception of dependence” that foreign aid creates in Pakistan. “[It] should be worried about less and enjoyed more,” said Thomson. The high commissioner said the UK wanted to see Pakistan progress, adding that by next year Pakistan would be the largest receiver of UK’s foreign aid. He then talked about the kind of projects the United Kingdom is providing funds for with the majority relating to maternal health care and primary education.

He said that while there was concern regarding situation of human rights, the aid from UK was “not conditional” and did not seek “political alignment”. He dismissed the “good aid-bad aid” concept. Thomson added that accountability of programmes using foreign funds was critical because the donor governments were “answerable to their taxpayers back home”.

USAID Pakistan’s mission director Dr Andrew Sisson told participants that in the past few years the USAID had disbursed Rs1.3 billion in humanitarian aid. Sisson did not specify the years in which the aid had been given.

Dr Sisson said that the USAID collaborated with the Higher Education Commission often in providing scholarships and building universities across the country. He said the USAID had provided funds for the Lahore University of Management and Sciences and the University of Karachi’s Institute of Business Administration, Karachi.

He then listed the areas that the USAID has now identified as priority areas. These included energy, economic growth, education, health, gender equity and good governance.

He said that though there was some controversy “back home” about aid given by the US, Americans wanted to help others in case of “an emergency”, like natural calamities. He described the projects completed in collaboration with the civil society as “a source of great pride for USAID”.

When the UK high commissioner mentioned that the UK is considering funding the federal government’s Benazir Income Support Programme, the announcement was resented by many in the audience. At this, Thomson said that if Britain decided to fund the programme, it wouldn’t do so to gain political support from the ‘people in power’. The UK government, he said, had reservations about the name of the programme.

Dr Ijaz Nabi, dean of the School of Humanities and Social Sciences, said that Pakistan could face “economic chaos” if foreign aid was abruptly withdrawn. He called domestic debt as “the bigger threat” to the economy. International loans, he said, were obtained on “easier terms”.

Dr Nabi lamented that a “Pakistani narrative of foreign aid” had not emerged. “The time has come for us to straighten our act and assist the donors in helping us,” Dr Nabi said.

Dr Sohail Naqvi, the Higher Education Commission executive director, said that in the absence of an action plan, aid failed to play the role of a ‘force multiplier’ in social reform. Dr Naqvi urged the need for appreciation for foreign donors. He said that problems arise only when aid is mixed with politics. “Wasting aid reflects on the [recepient’s] priorities.”

Published in The Express Tribune, April 7^th, 2012.