Afghanistan: NGOs baking aid cake, eating it

The National Business Review (New Zealand) / April 8, 2005

So-called NGOs -- non-governmental organisations that range from charities to "not-for-profit" infrastructure providers -- are ballooning in Afghanistan, raising fears that they are consuming far more of aid budgets than they should, while delivering far less than they promise.

In recent days, several of the country's top leaders -- and its legislature -- have all started talking tough about the issue.

According to government figures released last week, only 23 per cent of several billion dollars sent for international assistance is directly administered by the Afghan government, with the balance in the hands of humanitarian aid agencies or private contractors.

That cash tap has seen the number of NGOs in the country balloon from a few hundred three years ago to about 2,400, according to the World Bank.

And yet there has been precious little bang for all those bucks, leading to widespread belief that the NGOs are spending too much for too little -- and engaging in corrupt practices along the way.

The problem is so pervasive that Afghan President Hamid Karzai and his senior officials are asking international aid donors to switch targets and hand the money directly over to the government.

The World Bank reported this week that last week the Afghan cabinet had approved a law that barring NGOs from bidding for government contracts. The NGOs that would have been dispossessed by the new law raised hell and President Karzai agreed to review it but said the law was the product of "serious concern…that some NGOs were responsible for widespread corruption and misuse of public funds".

NGO representatives said the problem was down to nomenclature and that the government has confused entrepreneurial organisations registering themselves disingenuously as non-profit, with legitimate NGOs.

But it is not clear that the new government could absorb and channel all the relief money bound for Afghanistan any more effectively than the NGOs.

Praful Patel, president of the World Bank for South Asia, said lack of skills within Afghan ministries and departments was "worrying." "Indeed, there is some evidence from the health sector in Afghanistan that contracting out delivery of basic health services to NGOs produces accountability and equitable service provisions at competitive costs," Mr Patel said.

Not surprisingly, UN special representative Jean Arnault also claimed aid agencies had a vital role to play.

Meanwhile, the country's per capita GDP remains at about $US200 a year, the World Bank said, despite President Karzai's election promise to see it reach $US500 per year within five years. The CIA country brief gives a more optimistic view of the population's personal wealth, saying that based on 2003 data the per capita purchasing power parity was $US.700

In part low personal income figures -- and regardless of source, they are all low -- can be put down to the focus of relief on enablement issues such as security and basic humanitarian problems.

Turning the well known proverb on its head, donors have been providing fish rather than fish hooks.

But aid is beginning to turn to larger, wealth generating projects such as building core infrastructure and nurturing the nascent private sector -- agendas NGOs and the UN are not well prepared to advance.

The US, already the largest aid sponsor to Afghanistan, appears undistressed by the dearth of developments to date and said it would boost donations from $US2.5 billion in 2004 to $US5 billion this year, although some of that money would require Congressional approval.

Much of the new aid will go, however, for those larger scope projects that enable the generation of income, and even wealth.

Although a minor player in the Afghanistan development effort, New Zealand maintains a Provincial Reconstruction Team (PRT) based in Bamian, which has cost the government more than $80 million (NZ) over three years, according to Minister of Defence Mark Burton.

Mr Burton was at the aid conference in Afghanistan this week and met with President Karzai, senior members of his cabinet, UN Secretary General Special Representative Jean Arnault, the Commander Combined Forces - Afghanistan Lieutenant General Barno, NATO Senior Representative in Afghanistan Hikmet Cetin and Major General Kamiya.

He affirmed New Zealand's on-going commitment to the effort -- which has already seen $8 million (NZ) expended and another $7 million (NZ) pumped into the pipeline, and said it had and would continue to focus on "security and humanitarian interventions."

Like many other governments, New Zealand's aid funding is dispersed through NGOs and UN agencies, as well as its own PRT.

By at least some measures, all that aid may be doing some good in spite of rumoured profiteering and waste.

Afghanistan's economic growth hit 29 per cent last year, for example -- but like many things, metrics can be deceiving. In this case, they mask the fact that the gains were from a starting point that was almost unimaginably low.

Just giving every Afghan citizen $US100 would raise the country's per capita GDP by 50 per cent, based on World Bank estimates of per capita GDP -- and, with 28.5 million people, that equates to last year's US aid contribution.