Many countries that receive aid are also rich in natural resources. They could use the money earned from the exploitation or conservation of these resources to reduce poverty. But poor governance and widespread corruption mean that too often the wealth generated from natural resources never reaches government accounts. Meanwhile, aid helps to plug the gap.
In 2008, donor countries gave US$44 billion in aid to the developing world – giving them considerable potential influence over the policies and practices of the governments dependent on their financial help.
This influence has in the past been used badly, to impose economic orthodoxies and force a free market agenda. Such conditionalities have rightly been discredited.
Yet, it is in donors’ interests to encourage recipient countries to use the money generated from natural resources to alleviate poverty so they can move towards reducing their dependence on aid. Too often though they sideline the role of natural resources in wealth-generation, and turn a blind-eye to corruption in government.
Global Witness believes that aid can work when given to a government that genuinely wants to achieve development. But if aid is paid into corrupt environments it can entrench poverty rather than relieving it. In the worst cases, the unconditional provision of donor aid has facilitated looting of natural resource revenues and other state funds by paying for services that the government is failing to provide.
Global Witness has documented variations of this phenomenon over the past fifteen years, in countries such as Cambodia, Uganda, and Sierra Leone and believes that it needs to change.
Aid donors must introduce a new model of results-based development aid, with specific and measurable indicators to ensure basic good governance, including in the natural resource sector. Only then will they be able to guarantee that taxpayer-funded development aid is genuinely being used to alleviate poverty.
- 22.10.2009 | Global Witness Submission to the European Commisson's Mid Term Review
- 05.02.2009 | Country for Sale
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