The OECD should give up control of the aid agenda

New governance structures for aid, and greater input from recipient countries, are required for a very different world

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Bangladeshi commuters wait for public transport in rush hour during Ramadan. Aid-recipient countries should have more control over the aid agenda. Photograph: Munir Uz Zaman/AFP/Getty Images

The decline of western power does not mean the decline of the west. The former is not only a certainty; it is already a reality. Power is relative, so the rise of power elsewhere automatically diminishes the power of others. But it is how the west reacts to these new realities that will determine whether it suffers actual decline or responds to this geopolitical repositioning in such a way as to enhance its own interests and those of others.

The west has two options. Either it leads the process, whereby power and responsibility in global governance become more democratic, encouraging all countries to be brought in on a more equal footing (the G20 being a step in this direction). Or it resists (for example on the issue of World Bank and IMF governance), thus squandering long-term influence over the kind of changes that are anyway taking place.

One aspect of the west's dominance has been its control of the aidagenda. The Organisation for Economic Co-operation and Development (OECD) was set up in 1961 as a club of rich, mostly western, nations. It soon established a development assistance committee (DAC) to manage aid flows to poor countries, often ex-colonies. Aid is not just charity – it has been and remains an integral part of foreign policy, shoring up political support and economic opportunities in other parts of the world. That is why so far it has sat fairly comfortably in an OECD committee.

The OECD-DAC has been integral in discussions about how aid can be best used to promote development, not just the interests of donors. Arguably the most important role it has played in the last 10 years or so has been to transform pressure from civil society and recipient countries for "better aid" based on recipient-country control (or "ownership") into a fairly successful international bureaucratic agenda. The Paris Declaration on Aid Effectiveness (pdf) is not just a good set of principles, it is also a technocratic process of evaluation and monitoring that is leading to some important (if slow) changes.

The historic imbalances of power remain the same, and will do so as long as countries need aid as a fundamental part of their economies, rather than as an optional and useful extra source of funds. But the declaration and accompanying process have lent power to the countries insisting that donors support national priorities and systems, and to donors and civil society groups pressuring recipient countries to focus more on the poorest. This should mean that aid has been used more effectively for poverty reduction.

So the OECD team responsible for this area of work should be proud of what they have achieved to date. How much harder it will be, then, to relinquish control of this process. But that is the next crucial step if the Paris agenda, and the DAC itself, is to remain useful and legitimate. Why? There are three reasons.

First, non-OECD countries, such as China, India, South Africa, Brazil and Venezuela, are increasing in importance every year as financial supporters of poorer or smaller countries. DAC aid is about $125bn a year compared with non-DAC aid estimated at between $30bn and $60bn. It is nonsensical for a set of principles to cover part of the aid a country receives but not the rest. The OECD's instinct is to try to integrate these countries into the Paris process. But however welcoming the OECD tries to be, these new powers don't want to be part of an old world club – and they don't need to. They will increasingly be setting their own rules.

Second, the OECD's way of giving aid is outdated. That is partly why the Paris process got started in the first place. It is founded on a post-colonial client relationship that is being broken apart not only by the large new donors, but by the proliferation of smaller-scale south-south co-operation that is demonstrating new ways for countries to support one another's development. Not only are the terms "donor" and "recipient" anachronistic, but even the word "aid" itself needs to be shelved – all countries benefit from development co-operation, so a word implying charity is misleading.

And third, the new era of aid effectiveness will be ever more recipient-led. The Paris process has supported attempts begun by civil society in the 1980s to insist that power over aid strategy and spending be increasingly in the hands of recipient countries. The OECD has overseen the growth of a broad-based working party on aid effectiveness that brings countries together in a more or less balanced way to discuss the policy and process.

As we approach the High Level Forum on aid effectiveness in South Korea in November, all the talk is of leadership from recipient countries. Indeed, probably the most important statistic about the Paris agenda to date is that while only 34 recipient countries took part in the initial monitoring survey in 2005, that number rose to 55 for the second survey in 2007, and in the current survey, to be published later this year, 91 countries are expected to return data.

But if the OECD can find me one of those 91 recipient country government that believes the DAC should remain the central cog in this process, I would be surprised. New governance structures are required for a very different world.

The OECD needs to make a bold statement clearly relinquishing overall co-ordination responsibilities of the aid effectiveness agenda and offering to play a different, although still significant, role in a new way of managing aid effectiveness at a global level. By acting against its instincts in this way, it would ironically secure its influence and vital contribution to the gradual evolution of the role of publicly sourced development finance.

Which of these two Chinese is more qualified to be United Nation's Chief Economist at UN-DESA

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UN Scandal: InnercityPress publishes French Secret Documents showing France and UN planned since 2005 to destabilize Cote d'Ivoire

French government memos obtained by Inner City Press reflect, as far back as 2005, France and the UN wanted to “put in place a plan of action to destablize Laurent Gbagbo.” See document here, under the rubric “From New York: Departure of Gbagbo.”

The French were monitoring, to say the least, plans for a coup d'etat against Gbagbo, that would result in Gbagbo's “displacement” outside of Cote d'Ivoire. See documenthere.

France's internal reporting on military forces and leaders in Cote d'Ivoire is here.

Magic With U.S. Money for the United Nations

By Claudia Rosett

Click here for story on FORBES.COM

Welcome to the latest Magical Mystery Tour of American funding for theUnited Nations. Today’s featured mystery is, how to explain the missing $2.8 billion?

Thursday morning, President Barack Obama’s ambassador to the U.N., Susan Rice, testified before the House Committee on Foreign Affairs, on “United Nations Budget and Policy.” It was a long and lively session, full of questions about the U.N.’s despot-friendly, anti-American, anti-Semitic and financially opaque culture. But let us focus on the money, which was the core reason for the hearing. The U.S. is by far the biggest donor to the U.N., bankrolling 22% of the U.N.’s core budget, and roughly one-quarter of its far larger and murkier system-wide spending (estimated at somewhere upward of $25 billion). Rice was arguing the Obama line: That while the U.N. may be “far from perfect,” the only ways of improving it depend on an uninterrupted flow of billions in U.S. funding. Some members of congress, including Committee Chair Ileana Ros-Lehtinen (R-FL), were asking if it wouldn’t be better to try to change the U.N.’s entitlement mentality toward those U.S. tax dollars, and pursue a policy of “reform first, pay later.”

Looming behind all this is the question of how much money everyone is actually talking about. A simple question? Not a chance. This is the labyrinthine U.N., meshing with the mega-bureaucracy of hope-and-change America. Where these two meet and engage, details of the landscape tend to get lost in a miasma of cash.

But Rep. Dana Rohrabacher (R-CA) made a valiant attempt to extract some genuine financial specifics from the witness. He asked Ambassador Rice if it’s correct that the U.S. yearly contribution to the U.N. is $6.3 billion. As it happens, that was not a random number. Last June, the Obama administration sent a required report to Congress on U.S. funding for the U.N., covering fiscal year 2009. This report listed total U.S. contributions to the U.N., dispensed not only via the State Department, but via 18 other U.S. departments and agencies, ranging from the Department of Agriculture, to NASA, to the Peace Corps, Postal Service and Treasury. The grand total came to a hefty $6.3 billion. Or, to be more precise, $6,347,415,000.

That is the number that Rohrabacher was asking Rice about — the grand total of U.S. annual largesse to the UN. Since fiscal 2009, with the UN’s soaring budgets and emergency appeals, that number has quite likely gotten even bigger than when Obama’s budget office produced its most recent, 2009 figure. The U.N.’s secretary-general,Ban Ki-Moon, is now talking about “austerity” in the form of 3% cuts in the moving target of some of the U.N.’s escalating spending, but genuine austerity has yet to materialize.

Rice did not have an instant answer for Rohrabacher. She shuffled through her papers and gave a series of partial figures. Rohrabacher asked, “What does that all add up to?” Rice, apparently stalled briefly on the arithmetic, said “I can get you that in a second.” After some more back-and-forth on U.S. policy, Rohrabacher returned to the matter of money, this time asking: “How much has the budget of the United Nations grown over the past 10 years?”

The answer to that question would have to take into account, as theHeritage Foundation’s Brett Schaefer testified to the same House committee in January, that the UN’s regular budget over the past decade has more than doubled, the peacekeeping budget has more than tripled, and U.S. contributions to these, plus a host of other U.N. activities, have grown accordingly. But Rice did not address the question. Instead, she produced a figure for what she said the administration is now requesting for the United Nations.

The number she gave the House committee was $3.539 billion. That’s a lot of money, or at least so it might appear to many of the U.S. taxpayers who earn it and then shell it out to the government. But it is well short of the $6.3 billion that the administration itself reported giving to the U.N. in fiscal 2009. It’s $2.808 billion less, to be exact.

What happened? Did the Obama administration lop $2.8 billion or more off its annual contributions to the UN, and simply forget to tell anybody? Did the UN not notice? Surely this should be news!

Or maybe not. Rice’s lowball $3.539 figure represents specific budget requests for just two U.S. accounts: the Contributions for International Peacekeeping Activities, and the Contributions to International Organizations account (which, as she noted, also includes funding for outfits such as the Organization of American States). This cipher of $3.5 billion is what the news reports picked up on, and it is now circulating as the sum of the Obama administration’s current plans for U.N. funding. That’s just wrong, As last year’s U.N. funding report lays out, the administration dispenses money to the U.N. through a far wider array of spigots. For instance, in fiscal 2009, the State Department dispensed $4.1 billion to the UN; that’s listed separately from the $1.7 billion dispensed via USAID. That in turn was distinct from the $245 million dispensed by the Department of Agriculture, or the $44 million dispensed by the Department of Labor, or the $54 million from the Department of Energy, or the $132 million from Health and Human Services. The list goes on. And though the lucre comes from different sectors of the administration, it’s all U.S. tax money. It all flows into the U.N. A couple of billion here, a couple of hundred million there, and pretty soon — as happened in fiscal 2009 — you’re talking about $6.3 billion. Or these days, possibly more?

Rohrabacher made one last-ditch attempt to pin down the real numbers, as time ran out on the committee clock, asking Rice: “And for all U.N. activities, we’re talking about $3.5 [billion]?

“That’s what I’ve just said,” replied Rice, thus magicking into the debate a subtotal oddly short of the 2009 genuine $6.3 billion that Rohrabacher had initially inquired about.

What’s the real total of U.S. tax dollars the administration is now planning to pour into the U.N.? It’s a very good bet that it’s a figure much larger than the $3.539 that Rice mentioned in her testimony. Culling the real total out of the current budget fracas is something theOffice of Management and Budget should eventually get around to. But Rice never mentioned that. To get the grand total, or even an educated guess, it is apparently not enough that lawmakers ask America’s envoy to the U.N. for the information, though her own legation’s budget includes funding for such responsibilities as keeping an eye on U.N. getting and spending.

If members of Congress want full disclosure, it looks like they either need to summon someone from the trenches of the budget office, and spell out in big letters that they want the real numbers. Or they’ll have to toil through testimony from whatever agglomeration of executive branch departments are now proposing to pour more money into Turtle Bay. These are serious matters, given the UN’s record of spending dollars not only on blankets and bed nets, but on sky-high senior staff salaries, corruption-riddled procurement contracts, racist conferences on “racism,” projects such as the rankly pro-terrorist, anti-Israel Goldstone report, and agency governing boards populated by the likes of Cuba, China and Iran. If Congress is seeking accountability for what the UN does with the American money it gets, one of the big questions that deserves an honest answer is, how much U.S. money is the U.N. actually getting?

Ms. Rosett is a journalist-in-residence with the Foundation for Defense of Democracies, and heads its Investigative Reporting Project.

Tibaijuka: I'm not a dictator

The Citizen -Tanzania

April 11, 2011

By Tom Mosoba, The Weekend News Editor

Dar es Salaam. Lands, Housing and Human Settlement Development minister Anna Tibaijuka has strongly defended her record at the helm of United Nations Human Settlements Programme (UN-Habitat) in Nairobi, rejecting allegations of lack of transparency and mismanagement.

Prof Tibaijuka told The Citizen on Sunday in an exclusive interview early in the week that she took great exception to the suggestion that she was a poor or rigid manager, insensitive or even corrupt when she headed the UN agency, which she left to return home and run for Parliament.

The minister rejected the findings of an audit in February, by the United Kingdom’s Department for International Development (DFID) that could badly dent her image as one of the only two Tanzanian women to have risen to the top in the UN system.

Prof Tibaijuka was the highest-ranking woman, at the level of Under Secretary-General, before Dr Asha-Rose Migiro, who was the Tanzanian Foreign minister, was appointed in February 2007, as Deputy Secretary General. It is highest position a woman has ever held in the world body.

In defending her 10-year record at the helm of UN-Habitat, Prof Tibaijuka dismissed some of the findings of the DFID audit that led to a decision by the UK Government to withhold up to 1million pounds sterling (Sh2.4 billion) in core annual funding to the Nairobi-based agency.

“I take great exception to the insinuations contained in the audit because it is prejudicial and does not reflect the true position,” said the minister, when contacted for comment.

Prof Tibaijuka, who is highly regarded internationally and locally, is serving her first five-year term as the MP for Muleba South in Kagera Region, and was appointed to the Cabinet by President Jakaya Kikwete, who handed a docket aptly fitting her credentials.

Some analysts were reported in foreign media, as warning that the withdrawal of funding to UN-Habitat would not only severely hamper its programmes and projects, but also dent Prof Tibaijuka’s image. The Tanzanian has prided herself on raising the profile of the UN agency and helping to increase contributions to the organisation threefold during her time.

They noted that the DFID review was conducted while she was still in office, and, therefore, any shortcomings would be directly attributed to her leadership and management style. Some critics and insiders claim she was authoritarian and secretive.

A senior UN-Habitat official was quoted as saying that the current problems were caused by “poor leadership.” He added: “One of the reasons UN-Habitat and other agencies continue performing poorly is that they do not allow themselves to be audited externally. This creates a lot of room for corruption.”

The DFID audit was ordered by the British Secretary of State for International Development, Mr Andrew Mitchell, as part of the UK’s review of its funding to 43 multilateral organisations, as the Prime Minister David Cameron-led coalition embarked on serious efforts to curb expenditure.

The audit was also critical of several other UN agencies, whose funding it scaled down or withdrew altogether. They include the UN Industrial Development Organisation (Unido), the International Labour Organisation (ILO) and the UN International Strategy for Disaster Reduction.

According to DFID’s findings, many UN agencies and other multilaterals consistently fail to deliver results on the ground, partly because of lack of results-based management.

More than two-thirds of the multilaterals assessed were found to be weak in strategic and performance management. A significant number were said to be not sufficiently focused on reducing costs and cutting waste.

The report found that only nine of the 43 organisations offered “very good value for money”. They include Unicef, the Global Fund to Fights AIDS, TB and Malaria, and the Global Alliance for Vaccination and Immunisation (GAVI), all of which will receive increased British aid in future

That UN-Habitat scored “weak” and “very weak” ranking in almost all the yardsticks tested, was alarming enough for Prof Tibaijuka’s successor, Mr Joan Clos, to write to the UK to protest the poor rating and freeze of funding. He assumed office last October.

In a letter dated March 2, Mr Clos informed the UK Minister of State, Mr Alan Duncan, that he was disappointed, considering the crucial role that UN-Habitat plays in international development. He also pleaded for the rescinding of the decision to cut funding and pledged reforms to improve performance in line with the UK’s objectives.

UN-Habitat reportedly performed unsatisfactorily in strategic and performance management and cost and value consciousness. The review says that the agency has a poor record of institutional performance and transparency.

It states: “UN-Habitat does not operate under a presumption of disclosure. It provides some information on projects to the governing body, but does not publish full details on project performance.”

The DFID said the agency had not significantly contributed to the goal of improving slum dwellings.

But Prof Tibaijuka said it would be insincere to accuse her of poor leadership or corruption. “I worked tirelessly for the agency and for the improvement of the plight of poor urban dwellers,” she said, pointing out that she even won the prestigious 2009 Göteborg Award for Sustainable Development.

Recently, she was named by the Steering Committee of the Water Supply and Sanitation Collaborative Council (WSSCC), as its new chair to succeed Dr Roberto Lenton, whose second and final term ended last month.

“My record at the UN-Habita has seen the centre rise to a fully fledged UN office on the continent, while at the time of leaving office there was some $52 million (over Sh73 billion) in its accounts,” said Prof Tibaijuka.

The agency had made a mark that would continue to attract funding and support from more donors.

“There will be no proof to back up the audit claims of corruption or mismanagement. By withdrawing funding, the DFID has shown that it does not care for the urban poor and the role that housing could bring to the poor economies where we work,” Prof Tibaijuka told The Citizen on Sunday.

She added that the only plausible explanation for the move was that the DFID had removed urban housing from its core priorities, even in London.

The minister said the timing of the UK decision was also inappropriate “because it would have been logical that they support the incoming management instead of deserting them”.

http://thecitizen.co.tz/sunday-citizen/40-sunday-citizen-news/9845-tibaijuka-im-not-a-dictator.html

$6,347,415,000 and What It Bought

by Claudia Rosett @pajamasmedia.com

That’s the amount of money America gave to the United Nations in fiscal 2009, according to President Barack Obama’s White House budget office. What did it help pay for?

Why, lots of things. Among them, the General Assembly that elected Libya’s envoy as its 2009-2010 president, and molded the “reformed” Human Rights Council that brought us the now famous — make that infamous — Goldstone report on Gaza, hosted Iran’s President Mahmoud Ahmadinejad at the Durban Review conference in Geneva, and gave seats to Russia, China, Saudi Arabia, Cuba, Cameroon and Libya (before suspending Libya but now entertaining the candidacy of Syria).

Those American dollars helped maintain and service the grand General Assembly Hall which in September 2009 provided a global stage for Libya’s Muammar Gaddafi, Iran’s Ahmadinejad, Zimbabwe’s Robert Mugabe, Venezuela’s Hugo Chavez and their despotic brethren — and was pressed into service more recently as a theatrical venue for the celebrity-studded U.S. premiere of an Israel-trashing commercial movie. They helped provide tax-exempt “post-adjusted” take-home lucre topping U.S. congressional take-home pay for hundreds of UN senior officials who worked on such projects as jetting around the globe preparing for the December, 2009 climate bacchanal in Copenhagen. And they helped bankroll the activities of UN Secretary-General Ban Ki-Moon, who has been bragging up a UN financial “disclosure program” in which senior UN officials are not required to disclose anything, and who made a trip to Washington in the spring of 2009, during which he referred to America — by far the UN’s biggest donor – as “deadbeat.”

With reason, Congress is now looking at ways to try — yet again — to reform the UN, and require accountability and maybe even decency in how American tax dollars get spent there. This starts with getting a handle on how much money the U.S. actually provides and where the money goes. To that end, the House Committee on Foreign Affairs held a hearing this past Thursday, April 7, at which the sole witness was the person one might assume would know more than anyone else about U.S. dealings with the UN — Obama’s ambassador to the UN, Susan Rice. During that hearing, against the backdrop of America’s runaway budget and soaring debt, Rep. Dana Rohrabacher tried to get some straight answers about how much money the administration is now proposing to pour into the UN.

Somehow, in the course of answering that question, Rice came up not with a total, but with a subtotal that sounds oddly short — by a couple of billion — of what the U.S. has actually been spending. Has there been some dramatic cut in funding that neither the UN nor the U.S. has noticed? Or was there a disclosure malfunction of majestic proportions?… more in my column on “Magic With U.S. Money for the United Nations.

http://pajamasmedia.com/claudiarosett

Israel should topple Hamas: Lieberman

JERUSALEM — Israel should not settle for a truce with Hamas in Gaza, and should instead seek to topple the Islamist rulers of the coastal strip, Foreign Minister Avigdor Lieberman said on Monday.

"The goal that we have settled on, of seeking a return to calm, is a grave error because it will allow Hamas to reinforce along the lines of Hezbollah," Lieberman told public radio, referring to the Lebanese militia with which Israel fought a 2006 war.

"The objective must be to force Hamas out of power," said Lieberman, who heads the ultra-nationalist Yisrael Beitenu party.

www.google.com/hostednews/afp/article/ALeqM5ggOJkG2x-Z9j1Jn_DSlxE5fd6W8A?docId=CNG.490daf03504981722977bcaf5c8cc45c.5b1

The 'Business' of International Aid

What if Marriott paid hotel guests $50 per night, then bragged about its occupancy rates?

The Wall Street Journal

http://online.wsj.com/article/SB10001424052748704425804576220524034207558.html

April 11, 2011

By JONATHAN STARR

Mr. Starr is a former financial executive and co-founder and managing director of Abaarso Tech, based in the Maroodi Jeex region of Somaliland.

What if Marriott operated without any revenue, room-rate or other meaningful customer-usage data from its individual hotels? Suppose it remitted money to cover salaries and other expenses, without knowing if any of it was producing a product for which customers were willing to pay. Imagine further that Marriott asked only for self-graded quarterly "report cards" from its managers, and that, as its only act of supervision, it simply audited its hotels' expenditures.

You don't need to run a Fortune 500 company to know how quickly such a system would run amok. Absent accountability, managers and staff would have no incentive to provide a reasonable service. They'd have to be somewhat honorable to even bother showing up to work. In short order we'd find employees buying $10,000 worth of furniture for $20,000 and splitting the difference with the vendor. Come audit time: $20,000 expense item, $20,000 vendor receipt, "check and check, all looks clean here."

If you think that no business would operate this way, then you're evidently not familiar with the "business" of international aid. International nongovernment organizations get their funding from governments and other donors, not the men, women and children they are supposed to be serving. Without revenue or other quality customer-satisfaction metrics, NGO executives and donors have no way of measuring whether employees on the ground are providing a product of value to their impoverished "customers."

They then take a bad situation and make it completely unworkable by routinely paying beneficiaries to avail themselves of NGO services. Having bought their customers, NGOs send home reports about the great attendance that led to successfully training X-number of people on fishing/farming/water/waste/health. It would be as if Marriott paid guests $50 per night to stay in its hotels and then bragged about its occupancy rates. If the poorest people in the world require payment to take your services, what does that say about your services?

Because NGOs lack the ultimate customer-feedback metric of revenue, one would expect them to achieve accountability through oversight by executives on the ground with operations in a single geographic market. Sticking to one geographic market makes sense on many levels since there are no economy-of-scale advantages to being a multinational NGO (no bulk purchases, no manufacturing, no branding advantage) and all kinds of diseconomies of scale (foremost the lack of accountability). So why do countless NGOs operate as multinationals in dozens of countries with their executives sited in Washington, New York, London, Addis Ababa, Nairobi and Geneva? The obvious answer is that like everyone else, these executives respond to incentives, and what works on the ground isn't what pays their salaries. John Smith, NGO administrator, maximizes his personal value by going multinational while staying proximate to his donors, never mind the damage that model inflicts on the poor communities he purports to serve.

It doesn't have to be like this.

A few years ago I quit a career in finance and dedicated 100% of my time to improving education in Somaliland, my uncle's home country. Happily ignorant of the aid industry's modus operandi, I designed the Somaliland non-profit organization, Abaarso Tech, to be run like a business with the Somali people as both shareholders and customers.

I began with the precept that our employees' principal form of compensation would be pride in a worthy deed well done. Not only is generous pay unnecessary for success in development work, it is counterproductive. With low accountability, highly compensated individuals will choose the path of longest-term funding over good solutions (I suspect one case in point are NGOs in Haiti, which deploy money notoriously slowly). So I donated a large portion of my savings and promised not to take any salary. Having led by example, I was able to recruit like-minded individuals also willing to make financial sacrifices for equity in something special.

Turn a deaf ear to the aid agencies that tell you they cannot recruit quality employees without compensation packages that are far larger than what they could make in the for-profit world; the pay is essentially tax-free and NGOs already cover virtually everything, including room and board and all kinds of paid vacations. In Abaarso Tech's short history our teachers have included Ivy League graduates, a Ph.D. in physics, a Ph.D. in chemistry and nearly 20 well-trained, native English-speaking American, Canadian or British teachers. Our $3,000 annual salary basically pays interest on their college loans with enough left over for the occasional can of Pringles. Our staff works 70-hour weeks because they are motivated by the mission's goal and feel ownership for its success.

Managing a single geographic market with executives on the ground, highly efficient costs and properly motivated employees was a good start. But our nonprofit still needed to offer programs that the Somali people would value. Somaliland is one of the poorest nations in the world, but that doesn't mean Somalis won't scrape together what they have to buy something good. Just 20 months after landing here, Abaarso Tech has 100 students in its secondary boarding school, 100 in adult English classes, 20 in the undergraduate School of Finance, 50 in primary-school tutoring and 30 in the graduate business courses. Almost all of those 300 enrollees find a way to pay something towards their education. One of our top boarding-school students cannot afford much, but his family still brings us a bag of fruit each term as their way of saying "thank you." On the other extreme, we have a couple of wealthy British Somalis who left U.K. private school to join our boarding school at a tuition of $5,000 a year. Our program is a living repudiation of the notion that development beneficiaries need be paid to accept the services of their benefactors. Today, our program's net operating loss is approximately equivalent to the compensation package of a typical NGO worker.

Which brings me to a second question for the taxpayers and donors who, over the past few years, have provided hundreds of millions of dollars of aid to Somaliland: Even accepting that our boarding school and finance program would have been too sophisticated for a typical development agency, why, after spending all that money and far more time on the ground, has no other NGO thought to provide native English-speaking teachers for adult English courses? We just started the program in January, charging $200 for three months of classes, and our phones won't stop ringing with Somalis who want to pay to learn proper English. This isn't brain surgery; it is just listening to what the customers are asking for and finding a way to provide it at a reasonable cost. It is exactly what Marriott does every day.

Somalis are good people who could use well-spent aid money to rebuild their country from an awful civil war (which was in part caused and funded by Western food aid—see Michael Maren's 1997 book, "The Road to Hell"). However, until we take the perverse incentives out of the international NGO business, and only provide funding to those organizations whose executives are on the ground overseeing the otherwise unmanageable, the bulk of the money spent on international aid will, at best, be wasted.

http://online.wsj.com/article/SB10001424052748704425804576220524034207558.html

Carbon credits run aground on UN bureaucracy

South China Morning Post

Joe Cochrane in Jakarta

5 April 2011

Every day, Joseph Hwang leaves his home in Jakarta and travels to one of the filthiest places in Indonesia.

Off a highway in West Java, and up a winding bumpy two-lane road past rice fields and a shanty town of garbage scavengers, lies the Sumur Batu landfill. The 10-hectare site is the final resting place for about 500 tonnes of garbage hauled daily from Bekasi, a city of 2 million people south of Jakarta. To call it a landfill is a stretch: Sumur Batu consists of mountains of garbage, the older ones overgrown with grass and weeds, the fresh ones emitting a vomit-inducing reek.

Local scavengers including children jump onto the trucks as they approach Hill Number 4 and fight each other for plastic and metal they collect for a small recycling operation that pays them the equivalent of US$35 a month. In 2006, a garbage landslide killed 24 people.

"It's a dirty and dangerous place," says Hwang, a British citizen of Chinese descent. But Hwang also knows there is proverbial gold in these hills, which is why, as the production manager of Gikoko Kogyo Indonesia, an engineering and manufacturing company, he chooses such an unsavoury workplace.

Beneath the garbage hills are countless tonnes of methane, a greenhouse gas 20 times more effective in trapping heat in the atmosphere than carbon dioxide. Bacteria that eat the organic refuse create the methane, which, despite being extremely hazardous to the environment, is a potential energy source.

Gikoko runs a methane flaring plant that sucks more than 17,000 tonnes of gas out of the hills per day using a web of hoses and burns it.

There is an added bonus: the plant can use the methane it burns to generate up to 2 megawatts of power, which Gikoko plans to sell to the state power utility Perusahaan Listrik Negara. Hwang's company will also provide lighting to the landfill as well as sorting equipment to make the scavengers' jobs safer and more efficient.

"This is a good example of how CDM can contribute to sustainable development," he said, referring to the Kyoto Protocol's Clean Development Mechanism, which allows countries to earn carbon credits through cutting emissions. These credits can then be sold to other countries or companies to help them meet emission reduction targets.

However, Hwang's story is not totally a happy one. His company has been waiting two years for United Nations-appointed auditors to sign off on Gikoko's flaring operation so it can begin selling its certified emission reduction credits to European Union governments. The process is only supposed to take six months.

"It's a long process and frustrating," Hwang said. "There are a lot of obstacles, problems and difficulties."

And Gikoko is not the only clean energy company stuck in limbo. The snail's pace of the UN verification process is a persistent problem globally, according to sector players, who say the much-touted carbon credit scheme is less of a godsend than is fashionable to admit right now.

"Globally, the verification process is an impediment for any kind of carbon reduction programme," said Agnes Safford, co-founder of Greenworks Asia, which does carbon financing. "There is no commercial sense over at the UN Framework Convention on Climate Change.

"They get hung up on little things like checking boxing. The whole thing is bureaucratically constipated. I think carbon credits are a great concept, but they don't work because of the whole system that's been put in place."

A running joke among carbon credit players is that CDM actually stands for "complicated, difficult mechanism".

But it is no laughing matter for Hwang. His company has received US$1.5 million in loans from the World Bank and Asian Development Bank, and has not been able to sell a single credit. Gikoko, which has flaring projects at landfills in Palembang, South Sumatra and Makassar, South Sulawesi, expects to produce 40,000 tonnes worth of carbon credits a year from the Bekasi landfill once it is certified by UN-appointed auditors.

And Gikoko cannot begin earning revenue by selling electricity now because it would have to submit an entirely new application to the UN, which could take another two years.

Hwang acknowledged that the company is having cash flow problems. "Everyone is under pressure," he said. "I'm sure the UN is under pressure to go faster."

Ina Binari Pranoto, who works in the environmental unit at the World Bank in Jakarta, said the UN-backed carbon credit scheme was not as simple as people might think.

"If they are not giving the certification, then it won't move. Then they won't issue the CER [certified emission reduction], the certification for the credit," she said, "and then the buyer won't pay for the credits."

Gikoko also has problems closer to home, namely getting the Indonesian government and Bekasi administration to practise better landfill management. "It's a fight against time," Hwang said. "If they don't move quickly, there will be less gas from which to create credits and to fight global warming."

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Foreign donors block aid for Malawi; Questions over Scottish cash after African nation found to be squandering money.

By Mark Macaskill and Mabvuto Banda

The Sunday Times

April 3, 2011

THE UK government withheld £500,000 of aid to Malawi after an audit found large amounts of taxpayers' money had been squandered in the povertystricken country.

Officials at the Department for International Development (DFID) decided to punish the Malawi government for its failure to ensure that best value for money was achieved when spending British aid.

A grant awarded in January was reduced by £500,000 after a detailed investigation by DFID identified examples of "poor procurement" by the African nation.

Sources close to DFID said auditors felt officials in Malawi did not achieve best value for money when buying goods such as hospital equipment, drugs and stationery.

The disclosure will raise questions over how efficiently £13m of aid awarded to Malawi since 2005 by the Scottish government has been spent. In total, about £30m has been handed over in the last six years by a range of Scottish individuals and organisations, including schools, charities and churches.

"Our detailed audit found no evidence of fraud but did find some areas of poor procurement," a DFID spokesman said last week.

"The government of Malawi, along with other donors, has now implemented measures to ensure the situation is not repeated. The UK government is committed to ensuring that we get maximum impact from taxpayers' money, and where we find poor performance we will take action."

There is mounting international concern over human rights abuses and corruption in Malawi.

International donors grouped under the Common Approach to Budgetary Support, including Britain, Germany and Norway, have only disbursed £60m of the £95m slated for Malawi this year.

The money has been withheld amid concerns over a new media law that allows ministers in Malawi to ban publications deemed "contrary to the public interest", as well as concerns over a ban on public demonstrations and same-sex marriages.

In January, the US government withheld a £200m grant to rehabilitate Malawi's energy sector, demanding that it respects the rights of minorities and that a media law allowing ministers to ban publications deemed "contrary to the public interest" is repealed.

Last month, it emerged that plans by Madonna, the pop singer, to build an academy in Malawi to educate young girls had been abandoned.

An audit claimed the management team employed to build the school spent a big chunk of £2.4m on expensive architects, large salaries and a private chauffeur and golf course membership for the school's director.

Eight charity workers are suing the pop icon for unfair dismissal and non-payment of benefits.

Opposition politicians in Malawi have also reacted angrily after it emerged that the wife of Binguwa Mutharika, the Malawian president, enjoys a substantial salary as the country's ambassador for safe motherhood.

The role was previously held by one of Mutharika's ministers but did not attract special remuneration.

Leaked documents reveal that Callista Mutharika is paid the equivalent of £4,500 a month for the position, about double that paid to cabinet ministers.

"This is unprecedented because in our history no first lady has ever been put on a payroll for doing charity work," said John Tembo, president of the Malawi Congress Party, the country's main opposition party.

"The money that government is now paying the first lady could go a long way to saving the lives of many women dying in our hospitals from preventable pregnancy complications."

Hetherwick Ntaba, a spokesman for Mutharika, said the first lady was justified in getting paid for her work to improve the lives of vulnerable women.

"What she is doing is work and therefore she has to get remuneration for that. There is nothing wrong in the president putting the first lady on the payroll for her work."

A spokeswoman for the Scottish government, said: "Scottish government funds go directly to Scottish organisations who have demonstrated that they have the relevant skills, capacity and expertise to deliver services on the ground to the people of Malawi. Funding does not go to the Malawian government. Rigorous monitoring is in place and shows that funding is having a positive impact on the lives of Malawians."

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