The developed world sends billions and trillions of dollars to foreign governments each year in the form of aid. In the past, these funds were often reinvested back into the donor country through trade and public procurement programs. Today’s world leaders are working to change that.
Why Reformation Is a Must
“Aid alone is not development. Development is helping nations to actually develop – moving from poverty to prosperity.” This principle is the force behind changes that countries like the US and the UK are making in their foreign aid programs. “Evidence demonstrates that our resources are best spent when we invest in strengthening the host country institutions so that they can stand on their own,” says USAid assistant administrator Susan Reichle. Government officials admit that change isn’t easy, especially as they meet opposition from their own citizens, but reformation is the solution to global sustainability.
Is Local Procurement the Answer?
The World Food Programme (WFP) is one agency working with donor countries in support of local procurement. Robin Lodge, head of resource mobilization for WFP Pakistan says, “If the food is already here, why should we bring it in?” Instead of using cash donations to buy the needed goods, funds are spent on transporting and distributing local products. Not only is this more cost-efficient for the agency and its donor countries, it also boosts the local economy.
The Department for International Development (DfID) in the UK is seeing similar success with an aid initiative to improve healthcare in Nigeria. With direction from Crown Agents, a London-based supply chain management firm, Nigerian governments improved healthcare as well as the local economy as a whole. “We used local contractors to fix roofs and install locks at the stores where drugs were kept, and we used local security companies to make sure the commodities were safe. The benefit to the Nigerian government is clear, because there’s more employment and therefore more taxes,” says Bryan Richmond with Crown Agents.
Local procurement programs are more beneficial to both donor countries and aid recipients, but the process isn’t easy. To make this work, governments must “really be willing to go out into the field and get your hands dirty,” according to Reichle.