Phantom Aid

In 2003 ActionAid, a well known UK based NGO called this Phantom Aid. Some years before the phenomenon had been described as “Black Hole Development” implying that no matter how much fund flow there was, the results would still be the same!

The amount of money being raised for international relief and development assistance is huge.

Fund raising in the aftermath of natural disaster is impressive, and shows how supportive many people are of development initiatives.

But sadly the relief and development industry is less than candid about how the resources are used and what is being accomplished.

Value destruction

The amount of money that gets spent and the amount of good that gets done seems to be more and more unrelated. Five decades or more of teaching MBA students about ways to maximize profit without teaching much about society has created a very large community of experts in profit maximization and hardly anyone that has a deep understanding of the social costs and value destruction associated with this economic paradigm. The problem, however, is worse, because the relief and development industry has many people well trained in various other disciplines, but with rather little training in this dimension of economics ... and even less trained in accountancy..

Focus on disbursement ... on activity

Metrics ought to serve the needs of society ... but the easy metric that has been important in the Breton Woods institutions and their development clones has been disbursement. While there are cases where disbursement is a useful proxy for results, this is not so when it is used to the exclusion of almost anything else. Disbursement serves as a fairly good proxy for activity ... but neither can stand in for result other than in a very controlled and stable environment. Development, when it is successful, is not stable, but progressing ... and the only metric worth having is a measure of the results.

Sovereignty ... anything goes

The idea of sovereignty that embraces the independence of a people from a foreign power is good ... but the use of the idea of sovereignty to allow a regime of “anything goes” is not. People are being treated abominably by governments and elite leaderships ... and external interference is constrained by the idea of sovereignty. At what point does doing right become the driver of meaningful action?

Weak financial controls

Weak financial controls has been endemic and as a result all sorts of resources have gone missing ... stolen money ... stolen inventory ... over invoicing ... under delivering. Embezzlement of all sorts ... petty corruption and grand corruption.

Everything is complex

In 2005, Save the Children UK highlighted the complex structure of the relief and development industry and the complicated fund flow from funding sources to those in need.

The following is the same graphic but presented to have a fund flow from left to right.

While Save the Children made a good point, the situation was really very much worse.

Save the Children identified 9 sets of organizations or structures between the funding and the community level households. There are many more in the real world. The structure on the donor side has hundreds of organizations ... with functions that overlap, work in parallel and work in series. The structure on the south side is also complex, maybe more so.