[World Bank - IMF] ...unsuited for Africa aid says U.N. agency

from Reuters Alert Net

By Laura MacInnis

GENEVA, Sept 21 (Reuters) - The World Bank and IMF are poorly suited to lead the flow of aid to Africa, which would be more effective if it was distributed in line with a nation's needs, not competing donor interests, a U.N. agency said.

The U.N. Trade and Development Agency (UNCTAD) proposed in a report released on Thursday that aid for Africa should be channelled through a United Nations-run fund, which would regularly release money to African governments, who would then have discretion on spending.

"Such an arrangement would replace the current chaotic system in which too many agencies, some bilateral, some multilateral, are pushing too many development projects that sometimes compete with each other, often don't match recipients' development goals, and are costly to administer," it said.

"There are also very clear signals that security concerns and energy politics are again shaping the policy debates on aid and development," the report said, citing a concentration of funds for "aid darlings" of strategic interest to big donors.

Africa has received more than $500 billion in foreign aid since 1980, and remains the poorest corner of the world despite possessing vast natural resources like oil, gold and diamonds.

UNCTAD said overhauling the way aid is distributed was vital to ensure that assistance to Africa -- including a doubling of aid promised last year by the Group of Eight rich nations -- makes a noticeable impact on development.

Aid flows are currently too splintered, unnecessarily restrict government policies, place huge reporting demands on recipients, and prioritise donor preferences over the needs of those getting the aid, the U.N. agency said.

Existing aid procedures are too focused on technical assistance, at the expense of funding priorities identified by African countries, such as building infrastructure to smooth trade and diversify economic activity, UNCTAD official Janvier Nkurunziza told reporters in Addis Ababa.

Without a restructuring in aid delivery, he said African economies would miss an 8 percent annual growth rate required to achieve global poverty reduction targets.

CHECKS AND BALANCES

The World Bank and IMF, institutions which currently dominate African aid flows, "have not lived up to expectations and are not suited to administering doubled aid", UNCTAD said.

While grants and loans from the Washington-based lenders make up a small portion of overall African aid, the economic and political monitoring they undertake in countries accepting their financing serves as an assurance to other donors.

Their checks and balances have drawn criticism from advocacy groups, including Oxfam, for being too dogmatic. Britain also threatened this month to withhold a 50 million pound ($93.9 million) World Bank payment to press for an overhaul of the conditions linked to aid.

Still, finance ministers meeting in Singapore this week for annual meetings of the World Bank and IMF backed new conditions in the form of anti-graft measures to halt misuse of foreign aid, a problem that has been especially acute in Africa.

UNCTAD's Special Coordinator for Africa, Kamran Kousari, said a U.N.-run Africa fund would empower countries to use aid money as they see fit, while also seeking to strengthen public institutions in countries prone to corruption.

"We believe that aid should not be distributed on the basis of whether a government of a country is corrupt or not, it should be distributed based on the needs of a country," he told journalists in Geneva.

Kousari said the U.N. fund could collect money now dispersed across the World Bank's International Development Association (IDA), the African Development Bank, and aid programmes run by governments and regional bodies like the European Union. (Additional reporting by Tsegaye Tadesse in Addis Ababa)