Tied aid costs poor countries US$6bn a year
G7 countries accused as new report reveals tied aid costs poor countries almost US$6bn a year.
Monday 2 April 2007
Almost half of all aid is tied, costing poor countries almost US$6 billion a year, a new report reveals today ahead of the Development Assistance Committee (DAC) meeting on 4 April and the release of the annual aid statistics on 3 April.
The practice of aid tying, when aid is committed on the condition that the recipient country uses the money to buy goods and services from the donor country, wastes vast amounts of money that could be spent on poverty reduction and health and education services for the world's poorest children.
Tied Aid: The Untapped Billions by Sarah Hague and Alison Jeffrey of Save the Children UK, reveals that if aid was untied, its value would be increased by almost a third.
Nine out of ten donors tie some of their aid to developing countries. The G7 as a group tied nearly a third of their aid to developing countries in 2004. The worst offender is the United States which ties about 70% of its aid - an annual average of over $7 billion from 2002 - 2004.
The UK by contrast untied all its aid in 2001. However, having promised to 'take a leading role in international efforts to end the outdated practice' of tying aid, the UK has yet to convince other donors to follow suit and untie their aid.
Save the Children is calling on Hilary Benn, Gordon Brown and the UK Government to live up to this commitment at the OECD DAC meeting on 4 April.
The OECD DAC must announce that they will start a multilateral process to untie all aid and lead the efforts to end the practice of tied aid once and for all.
Sarah Hague, Economic Policy Adviser at Save the Children, said: "Tied aid wastes money. It is outdated, unnecessary and most of all costs poor countries billions of dollars that could otherwise be spent on treating and educating children. The UK government has led the field by untying its aid but they must now urge other donors to do the same to stop this appalling waste of money."
