Least Developed Countries (LDCs) is a special category of countries characterized by extreme poverty, weak economies, and scanty institutional and human resources.
Despite the fact that millions of dollars have been spent over the years to address the problems and needs in the least developed countries, the level of poverty there remains high and the goal of ensuring equal access to basic needs is far from being realized.
To a great extent, this is attributed to the corruption that is rampant in the least developed countries. Donor countries are, therefore, expected to be more vigilant in monitoring how resources are utilized.
The subject of donor funding to least developed countries is particularly important to me as well as to the international donor community because the existence of poor people in least developed countries depends on aid from donor countries. This paper looks at measures that have been taken in Kenya and India to guarantee the effectiveness of the foreign aid.
Effectiveness of Foreign Aid to Kenya
For several years, Japan has been the largest donor to Kenya with a special interest in the health sector. By the end of the year 2006, annual disbursement of aid to Kenya from had been estimated to be US $ 944 millions.
In the 1980s, Kenya was forced to implement Structural Adjustment Programs (SAPs) in an attempt to ensure that foreign aid was used appropriately. According to Carlsson, Somolekae and Walle (1997), the goal of implementing SAP in Kenya was to improve efficiency and ensure that foreign aid achieved the intended purpose.
With regard to donor aid management in Kenya, Japan International Cooperation Agency (JICA) found that institutional considerations were necessary in financing the health sector. Among the problems that have led to failed donor projects in the health sector are poor coordination, misuse of funds, lack of transparency and accountability, and inadequate procurement and distribution procedures for aid drugs and other medical supplies.
A case study of Kenyatta National Hospital, for example, indicated that inadequate transparency and poor accountability greatly hindered the effectiveness of donor funded projects (Carlsson et al, 1997).
Effectiveness of Foreign Aid to India
In India, a transparency and accountability policy was enacted to control how aid money was utilized. Under this policy, organizations that receive foreign aid are expected to adhere to proper accounting and reporting guidelines and to provide audited financial reports on a regular basis.
Donor practice in India also requires the use of locally based aid agency staff to ensure that there is a high level of accountability in the management of foreign aid. Today, organizations such as the International Aid Transparency InitIATIve (IATI) exist to monitor how the aid money is being spent.
The lack of effective accountability mechanisms for donor funds is certainly the major concern that must be addressed in a trice. Although many donor countries are aware that development assistance programs are not delivering the expected results, they are not fully involved in ensuring that aid money achieves the desired results.
From the discussion presented in this paper, it is obvious that problems in the least developed countries are mainly caused by lack of commitment by governments. It is absolutely necessary for donor countries to demand a high level of transparency and accountability for development funds channeled to governments in the least developed countries.
Carlsson, J., Somolekae, G. & Walle, N. (1997). Foreign Aid in Africa: Learning from Country Experiences. Sweden: Nordic Africa Institute.