Political mess undermines foreign aid metrics

The political unrest in Bangladesh is viewed with grave concern by donors, which fear this instability could render development programs ineffective and are slowly reducing funds — World Bank data recently revealed a significant drop in foreign aid commitments, an almost 28 percent slip from $1.6 billion in 2013 to $1.2 billion in 2014.

Weeks after the Prime Minister Sheikh Hasina was reelected for her second consecutive term as prime minister, the country continues to suffer from political instability which undermines the country’s development progress.

foreign aidA month prior to the vote, the nation was in the middle of a political standoff, with various political groups vying for a seat in parliament, and the possibility of a neutral interim government was even considered to dispel parity in the country. All this, and several political assassinations in Dhaka, have led, one way or another, to the country’s development being a victim of political instability.

The country’s central bank, on the other hand, said in a report last month that overall foreign aid metrics has generally decreased. The report noted that aid disbursements in the latter half of 2013 decreased by over 31 percent to $557 million from $809 million the previous year.

Reforms urgent

The Asian Development Bank acknowledges the problem and warns that delays in development projects undermine the country’s development.

“Delay in implementation of development projects continues to constrain Bangladesh’s development,” the Manila-based multilateral institution said in its Bangladesh country partnership microsite.

Although the regional bank said it remains committed to the development efforts in the South Asian nation, the government needs to do its homework if it truly wants to get back on the road to progress.

“Bangladesh needs to develop infrastructure, boost investment, improve the business climate, enhance the efficiency of the finance sector and the capital market, develop skills, and improve governance in order to further grow,” an ADB spokesperson told the media.

Currently, the bank is operating on a pre-approved partnership strategy to provide development assistance until 2015 with a special focus on economic growth, environmental sustainability and regional cooperation. Whether that assistance will increase or decrease will not only depend on the programs’ effectivity — but also the political climate of the country, among the top recipient countries of ADB aid in 2012.

Better governance

Along with the political instability issue is the capacity level of local officials and organizations to carry out development programs, particularly those funded by large donor agencies like ADB.

No matter how seamless a project is on paper, it will fail if the people implementing it on the ground cannot implement it effectively due to lack of proper governance and institutional frameworks — something the bank is keen on addressing in Bangladesh and the rest of the region.

“ADB considers good governance and capacity development as critical to effective development efforts,” the bank’s spokesperson said. “Good governance is a strategic priority in ADB’s assistance program to Bangladesh.”

Although the bank has already earmarked funds for development projects until 2016 including multi-million dollar funding for urban sector, education, water resource management and agriculture, the spokesperson said the private sector and the foreign aid community will have to play a key role in putting Bangladesh back at the right path to development progress.

“It is critical [for the private sector and aid community] to help local governments improve infrastructure, their service delivery mechanisms, and improve their skills, capacity, and governance to help make development efforts more effective,” concluded the official.

Courtesy: Devex.com