By I. M. D. Little
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Additional resources for Aid to Africa. An Appraisal of U.K. Policy for Aid to Africa South of the Sahara
In practice it sometimes is, but certainly not always. In East Africa, for instance, the Germans 26 DONORS' POLICIES have financed local costs, and even procurement from third countries. Eastern aid is mostly tied, but there are exceptions. ). , under an extremely foolish provision 1 of its charter, limits its aid to offshore costs. It leans over backwards in its interpretation of what are offshore costs, but it cannot go too far. Aid-tying very greatly reduces the value of aid. It is not merely that the recipient cannot buy imports in the cheapest market.
But it is generally guaranteed by the creditor's government. Such credit does much to tarnish the image of Western aid, since it is often counter-productive of development which is supposed to be the objective of aid, and since it reduces the point of attempts to provide public aid on terms which recipients will be able to meet. It is time Western governments did something to control it. In a competitive export world it will not be easy to get agreement. The Berne convention under which governments did agree not to guarantee private credit for more than five years appears to be defunct.
Procurement: in West Africa, the lower figure of 80 per cent seems to prevail, but this anomaly is probably transitional. A. is also experimenting with opening dollar credit lines to the value of the local cost component of the projects it supports—the counterpart funds being available to meet such local costs. A. A. A. will not insist on such imports being additional to normal imports. , the latter may, to some extent, succeed in channelling the additional imports, which arise indirectly from local currency expenditure, towards itself.
Aid to Africa. An Appraisal of U.K. Policy for Aid to Africa South of the Sahara by I. M. D. Little