At its last week's proceedings, US congressional foreign affairs sub-committee on South Asia and the Middle East was informed that a substantial chunk of the aid money meant for Pakistan and Afghanistan never left the US, and was siphoned off in the form of consulting fees and overhead costs.
Assistant Secretary of State Richard Boucher offered an idea of the kind of amounts involved when he said that on the high end it might touch 30 percent and on the low side it could be close to ten percent.
A few days earlier former ambassadors Richard Holbrooke and Thomas Pickering had told the committee that much of the $750 million earmarked for development work in Pakistan's tribal areas could never leave the US soil. Thirty percent of this amount would be more than enough to build schools, even basic healthcare centres, all over the tribal areas.
Pakistanis are quite familiar, though resentful, of this dubious practice. Over the years, this particular aspect of the US aid policy has been the subject of a lot of criticism precisely on the ground that a lot of the needed money goes back into the pockets of donors in the forms of overheads and interest, burdening successive governments and the people with never ending debt-servicing. Yet no one seemed to care. It has now been taken note of in the right quarters, apparently because of the nature of the projects involved and the countries in which the grant and aid monies are to be spent.
No wonder the committee chairman, Gary Ackerman, expressed undisguised frustration over the state of affairs saying, "It is strange that it's taken us all this time and billions of dollars to figure out that the money to be spent on the ground should be spent on the ground." Now that the problem has been figured out, it is only fair to expect that it would be addressed, too.
Fat consulting fees and overhead costs are charged in the US on the pretext that the recipient countries lack the necessary expertise. So far as Pakistan is concerned that argument does not hold any more. There is enough expertise around.
The size of local firms that can handle such projects, though, is usually small. This drawback can actually be turned into an advantage by offering smaller contracts to several firms, thus creating a competition among them to do their best. Local firms, of course, also have the advantage of knowing the conditions better and hence are likely to design and deliver better than foreign consultants.
There is need, however, to guard against misuse of funds through a transparent tracking mechanism. Unfortunately, examples are galore of money having been spent on developmental schemes like schools and roads, that exist only on paper. That is where the donors can play a useful monitoring role in tandem with the relevant recipients.