The Sunday Times Economic Analysis

The Sunday Times Economic Analysis By the Economist

Aid utilisation: The critical issues
The utilisation of the aid generously given has become a critical issue. The manner in which aid committed and sent to the country by international organisations, multilateral agencies, governments, NGOs and individuals is used and the accountability of the funds looms large as a factor that could determine the country's ultimate benefit from such aid.

Reports from the affected regions are not encouraging and could damage the interests of the intended beneficiaries and their welfare. Misuse of aid could change the minds of donors and thus affect the flow of further assistance, and also the welfare of the tsunami victims.

The euphoric expectations that the disaster could be transformed into an opportunity to improve the conditions of the poor and modernise the country could be dashed to the ground by the inefficient and corrupt manner in which the rehabilitation and reconstruction efforts are being carried out.

The problem is not merely the issue of the aid utilisation levels but the manner in which funds are being used to benefit the traumatized population in the tsunami devastated areas. Central to the problem is the inability of the government to determine policies that have a bearing on reconstruction and rehabilitation. Illustrative of this inability is the distance from the sea where housing is to be permitted.

This has slowed down the construction of houses and most of those seriously affected by the tsunami remain in unsatisfactory temporary accommodation. They are now also facing an uncertainty about their housing and are bewildered and baffled by the non-realisation of the promises held out to them as well as the official statements changing government policy from time to time. The government can also help by not insisting that nothing should be built within 200 metres of the beach. Those who pay for this are the poor fishermen. Instead of concentrating on the serious immediate human problem at hand, the government is undertaking an environmental policy though tsunami's have nothing to do with climate change. The tectonic plates that have moved to create the tsunami are unrelated to climate change and the probability of another tsunami in the foreseeable future is remote.

Another hindrance to housing construction is the inability to allocate land for construction of new houses. In fact some community actions for housing have been aborted by the withdrawal of permission to build on certain locations for which the relevant government authority had given permission. Some of these blunders would lead to the withdrawal of the funds for house construction. Other community efforts for construction remain in limbo owing to denial of permission for land.

The issue of orphans is similar. There is high talk and no action. Orphans remain without any means of being taken care of while the debate of how best they should be cared for are discussed. In the name of the best solution being envisaged, children are not being given to orphanages. Homes, of relations who could adopt children could be a shattering solution, if the selection and monitoring are inadequate. Adoption by relatives could be good only so far as the selection is good and a system of continuous monitoring of the children's condition is effectively implemented.

Without this, the welfare of the orphans could be seriously jeopardised. Giving a financial incentive for the children's upkeep could lead to adverse selection of families. On the other hand, the second best solution of selecting well-run orphanages and the expansion of their capacity is more manageable and pragmatic in this context.

The public sector should reconstruct the infrastructure, roads, railways, bridges, public buildings-all of which would help people indirectly as well by reducing their costs and bringing them into line with what existed before. Possibly the most effective utilisation of aid for reconstruction has been in the projects for reconstruction of railways, fisheries harbours, building of hospitals and schools that are to be undertaken by the donor governments themselves. The more they are turnkey projects the more successful they are likely to be.

The underlying reasons for this state of affairs are the euphoria generated by the massive commitments of aid, the inability to be non-political in the reconstruction and rehabilitation exercise and the desire of the government to control relief and reconstruction activities. The government's inability to plan and organise the reconstruction and rehabilitation owing to a weakened administration has contributed to ineffective aid utilisation.

The lack of a clear distribution of the reconstruction effort between the government and community organisations has led to confusion. All this may result in aid from various sources tapering off, pledges may not result in actual disbursement and the misuse of funds may lead to the enrichment of the rich and affluent and the continued impoverishment of the poor.

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