Donor countries’ increasing recognition of the need to address aid dependency in recipient countries is a welcome development, but donors need to be careful not to equate the need to reduce aid dependency to reducing aid volumes, a U.K-based think tank expert says.
“Reducing aid dependence is not the same thing as reducing aid,” the Overseas Development Institute’s Jonathan Glennie says in the Guardian’s “Poverty Matters” blog. “Aid dependence can be reduced without reducing aid (if other sources of money increase). And reducing aid doesn’t mean reducing aid dependence – it might well mean the opposite. It is the dependence not the aid that is the problem.”
Glennie says reducing aid dependence entails helping countries raise more financial resources through other means such as taxes.
“That requires action at the international level on issues such as trade policy, illegal capital flight and commodity pricing,” Glennie explains. “And at the national level it requires a coherent set of policies to gradually increase resource mobilization from untapped areas of the economy.”
He cites Uganda’s experience as an example of how donors can help reduce aid dependency. The African country, he says, is using foreign aid to improve its tax collection and administration to be able to raise more of resources on its own and rely less on aid from donors.
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