Surge in Intl Aid Could Hinder Burma’s Progress: Study

By William Boot 15 March 2013

Rangoon is the most sought after destination among the best and brightest working for the world’s leading aid agencies. One survey of World Bank employees found that 80 percent placed Burma top of their wish-list for an overseas posting.

From pariah state to most preferred place to go: Burma’s transition in the last two years has been breathtaking, but could the flood of aid and advice flowing into Burma become counterproductive and cause more harm than help?

That’s the warning from two eminent US researchers who visited the country to assess economic and political progress since President Thein Sein’s civil government took over from the raw military-uniformed rulers of recent decades.

“Foreign aid is not always a blessing. Countries in recent years that appear to have received too much aid too soon include Cambodia and Nepal. The record of foreign aid around the world is littered with cases of wasteful and even harmful projects and programs,” says the study by Lex Rieffel of the Brookings Institution think tank in Washington and James Fox, an independent consultant formerly with the US Agency for International Development (USAID).

“A classic mistake made by donors is to offer policy advice and propose programs and projects before mastering the political dynamics and cultural constraints of the receiving country. A related mistake is believing that a policy, program, or project that worked well in one country will work well in others,” the study warns. “It will take a miracle to avoid multiple mistakes of both kinds in Myanmar in the next 2-3 years.”

Some donors are entering Burma with economic assistance in areas which are not a high priority, either for the government or the populace.

“New Zealand decided that almost 85 percent of its aid to Myanmar over the next five years would be allocated to upgrading dairy farming, even though this has a low priority in the government’s plans,” the report noted.

“What steps can be taken by aid donors and the government to enhance the effectiveness of aid programs and projects, and mitigate possible adverse consequences?” the authors ask in their 55-page study “Too Much, Too Soon? The Dilemma of Foreign Aid to Myanmar/Burma”.

The report said Burma’s government is faced with eight major challenges in coming years: the peace process; the political system; macroeconomic policies; private capital flows; resource extraction; land grabbing; agricultural development and education.

Researchers said addressing these challenges should be the government’s priority, as these issues are of greater importance to Burma’s future than any amount of foreign aid.

“The implication for the government is that Myanmar’s transition will be jeopardized if it allows donor activities to divert its attention from addressing these challenges,” the report said.

The report urges the government to limit the amount of time that senior officials spend talking with donor agencies and visiting government representatives.

“At this early stage in Myanmar’s transition, the sheer number of aid-related visitors requesting meetings with government officials was compromising aid effectiveness more than any other factor. The requests were making it extremely difficult for officials to spend enough time on urgent matters of policy formulation and implementation,” says the study.

“Of course government officials could avoid this problem simply by deciding not to have so many meetings, but two factors militate against this.

“First, there is little cultural support for saying no to visitors. Second, after being a pariah state for so long it is very hard to say no to presidents and prime ministers, legislators, aid agency directors, CEOs of multinational corporations, Nobel Prize winners, movie stars, etc.”

Among the leading development organizations now offering help and aid in Burma are the International Monetary Fund, the World Bank, the Asian Development Bank, the Japanese government trade promotion agency JETRO, the Association of Southeast Asian Nations, and the European Union.

Despite the welter of visitors and aid offers, the report said the government and its various ministerial officials seem so far to be coping well.

“We give high marks to the Myanmar government for its national planning process and its management of foreign aid at this very early stage in the country’s transition to democratic rule and economic liberalization. The government seems to have learned from the positive and negative experiences of other countries.”

But there is a danger that “even if the flood of aid-related visitors recedes in 2013, an escalation in the number of investment- and business-related visitors may continue to impede sound and timely policy implementation.

“One source of harm is throwing money at problems. Examples include the large EU commitment for funding projects in conflict areas and the World Bank’s community-driven development project. Another source is when donor agencies select as partners the same prominent local NGOs to the point of overburdening them, while neglecting smaller but competent NGOs.”

There is also a problem of key competent Burmese being drawn away from important work by being hired by donor agencies and thereby “hollowing out the organizations they are leaving”.

Two aid initiatives that could be particularly beneficial to the country, said the study, are funding education abroad and helping the return of the Burmese diaspora, but unfortunately they do not appear to be high priorities for most donors.

The study was commissioned by Nathan Associates of Washington, an international economics consultancy, in honor of the company’s founder Robert Nathan who worked on development planning in Burma in the 1950s. In 1953 he identified four issues hindering progress in the country: internal security, shortage of skilled labor, government organization and administration, and political will.

These remain key challenges in 2013, concludes the study.