Report faults aid funding institutions

Thursday July 10 2014

By RAMENYA GIBENDI, [email protected]

A new report has indicted the dealings of western-based public finance institutions in developed countries.

The report by the European Network on Debt and Development (Eurodad) says that projects financed by the institutions lack accountability.

It said the projects are mainly in favour of the developed economies.

Eurodad, which is a coalition of NGOs, said that some development finance institutions (DFIs) offer little support to companies in the low-income countries in favour of firms that are based in wealthy economies.

“The principal concern is that almost all DFIs are owned and controlled by advanced countries with little effective input from the developing country governments,” said the report.

The report is a product of a four-year research project from 2006-2010, with funding from the European Union.

It showed that only a quarter of companies supported by the European Investment Bank and the International Finance Corporation (IFC) are based in developing countries.


Eurodad is calling for a review of DFI operations by a committee of independent experts from the governments of poor countries, civil society groups and the private sector.

The report singles out the financial sector for particular attention from development finance institutions in recent years.

“More than 50 per cent of funding for the private sector went to financial organizations, raising questions about the kind of impact on the ground following the recent financial crisis that resulted from irresponsible investment decisions,” said the report.

According to the Eurodad, the amount of money being channelled through the private sector by 2015 is expected to exceed $100 billion as donors look for alternative ways to fund development programmes.

The network of NGOs now wants financial institutions to align their investment decisions with the priorities and development plans of low-income countries if they have to achieve meaningful impact.