Quotes by Action Aid

We estimate that a massive $37 billion (47%) of the $79 billion in headline aid in 2004 was ‘phantom’, while real aid stood at only $42 billion. There was some improvement from 2003, with nearly all the increase in aid – otherwise known as Overseas Development Assistance or ODA – between 2003 and 2004 counting as real aid. However, even with this increase, our analysis suggests donors still contributed an average of only 0.14% of gross national income in real aid in 2004, or only one fifth of the UN target level. On average, donors give only $48 for each of their citizens in real aid each year – less than $1 a week.

* One quarter of the aid [provided by rich countries] – $20bn a year – funds expensive and often ineffective western consultants, research and training.
* In the UK, for example, almost half of TA spending goes on consultants and other experts, the vast majority of them British.
* A typical cost of an expatriate consultant will be in the region of $200,000 a year. According to the OECD, in typical cases more than one third of this is spent on school fees and child allowances – spending which would not be needed if local consultants were used.

Our definition of phantom aid includes aid that is:
- not targeted for poverty reduction, estimated to be worth US$4.9 billion
- double counted as debt relief, totalling US$9.4 billion
- overpriced and ineffective Technical Assistance, estimated at US$13.8 billion
- tied to goods and services from the donor country, estimated at US$2.7 billion
- poorly coordinated and with high transaction costs, estimated at US$9 billion
- spent on excess administration costs; totalling US$0.4 billion.
In total, at least 61% of all donor assistance is phantom aid.

In India, DFID spent US$40m on TA [technical assistance] from Credit Suisse First Boston over just six months, in the course of advising the state government of Orissa on energy privatisation. The total bill for foreign consultants on this programme eventually rose to US$110m, with most of the TA provided by Price Waterhouse Coopers. In Vietnam, one DFID official estimated that they typically pay foreign experts between US$18,000 and US$27,000 per month, compared to US$1,500-$3,000 for local experts.

... estimates using International Panel on Climate Change assumptions show that stabilising atmospheric greenhouse gas concentrations at 1990 levels would have implied a global, equal carbon entitlement of about 0.43 tons per person. Yet in 2000, actual per capita emissions in the rich countries were about 3.4 tons, meaning that each person in the rich world was over the limit by approximately 3 tons. According to the UK government, the damage cost of carbon emissions is US$56 to US$223 per ton of carbon. Using a mid range estimate of US$140, each person in the rich world owes US$420 annually through excessive use of carbon. In total, this results in a South-North flow of around US$400 billion.

In 2003, developing countries transferred a net US$210 billion to the rich world – that is, it paid out US$210 billion more than it received in new inflows... Interest payments alone continue to take US$95 billion of developing countries’ resources, almost three times the value of what they receive in grant aid.

In Cambodia, donors spent between $50m and $70m on 700 international consultants in 2002 - equivalent to the wage bill for 160,000 Cambodian civil servants. In other words, donor-financed consultants working in the Cambodian government are paid upwards of 200 times what their Cambodian counterparts receive.