Most third world (underdeveloped) countries receive international aid from either multinational donor agencies or through bilateral cooperation. To some extent, this is to accelerate and/or materialize their own development agendas, while a few countries depend entirely on international funding. Without such aid, these underdeveloped nations would be struggling to achieve their national development goals.
There are two categories of international aid: Loans and grants. The amount of loans provided is usually large, while grants are for small projects. Subsequently, a nation aims to stimulate related loan-based activities/programs or to gain support both socially and politically from civil society and other stakeholders during program implementation.
For the purposes of this discussion, the most important thing to keep in mind is that beginning with the initial stage, after the two parties (donor agency and related government officials) have agreed to the basic principles of the development aid, the cost for project preparation is part of the country's loan.
This stage usually takes more than a year (an average of two years) and involves very expensive experts (consultants). In other words, the recipient country also uses the loan to pay for the experts -- who are mostly foreign nationals.
It means that from the beginning of the loan, most of the money tends to be sent off abroad (to the experts' origins), and only a small amount of the money goes to local beneficiaries through the local experts.
The question is: Who is involved in the decision-making process and in management of the loan? To be frank, the loan negotiations and decisions are always very secret, decided only between the executive side (related officials or ministers under consultation with the head of state) and donors, whereas the legislative or representative body and NGOs (civil society communities) are not taken into account.
It appears that the government/executives are not obliged to involve those two parties in the loan-negotiating process. It seems that parliament and NGOs merely need to know the amount and purpose of the loan once the government reaches an agreement and adds it to the state budget as a funding source for any development project for the next fiscal year.
This process that does not involve the people's representatives (parliamentarian and/or civil groups) is very ironic and must be evaluated. Why?
First, the legislative body is mandated to fight for the people's interests in the policy-making process -- including development agendas.
Generally speaking, due to their positions and daily activities, civic groups are very close to local communities, and know more about their dynamics, cultures, interests and demands.
Second, it should be kept in mind that loans are heavy burdens for future generations. Obtaining loans by using its natural resources as the guarantee appears to be easy, especially for a country such as Indonesia which is very rich in natural resources. Many countries as well as donor agencies are interested in loaning money to such countries and subsequently are involved in this process of exploitation.
Indeed, loan management in Indonesia (in the reform era) has changed slightly.
It appears that the implementation of loan management in Indonesia has been improving from time to time particularly in promoting good governance and in making an effort to eliminate corruption practices within its bureaucracy -- particularly in the relevant executive branches with which the donor agency works with.
During the past 10 years of Indonesian political transition, many authoritative elites (executive officials, politicians and businessmen) have conspired to capitalize on misused funds, requiring best practice intervention from the donor agency.
But, to some extent, I personally think that donor agencies are also trapped by their own conservative situations. Based on certain requirements, consultant companies are allowed to join tender and are then listed as permanent business partners of the donor agency -- regardless of the quality of their work.
Donor agencies are being ambushed by formal qualifications, without paying more attention to the rising number of better qualified new consultant groups which consist of more educated people, with high integrity and personal moral responsibility.
Without reforming consultant involvement within a donor-sponsored project, donor agency/ies may be seen as misusing funds on loan-based projects.
Posted in Jakarta Post, 26 Nov 2008
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