“Millions of dollars worth of aid money is being wasted”

By Toby Poston, BBC News business reporter

As more than 5,000 British troops are being deployed in Afghanistan, it is becoming clear that the dire security situation is just one of many obstacles that hold back reconstruction efforts.

RAWA: From the terrible conditions of main highways, one can easily conclude that Mr. Karzai has done nothing tangible in the past 4 years to rebuild the country. Millions of $ has been given to Afghanistan by donor countries but much of it is being grabbed by warlords, NGOs and UN workers.

True, security is a major worry for aid agencies, who saw 30 of their workers die last year.

But in some cases, the agencies' wasteful bureaucracies are also holding back efforts to rebuild this war ravaged country, according to Ashraf Ghani, who has written a report on international development and post-war reconstruction, sponsored by the Overseas Development Institute (ODI).

As chancellor of Kabul University and Afghan finance minister between 2002-2004, Mr Ghani's word carries some weight.

When he says millions of dollars worth of aid money is being wasted, both donor nations and aid agencies take note.

Complete waste of money

Mr Ghani believes the Afghan government could build a school for about $40,000 (£23,000), a fraction of the $250,000 cost racked up when one international aid agency took on the task of delivering 500 schools.

The difference would arise because the Afghan government would use locally hired contractors, while the aid agency spent 80% of its funds on hiring external technical assistants, he explains.

Another case of money being wasted was the reconstruction of the road between Kandahar and the capital Kabul, which the government estimated would cost $35m.

It was eventually built by USAID and ended up costing more than $190m, Mr Ghani says.

Moreover, these are not isolated cases, Mr Ghani insists, as he estimates that more than 90% of the more than $1bn that was spent on about 400 UN projects in Afghanistan in 2002 was a waste of money.

More harm than good

But the billions of dollars of aid pumped into Afghanistan over the past four years have not merely been wasted; the cash injections might even be doing more harm than good, Mr Ghani suggests.

In particular, it has been damaging to the government and its ability to build law and order and deliver public services, he says.

With more than 2,400 national and international aid agencies and other non-governmental organisations (NGOs) registered in the country, the government is finding it hard to hold on to its staff, Mr Ghani says.

The country's 280,000 civil servants earn an average wage of $50 per month, while approximately 50,000 Afghans work for aid organisations where support staff earn up to $1000 a month.

"Within six months of starting my job as finance minister, my best people had been stolen by international aid organisations who could offer them forty to a hundred times the salary we could," he says.

Lucrative work

ODI workers on the ground say Mr Ghani has a point.

They say Afghanistan is brimming with expensive foreign contractors and consultants who are often duplicating or replacing work that could be carried out by the government.

"There is a tendency for UN agencies and non-government organisations to rush in with thousands of small projects, each requiring international staff and drivers," says Clare Lockhart, a research fellow at the ODI and a former advisor to the Afghan finance ministry.

These experts cost far more in overheads like living expenses and repatriation costs than in actual fees for their services, but with further lucrative work in the pipeline, it is not in their interests to pass on their skills to their Afghan counterparts, Ms Lockhart explains.

Nevertheless, she also points out that some projects, for example like the National Solidarity Programme, are worth copying.

The programme has seen hundreds of millions of dollars delivered straight to local communities, thus enabling 13,000 villages to plan and manage their own reconstruction and development projects, she says.

Corruption

Critical voices, such as Mr Ghani's, have helped ensure that in future Afghanistan's own government and people will gain greater control over how aid money is spent.

Early this month, the launch of the Afghan Compact initiative saw more than $10.5bn in aid pledged to Afghanistan over the next five years, as part of an agreement where both the Afghan government and its outside backers must benchmarks progress in areas such as security, economic development and better government.

In the UK, the Department for International Development is paying 70% of this year's £100m aid budget direct to the Afghan government, making it the largest donor to it's core budget.

The funds are not earmarked, and there are firm commitments to deliver the funds for at least three years hence. This gives the Afghan government the chance to plan ahead.