Top donor aid recipients

According to data from the Organisation of Economic Cooperation and Development (OECD) – a consortium of 34 donor countries – official development assistance (ODA) to Sub-Saharan Africa in 2014 saw a 41% rise compared to 2004, but Uganda’s share has seen the lowest growth compared to all her EAC counterparts. ODA are financial flows provided by official State agencies to develop social infrastructure as a foundation for developing nations in order to attract or develop other sources of development finance.

Peacekeeping and anti-terrorism supplies as well as military equipment and services are not counted as ODA. ODA makes up more than two thirds of external finance for least-developed countries. In comparison to 2004 figures, Uganda’s share of ODA increased from $1,412 million to $1,633 million in 2014 – an increase of just 15% – compared to Kenya’s 120% and Rwanda’s 91%. Kenya ($2,655 million) and Tanzania ($2,648 million) are second and third on the list of Africa’s top 10 donor aid recipients. With their total of $1,024 million, Rwandans received the largest amount of donor aid per capita in the region – $85 compared to Uganda’s $43 and Kenya’s $60.

The US, which was also listed as the world’s biggest donor country with disbursements of about $32,730 million, was Uganda’s biggest donor with about $451 million followed by the World Bank/IDA ($352m), the United Kingdom ($171m) and the European Union ($151m). Kenya and Tanzania also received more donor aid from the US than other countries while the UK was Rwanda’s biggest donor with $160m. Over the last decade, President Yoweri Museveni’s government has been keen to reduce dependency on donor aid by increasing revenues collections and looking elsewhere (especially China) for cheap long-term credit.

But while some development analysts say it will be long before Uganda completely weans itself off ODA, others say it is a positive development for Uganda to be getting less of ODA. Buliisa County MP Stephen Biraahwa Mukitale, who also sits on the Parliamentary Committee on National Economy, says he has no problem with lower levels of bilateral aid and more multilateral aid (support channeled through international NGOs) and more technical assistance. “A beggar has no choice,” he says. “In the past, we were forced to do whatever the development partners demanded but now that we have reached a certain level of self-sufficiency, we can afford to say ‘no, thanks’ if their aid comes with conditions that we can’t manage.”

Prof. Augustus Nuwagaba, an Economics professor at Makerere University, attributes the decline in ODA to Uganda to several factors but most especially the numerous corruption scandals in recent years, which have made the country unattractive as an aid recipient compared to her regional counterparts. Massive corruption, he says, has caused a situation whereby aid effectiveness is not felt by the whole population as most of the aid money ends up in the pockets of a few individuals. However, like Mukitale, he insists that national development must be initiated internally from within, with foreign aid only helping to propel it.

Indeed, while Uganda’s tax revenues have grown considerably, the budget deficit has not shown any sign of abetting and the revenue to GDP ratio has remained rather low at about 12% – way below what many of the top aid-receiving countries have achieved. Consequently, the revenue collections remain too low to alleviate the biting poverty in large parts of the country leave alone sorting out the infrastructure bottlenecks. This has forced the government into massive foreign debt mainly from China.

According to the Uganda National Household Survey (UNHS 2012/13), development indicators in large swathes of the country are still pathetic, while the country’s Human Development Index stood at 0.484, ranking at 164 out of 187 countries, according to the HDR 2014. Poor infrastructure, lack of access to markets, poor access to social services still require large amounts of resources to deal with.  However, Nuwagaba argues that with no governance and accountability systems in place to ensure that the resources are not abused, donors would continue to direct their money to countries like Rwanda that have zero tolerance for corruption.

Generally, according to the OECD, aid to the poorest countries fell in 2014, which OECD Secretary-General Angel Gurría attributed to the fact that the donor countries themselves were still emerging from “the toughest economic crisis of our lifetime.” Denmark, Luxembourg, Norway, Sweden and the UK continued to exceed the United Nations target of keeping ODA at 0.7% of GNI, while 13 donor countries saw a rise in net ODA, with the biggest increases being reported by Finland, Germany, Sweden and Switzerland.