In 2011, Rwanda led a coalition of African countries through negotiations that pushed for ending tied aid from donor countries. Tied aid can increase the cost of a development project 15 to 30 percent and often delays the time it takes to receive aid.
Since the Millennium Development Goals (MDGs) end at the end of 2015, Rwanda has reiterated their position to untie aid for the new set of 17 Sustainable Development Goals (SDGs) in order to take more effective action to achieve the new goals.
“We want to discuss how to finance SDGs but we want to change the way things are done because donors can promise us the money but you cannot use it because of the conditions and strings attached,” says Claver Gatete, Rwanda’s Finance and Economic Planning minister.
Rwanda has successfully achieved all of their MDGs except improving nutrition, making it one of five countries to do so in Africa. However, many of the issues surrounding tied aid in Rwanda deals with homosexual rights, which Rwanda argues is unfair to their culture.
The European Network on Debt and Development released a statement in 2013 that 20 percent of bilateral aid is tied. In return, the tied aid reduces spending power by 15 to 40 percent.
One way countries will tie aid is by controlling how a country spends the money, often forcing them to buy products such as food from the donor country. Therefore, instead of being able to purchase food from local markets in order to reach more of the population in a short time frame, the country may have to wait weeks or months to receive food items.
The World Bank and the IMF often tie their aid for Structural Adjustment Programs (SAPs) and the average loan comes with 67 conditions. SAPs can hurt a country economically because many of the conditions set force countries to lay off public workers and privatize more industries, resulting in a higher unemployment rate and public dissatisfaction.
By untying aid, it would increase its effectiveness and improve the rights of recipient countries to determine their own development course.
Goal 17 of the SDGs states, “Strengthen the means of implementation and revitalize the global partnership for sustainable development.” One way to improve implementation to achieve sustainable development is by allowing more autonomy for recipient countries to control their own development programs.
– Donald Gering
Sources: All Africa, The Guardian, OECD, UN, UNA