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Aid embezzlement in Uganda

Britain has suspended all aid to Uganda in view of the blatant misuse of funds in the Ugandan prime minister’s office. The Daily Monitor reports that almost $800,000 in aid sent for post-war recovery efforts in northern Uganda and the Karamoja region was used to purchase three luxury vehicles, including a Mercedes Benz worth $150,000 for the prime minister and five luxury vehicles for five other ministers.

Meanwhile, the Ugandan government’s spokesperson Ofwono Opondo has put a bold face on the donor funding cuts, saying that Uganda can do without donor funding, and the economy will not collapse. Uganda currently receives between $350 and $400 million in foreign aid each year, of which $100 million is direct budget support. Donor funding accounts for more than 25% of the Ugandan government’s budget.

The incident highlights a difficult issue with aid. Donors typically accept a small amount of embezzlement as a cost of ensuring that at least some funds get to the target recipients; it is only when large-scale embezzlement occurs that significant complaints are raised. Unfortunately aid tends to increase corruption, because it is seen as a large amount of “free” money, ripe for the taking.