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.