The begging bowl

25 Jan 2017


DONALD Trump’s nascent presidency has generated much uncertainty. In Pakistan, concern has been expressed that USAID funding might be affected by the transition, which stems from the incoming administration delaying meeting with the aid agency to discuss the continuity of future disbursements.

The concern is that since USAID disburses millions of dollars in Pakistan every year through NGOs, any disruption of this pipeline would affect their sustainability, the livelihoods of thousands of employees and the welfare of their intended beneficiaries. This much is easy to grasp.

At the same time, however, analysts have highlighted other, conflicting dimensions of such funding, which question the objectives and consequences of this aid. They suggest that the primary purpose of the aid is to promote US influence in recipient countries, that aid-based development is not sustainable, and that continued dependence dents national pride — references to the begging-bowl syndrome abound.

Why is no one willing to change a broken development model?

There is thus an obvious dilemma to consider: which of these positions ought to influence national policy regarding bilateral assistance in general and USAID in particular, the latter because the US has (most obvious) security interests in the region? In theory, most analysts prefer development that is financed from local resources with a concomitant winding down of external assistance.

In practice, however, they resign themselves to perpetuation of the status quo. They claim there is no alternative because Pakistan’s population does not wish to pay taxes and believes in getting something for nothing. Is this claim fair, and is it a plausible explanation for the present predicament?

Start with the fact that income and wealth distribution in Pakistan is highly skewed — it can’t be much different from India, where the 57 richest individuals are reported to hold as much wealth as the poorest 70pc of the population. Clearly, any move to widen the tax net would also impact those at the top of the wealth pyramid, many of whom are networked in the ruling establishment. Is it realistic to expect the wealthiest to tax themselves voluntarily? Would they move the country towards self-reliance (in a model where they would have to contribute their share) or continue dependence on external money (from which they have nothing to lose and something to gain by way of rents)?

At the same time, is it correct to assume Pakistan’s population does not pay taxes when it is burdened with all kinds of indirect withholdings? Taxes are withheld from everyone who uses a mobile phone, has a bank account or owns a motorcycle, including those whose incomes are below the minimum taxable limit. The injustice is compounded because many do not even know how to reclaim the withholdings. Equitable taxation from above is avoided while oppressive extortion from below is promoted, much as what one would expect from abuse of power.

The bottom line is that the existing arrangement of development assistance persists because it is in the interests of all the key players — the donor country that uses aid to buy influence, the local establishment that does not want to tax itself, the foreign consultants and contractors who feed off inflated charges, and the NGOs that flourish on easy money for which the donors do not demand accountability — the circle thereby completing itself. Each of these players is happy with the outcome and least bothered by the begging-bowl syndrome that gnaws at the pride of analysts.

Such is the eagerness to make the good times last that a blind eye is turned to the readily available evidence pertaining to the outcome of billions of dollars worth of aid Pakistan has received over the decades. Major recipients, like public health and education, are in a state of shambles and people continue to die from lack of access to clean water and sanitation. What is there to show for the thousands of teachers and health workers who have been trained again and again, each training costing millions?

Why, in the face of such clear evidence, are the decision-makers not clamouring to change this development model? Is it because all the key parties involved are benefiting, while those who will have to pay the future liabilities have no say in the matter?

The only way this gravy train can come to a halt is if Trump does one of those bizarre things people have come to expect of him. It might well happen in Africa, but it is more likely he will be convinced to appreciate what his funding is buying in return in a high-stakes zone like Pakistan. At most, he will demand a higher price from the establishment, which they will accept as the new reality.

The writer is a fellow at the Centre for Development Policy Research in Lahore.

Published in Dawn, January 25th, 2017