BusinessPeople In BusinessConsultants earn £11bn in aid cash

Consultants earn £11bn in aid cash

Charity group reveals consultancy fees help flatter G7 aid donations by billions

The Management Consultancy Association has strongly defended the UK industry’s position following a damning report that claims consultants from the world’s richest countries are pocketing $20bn (£11bn) from global aid budgets.

Published before the UK hosts the annual G8 summit in Scotland next week, the Action Aid report said that G7 countries (Russia is not a donor), ‘exaggerate’ the real value of their aid by including excessive spending on ‘technical assistance’, consultants, administration, and by ‘double counting’ debt relief.

It said that this made the world’s richest nations appear three times as generous as they really are.

However, an MCA spokeswoman said that fee income earned abroad was ‘declining’, and that its figures indicated that rather than buying in expertise from the UK, ‘indigenous’ consultants were being used. ‘Only 5% of MCA fee income was generated from clients based outside the UK in 2004, compared with 19% in 1999.’

The $20bn total is a staggering 40% of the international communities’ $50bn overseas development fund – money normally earmarked to relieve poverty in developing countries.

The World Bank said that money spent on consultants had increased by $2bn on last year’s total. A spokesman admitted that rising consultancy fees ‘needed to be addressed’.

The report calls for sweeping reform of the international aid system, and calculated that only one third of G7 official aid in 2003 was ‘real’ aid. It said the rest was ‘phantom’ aid, which ‘may have achieved other goals, but did not help to fight poverty’.

Patrick Watt, senior policy officer at ActionAid, said: ‘Among G7 countries the UK is best in terms of the proportion of its aid that really helps people. But the UK still spends too much on expensive consultants and administration and inflates its aid figures by including debt relief. The UK should increase its aid to 0.7% by 2010 , and ensure that 100% of it is “real”.’

Six of the seven countries agreed in 1970 to spend 0.7% of their income on aid. The report shows that the G7’s ‘real’ aid still amounts to only 0.07%.

In Cambodia, it found that the cost of 740 international ‘advisers’ was between $50m and $70m, virtually the wage bill for the country’s entire civil service of 160,000 people.

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