When foreign aid is an ATM

ON A RECENT trip to Uganda, I stopped by the local offices of the Global Fund to Fight AIDS, Tuberculosis and Malaria. Since it was created in 2002, the Geneva-based multibillion-dollar health agency had disbursed $54 million to Uganda. But in August 2005, the auditing firm Pricewaterhouse Coopers concluded that the whereabouts of much of the money was unknown.

No one knows the exact amount that is missing, but estimates range in the tens of millions of dollars. According to the Pricewaterhouse report and to local newspaper accounts, some of the money ended up in the private bank accounts of government officials. Some was spent on campaign junkets and bogus trips abroad to meetings and “workshops.” Some may have been spent on the campaign to lift presidential term limits so that Ugandan President Yoweri Museveni could compete in the country’s recent elections.

In September, Global Fund headquarters temporarily suspended all disbursements to Uganda. Ugandan authorities responded promptly, sacking the entire project management unit, the local body overseeing the grant -- including secretaries and cleaning ladies. A new team was hired and a commission of inquiry was set up to find out how much money had been stolen, who stole it and what they did with it.


When I visited the local Global Fund offices in Kampala in February, four armed guards stood at the entrance, and the new receptionists were reading Bibles. Although it is heartening to see how seriously the Ugandans are taking the matter, none of this can erase the fact that an enormous act of international goodwill that may not come again has been squandered.

The shenanigans had fatal consequences. Programs to deliver treatment for the three diseases are behind schedule. One Ugandan recently complained on an Internet blog that his child almost died of malaria because all the health workers at the local clinic were at a “workshop” in the capital or out of the country. In Kampala, I heard the officials involved in the scandal referred to as “nightdancers” -- evil spirits of Ugandan mythology who haunt graveyards and feed on the dead.

The irony of all this is that the Global Fund was intended to be a transparent, efficient mechanism that would avoid the inevitable politicization of bilateral aid programs and the hopelessly entangled bureaucracy of United Nations agencies. When it was created with great fanfare, fund officials announced that the money would be controlled by local players, including officials from local government and nongovernmental organizations. Donor governments, including the U.S. and Britain, as well as private philanthropists, including Bill Gates, have so far given about $5 billion to the Global Fund to support some exemplary programs around the world.

However, some powerful Ugandans seem to have been under the impression that the Global Fund was an all-you-can-eat buffet. When I was in the country, the commission of inquiry spent one afternoon questioning the director of the Uganda Center for Accountability, which received $120,000 from the Global Fund to train community-based organizations in financial management. The director, Teddy Cheeye, is a close associate of Museveni, the Ugandan president, and a senior official in the country’s main spy agency.

Bank records show that two days after the Global Fund money was transferred to the center in March 2005, Cheeye withdrew $33,000 and bought a plane ticket to China, according to the commission of inquiry. With a bemused, insouciant air, Cheeye told commissioners that he had mixed up his accounts and the plane ticket had nothing to do with the Global Fund money. When asked for evidence that he had used the money to do management training, Cheeye produced a sheaf of gas station chits to prove he had been traveling to workshops all over the country.

In Uganda, gas station attendants write the registration number of the vehicle on receipts. One of the commissioners checked with the motor vehicle registry and discovered that the vehicle Cheeye claimed to have used to drive to these workshops was a 1977 Caterpillar tractor.

All this was personally depressing to me because I love Uganda. Uganda was the first African country to see a nationwide decline in HIV rates, a success that saved perhaps 1 million lives during the 1990s. There has been much debate about whether this was mainly the result of rigorous abstinence or condom use or (my preferred explanation) pragmatic avoidance of casual sex.

But on a deeper level, what really made the difference was none of these things. Rather, it was something public health experts have no name for. The only way to describe it is a shared sense of humanity, social cohesion, mutual aid and commitment that is impossible to quantify or program. During the 1980s and early 1990s, while many other African countries were ignoring the looming AIDS crisis, hundreds of tiny community-based AIDS groups sprang up throughout Uganda to comfort the sick, care for orphans, help neighbors cope with the consequences of AIDS and open up discussion of sexual behavior. Museveni, whose political party has been deeply implicated in the scandal, had been involved in these campaigns.

The World Health Organization provided some funding for Uganda’s early fight against AIDS, but much also came from the pockets of the poor themselves. Their compassion and hard work brought the disease into the open, got people talking, sharply reduced AIDS-related stigma and denial and led to a profound shift in social and sexual norms. Although this process was very African, it was similar in many ways to the compassionate, vocal response to AIDS among gay men in Western countries during the 1980s, when HIV incidence in this group began falling.

In 1993, international donor agencies, including the World Bank and the U.S. Agency for International Development, began funding a larger share of Uganda’s AIDS programs. They supported many vital programs to improve health infrastructure, making condoms more available and improving AIDS treatment. But they also bureaucratized the response to AIDS. Uganda’s vast budget, amounting to about $50 million for this disease alone (in a country with a total health budget of about $170 million a year) contributed to what Ugandans call a “Pajero culture” -- a reference to the fancy four-wheel-drive aid-agency vehicles that soon became ubiquitous in Kampala.

In the months and years that followed, some people came to see AIDS less as a terrible scourge and more as a growth industry and an opportunity for a career move. It’s worth noting that as the Pajero culture has grown from the late 1990s to today, the HIV rate in Uganda has declined ever more slowly. During the last five years, as the AIDS budget ballooned even more, the HIV rate has not fallen.

Many factors are responsible for this trend, and it’s unfair to blame it all on the foreign-aid industry. But it does hint at a disturbing paradox. As New York University professor and former World Bank economist William Easterly argues in his new book, “The White Man’s Burden: Why the West’s Big Plans to Aid the Rest Have Done So Much Ill and So Little Good,” poorly administered foreign aid can create perverse incentives.

Global Fund administrators tell me that they have learned many lessons from the Uganda fiasco and that they intend to improve oversight mechanisms. But what I wonder is this: When will we learn that the answer to serious global problems is ... well, there is no answer?

Just as ecologists have learned that you don’t bulldoze a complex virgin forest to plant daffodils, and just as city planners have learned that urban renewal programs can uproot poor but functioning communities, and just as everybody knows that planned economies are a no-no, we learn from Easterly that if you fire-hose poor countries with development dollars, you risk generating a mad scrum for money, and it’s no use blaming Africans (again) when the money is misused.

Truly well-designed aid programs involve hard, unglamorous work and have very modest goals. They involve close monitoring of simple projects, and they are run by officials who learn quickly from their mistakes and recognize that aid is inevitably political, so they anticipate and address such problems as they arise.

The most important thing is that they preserve the sense of commitment and solidarity without which no development program can succeed. A couple of years ago, I met Nkululeko Nxesi, then head of South Africa’s National Assn. of People Living With HIV/AIDS, and I asked him why the HIV rate in his country was so high and had not fallen, as it had in Uganda.

Nxesi had been asking himself the same question. Years earlier -- long before the Global Fund and other big donors began pouring money into Africa -- Nxesi had met a Ugandan AIDS worker at a conference. “He told me, ‘In Uganda, we may not have highways and tall buildings, but we take care of our people,’ ” Nxesi said. “Down the line we will realize that development is not only about how good your infrastructure is. It’s also about the heart.”