Monday, April 21, 2008

Failed Promises For Aid And Windfalls For War

My last post provided some links regarding the history and different perspectives on some of the issues being raised concerning microcredit. What was left unexamined was the potential for abuse or misconduct. It would seem that there is a great deal. The name that stuck out the most from the last post was the Louis Berger Group.

Windfalls of War - The Center for Public Integrity
Louis Berger was one of the six companies chosen by USAID to bid on the main Iraqi reconstruction contract, but lost out to Bechtel. The four other companies that bid were Fluor, Halliburton's Kellogg, Brown & Root, Parsons, and Washington Group International.

The following blog has a particularly negative view, but it would seem that it is more directed at government programs being used for geo-political purposes than the efforts of organizations such as Acumen.

The Failed Promises of International Aid | Corrente
"The report estimated that 40% of the aid money spent in Afghanistan has found its way back to rich donor countries such as the US through corporate profits, consultants' salaries and other costs, significantly inflating the cost of projects. For example, a road between the centre of Kabul and the international airport cost over $2.3m per kilometre in US aid money, at least four times the average cost of building a road in Afghanistan, today's report says."
And the companies the contracts went to bear familiar names: KBR, the Louis Berger group, Chemonics International, Bearing Point, and Dyncorp International.

This particular example of government sponsored abuse does not argue though against the case made by Professor Cowen and Professor Karol Boudreaux in the previous post. It also does not settle the debate on whether social-entrepreneurs should seek to maximize returns.

But Compartamos’s decision to go public last April became a flashpoint in what had been a genteel debate over how microfinance could tap into the financial markets’ vast resources. The initial public offering gets special mention at every microfinance conference, and has been condemned by Mr. Yunus, the Nobel laureate.

This blog has had a number of posts recognizing the need for an entrepreneurial approach along with better business practices in the field of social-entrepreneurship. The Global Sociology Blog provides a another view with Mr. Yunus as its standard bearer.

While each side of the question may see the issue clearly from its own perspective, it is going to take some more contemplation on my part.

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