LENIAS HWENDA: SA is right to refuse to be bullied over pennies

The US is withholding aid funding to SA as punishment for the government doing “very bad things”, but just how much money are we talking about?

President Cyril Ramaphosa has said the funding SA receives from the US Agency for International Development (USAID) “accounts for about 17% of HIV spend”. SA funds most HIV and TB treatment and other services from its fiscus. He explained that SA would fill the gap with its own money.

If the amount SA receives from the US is relatively small, is the magnitude of US aid to other governments also overblown? The journal Foreign Policy calculated that “of the $51bn in US aid tracked by ForeignAssistance.gov in fiscal 2020, about 40% was spent by the US government itself to buy goods and pay salaries, for example”.

“Another 20% was administered by US-based firms and nonprofits. A little more than 30% went to international organisations — the UN and other multilateral agencies — and international NGOs. Of the small remainder, foreign firms and nonprofits, based mostly in recipient countries, received just above 5%.”

Low- and middle-income country recipient governments got “only 3.9% of US aid spending.” A large part of that goes to Jordan as US bilateral aid, leaving 0.7% for the rest of the countries.

So much drama over pennies. As Richard Haas writes in the Home And Away newsletter, “It is impossible not to be struck by the hubris of it all.” Greenland. Canada. Panama. Gaza. Now SA.

The rest of Africa must urgently assess their options, weighing the risks and costs, and factor in what trade-offs countries are willing to make to create a strategy for dealing with such an erratic leader.

Trump has been heavily criticised by the foreign-policy community for dismantling USAID to save money. However, the Associated Press notes that foreign aid accounts for less than 1% of the US federal budget. The US Congress earmarks $60bn annually for international affairs spending. Of that, about $10bn goes to global health spending, $8.5bn to humanitarian work and $1.2bn to education.

Most of this money never reaches other countries. In fact, USAID does not provide direct finance to government initiatives regardless of development priorities. So where does the money go?

It is “an open secret in Washington” that very little American aid money ever leaves the country, according to a report on a case study on foreign aid done by Unlock Aid called “Follow the Money”.

The US spends most of its US foreign aid money on Americans, not people in low- and middle-income countries. Foreign Policy journal calls the small group of Washington-based agencies, consulting firms and NGOs that receive most US foreign aid “the Washington bubble”.

For instance, former president Joe Biden’s Build Back Better World initiative, launched in 2022 at the G7 Summit, which included the health facility electrification initiative. It was spent almost exclusively on the usual US aid recipients. Americans.  

Writing for Foreign Policy, Charles Kenny lamented: “Sadly consistent with every major US aid initiative of the past 20 years, Build Back Better World appears to channel virtually all its funds through a Washington bubble of agencies, contractors, and non-governmental organisations, providing hardly a cent of bilateral aid to developing-country governments.”

According to Kenny, the US, the world’s biggest donor, directs its spending through “just about everybody except the governments of developing countries. It pays the US military to provide emergency relief services; subsidises private firms to invest in infrastructure projects; funds NGOs to deliver aid in the health, education and humanitarian sectors; and pays billions of dollars to private consulting firms within spitting distance of the White House to provide so-called technical assistance.”  

What recipient countries like SA often get are overpriced experts and consultants who know little about the challenges of African communities and have little development progress to speak of. It is hardly worth the abuse meted out to SA. Ramaphosa is right to say: Go hang. SA needs better friends. Instead of cowering, it is better off using the G20 platform to find more reliable partners. 

• Hwenda is founder and CEO of Medicines for Africa.