The African Forum and Network on Debt and Development (AFRODAD) has expresses its concern on the use of private sector instruments in the disbursement of official development assistance (ODA).
According to AFRODAD, at least USD 3.2 billion of net ODA flows were channelled through private sector instruments (PSIs).
‘’This is a continuing trend whereby donor countries leverage on ODA to catalyze private sector growth. This is being done in the absence of robust frameworks to ensure transparency and accountability and the safeguarding positive development impact from the profit-oriented motives of the private sector’’. Reads part of the report by AFRODAD.
AFRODAD claims that the continued use of Private Sector Instruments (PSIs) is a big challenge and undermines the critical roles played by ODA in enhancing capacities in African countries’ development practices and tackling development setbacks.
The African Forum further said sectors such as social protection e.g. Education, health and services availability including vaccinations are critically important as only 10 countries have administered 75% of all Covid-19 vaccines available.
AFRODAD has also warned that the use of multilateral institutions such as World Bank as conduits of disbursing ODA funds to developing countries will soon promote the expansion of private and equity finance resulting in the financialization of development including the covid-response by big corporations.
‘’This is evidenced in the Financial Transparency Coalitions’ report that notes that in Kenya, 92 percent of Covid-related bailout funds went to big corporations, rather than to those facing poverty. This made Kenya’s corporate tax rate the lowest in East Africa, fuelling tax competition whilst in Sierra Leone atleast 92 percent of announced and allocated funds were accounted to big trading corporations. This has a constraining effect on fiscal space in African LICs and we therefore call on the DAC and partner governments to establish appropriate accountability and transparency mechanisms to hold these International Finance Institutions accountable for their policy interventions’’