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'Challenge' for nations seeking aid

By Nicole ItanoSpecial to The Christian Science Monitor / January 22, 2003



MAPUTO, MOZAMBIQUE

This vast, semitropical nation, almost twice the size of California, usually tops the list of African success stories.

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Ten years after a brutal 16-year civil war, it boasts a multiparty democracy, significant spending on public services, and economic growth consistently in double digits.

Indeed, it's just the type of country President Bush said he wanted to reward with his new Millennium Challenge Account (MCA), a $5 billion increase in foreign aid that will reward poor countries on the right track.

But Mozambique may not be getting a piece of that big pie.

Under the new fund's criteria - a set of 16 financial, political, and humanitarian indicators - Mozambique doesn't make the cut.

Nor does Uganda, another country Mr. Bush specifically mentioned as a development success story in his speech last March announcing the account.

It turns out that giving aid on the basis of merit is harder in practice than in theory.

The Millennium Challenge Account emerges from a shift in thinking among donor nations: Foreign aid should go first to the nations with the "right" policies. It's a merit-based boost to countries giving a priority to education, healthcare, and fighting corruption. Although Congress still has to authorize funding for the MCA, and the qualifying countries have yet to be announced, the "irregularities" emerging from the MCA criteria show that separating the worthy from the unworthy isn't as easy as it sounds.

"There's been a decision to base this on merit, trying to show which countries are really committed to development," says Steve Radelet, a senior fellow at the Center for Global Development in Washington, which conducted the survey. "The reason they have these numerical indicators, for all their weaknesses, is that they are in effect trying to depoliticize aid. The negative is that you sometimes get funny results."

Seventy-four countries, which have a per capita income below $1,435, are eligible for MCA money. To then qualify, a country must be above the international median on half of the indicators in each of three areas: ruling justly, investing in people, and economic freedom. However, failing to pass the corruption indicator alone can disqualify a country from consideration. As many as 20 countries are likely to qualify for MCA funds, says Mr. Radelet.

The problem, say observers, is a lack of good, comprehensive data. The US wants to reward countries that invest in their people, for example, but there is no single statistic that tells that, explains Radelet. Things that can be measured, such as spending on education and health, the percentage of children who are immunized, and primary school completion rates - all of which have been chosen as indicators in the "investing in people" category - can discriminate against exactly the poorest countries who would most benefit from the MCA.

Take Mozambique, for example. Often commended for its political and economic reforms, Mozambique passes all the governance criteria, which address such issues as corruption and human rights, and the required economic criteria. In other words, it has a good government with the right economic policies.

Where Mozambique fails is in the investing in people category, where it passes only one of four indicators. It doesn't have high enough immunization or primary school completion rates, and while it spends enough on health, its education budget isn't large enough.

But development experts say that these are the problems of a poor country, not necessarily the problems of an inefficient one.

"The hardest set of hurdles are in health and education," said Radelet. "Of the five countries that miss qualifying by one indicator, all of them fail in the investing in people category."

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