Obama in Ghana: Time to End Tied Aid

In President Obama's speech in Ghana, he will highlight the importance of tackling corruption in order to support economic development in Africa. While he will surely focus on the key challenge of governance in Africa, President Obama also said last week that too little foreign assistance is reaching those who need it because of tied aid: "One of the concerns that I have with our aid policy generally is that Western consultants and administrative costs have been gobbling huge percentages of our aid overall." If Obama tackles this problem of tied aid as well as the challenge of corruption, he will be doing an enormous service for Africa and the world.

Tied aid remains common among foreign assistance programs of the United States and other major donors. For a decade, starting in 1996, the United States stopped publicly reporting the amount of tied aid in its foreign assistance. At that time, 72 percent of U.S. foreign assistance was tied. In 2001, the world's wealthiest nations agreed to untie the majority of their assistance to the world's poorest countries. While there has been some progress since then, the Center for Global Development still found that nearly half of all U.S. foreign assistance was tied or partially tied in its 2008 index.

Food aid is one of the biggest examples of tied aid in the world today. Virtually all food assistance provided by the United States is required to be produced and packaged here and shipped on U.S. flagged vessels halfway around the world. Past efforts to shift a fraction of these resources to the local purchase of food in countries facing severe hunger were blocked in Congress. Although there is now a tiny pilot program on local purchase, real reform of food aid will not happen without leadership from President Obama.

When foreign assistance is untied, it pays off with powerful results on the ground. In Ghana right now the United States is helping to support the expansion of primary education by building new schools with untied aid. Ghana is a good example of a country investing in its own people with the government now supporting free public education starting in kindergarten. In Burkina Faso, the government used untied aid from the United States to dramatically expand girls' enrollment and performance by creating schools in rural areas.

A great strategy to ensure that more foreign assistance actually reaches those who need it is to expand America's investment in multilateral aid agencies. Multilateral mechanisms like the Global Fund to Fight AIDS, Tuberculosis and Malaria have demonstrated impressive results in recent years, in part, because its resources are not diverted by tied aid restrictions. President Obama previously committed to create a Global Fund for Education, which could similarly ensure that the additional $2 billion he pledged to invest in basic education would reach the children who need it. The president is right to take on the important challenge of corruption in Africa, and it will be no less important for Africa that he follow-through on tackling the problem of tied aid.