Finland maintains decision to cut aid to Zambia due to corruption

Finland maintains decision to cut aid to Zambia due to corruption

– Gradual termination started in 2013
– But corruption, politics and general situation has deteriorated even further under current regime

Finland has begun to rapidly wind down its development aid cooperation with Zambia after 45 years. The decision was made during the early phases of the current Juha Sipilä administration.

The Finnish Foreign Ministry cited Zambia’s then-poor economic outlook and the shrinking importance of development aid in the country as the reason for the decision to gradually discontinue the development programme.

According to a statement from the ministry, the situation in Zambia has deteriorated since the government decided to drop the curtain on the aid programme.

Six years ago, Zambia was still one of the top destinations for Finnish development aid. In 2013 Zambia received the second-highest amount in Finland’s development aid programme, more than 30 million euros.

However the amount of aid funnelled to Zambia has declined dramatically since then. In 2018, Finland allocated just 4.3 million euros to bilateral aid for Zambia and this year the amount will be even less, at 3.5 million. Next year, it will be an estimated two million, eventually drying up by 2023.

Austerity sees development aid cuts

“You could say that Zambia has been a disappointment during the last few years. The country has lagged behind in a number of metrics and the political climate has been particularly toxic. Zambia is becoming indebted at a rapid rate – you could say unsustainably – and relations with the International Monetary Fund are poor,” noted Juha Savolainen, head of the ministry’s Southern and West African unit.

Last September the IMF announced that it would no longer extend additional credit to Zambia.

“Corruption scandals have become more widespread. Leading politicians have either been sacked or they have left the government because of these suspicions,” Savolainen added.

“We are following the situation with some concern and are in active dialogue with Zambia,” he continued.

The ministry official admitted however, that the decision to terminate development aid was made in rather different circumstances. From 2010, the Zambian economy posted growth of up to 10 percent annually, slowing to about three percent per annum in recent years.

When the Sipilä administration took office in 2015, it implemented an austerity programme that included deep cuts to development assistance, starting in 2016.

In addition, recent revelations of misuse of development funds in Zambia have resulted in projects being frozen or wrapped up and only served to accelerate Finland’s move to wind down the programme.

20 cases of suspected wrongdoing

Yle’s A-studio discussion programme requested reports on suspected abuse of all development aid spending between 2015 and 2018.

The foreign ministry handed over information about 20 suspected cases of development aid misuse, 11 of which involved Zambia and seven of which involved calls to repay funds contributed.

Four other cases involved miscellaneous suspicions: in one of them no effort was made to reclaim development funds since the organisation in question had disbanded.

Another foreign ministry report saw officials decide to shut down a project over delays and administrative issues.

Yet another case was settled after a payment plan to reimburse development funds was agreed with the new management of the NGO in question.

Support for human rights groups

In a fourth case an audit of the organisation’s accounts revealed several instances of over-spending, but a review determined that the funds had been used for the agreed purposes.

The majority of cases involved instances where the Finnish embassy provided direct assistance small local organisations. In these cases, the recovered sums ranged from a few thousand euros to nearly 70,000 euros.

According to Savolainen, the number of cases has been affected by the fact that the Finnish embassy in the Zambian capital Lusaka had access to funding allocations to provide direct support to small local NGOs.

For example it provided financial backing to local NGOs campaigning for human rights, which tried to get local leaders to address wrongdoing.

Savolainen described this form of direct backing as one example of Finland’s success in Zambia, in spite of several instances of development aid misuse.

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