In East Africa, Tanzania was also studied and researchers found at least $145m had been hidden by its elites. Researchers concluded that this was because politicians, elites and their cronies got access to aid money and instead of using it to work on projects that developed their countries, they hid it away for personal use.
The World Bank is one of the leading agencies that give Uganda aid money
Ugandan officials could have stashed
away a whopping USD 73M (UGX267B) of the aid money from the
World Bank between 1990 and 2009, a new research paper suggests.
The controversial paper written by
researchers from the Norwegian Business School, University of Copenhagen, and
The World Bank observed that every time the institution released money to aid-dependent countries
like Uganda, “there was correlating increment in the amount of money deposited
in countries praised as havens” – usually used to hide stolen cash.
The countries where they hide money
include Switzerland, Luxembourg, Cayman Islands, Bahamas, Hong Kong and Singapore. The paper is
titled “Elite Capture of Foreign Aid:
Evidence from Offshore Bank Accounts” was on Tuesday published on the bank’s website.
For Uganda, researchers found that
money hidden in havens by Ugandans grew by 2.4% per quarter when the World Bank
released money for the country. This is higher than the quarterly growth in the
country’s economy at just an average of 1.6%.
The amounts hidden in these countries had
reached Shs 267bn by 2009. Uganda receives annually up to 3.3% of its GDP in aid from the World Bank, the paper’s analysts found. The paper only looked at aid from
World Bank but Uganda receives much more money from other institutions and countries including
the USA and the Scandinavian countries like Norway, Sweden, and Denmark.
This means money stolen could be much more. The research paper does not name the officials who hid the money. In East Africa, Tanzania was also
studied and researchers found at least $145m had been hidden by its elites. Researchers concluded that this was
because politicians, elites and their cronies got access to aid money and
instead of using it to work on projects that developed their countries, they
hid it away for personal use.
paper had reportedly been spiked by the Bank after it put a spotlight on the
World Bank’s work. It was released on Tuesday after the World Bank’s chief
economist Penny Goldberg resigned and after the paper was leaked to the UK’s Economist
and Financial Times.
The World Bank
has said in a statement that “management takes corruption and related fiduciary risks very
seriously, especially given the challenging environments in which we need to
work to achieve our poverty mission.” It reignites
questions on whether aid money was actually helping the intended people but
also on corruption by ruling class in countries receiving this aid.
papers aid money doesn’t necessarily help the most disadvantaged people. The paper says: “The results are consistent with aid capture by ruling
elites: diversion to secret accounts, either directly or through kickbacks from
private sector cronies, can explain the sharp increase in money held in foreign
banking centers specializing in concealment and laundering.”