In his excellent new blog, Aid Watch, William Easterly has posted a video of Andrew Mwenda speaking at a recent conference at NYU. Sadly, my Internet connection is currently too slow to watch it, but I have spent enough time with Andrew at The Independent and around town that I am pretty sure I know what he is saying...essentially that foreign aid makes governments accountable (if at all) to donors instead of their own people, which has damaging consequences for many young and emerging democracies.
I generally agree. In some cases, there is little evidence that governments need to be accountable even to the donors, who seem to keep throwing money at programs and government coffers without following up to see that the money translates into measurable outcomes. Domestic taxes are a good (if obvious) solution. When people are coughing up their hard earned money to pay for public services, for example, they are much more likely to make sure that government actually delivers these services.
Tax collection is not easy, however, especially when the richest businessmen are often top government officials themselves, or have close ties to the government. Studies from the Economic Policy Research Centre in Uganda have found that tax evasion in the country is widespread (an altogether expected finding). I am sure we would be shocked to know the real amount that is owed to the Uganda Revenue Authority. It is also hard to tax the informal sector, which constitutes a large and largely undocumented portion of the economies of many developing countries. Nevertheless, improved tax collection should be a high priority for those looking to create real systems of accountability in countries like Uganda. But who are these people exactly? Politicians? Government officials? The most powerful people in the land? Mmmm, methinks not...
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