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28 September 2011 | Adam Leach

Foreign aid awarded to Namibia to support infrastructure and health projects should provide greater economic benefits to the country through local procurement, according to a letter to EU states.

The European Network on Debt and Development (Eurodad) has written to all EU member states and called on them to ‘untie’ aid awarded to developing countries.

The letter, published on Monday, said: “Aid can yield a double dividend for poverty eradication and sustainable development when it is spent locally, when it actually enters the economies of recipient countries thus creating jobs and income opportunities, building domestic productive capacities and driving inclusive growth.”

The letter follows on from recent reports by Eurodad into the effectiveness of foreign development aid. Procurement, tied aid and the use of country systems in Namibia, published in February, argued that the Namibian government should make changes to the tender process for contracts so that domestic companies, and in particular small-to medium-sized enterprises (SMEs), can compete against large companies from donor countries for infrastructure and other public work.

The report claimed that some foreign aid awarded to the country for economic development is formally or informally ‘tied’ to the awarding of contracts to companies in the donor country. Some aid donors, such as the US Millennium Challenge Cooperation, do not use the Namibian procurement system because it conflicts with its domestic policies.

Just 70 per cent of official development aid given to the country is actually channelled through Namibia’s State Revenue Fund, according to the report. It concluded that the Namibian government should make a number of changes to its procurement policy in order to strengthen the benefits for local contractors and make it more attractive for foreign donors to use the process rather than their own procurement system.

The recommendations included: to invest in and increase the capacities and skills of the public sector’s tender boards and to systematically assess the results of public procurement with regard to contracts awarded to local or foreign firms.