On legal courts and stock markets

Courts and stock markets appear to have very little in common. The first are a revered part of most countries’ legal infrastructure; we cannot imagine life without them. The second, seem to bounce from loved to hated and back again in a matter of hours and are often far from respected; some countries even believe they can do without them altogether. But what do they have in common?

They both play important roles in checking the status quo. Both institutions are often the only places that can bring powerful people and institutions to account for their deeds. Courts, with their sacrosanct independence from politics and private interests, are able to bring down decisions punishing anyone that violates the law or does not honor a contract. Stock markets, for their part, can punish companies that are not fully dedicated to implementing the strategy they promised their shareholders they would adhere to and implement successfully.

Less dramatically, they both play a decentralized governing role, ensuring among other things that companies are well run, contracts are upheld, rights are not flaunted and corporate investments are allocated efficiently. They may not be perfect in doing this, but at least they give us some chance to make power accountable. Most importantly, their role is independent of the executives and management.

One cannot help but notice the relative absence of either of these two powerful institutions at work in the development aid community. The obvious questions is, how are aid institutions and decision made accountable? Who or what makes sure our aid dollars are not being spent inefficiently in helping third world countries develop or deal with a crisis? Who makes sure the allocation of aid dollars is done according to certain high level priorities? How do we make sure our aid dollars are not used to achieve unstated aims, such as distorting the political systems of supposed beneficiary countries or supporting unnecessary agencies and government bodies?

The short answer to that of course is politicians and our government bureaucracy; but they are far from independent. How are they accountable? Sure, if it gets bad enough elections can do the job, but that seems far from effective in most cases. When we give money for aid, the idea is to achieve certain developmental goals, and for temporary assistance. Are our politicians motivated to achieve those goals and makes sure that they do so in the interests of all stakeholders, including beneficiary communities?

Viewed from the field, it often seems like there is a lot of waste in the development aid industry. SUVs and large salaries support a lifestyle often at odds with the lives of those we are trying to help. Accountability and oversight are often shortchanged for control and expediency. Results may often look good on paper, but how do they look in reality and who is checking?

Though this impression was obtained during my time as a Kiva Fellow, it was not due to anything I saw directly in my work with Kiva or its field partners. Rather, it is something I gained from being exposed to people involved in development aid activity funded with official grants from governments. In this respect, Kiva is a refreshing antidote to this status quo, where individuals and a private NGO are facilitating development outside the realm of governments and official aid. Thumbs up to Kiva!

Nemr is a KF7 spending 12 weeks at Ameen. You can also check out his personal blog. Check out some of Ameen’s borrowers and make a loan today by clicking here.


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