NGOs: whose babies and for whom?

Globalisation is an ancient and shifting free-market paradigm predating since even 1492. The basic tenet of this paradigm is to promote global free trade, perceived as a rising tide raising all boats. This is an economic prescription that one size fits all. They seem too good to be true. In reality, these prophecies are simply fictional. Factually, this rising tide raises yachts much higher than rowboats. Moreover, one size does not fit all, given the uniqueness and structural differences across economies and societies. In contrast, income inequality (as measured by Gini Coefficient) between rich and poor nations/groups/individuals has been gradually increasing at least over the last four decades when globalisation started regaining momentum and becoming a worldwide household word. Also, people in the top 10-20 percent are earning increasingly several folds of that of the people in the bottom 10-20 percent on the income ladder. At the same time, the rural/urban income gap continues widening because of city-centricity of globalisation. As a result, more and more people are falling further into poverty through the cracks of rising income inequality. Today, about one-fifth of the world population lives on less-than-one dollar a day (or in very extreme poverty). Globalisation as a free-market paradigm is designed to work more in favour of the developed industrial nations, the affluent and the better educated as compared to the less developed nations, the marginalised and the less educated. This also breeds global corruption (both financial and moral), a prime cause of escalating poverty.

The proponents of globalisation have been aware of the above adverse consequences since its inception. To put a human face on globalisation and to mitigate potential anti-globalisation sentiments, they keep attaching new ornaments to this paradigm to retain its attractiveness to the willing victims. In the process, globalisation has become an antecedent of Non-Government Organisations (NGOs) that date back to at least 1839, Commission on Human Rights dating back to 1946, the Washington Consensus originally dating back to 1989, and the Transparency International dating back to 1993. They all surround the paradigm of globalisation. Each has been shrewdly and skilfully crafted to remedy a specific negative side effect of globalisation to keep it enticing. But it still produces tantalising effects on many less-developed/developing economies.

To many, globalisation has become an effective tool of net transfer of capital/resources to the developed nations from the less developed/developing nations. In return, a part of this transferred capital is recycled to developing nations by funding the activities of the aforementioned entities. Their activities are moulded by the major donor countries the way they serve their interests the best. Even the research findings of particular project(s) are tilted towards their undisclosed intent(s). In brief, globalisation has thus become the cause and the cure of the same disease. How is it possible? At least so being, it can manage to keep many people in a state of confusion by obfuscation and by sugar-coating a bitter pill.
The NGOs are created and funded, prima facie, with multiple humanitarian objectives and beneficial social causes. The publicised goal is to alleviate poverty and thereby to help advance some desired social progress among the disadvantaged. The donor countries use their respective NGOs as vehicles to deliver help directly to the poor with good governance and transparency. The NGOs operate without government oversight and often tend to challenge the authority of the host-country governments. They also seek to impose the macroeconomic policy prescriptions of the so-called Washington Consensus. No doubt, many host-country governments are corrupt and incompetent. Nowhere in the world, governments are absolutely free of corruption. Corruption in governance is just a matter of degree. However, this must not exonerate any corrupt government. The same allegations of corruption, bad/poor governance and lack of transparency are also labelled against many NGOs, though not all.

To be very brief, corruption is a multi-dimensional concept like poverty. The dimensions include public, private, financial, moral, political, social, procedural, etc. Regardless of dimensions and disagreements on definition, any violation of the universal principle of impartiality and deviation from public/social commitment are corruption. In fact, moral corruption has far more damaging consequences than any other type of corruption. Additionally, something legal is not necessarily ethical. Corruption is both illegal and unethical.

Bangladesh has been witnessing proliferations of NGOs since the 1970s. Today, they number in thousands. 1200 of them are also engaged in micro-lending charging some 30 percent or higher interest from the poor borrowers. Only 540 of the above are registered with the toothless Microcredit Regulatory Authority (MRA) in Bangladesh. The Grameen Bank is not even one of these 540 NGOs, because it was founded in 1983 by a Special Ordinance as a specialised bank subjecting it to supervision only by the Central Bank (Bangladesh Bank). In fact, the Grameen Bank is a hybrid of NGO and credit union. By nature, any hybrid creature is likely to be mysterious, to say the least. Microcredit is not a simple small loan model. It is complex with limited transparency in the loan initiation process. This is also somewhat predatory and comparable with the Payday Loan in the USA as it targets the cash-starved, vulnerable and unsophisticated.

Allegedly, the not-for-profit NGOs in Bangladesh have infections of both financial and moral corruption. Their high officials take advantage of the "benign neglect" mentality of the donor countries. Again, NGOs are led by CEOs with heavy concentration of power. Many of these CEOs are employed from the local pool of retired, talented and prominent individuals. They draw attractive compensation with hefty benefits (fat bonus/allowances, luxury cars, pompous office space, etc.). Their basic salaries are kept deliberately much lower than other total benefits to reduce their tax burden. Allegedly, such CEOs also hire their relatives and friends without following a due recruitment process and with no due care for appropriate qualifications for the positions, held. The foreign donors are billed for multiple tasks in several projects, performed by an employee. But the employee is actually paid for performing a single task in one project. Some of the NGOs also submit minutes of fictitious meetings to the donors. Additionally, they misuse tax loopholes for spurring financial gains and report overly inflated expenses to the donors. Some are also alleged to fund acts of terrorism to destabilise the host-country government. The NGOs usually hold meetings/seminars on poverty alleviation in super luxury hotels in the capital city and spend very generously on lavish entertainment and feasting. How do such practices align with the stated goal of poverty alleviation? At least, they seem to have a telescopic view of the distant poor in the mud and the cold from an ivory tower. These are just a few examples of ongoing corrupt practices in many NGOs operating in Bangladesh. In reality, there may be many more. However, all NGOs are not corrupt. Simply, there are many black sheep among their ranks. Candidly, the aforementioned are not unique to Bangladesh. This is a common sad picture of NGOs across developing countries.

The corrupt NGOs either conceal the misdeeds from their foreign donors or the donors depict a benign neglect attitude. The donors may tend to tolerate such behaviour because these NGOs help promote their goal of running a parallel government at grassroots level within a developing country through their created political clout, social influence and shrewdness. They also help fulfil donors' religious missionary goal and local networking for cultural imperialism.

Now, the question is, "Why Should a Host Country Object to Such Practices, When It is Entirely about Foreign Money?" True, whatever tiny amounts of foreign donation money flows to the poor is good for the country. Seemingly, anything bitter is sweet in a hungry mouth. Much more positive things could be done with foreign donors' money for poverty alleviation if a lion share of it were not soaked in overhead cost. In some cases, it reaches as high as 80 percent of total project budget. All told, NGOs are foreign babies and they primarily serve the foreign donors' interests with spill over benefits for local poverty alleviation.

Prima facie, foreign donation money flows through NGOs without interest and principal repayment obligations unlike foreign (public and private) aid and loan. But this money is not free from the vested interests of the donors. Maybe, some money goes to purely humanitarian and missionary causes, but largely it is meant for promoting neo-colonialism or cultural imperialism. We now have to understand the foreign donors' ultimate interests/motives after warming to NGOs for so long. This is high time to separate the good from the bad. The good ones should be rewarded and the bad ones should be penalised instead of rooting out all their activities. Many developing countries that hosted NGOs are now considering regulating them. To name a few, they include China, India, Pakistan, Sri Lanka, Afghanistan, Syria, UAE, Ghana, Guyana, etc.
To be very brief, the Commission on Human Rights and the Transparency International are also largely dependent on foreign funding to carry out their missions/assigned activities within some broad guidelines. They are designed very skilfully and sold to the developing world through the United Nations by the major donor countries. The local officials are primarily selected from the self-declared elitist civil society for these entities. One should not read too much from the Corruption Perception Index (CPI) as available annually since 1995 because of its methodological flaws and extreme-small-sample bias. In fact, the magnitude of actual corruption is different from that of perceived corruption. The primary data on corruption can be tainted depending on how the questions are designed and how the sample respondents are selected to prove a self-serving cherished view. At the end of the day, one must not disagree on genuine efforts to mitigate corruption because it is potentially pernicious to democracy, economic and social progress, international trade, national and individual security, justice, human rights and human dignity.

To conclude, corruption, in general, is almost everywhere in our society. The difference is only in its degree. Only a strong social movement can salvage the country from the cancerous corruption. For a social movement to occur, all people must be made adequately aware of their rights and responsibilities through mass education. Only people have the ultimate power to force all involved in corruption to come out clean. Until then, we may have to live with this social ill.

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Dr. Matiur Rahman is the MBA Director and JP Morgan Chase Endowed Professor of finance at McNeese State University, USA.