LONDON Feb 26 The cost to aid budgets of the
world economic downturn is headed for billions of dollars,
slashing assistance to the world's poorest people just as it
becomes harder for them to make money for themselves.
In the United States, the heads of more than 50 groups in
the InterAction coalition, whose 175 members manage a total of
$9 billion annually, say they expect donations from individuals,
businesses and foundations to fall by about $1 billion this
"If this (recession) goes into 2010, we will be seeing a
significant reduction in delivery of programmes in the world's
poorest areas," InterAction president Sam Worthington told
Reuters, adding weaker organisations may fall by the wayside.
British-based charities are suffering additionally from the
pound's decline, making their money worth less abroad.
The squeeze has come as the needs of many crisis-hit
communities, such as those in Zimbabwe, Sri Lanka and Sudan's
war-torn Darfur region, are rising.
"The problems in Darfur haven't changed one iota because of
Western bank failures. If anything, it's just gone off the
agenda," said John Low, chief executive of the Charities Aid
Foundation (CAF), which helps charities manage money.
A CAF survey in January of 322 British charities --
including groups working on overseas aid -- found half expected
their income to fall in the next year and 41 percent had seen
their income drop in the previous three months.
Groups in Africa, which receive much of their funding from
international charities and government donors, are worried about
the effect on their work.
They include Uganda's National Guidance and Empowerment
Network of People Living with HIV/AIDS.
"With HIV, the major effect of the global financial problems
is fear: fear that there might be less funds committed to the
campaign and fear that there might be a shortage of essentials
like drugs and condoms," said director Major Rubaramira Ruranga.
In South Asia, the mood is calmer, partly because most
countries are less reliant on international donors than in
Africa, where aid makes up close to half some national budgets.
Agencies in India told Reuters they had secured resources
for the coming year but were cautious.
"It is important to ring those alarm bells of concern at
this time because across South Asia there are people who are
already teetering on the edge and a sustained wound to the head
would be fatal," said Sarah Crowe, regional head of
communications for the U.N. Children's Fund.
The World Bank has warned that almost 40 percent of 107
developing countries are highly exposed to the effects of the
credit crunch and up to 53 million more people are being trapped
in poverty as economic growth falters.
The British-based agency Oxfam points out that a fall in
remittances from migrant workers will have a huge effect in
countries such as Bangladesh, where one family in every village
is dependent on them.
Experts say it is hard to predict how far the global
downturn will cut into aid budgets. Italy has halved its 2009
assistance and Ireland has cut 17 percent from its overseas aid
in three reductions since July.
"We realise that the government finds itself in extremely
difficult circumstances with tough choices to make, but it is
shocking that the option taken has hit at the poorest and most
vulnerable," said Tom Arnold, chief executive of Dublin-based
agency Concern Worldwide.
Aid contributions from European Union countries, which had
been expected to top $92 billion in 2010, could be $15 billion
to $25 billion less because of currency weakness and lower
growth, according to Nick Highton of the London-based think-tank
Overseas Development Institute.
"Just when poor countries are most going to need it is when
rich countries draw in their horns," he said.
British charities working overseas say the most harmful
effect of the crisis so far has been the weakness of the pound.
The CAFOD agency estimates the dollar value of British
government aid may fall by as much as $41 billion between 2008
Groups funded by CAFOD in developing countries have already
seen the dollar value of their sterling grants drop 25 to 30
percent compared with the middle of last year. "We're basically
passing on the pain to our partners with profound apologies,"
said policy adviser George Gelber.
In Kenya, Charles Mwangi Waituru, country coordinator for
the Global Call to Action Against Poverty, says the financial
crisis will slow progress towards U.N. benchmark targets for
reducing extreme poverty, which have a deadline of 2015.
"We are going to see drawbacks in key campaigns against
poverty, disease and the new burden of climate change," he said.
"In the long run the Millennium Development Goals will not be
achieved in the stipulated time frame."
In the country's Rift Valley, 24-year-old Michael Ole Sayo
runs a small agency that runs projects for Maasai nomads.
They have funding requirements of a few thousand dollars
each, a tiny drop in the multi-billion-dollar aid industry. They
are Ole Sayo's life's work.
"Most of the programmes are donor-funded. So if the donors
don't get money we, who are the last kind of grassroots people,
are not getting funding either," he said.
One of a new generation of educated young Maasai equally at
home in their parents' remote huts and the internet cafes of
Nairobi, Ole Sayo has given up several job opportunities in the
city to stay and work with the community.
His projects include building rainwater collection tanks at
a school, helping Maasai bead workers market their crafts,
increasing awareness of female circumcision and improving
inoculation and water supplies for cattle.
"It is a new problem," he says, "one I'm not sure how we can
Some charity fundraisers argue lean times will result in
Caroline Underwood, director of partnerships for Save the
Children UK, expects businesses to put more pressure on aid
groups to use their donations wisely and creatively.
"Charities will have to work smarter," she said.
(Additional reporting by Frank Nyakairu and Tom Kirkwood in
Kenya and Nita Bhalla in New Delhi; Editing by Andrew Dobbie and