withdrawal of aid created a vacuum because it was unclear who
would fill the void, given Pakistan’s dependence on foreign aid.
Overall, the root causes for USAID’s aid withdrawal were both
internal and external. Pakistan’s shifts in foreign policy, increases in the focus on certain development priorities, reductions in
constituency support, assessments of environmental changes,
and evaluation of programs’ performance, lead to USAID’s
decision to withdraw support.
Impacts of Aid Reduction
The impact of aid reduction and eventual donor exit can have
an enormous implications for the host nation, in particular,
nations with struggling economies that have just emerged from
violent conflict. Though it is important for these nations to
become self-sustainable and independent, and to build the
strength of their local civil society, it is necessary they be provided with sufficient initial aid to build towards their development
goals, and to plan the most appropriate allocation for the use of
the donor dollars. If no such plans exists, donors will eventually
withdraw funding due to the potential misallocation of funds
and a general lack of development progress.
16
Host nation’ CSO credibility with the local population may be
affected in that a decrease in aid and donor assistance can also
lower internal CSO capacity to use funds because of staff turnover and CSO brain drain. However, donor exit may also have
a positive effect on CSOs by increasing host nation ownership,
creativity and innovation. When the host nation is forced to
rely on already existing internal organizations, or to create new
structures, it is possible that the nation can become self-sufficient using only existing resources, and building capacity internally. Retraction of external funds could also force host nation
governments and organizations to think of new and innovative
ways to solve their internal issues, and build up their CSOs.
Aid decrease and donor exit can impact the development objectives of a nation, causing the host nation to shift focus from
an area of core competence to another area based on donor
fund allocation. For example, Liberia shifted their focus from
improving transparency in election to health care issues based
on the allocation of donor funds. If resources decline, then host
nations must have lower expectations for the number of issues
addressed at one time, and focus on those development concerns that can be addressed in a much shorter period of time.