Cohen urges accountability in fed grant management

A ranking U.S. government official has called on Pacific island governments to improve accountability in financial aid management and to reduce their reliance on federal grants for funding of their projects.

David Cohen, deputy assistant secretary for the Department of the Interior’s Office of Insular Affairs, said Pacific island communities were receiving the most aid, per capita, from the federal government.

Citing a recent presentation by World Bank economists, Cohen added that some of these jurisdictions were achieving some of the worst results in certain health, education and economic development measures.

“[T]here almost seemed to be an inverse relationship between the amount of aid that a country received and the country’s progress in human development,” said the keynote speaker at the Island Government Finance Officers Association Annual Meeting in Hawaii on Tuesday.

To address this problem, governments should promote accountability, he said.

“The challenges the islands face are so great: lack of resources, isolation, poor infrastructure, lack of technical capacity. The assistance provided by the U.S. government is greatly needed, and can make the difference between a secure future and an extremely difficult future for most of our island communities. We have very little margin for error in the islands, and much is at stake. We simply cannot afford to squander precious financial assistance,” he said.

According to Cohen, money can get squandered not only in a deliberate manner; it can also get squandered even if no one has bad intentions.

“Funds can be squandered because of poor planning, because of poor oversight, because of poor prioritization, because of poor communication, because of the lack of capacity, because of the lack of political will. Funds can be squandered because of poor management controls, or because of the inability to provide timely information that can enable problems to be identified,” he said.

Furthermore, Cohen also reminded island governments that federal grants were being issued not to create dependence, but to help the islands foster sustainable growth and become more financially independent.

He made this statement in light of some island lawmakers’ complaints that the OIA’s tighter control over grant fund was “undemocratic because it interferes with the authority of elected legislatures in the islands to control grant funds.”

“Well let me clear up any confusion: Grant funds are not a substitute for local revenue. Grant funds do not absolve the legislature of the responsibility to create a good business climate in the islands, so that the islands can generate more local revenue. If used wisely on critical infrastructure and other important needs, grant funds can make it easier for local legislatures to raise local tax revenue,” he said. “Local legislatures should understand that if you want to appropriate funds, you need to generate funds.”