The sustainability enigma: aid dependency and the phasing out of projects: the case of Swedish aid

Using interviews and evaluation materials from twelve Swedish funded projects in Tanzania as cases, this study assesses the relationship between aid dependence and project phase out performance.<B>Findings:</B> project phasing out is complicated by the lack of financial sustainability of the supported institutions. This is not purely the result of Tanzania's overall poor macro-economic environment but is caused by a number of underlying factors, includingthe level of technical ambition in projectsthe lack of finance, organisation and financial skills as a result of the heavy focus on technical skills, while the attention to finance and management issues is weakgovernment expectations and donor replaceability perverted incentive structures on both recipient and donor sides, which lead to unsustainable projects, difficult to phase outlack of attention to cost-effectiveness during the aid-funded perioda micro-macro delinkage in which Sweden changed its policy direction and joined with the forces of structural adjustment at the macro levelfactors influencing the sustainability of projects and making phasing out difficult include:the fallacy of synergy in aidthe stakeholders' vested interest on both sides and the herd mentality in the donor community<B>Recommendations:</B>aid must be shifted from a supply driven, disbursement oriented venture towards a demand driven, performance oriented oneaid should be shifted from a primarily government to government undertaking to aid which responds to the whole societyaid should be focused on becoming a knowledge-based service venture rather than an administrator of aid flows<B>Lessons learnt:</B>the linkage between project success, sustainability and phase out decision-making has been weak. This is mainly the result of two differing management tendencies within Sidathe need for the donor agency to be realistic and to fully appreciate its dominant role in the aid web as well as the consequences of this role to achieving favourable outcomes in terms of success, sustainability and phase outthe problems of sustainability in Tanzanian projects are primarily a question of financial sustainability rather than technical competence[From the author]