Squandered aid: A U.S. fund in Africa suffered from poor oversight

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The collapse of the Southern Africa Enterprise Development Fund, taking down with it at least $80 million in U.S. government aid, has broad implications for American involvement overseas.

The fund was started in 1994 by President Bill Clinton and South African President Nelson Mandela. Mr. Clinton chose former Atlanta mayor, former congressman and former ambassador to the United Nations Andrew Young, now 81, as chairman of the board of SAEDF, a position he held for 17 years until 2012. SAEDF was supposed to provide seed money to finance enterprises in 11 countries of southern Africa in fields that included communications, finance, manufacturing and tourism. Half of its money was supposed to go into newly majority-ruled South Africa.

The New York Times reported Thursday that SAEDF and its projects fell victim to insider dealings, bad management and what appears to have been a lack of oversight by the U.S. Agency for International Development. USAID was supposed to be responsible for it on the federal government side, based on providing its financing. The fund's original $80 million had dropped to $48 million by 2009, having been drained through legal fees and management expenses paid to management insiders. Its value is now estimated at less than $18 million, which could lead to its demise.

USAID's budget for fiscal year 2013 is $1.6 billion and it administers programs amounting to $40 billion. Congress has never been very enthusiastic about funding its work and is even less so now with the sequester. Yet U.S. aid to needy countries remains important to overall foreign policy. In that context, a scandal such as that surrounding SAEDF calls into question USAID's ability to manage anything.

It would probably have been difficult to clean up SAEDF, given its antecedents and its well-connected inside players, but the price of the Clinton, Bush and Obama administrations not having done so for the past 19 years risks the future of the entire U.S. foreign aid program.



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