Danish aid financing hikes commodity prices
A report to the Danish Ministry of Foreign Affairs reveals overpricing by 30 per cent on aid-financed contracts compared to prices for the same commodities purchased on the world market. (See DT 17/94)
The report scrutinises so-called tied commodity imports financed by Danish aid, such as fertiliser, cement and seeds. Local buyers must pay for the commodities in local currency at prices set by the donor. Several importing companies state that they would like to purchase Danish commodities provided the prices are competitive.
As a result of the overpricing, 25,000 tonnes of Danish fertiliser remained unused in Bangladesh. Large quantities of tallow and sodium silicate were also too expensive for local buyers.
The report compared Danish suppliers’ prices when bidding on World Bank contracts, and found that they grossly over-priced when selling to Danida.