Aid agencies providing vital support to developing countries are losing about a fifth of their income due to unfavourable exchange rates, Ireland’s largest aid agency has claimed.
Concern Worldwide said the exchange rates combined with the global recession had produced “a hugely challenging period for aid agencies” and warned that it may have to scale back some of its programmes.
Paul O’Brien of Concern Worldwide said the recent fluctuations in international exchange rates would have a significant and damaging effect on its overseas programmes next year.
“We are already experiencing the damaging effects of the recession on our fundraising and, as a consequence, on our ability to deliver on our overseas aid and development programmes.
“Now we have this latest blow, with exchange rates working against us, resulting in up to a 20 per cent loss in the value of the 2009 budgets we have drawn up for several countries.”
Mr O’Brien said just 10 per cent of Concern’s operational areas were unaffected by these exchange rate fluctuations.
“Exchange rate losses of 10 per cent are just about ‘absorbable’ over a period of time, but any percentage higher than that really starts to hit our programmes overseas.”
He said local currency was linked to the US dollar, or the dollar was used as a currency, in a lot of countries where the agency operated.
With some 85 per cent of all Concern’s income spent on overseas development and emergency assistance, the potential combined impact of the euro-dollar exchange rate fluctuations was “clearly enormous”.
“Loss in value is where the real impact will hit home. For example, if one of Concern’s overseas livelihoods programmes could buy a 10kg bag of seeds for €10, then the same €10 will now only buy 8kg of seeds.”
Mr O’Brien noted there had also been substantial increases in both food and fuel prices.
He said uncertainty in the financial markets at present had made it “extraordinarily difficult” for agencies such as Concern to plan their actual spending for 2009 and beyond, as initial estimates could drift “way off target” due to currency instability.
Concern Worldwide has a staff of 4,000 people in 140 locations in almost 30 countries. It spent nearly €110 million last year on its overseas assistance in Africa, Asia and the Caribbean.