Sunday, August 24, 2008

Word of the Day: Mittelabflussproblem

Mittelabflussproblem (n.) - From German. Literally meaning "the problem of fund disbursal". Could also be transliterated as "means drainage problem". This describes the problem faced by almost all development agencies in which project expenditure is always less than maximum project expenditure. This creates a problem for the project, because if it fails to meet expenditure targets, this will result in one or both of the following:

  1. The donor will assume that if the money is not spent, the work is not done, and therefore contractual obligations are not being fulfilled.
  2. The donor will assume that if the money is not spent, it has over-allocated the budget and will cut the amount of funding available in future years.

The development project will attempt to reach the (usually impossible) target of 100% of the maximum available budget being disbursed by implementing one or more of the following actions:

  1. Buying additional office equipment or project vehicles that may or may not be useful for future years.
  2. Assigning a consultancy contract for a study that is interesting, if unessential.
  3. Less careful spending on existing activities.
  4. Better budgetary planning.

An alternative definition of "Mittelabflussproblem" proposed here is : The problem of focusing on on fund disbursal rather than on project impact.

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