House of Commons - International Development

Select Committee on International Development Second Report

THE DEVELOPMENT WHITE PAPER (continued)

THE ELIMINATION OF POVERTY

11. At the heart of the Government's policy on international development is the elimination of poverty, as the title of the White Paper makes clear. 1.3 billion people live in extreme poverty, on less than the equivalent of one dollar a day.[17] Almost 70 per cent of them are women. The concern to eliminate poverty provides an admirable focusing of our development efforts on the truly important. The Secretary of State said that "there was a whole period in the history of development when the general view was that big projects in poor countries helped the countries and therefore would help the poor, and the whole era of massive dams and big infrastructure projects came out of that analysis. Part of this [focusing of development effort on poor people] is lessons about what reaches the poor and what does not reach the poor".[18] The focus on poverty thus partly involves a reassessment in the development community of how the poor can really be helped. The White Paper in section 2 outlines the new agenda. There is now a particular emphasis, for example, on greater equality for women, good governance and the rule of law, and such sectors as health, education and family planning.[19]

12. The focus on poverty is in part a result of a new analysis of developmental effectiveness. It is also the result of changes in the international political order. The end of the Cold War has removed one of the great pressures for the misuse of aid for political ends. It has coincided with a series of international conferences under the auspices of the United Nations which have set an internationally agreed agenda on such issues as the environment and development, population and development, women, food, human rights, social development, and human settlements. Development must ultimately be viewed as an international effort. This is because the challenge of poverty is so large that only an international response can be effective. It is also because the increasing globalisation of trade and finance means that solutions to poverty are often global ones.

13. The commitment to eliminate poverty does not remain purely theoretical in the White Paper. The Government commits itself to a number of international development targets as found in the document `Shaping the 21st Century: The Contribution of Development Co-operation', produced by the Development Assistance Committee (DAC) of the OECD[20] and published in May 1996. They are:

- universal primary education in all countries by 2015.

- demonstrated progress towards gender equality and the empowerment of women by eliminating gender disparity in primary and secondary education by 2005.

- a reduction in the mortality rates for infants and children under 5 and a reduction by three-fourths in maternal mortality, all by 2015.

- access through the primary health-care system to reproductive health services for all individuals of appropriate ages as soon as possible and no later than 2015.

- the implementation of national strategies for sustainable development in all countries by 2005, so as to ensure that current trends in the loss of environmental resources are effectively reversed at both global and national levels by 2015.

There are also important qualitative targets such as democratic accountability, the protection of human rights and the rule of law.[21]

14. The White Paper's focus on poverty was universally welcomed in the memoranda received. This is in itself important, suggesting a shared vision in government and civil society which is vitally important for future success. The adoption of the DAC targets was also praised.[22] There was, however, concern that others would have to adopt these targets for them to be at all reachable, in particular the multilateral institutions. An obvious donor which must commit itself to the targets is the European Union.

15. Over 30 per cent of the United Kingdom's development programme is spent through the European Union. If the European Union does not also commit itself to the DAC targets the United Kingdom's efforts will be seriously frustrated. The Committee was pleased to note a greater emphasis on the alleviation of poverty and mention of the DAC targets in the Commission's recent Communication on the renegotiation of the Lomé Convention.[23] The White Paper commits the Government to use its influence to strengthen the poverty focus of the European Union's development programme and set quantifiable targets for poverty reduction. That influence will be particularly marked in the first half of 1998 when the United Kingdom has the Presidency of the Development Council. We recommend that in the office of the United Kingdom Representative to the European Commission in Brussels there be personnel and input from DFID at the highest level to ensure progress in the reform of the European Union development programme. This should be at the same level as DFID's representation at the World Bank.

16. We recommend that the United Kingdom press for the adoption of the DAC targets by the European Union. A debate on the subject should also encourage the European Union to adopt a more coherent and poverty-focused developmental policy. The number of agreements, instruments and Directorates-General currently involved in development suggests a divided and confused approach. In short, we believe that the adoption of the DAC targets by the European Union must be in the context of a new coherent development policy. The European Union needs its own `Development White Paper' and the United Kingdom should work for one in 1998.

17. Another issue raised in connection with the DAC targets was the monitoring of progress. To this end Christian Aid recommended that interim targets be set for 2005 and 2010 in order to assess the gains made.[24] This could well be an important means not only to monitor progress but also to sustain the interest and effort necessary to achieve these targets. We recommend that the OECD be encouraged to produce interim development targets for international agreement.

18. The general welcome for the poverty focus of the White Paper was twinned in many cases with concern at its treatment of globalisation. Oxfam suggested that the White Paper could have gone further in identifying policies which help the poor and thus offset any inequality globalisation might otherwise produce. It should also have spelled out "the specific policy changes which are needed to the current rules governing international trade and investment for making globalisation work in the interests of the poor".[25] There was particular concern at the sections on the liberalisation of trade, agriculture and investment. In each case it was considered by Oxfam that there was inadequate recognition that the process created losers as well as winners and of the vulnerability of small industries and small-holder producers.[26]

19. The World Development Movement,[27] the Independent Group on British Aid[28], Tear Fund[29], the Bretton Woods Project,[30] Christian Aid,[31] and Save The Children[32] all raise similar points. There was a concern that DFID reassess its macroeconomic model which had been developed "under governments still ideologically obsessed with the free market".[33] The Independent Group on British Aid said, "The macro-economic dimension of poverty alleviation is missing from the White Paper: it would be good to see DFID disseminating knowledge on poverty reduction at this level as well as the more convenient project and sector level".[34]

20. In addition to more information on its macroeconomic models for growth, there were particular recommendations for the United Kingdom to exert an influence on the multilateral donor organisations to improve their policies towards the poor. The IMF, the World Bank and the World Trade Organisation were all mentioned and there was particular criticism of past structural adjustment programmes. Tear Fund recommended that "the proposed policies and decisions of the World Bank and IMF and WTO are systematically `screened' for their likely impact upon poor countries and the poorest sectors within developing countries".[35]

21. This is an important issue for a number of reasons. One is the crucial part such multilateral organisations must play in achieving the DAC targets. Another relates to the White Paper's insistence on greater donor coordination so that developing countries with limited administrative capacity do not have to negotiate separate country development plans and conditionalities with a number of bodies.[36] The role of the multilateral organisations such as the IMF and the World Bank will clearly be crucial in such coordination. This makes it all the more important that they share the United Kingdom's analysis not only of the benefits of globalisation but also of the dangers and that they be fully committed to the elimination of poverty.

22. The White Paper does acknowledge the need for a clear focus on poverty elimination in the multilateral institutions such as the IMF and the World Bank.[37] The Secretary of State added in oral evidence that she wished to see a strengthened commitment from the multilateral organisations such as the IMF, the World Bank and the World Trade Organisation to poverty eradication.[38] She also accepted that with globalisation there came a risk of marginalisation for certain countries. She did, however, have confidence in the current leadership in the IMF and the World Bank.[39]

23. A number of memoranda raised concerns over the current proposals for the Multilateral Agreement on Investment (MAI).[40] This is an initiative within the OECD to negotiate an improved multilateral framework for investment based on principles of non-discrimination against foreign investors, open investment regimes and investor protection.[41] NGOs such as Oxfam, the World Development Movement and Tear Fund, while agreeing that investment was an important engine for growth, considered current proposals gave inadequate protection to developing countries against investment of poor quality or low standards.[42] All three bodies argued that the OECD's Guidelines on Multinational Enterprises should be formally incorporated into the MAI. The White Paper merely commits the Government "to work to ensure that the OECD Guidelines on Multinational Enterprises are closely associated with the MAI".[43] We are not sure what "close association" means in this context. We invite the Government to explain what formal relationship they propose between the Multilateral Agreement on Investment and the OECD Guidelines on Multinational Enterprises and whether they support the formal incorporation of the Guidelines into the MAI.

24. Clare Short told the Committee that the MAI "is not meant in any way to be a development instrument; it is meant only to apply to OECD countries. The concern of course is that it will become the model and then will spread more and more widely and the developing countries will not have been at the table when it was developed and their interests...not taken into account".[44] The British Government had "put in reservations on the MAI on the question of poor labour standards and environmental protection to make sure that countries are not driven into creating incentives to attract investment that mean constantly cutting labour standards or cutting environmental standards".[45] We welcome this concern to protect core labour and environmental standards.

25. We do not believe that the economic analyses of globalisation from the Government and from the NGOs are that far apart. We do believe that the Government would benefit from clarifying its position further. We recommend that the Government provide more detail of its macroeconomic policy, and in particular the advantages and disadvantages of globalisation and the kinds of pro-poor policy which can be adopted to avoid marginalisation. We also recommend that the Government press for `poverty audits' to be applied to the proposals and structural adjustment programmes of multilateral institutions such as the IMF and the World Bank.

26. Macroeconomic policy must be matched by microeconomic policy. Results UK complained that "there is only minimal support for microcredit given in the White Paper, and no direct support for women to be targeted by microcredit programmes".[46] The Intermediate Technology Group welcomed enthusiastically the White Paper's focus on poverty but observed that it was "notably silent on...wider issues of small scale production".[47] Christian Aid also stressed the way that `pro-poor economic growth can be achieved "through micro-economic empowerment delivering jobs, incomes and sustainable livelihoods. The provision of micro-credit is a specifically useful strategy in this respect".[48] These may simply be questions of emphasis. We would, however, welcome an account by DFID of how they intend to assist the small scale and informal economies of the developing world and how DFID can encourage the provision of micro-credit, in particular to women.

27. We have already quoted the statistic that almost 70 per cent of those living in extreme poverty are women. The issue of microcredit discussed above is merely one example of how the targeting of women with development assistance can have a significant effect on poverty. In such areas as education and the labour market women in developing countries are at a significant disadvantage both in terms of access and conditions when compared with men. The Secretary of State made clear the concern of DFID to improve opportunities for women in such areas as primary and adult education and to secure better labour conditions.[49] There was no women's unit within DFID, the Department preferring to include a gender component in all their projects.[50] In response to a request for further information from the Committee, the Department gave the example of the Know How Fund as a project where more attention will be given to its impact on women in the light of the commitments of the White Paper.[51] We look forward to the creation of specific programmes to assist women, to the establishment of gender-specific targets within development programmes, and to an assessment of the effect on women to be included in all evaluation of development assistance.

TARGETS

28. Mention has already been made of the DAC targets, in particular the goal of halving the proportion of the world's population living in extreme poverty by 2015. It is important to have such an over-arching objective to a development programme. It must also be said, however, that this is a target which can only be achieved by the international community as a whole. It is not a target against which one can measure the performance of our own Government. There were, therefore, suggestions from the NGOs of targets by which the performance of the United Kingdom Government can be judged.

29. The target most frequently mentioned is cited at the very end of the White Paper. This is the United Nations target that donor countries provide the equivalent of 0.7 per cent of their GNP in official development assistance. In 1979 the percentage for the United Kingdom was 0.51 per cent of GNP but by 1997 it had fallen to 0.27 per cent. The White Paper states, "Britain's development programme of £2.2 billion is the sixth largest in the world in terms of volume; but Britain ranks only 15th among the 21 donor member states of the Development Assistance Committee of the OECD".[52] The Government commits itself to reversing this decline[53] but has not set a date by which the 0.7 target will be reached. The Secretary of State made clear that "a small increase [in government spending each year] does not reverse the decline..because in the meantime one has had economic growth in one's country, so the

sort of sums of money that have to be found in order to keep the commitment are considerable".[54] Thus to honour its commitment to reverse the decline it is necessary for significant annual increases in expenditure on the development programme.

30. We have no illusions about the difficulty for any department in securing increases in expenditure from the Treasury in the annual expenditure review. This is precisely why a target is so important. It marks a clear ambition by Government rather than merely a good intention. Christian Aid suggested an interim target for the end of the Parliament of 0.37 per cent of GNP, the current EU average.[55] We consider this a useful medium-term goal. Clare Short mentioned the fact that "if all the industrialised countries paid their 0.7 [per cent] we would be beyond the £80 billion a year that [the annual report of the United Nations Development Programme] estimates is necessary for sustained and continued progress to meet these human development targets".[56] Such increases in expenditure are also necessary if the bilateral share of the United Kingdom development expenditure is not to shrink to about a third by the end of the century. Great improvements can no doubt be achieved through effective development policy. This should not blind us to the continuing need for more money to fund the development programme. On that point the White Paper remains unacceptably reticent. We recommend that the Government commit itself to an expenditure of at least 0.37 per cent of GNP on official development assistance by the end of this Parliament.

31. Another target mentioned by Christian Aid,[57] Unicef[58] and Saferworld[59] is the 20/20 initiative target which, they suggest, should be embraced by the United Kingdom Government. This initiative calls on developing country governments to allocate on average 20 per cent of their budgets to the provision of basic social services and on donor governments to allocate 20 per cent of their official development assistance to the same services. With regard to bilateral aid, Results UK asks for mid-term targets to be set for DFID programmes so that progress can be effectively monitored.[60] Clare Short assured the Committee that DFID would be setting more output targets for its bilateral programme.[61] We recommend that targets for DFID's bilateral programmes and performance against those targets be published in the annual reports. We recommend that the Government also provide regular information on how its bilateral programmes, and in particular technical assistance, have reduced poverty.[62] We recommend that the Government commit itself to the 20/20 initiative and provide the Committee with information on how this target can be integrated into the agreed country programmes.

32. The White Paper states that the Government will encourage the multilateral institutions, and in particular the European Union, "to set quantifiable targets for poverty reduction, and measure progress towards these"[63] and "to devote more attention to evaluating and monitoring the output of their activities, and to harmonise their impact assessment systems".[64] We support efforts to set clear targets at the inception of all multilateral development projects, especially those of the European Union, and to ensure annual evaluation of progress. There has been particular criticism of EU evaluation processes[65] and we look forward to significant improvements under the United Kingdom Presidency.

17 White Paper para.1.9. Back

18 Q.17. Back

19 White Paper para.2.3. Back

20 Organisation for Economic Co-operation and Development. Back

21 White Paper Panel 4 p.21. Back

22 Evidence pp.30, 52, 72, 81. Back

23 Communication from the Commission to the Council and the European Parliament COM(97) 537 final para.2.1. Back

24 Evidence p.53, see also CAFOD evidence p.76. Back

25 Evidence p.31. Back

26 Evidence p.32. Back

27 Evidence p. 34. Back

28 Evidence p.40. Back