Select Committee on International Development Sixth Report


19. The Departmental Report shows clearly the level of DFID spending by country and region from 1998/9 to 2002/3, indicating that in the financial year 2002-2003 DFID plans to spend £1.425 billion out of its total spend of £3.5 billion on its bilateral country and regional programmes. What is much less clear, is DFID's level of spending on the pursuit of each of its objectives. This, as we have already mentioned, is because although the MDGs, and to a large extent DFID's objectives as set out in the 2001-2004 PSA, are sectoral—relating to health or education for instance—DFID's allocation of resources remains primarily geographical.

20. Suma Chakrabarti explained to us how DFID's resource allocation currently works.[18] Each year, DFID sets three-year country budgets for its recipients, on the basis of bids submitted by country teams, and within the limits set by the Spending Review. In order to maximise aid effectiveness, allocations are made according to two key criteria: how poor the country and its people are; and the extent to which the country's Government has a real commitment to reform.[19] This explanation of DFID's resource allocation process fails to illuminate the extent to which DFID's resource allocation is driven by its stated policy objectives, a situation which is not improved by the lack of information about spending by sectoral objective in the Departmental Report. In addition, it says little about the role of historical inertia in determining resource allocations. We do trust that DFID seeks to spend its money wisely, but for the purposes of accountability, trust is not sufficient. We were pleased to hear DFID state: "we are currently reviewing our resource allocation system in order to identify how better we can relate resource allocation to our objectives and the MDGs".[20]

21. During the planning process, DFID seeks to square the circle of sectoral goals and geographical allocations through the design of its Country Strategy Papers (CSPs). As DFID told us: "Country planning processes identify in broader terms how far PSA objectives and MDGs are to be addressed in country programmes, but not in terms of specific allocations or spending forecasts".[21] Suma Chakrabarti explained further that:

    "In terms of which sectors within countries, we leave those choices pretty much to country teams to have a first shot at and then throughout the centre, the people in the headquarters, the people say maybe or maybe not and they argue the toss much more with the country teams. That is resolved through a committee which Richard [Manning] chairs which is called the Department Committee".[22]

22. The Department Committee and the CSPs clearly have an important job to do in mediating between sectoral goals and geographical allocations during the planning process. In addition, given the important role of CSPs in delivering DFID's objectives, we would appreciate some clarification of the relationship between these plans and the importance apparently attached to the local ownership of development strategies and Poverty Reduction Strategy Papers. During our recent inquiry into Financing for Development Clare Short explained to us that DFID and other donors are continuously trying to refine the nature of the conditions they attach to the aid which they provide.[23] We look forward to the inclusion in future Departmental Reports of information about the interplay between DFID's plans for realising its policy objectives—in part by attaching conditions to aid—and its support for locally-owned development strategies.

18   Q18 Back

19   Fifth Report from the International Development Committee, Session 2001-2002, Financing for development: Finding the money to eliminate world poverty, HC785, paragraphs 73-75.

See- Back

20   Ev 2, paragraph 5. Back

21   Ev 2, paragraph 5. Back

22   Q8 Back

23   Fifth Report from the International Development Committee, Session 2001-2002, Financing for development: Finding the money to eliminate world poverty, HC785, paragraph 81. See footnote 19 for web-site. Back

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