Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses (Questions 60-79)



  60. How is it going in Afghanistan in terms of aid and poverty elimination?
  (Mr Chakrabarti) Reasonably well. It is very early days, obviously, but reasonably well in terms of getting some co-ordination of the various flows of aid coming from many donors. We put ours into a trust fund which the Afghans themselves control with the World Bank.

  61. If you looked at a graph with the level of poverty in Afghanistan across time from September 11 onwards, if you like, and presumably in terms of the devastation and the inability to get through supplies and all the rest of it there is a major increase in poverty and mortality and all this sort of stuff, presumably now we are well above the levels that we were achieving prior to September 11 due to people having food and hospitals and the emergence of hospital health facilities and schools? Is that true?
  (Mr Chakrabarti) I think so. Even during the emergency operations we were enormously successful in getting aid through to feed people through a very rough winter and that has continued.

  62. Mr Lowcock, you mentioned carbon based solar energy at one point as presumably part of this effort of getting sustainable economic development. Is there a trade-off here where you can end up financing carbon based solar energy, for argument's sake, and you could use that to save money on more conventional, less environmentally friendly, industrial investment, but you would have fewer people starving but it would not be as environmentally friendly? Is that a trade-off you recognise?
  (Mr Lowcock) This is not a sector where we do a lot of work. The example I was giving was for money we give to another organisation. It must be the case that in a lot of developing countries solar power is a bigger option and a more economic option, not just a more environmentally friendly option, than it is in some other countries.

  63. That is good. So you have not got some sort of politically correct driving force that is letting people starve in order to build solar panels if you would be better off using conventional methods? That is not the case?
  (Mr Lowcock) No.

  64. In terms of corporate involvement, Mr Chakrabarti, do you feel there is a danger that, in so far as you do get corporate support, you accept their global brands and therefore are politically vulnerable? Is there some sort of fear that there is some sort of trade-off in that you may have overlooked some of their anti-environmental activity in the developing world?
  (Mr Chakrabarti) I would not want to do that. I think it is very important, whenever we engage with any other player, whether it is corporate or non-corporate, an NGO even, that we do have a proper analysis of their activities and make sure we are happy with putting money into them. We would not want to put money into BP or Shell. They are wealthy enough to try and do things in solar energy for themselves.

  65. I did not mean put money in but presumably corporate activity where they are providing money. Do you do that or not?
  (Mr Chakrabarti) Yes. If we were co-operating with them in a new initiative we would want to make sure that their policies in that area were kosher.

  66. This may not be appropriate but perhaps I could mention in passing that Nestle« are based in Croydon and I have approached them with a suggestion that they invest multi-million pounds in developing a world water infrastructure partly to compensate for the very bad reputation they have got for making people have dried milk that then is consumed with dirty water and ultimately kills babies. I did put them in touch with Water Aid but I think there are issues with some of these organisations about the political match and if there is any way we can facilitate that sort of investment it would be helpful. Can I move on? In terms of your factoring in the risks of war and political change in a given environment in which you are investing, if you thought the political conditions for a major war were emerging how would that influence what you were doing on the ground? Would that encourage you to do less or more?
  (Mr Chakrabarti) Can I just clarify the political conditions for war?

  67. Say you thought there was going to be some civil war breaking out in Zimbabwe or whatever it was. What would that encourage you to do, if anything? Would you try and direct more aid in or hold back and think, "Look. This might not get through. Let us spend it somewhere else"?
  (Mr Chakrabarti) I think it would be according to the question whether we could operate effectively because the sorts of people who are doing HIV/AIDS testing clinics in Zimbabwe operate in quite a lot of rural areas and if they were closed because of civil war and food aid (another thing we are doing in Zimbabwe) was not able to operate and we were not able to get food to poor people, then we would not be there.

  68. I think you mentioned that of the £3.5 billion turnover you had 2.5 per cent, say five million, was in administration costs. How much do you estimate is consumed by corruption,—not in your organisation, by the way—in top slicing in aid, wherever it is going and all the rest of it? Some of it obviously must be siphoned off. Have you any estimates on that?
  (Mr Lowcock) I think there are no wholly reliable estimates of the scale of corruption in most developing countries. We have very few cases affecting our own budget that we come across but clearly this is a major issue in a number of developing countries.

  69. You have got no real estimate. Do you not think it would be a good idea to try and put in some estimates of how much corruption is going on?
  (Mr Chakrabarti) There are estimates that organisations produce but we are sceptical about how possible it is to have good figures on this, so we are a bit cautious about the estimates that there are.

  70. You do not even have a range that it could be in? It could be anything up to £3.5 billion.
  (Mr Chakrabarti) I think our internal audit systems would catch it if there was very large scale corruption, and so far all their reports suggest there is not.

  71. Can I move on? I understand that there is a global target which reduces extreme poverty by half by 2015 and this poverty has been defined as those billion people who are living on less than a dollar a day. If, for whatever reason, the US economy went down and exchange rates changed, you might find overnight that you could meet this target, might you not? Certainly they might be on 1.1 dollars a day so they could afford a bigger bowl of rice.
  (Mr Lowcock) No, because the way the target is specified it is about the amount of consumption that a person in that country could buy with their purchasing power parity—I am sorry to use the jargon—of a dollar a day in 1988, I think it is. It is a real terms measure.

  72. That is a great relief. Thank you for that. In terms of the value of this billion we are talking about, a billion people on a dollar a day, so we are talking about something like $360 billion, are we not? Have you any idea of the amount of agricultural subsidy the United States spends on grain each year?
  (Mr Chakrabarti) I do not know off hand, but it is clearly high.

  73. It is more than that anyway. Can I ask you about trade and aid briefly? Obviously there has been some debate about the trade restrictions from the EU being much more damaging and would be more valuable if they were taken away than the global aid from the EU. Is that correct? Can you give us some figures on that?
  (Mr Lowcock) The central problem as far as developing countries are concerned is subsidies that the EU provides to farmers within the EU. It is not so much that there are tariffs or restrictions on developing countries getting their goods in. It is that they cannot be competitive because of the subsidies that we have.

  74. Prices are subsidised. How does that subsidy compare with the total value of aid in the EU?
  (Mr Lowcock) The size of the subsidy is much bigger than the EU's figure on aid.

  75. Can you give us some figures on that?
  (Mr Lowcock) I am afraid I do not have the figures, but we can get them.

  76. That would certainly be of interest to me.
  (Mr Chakrabarti) We can certainly give you a note.[2]

  77. Is there any sense in which—and this is certainly not my view—in some countries where you operate you are developing a dependency culture partly as a result of this subsidy on grain prices in the United States and the subsidy on EU agricultural products? In other words, if you have got a developing country that should be trading in agriculture and simply cannot because it is unfairly undermined by the tricky operations of the EU and the US and they cannot make grain at an economic level, then they have got to consume aid even more? Is there a problem here of not getting anywhere in terms of inevitably having a dependency culture?
  (Mr Chakrabarti) I would not say they are not getting anywhere but you do raise a very interesting issue for us which is the need to work on two fronts. You cannot just provide aid. To some extent you are right. It is compensating for the bad policy on the trade side so we, with our colleagues in DTI and elsewhere, are also trying to remove some of the bad trade policies through the WTO in order to have a much greater impact on the countries we are supporting.

  78. Can I briefly ask you about GM food? There is a view that there is a conspiracy basically on GM foods to get the developing world dependent on it and then to jack up the prices of receipts. Have you considered this problem seriously and do you think this is a major threat to world poverty?
  (Mr Chakrabarti) I would not have thought it was a major threat to world poverty but I am not aware of any analysis on that. Have we done any analysis of that?
  (Mr Lowcock) I am not sure.
  (Mr Chakrabarti) We will have to check and come back to you on that.[3]

  79. But you understand the logic, that developing countries would be using these crops and then suddenly the price goes up and, hey presto, people die?
  (Mr Chakrabarti) Yes, I understand the logic.

2   Ev 23, Appendix 1. Back

3   Ev 23-24, Appendix 1. Back

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