Comparative Advantage and Complementarity:
The rationale behind DFID's plans and priorities?
22. Development strategies need to be locally-owned
if they are to succeed and to be sustainable. Consultations can
increase the local-ownership of development strategies. In this
respect, the process through which DFID's CAP is being produced
provides something of a contrast with the Government of Kenya's
Economic Recovery Strategy. As we heard in Nairobi, this strategy
- which has in effect superseded Kenya's Poverty Reduction Strategy
Paper—was produced in a hurry with little consultation,
a factor which might account for its weaknesses on poverty reduction.
But consultation may generate a string of wish-lists. Indeed many
of the submissions received by DFID and by us are essentially
requests that particular sectors receive more attention.[23]
This is understandable, given the lack of resources which many
sectors and organisations experience. Nevertheless, in the face
of an overall lack of resources for development, this approach
does not help donors or governments to prioritise effectively.
In the face of multifarious demands from different stakeholders
and sectors, the temptation to do a bit of everything is clear.
The Secretary of State conceded to us that DFID-Kenya is perhaps
spreading itself too thinly.[24]
23. The Country Assistance Plan does more than commit
DFID to assisting Kenya. It also states DFID's priorities, and
ought in our view to explain more clearly how DFID sets its priorities
for Kenya.[25] By making
explicit its own rationale for prioritising certain sectors and
activities, DFID may also encourage its development partners and
consultees to ensure that their plans take the form of evidence-based,
prioritised strategies, rather than wish-lists. The draft CAP
for Kenya does include some useful analysis of the challenges
faced by Kenya, analysis which fills in what has been referred
to as the "missing middle"[26]
between DFID's objectives and DFID's spending plans, but this
does not in itself provide sufficient explanation of DFID's priorities.
24. Hilary Benn told us that: "in the
end we have to form a judgment about what is the right balance
for the range of the programme, recognising that other people
are going to do things and just because we are not working in
a particular sector does not mean we do not think it is important;
we do, but other people may be leading on it."[27]
As such, DFID may well be right in its assessment that tourism
is not an area where it should be focussing its assistance,[28]
and may be wise to leave procurement and civil service reform
to the World Bank.[29]
We were interested also to hear in oral evidence of DFID's plans
to work with the Canadian International Development Agency on
education[30]; and with
the Swedish International Development Co-operation Agency and
the World Bank on improving the management of financial information.[31]
But the CAP itself would be improved were it to provide more explanation
of how DFID sets its priorities, particularly about how DFID ensures
that its activities complement those of other donors.
25. DFID's Permanent Secretary, Suma Chakrabarti,
has in the past explained the rationale for DFID's allocation
of resources between and within countries in terms of comparative
advantage. As he made clear to us in 2002: "We are part of
a collective effort; we do not have to be in every single sector
in every single country and we should look at comparative advantage
at a country level to try and work out where we can best make
the real difference".[32]
That is, DFID should do those things which - relative to other
donors - it is good at. This seems a sensible approach given the
scarcity of resources for development, and the need to use them
effectively if progress towards the MDGs is to be maximised. We
acknowledge that comparative advantage, including that which is
conferred by history and culture, may be a sound basis for making
decisions about priorities and resource allocations. But one donor's
comparative advantage only makes sense in relation to the comparative
advantage of other donors. Unless information is provided about
what other donors are doing, and where their strengths lie, little
can be said about DFID's own comparative advantage.[33]
26. Clearly, a CAP cannot contain everything about
a country's situation. Nevertheless, it seems to us that a
CAP should not simply outline DFID's plans; rather, it should
provide a rationale for its plans and an explanation of how its
priorities are decided. If priorities are decided on the basis
of comparative advantage, then more information should be provided
in the CAP about what other donors are doing in-country.[34]
In addition, given the need for different donors to work together
effectively, and to avoid placing excessive demands on recipient
governments, it would be useful if CAPs included more information
about the extent of, and mechanisms for, donor coordination and
harmonisation.[35]
The Aid Relationship: Balancing
local ownership and external accountability?
27. As the former Secretary of State, Clare Short,
was keen to stress, aid is not charity; rather, aid is an investment
in poverty reduction.[36]
Relationships between investor and investee are complex and require
delicate balances to be struck, in particular between local ownership
and the external accountability which is crucial to ensure that
funds—UK taxpayers' funds—are spent wisely in pursuit
of the development goals to which the UK Government is committed.
Aid is provided to a country in the expectation that it will deliver
real returns in terms of poverty reduction. Governments of developing
countries must be in the driving seat, but donors will only provide
the fuel if the car is being driven in what the donor regards
as broadly the right direction and at a reasonable speed. Aid,
if we are honest, is used as a way to influence policy, to persuade
the (potential) recipient to pursue pro-poor policies, and to
deliver poverty reduction.[37]
28. Developing countries need to be able to determine
and pursue their own policies, but in circumstances when DFID
is providing them with assistance, DFID must be able to check
that its funds are being well-spent. As Hilary Benn put it: "It
is very important that we are able to manage both the progress
of the elements of our own programme and also the way in which
the spending of the Government of Kenya on what I think we collectively
regard as the priority sectors actually moves."[38]
We agree. Responding to a question about what rate of progress
would be acceptable on tackling corruption in Kenya, and at what
point DFID might say "We are sorry. This is not working out",
the Secretary of State told us that:
"Sometimes I sit and I think 'Are we being over-ambitious
and having excessive expectations about rate of progress?' and
on the other hand sometimes one thinks, 'Well, we know this is
absolutely fundamental to dealing with some of the broader problems
and therefore it is in everybody's interests that people should
crack on as quickly as possible', and in the end it has to be
a balance between the two."[39]
29. We agree that there has to be a balance between
maintaining a sense of urgency and being realistic about what
is achievable in a certain time-scale. But when DFID's funds are
being spent, thoughts about the appropriate balance must be translated
into agreed, if flexible, timetables for making progress towards
the MDGs.
30. We welcome the fact that DFID's CAP sets
out how it intends to support Kenya's development strategy, rather
than superimposing DFID's own strategy. DFID ought not
to micro-manage Kenya's development effort. But DFID must be able
to assess whether sufficiently speedy progress is being made towards
agreed objectives. DFID must be able to monitor Kenya's progress
towards the MDGs, and to evaluate the effectiveness of its assistance.
The Secretary of State accepted that DFID "ought to do more
on how we track and monitor".[40]
Well-designed processes for poverty reduction and development
assistance are crucial, but they must be judged by whether or
not they deliver the outcomes required in an agreed timescale.
We look forward to hearing from DFID as to how it intends to do
more on tracking and monitoring Kenya's progress towards the MDGs.
20 "Poverty and poverty trends" is used here
as a shorthand for the range of development issues faced by Kenya. Back
21
UNDP, Millennium Development Goals: Progress Report for Kenya,
2003. See http://www.undp.org/mdg/kenya.pdf Back
22
Q 9 [Hilary Benn] Back
23
Q 36 [Hilary Benn] Back
24
Q 7 [Hilary Benn] Back
25
The ways in which DFID prioritises and allocates resources across
countries is an equally important related issue. See: International
Development Committee, Sixth Report of Session 2001-02, Department
for International Development: Departmental Report 2002, HC
964, especially paragraph 39. Back
26
Ibid., paragraph 34. Back
27
Q 36 [Hilary Benn] Back
28
Q 14 [Hilary Benn] Back
29
Q 36 [Hilary Benn] Back
30
Q 12 [Felicity Townsend, Senior Education Advisor, DFID-Kenya] Back
31
Q 31 [Hilary Benn] Back
32
International Development Committee, Sixth Report of Session 2001-02,
Department for International Development: Departmental Report
2002, HC 964, paragraph 39. Back
33
Q 36-41 [Hilary Benn and Matthew Wyatt] Back
34
There is, for Vietnam for instance, a publication which outlines
the activities which different EU donors and the European Commission
are involved in. EU, European Union Development Cooperation
Activities in Vietnam 2002, Hanoi, September 2003. Available
at http://207.201.187.56/en/whatsnew/bluebook/fore_word.htm Back
35
The draft CAP notes in table G that donors are "poorly harmonised
around Government's national strategic plan", and includes
at E13 an objective of "increased harmonisation and alignment
of donor resources behind ERS priorities", but says little
more about the nature of donor harmonisation or coordination.
Back
36
International Development Committee, Fifth Report of Session 2001-02,
Financing for development: Finding the money to eliminate world
poverty, HC 785-I, paragraph 71. Back
37
There is a large literature on the effectiveness or otherwise
of conditionality, and different forms of conditionality, but
donors clearly try to achieve policy influence through their use
of aid. See IDC, Fifth Report of the Session 2001-02, Financing
for development: Finding the money to eliminate world poverty,
HC 785-I, paragraphs 78-81 (see footnote 36 for full reference). Back
38
Q 4 [Hilary Benn] Back
39
Q 35 [Hilary Benn] Back
40
Q 7 [Hilary Benn] Back
