Examination of Witnesses (Questions 200
- 211)
TUESDAY 28 MARCH 2006
MR PETER
CAMERON AND
MR PETTER
MATTHEWS
Q200 John Bercow: I am always keen
to try to nail things down to have a specific rather than a general
point. Can you offer the Committee one example of what you would
regard as an overly onerous condition?
Mr Cameron: I think probably the
one we have just mentioned, the Biwater affair in Tanzania is
a key one where, for whatever reason, it was partly pushed by
the World Bank to say that we must have a fully privatised service.
In the UK the problem of a privatised water supply tends to be
looking more at the hiking of charges without enough concentration
on the repairing of leaks. Overseas you can have the easy part
very quickly established of an urban water supply but it still
leaves the people in the ghettos, the margin towns without water,
or if they want water they have to pay inappropriate levels of
fee for it.
Mr Matthews: Going back to your
original question, absolutely I would agree with the Commission
for Africa in its recommendation that donors re-think their role
in supporting investments in infrastructure, but in some way I
think the Commission for Africa was picking up on a trend that
was already evident. I think that re-thinking had already begun.
Probably in the 1960s and 1970s these investments in infrastructure
were delivered largely through the public sector and there were
enormous problems and a lot of failures. In the 1980s and 1990s
the pendulum swung the other way and there was an overemphasis
on the private sector, again ideologically driven in the same
way it was in the 1960s and 1970s. Since then there is a more
nuanced understanding of the role of the private sector which
is less ideologically driven. I think that is correct and right
and we would support that. Amongst the bilateral donors, DFID
have been progressive in some of their ideas and their approach
to this. For example, Peter mentioned the issues around conditionality.
The way that I would see it, the removal of conditionality is
not giving carte blanche where you hand over resources to be consumed
in a way seen fit by that government, but there is an assessment
of whether that government is a strong partner and a good partner.
If it is, then I think you make the grants or the loans available
and you allow them to decide what the priorities are, but if they
are not a good partner—and I think DFID has done this recently
in Kenya for example—then you may have to find other channels
for your funds, if you believe there is a corrupt system in place
and resources are simply going to fuel corruption.
Q201 John Bercow: What are DFID's
strengths and weaknesses in supporting infrastructure in developing
countries? As a follow-up to that, do you think that DFID, which
has been very wary of this, should seek to specialise in infrastructure,
or is it right that it should effectively subcontract that responsibility
to others?
Mr Matthews: DFID has been involved
and it has been a key mover in some very important and vital initiatives.
The Infrastructure Consortium for Africa, for example, is getting
widespread support among civil society organisations. They see
the potential of that body. The existing infrastructure on the
ground in sub-Saharan Africa at the moment has got enormous problems.
Take, for example, the one of the lack of regional integration.
The original stock of infrastructure during the colonial period
was established primarily for moving people and goods out and
into Africa rather than promoting regional integration, and even
since the colonial period and periods I have talked about in terms
of investment in infrastructure, it is still a problem. Regional
integration still has not occurred for a complex number of political,
social and cultural reasons, but it has happened, and the Infrastructure
Consortium is a key employer that can make that happen. DFID's
role in driving forward that process of being involved is a progressive
one and we would support that. The Investment Climate Facility
is another one DFID has been supporting quite actively that can
create the conditions that can encourage investors to get involved
in sub-Saharan Africa. In some ways the problem in sub-Saharan
Africa is not so much over-exploitation; it is one of indifference
where investors have not been prepared to put any money in, and
therefore it is still seen as a high-risk, low-return environment
to work in by many companies, rightly or wrongly. I think DFID's
involvement at those kind of levels is extremely good. In terms
of specialising, I am not certain. That is what I think they do
well at that kind of level, the multi-lateral level. I think they
also do well quite often at a micro level in the example of supporting
Engineers Against Poverty, where we work in the larger scale of
things on relatively small and individual projects but they are
supporting us to try and develop innovative initiatives with one
company within one project and then use that to influence DFID's
policy and corporate and government policy. I hope I have at least
begun to answer your question.
John Bercow: Indeed and I am most grateful
to you.
Q202 Ann McKechin: I think, Mr Matthews,
you have answered part of my first question about the working
between cross-border and regional infrastructures which I think
you quite rightly say are very important, particularly for a number
of small and land-locked countries in Africa. After a move away
from many years of supporting large infrastructure projects the
donors, including DFID, are moving towards them again. Perhaps
you could let me know what your view is as to what you attribute
this change in fashion. As the Chairman has mentioned earlier,
there is a danger that it is a changing fashion which is going
to be a fad and then move back to small projects again, or do
you see this as a new permanent way of thinking which is going
to result in a sizable change?
Mr Matthews: I guess my answer
necessarily will be partly speculative and what I would like to
see. It is a good question and I am not sure I have thought about
it specifically. I guess one of the key reasons is likely to be
the problems there have been in making progress towards the Millennium
Development Goals, particularly in sub-Saharan Africa. I do not
think based on my own anecdotal experience there was ever a view
that investment in infrastructure is not an important part of
the pro poor growth and development. However, I think previous
experience has shown that investments in infrastructure are incredibly
difficult, so part of that may have been the fact that it is very
difficult if we are putting money into projects and it is fuelling
corruption and it is leading to projects that are not meeting
the needs of the poorest, so instead you jump on to another bandwagon,
as it were. It is extremely welcome that there is this new interest
in infrastructure and it has come to the surface again. We have
got an opportunity to get it right because I think we have been
through the myopic approaches that public is best and private
is best and now we have a more nuanced understanding of bringing
together the relative strengths of the different sectors. Also
I think companies and civil society have got the management tools
for making those partnerships work more effectively than they
have done in the past. You hear this term sometimes "multi-sector
partnerships" bringing together business, state and civil
society. I have been involved in trying to set up those partnerships
and it is time-consuming and difficult and often has costs attached
in the early stages of establishing them. However, a lot of progress
has been made and I think the conditions are right now where we
can get the infrastructure right if we can get the investments
right, and if we can do that I think the interest will be sustained.
Q203 Ann McKechin: Mr Cameron, you
made a very good point about the roads being built without any
ability to maintain them. I think there is some shocking figure
of 40% of water pumps in a developing country at any one time
are not operational due to lack of maintenance. Have we got the
right infrastructure in place to make sure that when we do carry
out these new infrastructure projects they are going to be sustainable
and they are going to be able to have the income to maintain them
in the future and not, as Mr Matthews said, repeat the mistakes
of the past?
Mr Cameron: I think we are beginning
to realise what the mistakes in the past were, and therefore taking
a broader view and taking a more realistic view and ensuring that
we direct our resources not to make those mistakes again. Two
or three years ago we co-hosted a workshop on behalf of DFID looking
at their research programme and we made great efforts to emphasise
the importance of developing infrastructure, be it infrastructure
on the bigger scale or on the micro scale. Certainly moves have
been made to absorb that and you can see clearly through our contact
with DFID that all areas of infrastructure are being looked at
and promoted in a more sustainable way.
Q204 Chairman: Mr Matthews, you mentioned
the Africa Infrastructure Consortium. I was interested, this Committee
having visited Africa, that everywhere we went we saw energy problems
and electricity problems. Uganda seemed to be under a Ted Heath
regime and South Africa was heading for the same situation. I
am talking about rotational power cuts such as we had in the three-day
week. Malawi was having similar problems. The Africa Infrastructure
Consortium is obviously involved in trying to solve Mozambique's
and Malawi's problems and other ones, as I understand it, in West
Africa, but what is it about the Africa Infrastructure Consortium
that makes you feel this is innovative and beneficial compared
with other similar kinds of agencies?
Mr Matthews: There are other initiatives
like NEPAD that are also important and to some extent bring together
a similar group of partners, so it is not the only one. I think
they have got the right organisations involved, the Africa Development
Bank being based in Africa, the regional organisations, the big
multilateral and bilateral donors. If you are going to achieve
policy coherence it is essential that you have those right players
on board. Many of the problems that are facing sub-Saharan Africa
are regional continental problems. I was in South Africa as were
our previous witnesses as well. One of our institutional supporters
is the South African Institution of Civil Engineering and they
have just conducted a major study of capacity in engineering in
South Africa. After three years of work, they have produced an
interesting report called Numbers and Needs. South Africa
is in serious problems in terms of its engineering capacity. One
of the problems is that if more money goes into infrastructure,
as has been recommended by the Africa Commission and the Sachs
Report that money fuels corruption and leads to projects that
does not meet the needs of the poorest. If South Africa has the
scale of problems that it has got in terms of engineering capacity
to apply those kinds of resources, we can only begin to imagine
what some of the poorer countries in sub-Saharan Africa have in
terms of their problems around meeting capacity. Even if you live
in a country like South Africa, which is relatively well endowed,
they often go to work outside of South Africa. There are lots
of South African engineers in Britain and parts of Europe, for
example. That is the kind of problem that needs a regional approach
and a continental approach. So I think in summary it is the membership
of the Consortium and it is the fact that that membership allows
it to have a continental reach and a regional reach to solve the
problems that has not been possible in the past through a more
national based approach.
Mr Cameron: An interesting comment
is that much of the inherited transportation infrastructure within
Africa is concerned with links from extraction areas to the ports
from the colonial days and very little in terms of infrastructure
between the main communities, and that needs to be addressed.
Q205 Chairman: I understand when
it was set up there was a challenge to identify five projects.
We have been advised of two, which is the hydroelectric plant
for Senegal, Mauritania and Malawi, and the one I have already
mentioned in Mozambique and Malawi. What about the other ones?
Are others identified and what progress has been made on that?
Mr Matthews: I actually have very
little information. I did not even know of those two. I knew that
they were identifying those key projects. My search of the Internet
yesterday did not reveal even those projects to me, so I am interested
to hear that.
Q206 Chairman: That is interesting
that you do not know what stage they are at. They are plans. Certainly
there is €60 million from the European Commission and €260
million from the European Investment Bank for funding projects
of that scale. One of the things that occurred to me when I was
reading and looking at the problem, particularly of electricity
in Uganda or South Africa or wherever it was, was that all the
talk was about new hydroelectric projects and new thermal stations.
This is part of the solution and I accept they have to have a
proper infrastructure, but particularly in Africa where we have
got sun, we have got wind, and we have got rivers, we have got
tidal round the coasts, do you think that the Africa Infrastructure
Consortium is or should be a route for more sustainable projects?
I accept that hydroelectric is sustainable in one sense, but it
does depend a bit on the scale of the project. Clearly thermal
stations are not the definitive answer. Do you think it would
be the right way for that kind of priority?
Mr Matthews: I suspect that it
would be better to have a mixed approach. Sometimes when we are
talking about infrastructure, we think in terms of the social
and economic infrastructure so investment in large energy projects
is going to attract the foreign investment, for example ports,
airports and road networks might be seen initially as investment
in financial infrastructure, and that is absolutely vital, but
if that kind of investment occurred at the expense of social infrastructure
which goes directly to help poor people with investments in water
and sanitation and associated services, then that would be a mistake.
So I think that it has to be a mixed approach. I think that you
have to look at individual countries and identify what are the
unique opportunities there. If you look at the way that telecommunications
infrastructure has developed throughout sub-Saharan Africa, you
sometimes hear this phrase "technological leapfrogging".
If you are developing a telephone or telecommunications system
now you would not do it in the way it was done in Britain 50 or
100 years ago because there are new technologies that are much
cheaper and much more accessible. I am not aware if a study is
being conducted but the impact of the mobile phone on the economic
development in many parts of sub-Saharan Africa, from anecdotal
experience, is enormous. In summary, I think it needs to be a
mixture of those approaches for the financial and social infrastructure,
and that there is an opportunity to be innovative in terms of
the choice of infrastructure that you put in place. The key to
that is something that Peter said earlier of ensuring that there
are mechanisms for consultation so that certainly poor people
and other sections of society can express their views as to what
is appropriate. While we can pat DFID on the back and the Infrastructure
Consortium to some extent, it is not clear to me how the Infrastrucutre
Consortium is going to be engaging with civil society and business.
I know that Business Action for Africa, one of the initiatives
that came out of the Commission for Africa, is looking at engaging
with the Infrastructure Consortium. It is absolutely vital that
that occurs. It may be occurring but I am not aware of it.
Chairman: I think that is helpful. I
think you have identified some communication gaps here that perhaps
the Committee can shine a light on. I am going to bring Ann back
in just with the observation, before introducing her, that those
of us who went to Uganda were struck by the fact that we watched
young girls and women queuing for water. They were not walking
because they dared not leave the camps but they were queuing for
five or six hours simply to fill up their water carriers to take
them into the camps. I have to say that the men were sitting around
watching them do it! I think, Ann, we had better have the question.
Q207 Ann McKechin: It is one which
my other colleague, Joan Ruddock, has raised with other witnesses
and it is the question about a national gender strategy when we
are looking at the issues involved in eradicating poverty and
how you feel donors can invest and support gender responsive services
looking at girls and women. The issue of decision making and the
issue of collecting water is a very relevant one. Very often they
are the poorest people but they are often the most frequently
ignored.
Mr Cameron: Again, it comes back
to the point we keep making about consultation with the end user.
There have certainly been studies where local women have been
involved in the design of shelters and made an enormous difference.
Immediately they are empowered. They say, "Yes, we can understand
now the problems of construction but you can understand what it
is we actually need within our shelters." Access to water
is another example of that, how they need not just closed access
to their water supply, but that also gives them more time to then
devote to small-scale crop production close to where they are
living. So it is the consultation. It is a very big, difficult
problem for us from the developed countries to be able to get
into their mind-set and understand what it is that they really
do need. That is the big challenge.
Q208 Chairman: I think the point
that depresses the consultation effect is if somebody comes along
and says, "I am going to build a big power station,"
but then we ask how much does that investment deliver compared
to what a comparable amount of money could do to improve the opportunities
and life chances for women, bearing in mind in many cases that
will have an economic benefit for a whole community?
Mr Matthews: Quite often the kind
of projects that Engineers Against Poverty is involved in are
trying to make those connections. We work in infrastructure in
the extractive sector so it is often large-scale projects. I was
in West Papua recently with BP on a Tannguh project, a $5 billion
investment in liquid gas for export to Asia. Looking at the internal
mechanisms that BP uses, it is extremely well-intentioned and
in the way it set up the project and what it wants to achieve
socially and environmentally there are enormous developmental
opportunities, but its procurement system, for example, is dispersed
amongst a number of different parts of the company and it is not
aligned with their social investment strategy. There are opportunities
there for marginalised sections of the communities in enterprise
development, girls and women being a key part in many instances
of the marginalised sections of communities. That was an opportunity
for a company to do much more. We were giving them support around
enterprise development, trying to maximise the amount of goods
and services that were sourced locally, and we were trying to
encourage them to bring together their requirements in terms of
meeting quality standards and technical specifications in the
goods and services they required but also marrying them with social
objectives. If they can meet those quality standards, can we get
those delivered by sections of the community who have been marginalised,
including girls and women? Can we create specific opportunities?
There are things that companies and governments can do? When poverty
reduction strategy papers are being put together, there needs
to be encouragement from multilateral and bilateral donors to
include a gender perspective when you are designing the safety
net and identifying what those priorities are. Quite often, even
if there is a desire there on the part of the government who is
putting together the poverty reduction strategy paper, the mechanisms
to reach marginalised sections of the community often do not exist,
so sometimes donors can bring that perspective if it is making
the resources available through grants or expertise or participatory
data gathering which can enable decisions based on the needs of
girls and women, for example.
Mr Cameron: Linked to that capacity
building within the communities often encourages girls and women
to be much more involved, and much more readily involved in learning
and understanding even simple technical issues.
Q209 John Barrett: As was mentioned
earlier on, water has a key role to play in both health, education
and many other aspects in the developing world. Could you touch
on what you think the donors could do to achieve the desire to
get at least minimum standards of water delivery to a maximum
number of people and where you feel the privatisation of water
can fit into this? We are often lobbied by a number of groups
that privatisation means bad news. I think we have seen both the
good and the bad aspects on our trips to a number of countries
where it can work towards the delivery of a water supply to those
who do not have it.
Mr Cameron: There are two clear
almost divided parts of that. On the one hand, it is the rural
problem of water supply whereby many millions of people are living
remote from a water supply. There are programmes that have been
going on of hand pumps and of play pumps and so on which have
made an enormous difference, and through the private sector there
should be the opportunity of expanding those programmes of providing
simple, sustainable pump systems that provide water where it is
needed and also provide water and irrigation for crop production,
which then immediately starts to lift income. In the urban areas
it is very difficult because the urban areas, as we know, are
growing very very fast and you set up a private contract, say,
for supplying an area of water supply, and often that is linked
to fees for the amount of water taken and, as I said earlier,
that can marginalise the rim of poor people on the periphery.
We need to find mechanisms. Often it is a partnership between
privatisation and the public local authority to take on that social
aspect which cannot generate the income that a purely private
contract would expect, so that the marginalised people do obtain
water or at least shared water taps within reasonable distance
from where they are living. There is an example of where people
have been given land rights to where they are living. It may be
that it started from a squat basis, but where they have got some
rights on to the land where they are living, they will more readily
pay money for the water because they have got a direct right which
they are making use of.
Q210 John Barrett: And are there
opportunities for donors to move forward and is DFID missing a
trick anywhere that you are aware of?
Mr Matthews: In the more recent
projects around water privatisation, I think a lot of the blame
has been delivered at the door of the companies; in some cases
probably unfairly. I think the trick that was missed was often
in the way that the project was packaged and the kind of information
that it was based on for planning. Often public opposition may
have been ignored and there was not sufficient consultation. This
was one of the interesting things that came out of Turning
off the Taps, the ActionAid research. That report was published
a year or so before the virtual collapse of that project, but
if you look at the recommendations and the problems that they
were raising, they came to fruition a year later, so that they
spotted them, they were evident. I think a lot of that was a result
of project packaging. By the time the company arrives on the scene
some of the key decisions have already been made about the finances,
about the consultation, about the form of risk management that
is going to be used. To some extent, the companies have been set
up to fail. It was of concern to me reading recently about the
meeting there has been in Mexico on the release of the UN's World
Water report because that report says that a lot of private
companies are pulling out of the projects they have been involved
in and are unlikely to get involved in projects in the future
and I do not think we can afford to lose that expertise. I do
not think the private sector have all the solutions but I think
that they are part of the solution. If they disappear from the
scene then that is going to set back progress.
Q211 Chairman: There is some responsibility
on the NGOs in their campaigns if they are identifying real and
substantive issues that they do not promote them in a way that
effectively drives away the very people who are needed to solve
the problem.
Mr Matthews: I understand that.
Chairman: Thank you very much. I apologise
that you have been kept waiting. As you have seen, the Committee
are under some pressure of time because clearly we would have
finished a few minutes earlier. Nevertheless, I think you have
highlighted a few quite helpful points which we very much appreciate,
and indeed your written briefings, certainly for me, were quite
informative and enlightening and will obviously help us in writing
our report, so thank you both very much indeed.
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