Appendix: Government response
DFID welcomes the International Development Committee's
positive report on our programme in Vietnam. We are pleased that
the Committee has highlighted the impact of our increased budget
and found that "British money has helped to lift millions
of people in Vietnam out of poverty". It is also helpful
that, having heard evidence from the Government, civil society
and other donors, the Committee has endorsed our use of budget
support, recognising "its multiplying effect, impact on
government capacity and ownership of development". We
agree with the majority of the recommendations and in most cases
we are already taking the appropriate steps to address them. Responses
to specific recommendations follow below.
It is clear that tackling inequality and vulnerability
will be a key challenge as Vietnam approaches middle-income status.
While the Committee states that "the programme appeared
to be effective and targeted", we agree that we will
need to further improve targeting of the poorest and marginalised
groups to make sustained progress on poverty reduction. Reducing
vulnerability to external shocks, including climate change, will
be critical to ensure development gains are not lost. We will
continue to support a number of programmes that address this directly,
as well as promoting measures such as a social security system.
We also recognise the need for a more coherent focus on building
a strong civil society. On monitoring and evaluation, we are already
working to improve our internal systems, in the context of budget
support and working through others.
We are currently developing a new Country Assistance
Plan (CAP) for the Vietnam programme to 2011. We believe this
builds on many of the Committee's findings and recommendations.
A draft of this is currently out for consultation and will be
published by the end of the year. The overarching objectives to
2011 are:
- Ensure the poor benefit from
the opportunities provided by WTO accession;
- Improve quality and inclusiveness of services
for the poor and vulnerable;
- Promote effective and accountable governance.
Response to specific recommendations
[Paragraph 8] Against a backdrop of staff and
administrative efficiency targets across the civil service, including
at DFID, the tripling of DFID's budget in Vietnam in five years
is a very sharp increase to manage. However, in general terms,
we were very impressed by the quality of the work in which DFID
was involved in Vietnam. DFID staff in Vietnam were well-informed
and the programme appeared to be effective and targeted. We were
provided with good examples of the positive effect British development
assistance was having on Vietnam's development. All our comments
in this report should therefore be seen in that light.
We welcome this positive assessment of DFID Vietnam's
work and the quality of staff. The new draft Country Assistance
Plan has been developed to ensure that we are able to continue
to deliver an expanding, effective and high-quality programme
while achieving our staffing and administrative efficiency targets.
[Paragraph 11] Much of DFID's programme in Vietnam
focuses on rural populations, particularly through targeted budget
support programmes: 'Education for All', which focuses on increasing
access to primary education, and the rural infrastructure-oriented
programme, 'Programme 135'. These are excellent programmes which
we applaud.
We welcome these findings and have no specific comments.
[Paragraph 12] Dealing effectively with growing
inequality between Vietnam's ethnic minorities and its majority
will be key to ensuring that all Vietnam's poor benefit from the
country's remarkable economic development. We therefore welcome
a review by DFID of the Government of Vietnam's policy to promote
ethnic minority education. However, given the scale of the challenge
and the apparent failure of current policies to halt the widening
inequality, we recommend that DFID work with the Government of
Vietnam and other donors to carry out such reviews across the
range of government policies towards ethnic minorities.
The Government of Vietnam is currently reviewing
its policies towards ethnic minorities across a range of policy
areas. The review of education policies referred to above was
initiated by the Ministry of Training and Education. DFID is supporting
it jointly with other donors. DFID will continue to actively support
improvements to Government policies to ensure ethnic minorities
share the benefits of economic growth and development. We will
also promote improvements through the new Governance and Poverty
Policy Analysis programme with the World Bank, in which ethnic
minority poverty is a core theme.
[Paragraph 15] Vietnam has a particularly large
proportion of its population living just above the poverty line.
Ensuring that these people remain above that line, and indeed
increase their income so as to reduce their vulnerability to external
shocks, is crucial for Vietnam's further development. There is
also an increasing number of economic migrants being drawn to
industrialised centres who are at risk of becoming marginalised
and vulnerable. We recommend that DFID monitor these populations
closely and work with the Government of Vietnam to prioritise
programmes which reduce their vulnerability.
[Paragraph 33] We view the priorities for a sustainable
and effective social security system in Vietnam to be: broad coverage
which includes the poorest and most vulnerable people; simplicity;
and demand-side education led by civil society. We recommend that
DFID ensure that each of these priorities is reflected in its
support in this area.
Vulnerability is one of the main development challenges
facing Vietnam now. Over 14 million people (16%) are still poor
(<$1 a day) and 45% of the population lives on <$2 dollars
a day. These people are extremely vulnerable to external shocks
and risk slipping back into poverty.
The Government of Vietnam is committed to eliminating
poverty and protecting the vulnerable. This is reflected in the
national five-year development plan — SEDP (2006-10) —
where a key priority is improving its social security programmes.
The government has allocated budgetary resources to ensure all
the poor and vulnerable have full health insurance coverage by
2010. From 2008 onwards the Government will expand the social
safety net to institutionalise voluntary old-age pensions for
the poor and vulnerable. Their coverage will be monitored through
the Poverty Reduction Support Credit (PRSC).
In addition to supporting this issue through general
budget support, DFID, along with the World Bank, is designing
assistance to strengthen the Government's social security programme.
We acknowledge the importance of simplicity and the important
role for civil society in supporting demand-side education. However,
DFID's policy priorities are slightly different to the Committee's
suggested ones. These are: (a) supporting implementation of voluntary
social insurance with specific focus on the poor and vulnerable;
(b) increasing coverage of voluntary health insurance (c) reforming
Vietnam's Social Security Agency to become an accountable and
responsive agency. Our "Making Markets Work for the Poor"
Programme has also been working on ways to reduce vulnerability
and increase incomes of poor producers in key economic sectors
where the poor are very active.
[Paragraph 20] We agree with many of DFID's arguments
in favour of budget support, including its multiplying effect,
and its impact on government capacity and ownership of development.
The Government of Vietnam has a good track record on poverty reduction
and should be supported. We are concerned, however, that DFID
may be neglecting other aid instruments or combinations of aid
instruments in favour of budget support, even where these could
be equally or more effective. In particular, we believe that DFID
should engage with civil society more than it currently does,
including looking at options for civil society projects to run
in parallel with Government-led initiatives. We believe that a
strong civil society in Vietnam will be crucial as the country
faces new challenges in its development, and in its social and
political evolution.
We welcome the endorsement of budget support as a
main way to support the strong leadership of the Government of
Vietnam in the implementation of its poverty reduction strategy.
We also welcome expert-witness comments that agreed that, in terms
of aid effectiveness, budget support in Vietnam is an effective
way to support a strong, capable and committed state.
However, we disagree that DFID is neglecting other
aid instruments or combinations of aid instruments. We are using
a mix of aid instruments, with budget support accounting for 70%
of our resources, and the remaining 30% as projects. A number
of these projects support investment (for example, in rural roads,
public financial management and education facilities) where the
conditions are not appropriate for budget support. Other projects
provide technical assistance and promote innovation in areas such
as World Trade Organisation accession and anti-corruption.
We agree with the Committee that a strong civil society
will be crucial to the country's future. That is why our new CAP
prioritises strengthening the accountability dimension of governance,
including civil society. We have already agreed a process with
NGOs to review civil society strengthening in Vietnam and see
what more DFID and other donors should do. The results will be
reflected in our 'legacy strategy' [see Paragraph 58 below].
[Paragraph 23] It is fundamentally important that
DFID is able to demonstrate effectively its impact on poverty
reduction. We saw some evidence on the ground of this impact.
But in terms of systematic monitoring and evaluation, we believe
that "reasonably inferring" such impact is not good
enough. Given that 70% of DFID's budget in Vietnam is channelled
through the Government, we recommend that DFID urgently re-examine
the level of support it is providing to enhance Vietnam's own
monitoring and evaluation systems, in particular the capacity
to produce qualitative data and analysis. Until those systems
are fit for purpose, we recommend that DFID further enhance its
own monitoring and evaluation systems, including through allocating
dedicated staff to this role.
We agree that demonstrating impact is fundamental.
Some examples of the directly attributable impact of our work
include: a reduction of 210,000 people living in poverty in rural
communes as a result of provision of all-weather roads through
co-funding of the Government's rural access programme; an improvement
in quality of schooling for more than 1,000,000 children through
co-funding to the Government's primary education programme.
We already provide a high level of support to strengthening
Vietnam's own monitoring and evaluation (M&E) systems. We
have invested over £10 million in a programme with the World
Bank which includes supporting Government to strengthen these
systems. As a direct result, for the first time ever in 2006,
the Government of Vietnam approved an M&E framework for its
Poverty Reduction Strategy. Currently, DFID is also supporting
the General Statistical Office (GSO) through a project co-financed
with UNDP to strengthen its data-collection capacity; and the
new Governance and Poverty Policy Analysis Programme with the
World Bank has the strengthening of Government M&E systems
as one of its three core themes.
We agree that DFID's own M&E systems can be further
enhanced and we have implemented three measures to address this.
First, we have created a new post to work on strengthening our
internal M&E. Secondly, we have strengthened M&E in existing
projects after carrying out a portfolio review. Finally, we have
organised training on results-based programming for staff to strengthen
our capacity in M&E.
[Paragraph 28] We welcome the progress on gender
equality that is being achieved in Vietnam. We believe, however,
that women must routinely have the opportunity to participate
equally in decision-making, both at a policy level and on the
ground. This calls for a participatory approach at project level
which we did not observe in DFID's work in Vietnam. As well as
ensuring basic fairness and inclusion, such an approach would
provide the Government of Vietnam with a model for its own programmes.
We recommend that DFID devise a specific gender strategy for each
of its programmes and projects in Vietnam and share these with
us within six months.
We agree that participation of women and men in programmes
and policies that affect their lives is crucially important to
maximise the impacts of our interventions. We ensure a participatory
approach in many of our projects, for example the Northern Mountains
Poverty Reduction Project (NMPRP). This approach has maximised
the impact on Vietnam's own programmes. For example, the lessons
learned from NMPRP influenced the Government design of the National
Targeted Poverty Programme — P 135/2. We have also organised
specific gender training for programme staff. We will however
review all our programmes and projects to see what changes we
should make, and will report back to the Committee within 6 months.
[Paragraph 36] In 2004, DFID was the first donor
to fund large-scale HIV/AIDS prevention programmes in Vietnam.
115 million condoms and millions of needles have been distributed
through these programmes. These are good initiatives which we
wholeheartedly support. We recommend that a lessons-learned exercise
be carried out in connection with the underspend on the HIV/AIDS
programme and shared with us within six months.
We welcome the Committee's support for our HIV/AIDS
prevention programme and recommendation that DFID continue to
prioritise support to HIV as an off-track MDG. Although the programme
underspent in 2004/05, disbursement has increased rapidly since
2006, when we transferred management to the Ministry of Health.
In 2005, the project reached 40.4% of street-based sex workers,
increasing to 96.8% in 2006. In 2005, the project distributed
200,000 needles and syringes, increasing to 1.5 million in 2006
and expected to rise to 10 million in 2007.
Our regular M&E of projects includes consideration
of lessons learned, so we can share those lessons learned on this
project with the Committee now. These are attached at Annex 1.
The main lesson learned is that Government leadership and ownership
is critical. Sole management of the project by the Ministry of
Health, leading to stronger government ownership and leadership,
has been more effective than co-management with WHO.
[Paragraph 39] Our report on sanitation and water
makes clear that these services sit at the heart of development.
We recommend that DFID work urgently to find the £20 million
for rural sanitation in Vietnam which DFID analysis suggests could
provide four million people with hygienic sanitation, whether
as a single donor or in coordination with other donors. DFID should
also look at options other than budget support for its work in
this sector.
We agree. As we set out in our earlier evidence to
the Committee, sanitation is now the most off-track MDG target
in Vietnam. It is identified as a priority in our draft Country
Assistance Plan, which is currently out for consultation. We are
working with the World Bank on the design of a joint programme
to support Government in getting rural sanitation back on track.
DFID's investment would be at least £20 million. At the
same time we are tackling the institutional constraints holding
back progress. Through the PRSC, we have successfully encouraged
Government to develop a Unified Sanitation Strategy. This is an
important step towards the better inter-ministerial co-ordination
and multidisciplinary working which the Committee highlighted
in its recent inquiry on water and sanitation.
Our work in this sector is not and will not be limited
to budget support. We recognise that a range of approaches are
helpful to achieve progress. In particular we see the introduction
of more demand-driven approaches to water and sanitation provision,
proven elsewhere, as a key contribution. We are doing this in
a number of ways: "Making Markets Work for the Poor"
is piloting the provision of market-based sanitation; our contribution
to the 'Sanitation and Water Partnership for the Mekong' is supporting
the scaling- up of such research and pilots into national programmes;
and, through our secondee in the World Bank, we are developing
revolving credit funds for sanitation. This project-based work
is linked to the development of a sector programme.
[Paragraph 44] Given the scale of the challenge,
we agree that the DFID programme in Vietnam should increasingly
focus on governance and human rights issues. We recommend that
resources be redirected at least to double the financial resources
available for DFID's governance programme in Vietnam, mirroring
the planned increased DFID staff capacity. The refocused and strengthened
governance programme is likely to coincide with Foreign and Commonwealth
Office priorities. We recommend that DFID and FCO begin planning
now for this convergence in order to avoid duplication and to
maximise cooperation and shared resources, including staff.
We welcome the Committee's endorsement of our increased
focus on governance and human rights. This increased effort will
require us to commit additional resources, both human and financial,
to the programme. We have already substantially increased our
staff working on this and we are also working with the UN and
World Bank to increase their capacity in this area. Our experience
in Vietnam is that supporting improved governance is less about
financial inputs and more about ideas, knowledge transfer and
ways of working. We are therefore reluctant to specify at this
stage precisely what increase in financial resources will be required
for the programme.
We already work closely with the FCO on governance
and human rights. We co-operate in both the preparation and implementation
of our respective business plans and agree joint annual objectives.
We share analysis and resources, including staff, and work constructively
to maximise our different comparative advantages and avoid duplication.
This will continue and deepen over the period of our next CAP.
[Paragraph 47] DFID already supports programmes
whose aim is to ensure that the benefits of World Trade Organisation
membership reach beyond the urban industrialised areas and include
the poor and vulnerable. We support this work and endorse the
priority given to it in the draft new DFID Country Assistance
Plan for Vietnam and would expect to see this level of priority
maintained in the final agreed Plan.
We agree. Our new CAP prioritises support to Vietnam
to ensure that the poor and most vulnerable also benefit from
World Trade Organisation membership. See also responses to Paragraphs
15 and 33 above.
[Paragraph 50] DFID was not able to tell us by
how much its budget will reduce once middle-income status is attained
nor how quickly. We believe, however, that this is likely to involve
more than a "slight scaling back". DFID should therefore
begin now to set out for the Government of Vietnam the likely
changes so that it in turn is able to prepare for reduced aid
flows.
The UK was used as the example of best practice on
aid predictability by the Government of Vietnam in its ODA Newsletter
in December 2006. Our Development Partnership Arrangement (DPA)
sets out planned annual aid flows to 2010/11. We will carry out
an in-depth review of the DPA in 2010, and following this we will
agree DFID aid resources for the last five years of the DPA until
2015. We, together with other donors, have already started dialogue
with the Government on potential changes in aid flows after 2011,
once Vietnam achieves middle-income country status. This will
be a main topic of discussion at the annual donor-government consultations
in December 2007.
[Paragraph 54] We see a medium-term role for DFID
in Vietnam in providing more advice and less funding. We believe
that research-led, pioneering work is a strength of DFID's programme
in Vietnam and can lead to compelling arguments on which DFID
can base its advice to the Government. We recommend that this
work should become even more central to DFID's work in Vietnam
as it approaches and attains middle-income status. We believe
that DFID support for some small, innovative civil society projects
would complement well its role as a development pioneer in Vietnam
and recommend that DFID begin such funding in this financial year.
We welcome the Committee's recognition of the influence
DFID's research-led, pioneering work has had in Vietnam. We will
increase this type of work under the new CAP. We also agree that
support for small, innovative work by civil society is important.
We are already funding such work e.g. to inform government thinking
on drug rehabilitation and to curb HIV transmission among intravenous
drug users. We agree this type of approach can produce compelling
evidence on which DFID can base its advice to government.
[Paragraph 58] We agree that a strengthened and
coordinated UN presence in Vietnam offers significant potential
gains for Vietnam. We do not agree, however, that it is the only
vehicle for ensuring that Vietnam's development continues to be
informed by advice and innovation which draws on international
experience and best practice. Strong civil society groups and
well-resourced international non-governmental organisations can
also offer relevant experience while also encouraging increased
government accountability. We recommend that DFID's 'legacy strategy'
be reviewed in order to provide a much clearer role for civil
society capacity-building.
We recognise that the UN is not the only vehicle
for ensuring Vietnam continues to access international experience
and best practice. As bilateral donors scale back their presence
with Vietnam's achievement of middle-income country status, a
more effective civil society and a strengthened UN will both have
important roles to play. The UN, in collaboration with international
NGOs, continues to help build the capacity of civil society.
The process of UN reform is well established in Vietnam. We believe
it promises significant efficiency and effectiveness gains as
well as providing lessons for other countries embarking on UN
reform. More importantly, the Government of Vietnam has provided
the vision and taken a strong lead on this agenda.
We are also considering other ways to support civil
society better and have included this as one of four key questions
in ongoing consultations on our new CAP with all development partners
(including both Vietnamese and International NGOs). See also response
to Paragraph 20 above.
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