Appendix: Government response
[Paragraph 12] We recommend that the financial
tables in Annex 1 of Departmental Reports include a breakdown
of ODA [Official Development Assistance] figures, so that readers
can easily identify which components of ODA—contributions
from CDC, debt relief, the DFID budget—are changing. With
regard to debt relief, we recommend that relief only on the amount
being paid in debt servicing can reasonably be classed as ODA,
and that the UK Government should give a detailed breakdown of
this amount when apportioning debt relief to the ODA total.
We will provide a detailed breakdown of ODA, including
the breakdown of contributions from CDC, debt relief and the DFID
budget, in the Departmental Report 2007 and in future Departmental
Reports. We will report this data separately from Annex 1, since
that annex reports data by financial year on an accrual accounting
basis, whereas ODA is reported by calendar year on a cash accounting
basis.
As noted in paragraph 11 of the report, the UK abides
by the OECD DAC (Development Assistance Committee) decision to
score debt relief as ODA and we clearly identify this within our
ODA statistics. We do not plan to classify only the amount being
paid in debt servicing as ODA or break down debt relief in this
way.
[Paragraph 14] We encourage HM Treasury to make
overall administration costs, rather than staff headcount, the
focus of DFID's efficiency savings. This will help ensure that
DFID has the necessary human resources to support the Department's
increasing financial resources.
DFID is committed to reducing administration costs
and staff numbers over the 2005-8 period in order to increase
the funds that go to developing countries. Over the period of
the current efficiency programme the quality of DFID's portfolio
of projects and programmes has increased, alongside the reductions
in staff numbers. Going forward DFID and the rest of government
remain committed to bearing down on administration costs to release
resources to the front line.
We are developing a Corporate Plan that will provide:
(a) a vision of what DFID will be like by 2013 and (b) a specific
plan for the 2008-11 period on how we will deliver on our White
Paper and Comprehensive Spending Review commitments. How to deliver
on an expanding programme of work with diminishing administration
resources will be a key issue for this plan.
[Paragraph 19] We recommend that information is
made available in the Comprehensive Spending Review 2007 on exactly
how DFID intends to specialise further beyond its focus on low-income
countries, how it plans to divert activities from non-core to
core activities and what cost savings can be generated through
off-shoring and outsourcing of activities.
We agree that these are important issues, particularly
in the context of a Government-wide reduction in administration
budgets aimed at releasing resources for frontline services.
We are exploring options as part of the Comprehensive Spending
Review (CSR) covering the period 2008/09 to 2010/11. Details on
how the funds will be spent both on programme and administrative
activities will be announced following the settlement.
[Paragraph 24] Millennium Development Goal 8 seeks
to build "a global partnership for development", and
towards this goal donors should participate in a coherent process
when co-ordinating countries of operation. DFID has not fully
made the case for its comparative advantage in focusing on fragile
states such as the Democratic Republic of Congo. We expect a clear
explanation of why DFID is investing considerable resources in
DRC.
We are investing in DRC because we are confident
we can help DRC make progress towards the Millennium Development
Goals. DRC has 60 million people, almost all of whom are poor.
Progress in this vast country is essential for stability in central
Africa, as was shown during the last war when virtually all of
DRC's neighbours were involved militarily. The MDGs will not
be achieved in Africa without progress in the big, populous states
of DRC, Sudan, Nigeria and Ethiopia.
We believe that it is important to take advantage
of the opportunity that exists to help secure and sustain peace
in DRC. The international community has provided essential support
to the transition and DFID was the biggest bilateral funder of
last year's successful elections. But elections were only one
step towards developing a democracy and DRC remains underaided.
This is the time when resources can have a major impact. Evidence
suggests that in years four to seven after conflict, when donors
tend to withdraw, aid is twice as effective as in similar countries
at peace.[1]
DFID's investment is already making a difference.
Our support to the Humanitarian Action Plan contributed to: giving
500,000 people emergency access to water and sanitation, and a
further 300,000 a permanent water supply; and vaccinating 1.59
million children. We have helped protect a million people from
malaria by providing anti-malaria bednets and are expanding this
to reach 3.6 million people.
Finally, we believe that we do have a comparative
advantage in fragile states, such as DRC. This comparative advantage
comes from: our experience in Sierra Leone, Rwanda and Uganda—countries
that were fragile states and are now making progress; our untied
and flexible approach to how aid is delivered; our ability to
work closely with other Government Departments, particularly on
security issues; and our decentralised structure, which enables
decisions to be informed by a good understanding of the country
context.
[Paragraph 27] We welcome DFID's commitment to
work in fragile states. However, in order to maximise poverty
reduction and retain public support, we encourage DFID to make
information available on exactly how it intends to balance good
performers and fragile states while at the same time increasing
its specialisation and focusing on what it deems to be "core"
activities.
Through the CSR process, we are looking at how to
put into effect the White Paper commitment to work more in fragile
states. Decisions on the balance between good performers and
fragile states, as well as those on specialisation and core activities,
will be made after the CSR settlement is announced in mid-2007.
[Paragraph 34] We recommend that when it reviews
the proportion of spending channelled through multilateral institutions
for the Comprehensive Spending Review 2007, DFID makes information
available on how it allocates its funding across such institutions.
We also recommend that, when publishing this information, DFID
makes clear how the Department assesses multilateral institutions
using the Multilateral Effectiveness Framework (MEF) and how the
MEF influences its funding decisions.
We agree. As part of the CSR, we are considering
the amounts that DFID should spend through multilateral organisations.
A number of criteria will inform these judgements, including the
requirement to pay membership subscriptions (eg to certain UN
organisations), our sector and international system reform objectives
as set out in the 2006 White Paper, and what we know about the
effectiveness of individual organisations and the results which
they deliver. Information on effectiveness is being systematically
reviewed as part of this exercise, including from the results
of the DFID Multilateral Effectiveness Framework (MEFF) which
was published in 2005.
[Paragraph 45] We were pleased to hear that Ethiopia's
Protection of Basic Services Grant provides for regular financial
monitoring, including the provision of detailed budgetary information
to citizens for the first time. However, we recommend that these
monitoring arrangements—particularly making detailed budgetary
information available to citizens—are extended to all PRBS
arrangements to enable improved transparency and accountability.
We plan to visit Ethiopia early in 2007 as part of our Water and
Sanitation inquiry and will follow up on these points during the
visit.
We agree that improving the budgetary information
available to citizens is important. The White Paper emphasises
DFID's support to improved transparency and accountability from
outside government, including civil society, the media and parliaments.
We are providing this support in a number of ways.
In Ethiopia, technical support to the government and to civil
society to strengthen financial accountability is integrated into
the Protection of Basic Services Grant. In other countries, we
provide support to strengthen budget transparency and improve
financial accountability to the public in parallel to budget support,
through separate programmes. For example, in Tanzania we have
supported transparent annual public expenditure reviews and citizens'
access to parliamentary debates. Through the Civil Society Budget
Initiative of the International Budget Project, we support the
strengthening of NGOs to engage with the budget process in Indonesia,
Burkina Faso, Malawi, Bolivia, Mozambique, and Ethiopia. In many
countries we support core public financial management systems
so that they produce more accurate and timely information. In
Sierra Leone we support public expenditure tracking surveys to
understand how well resources are reaching health and education
facilities and how systems can be strengthened. We are also funding
a programme of support to the Sierra Leone Audit Service. In Uganda
and Vietnam, governments publish budgets at community level so
that citizens are aware of the resources reaching facilities such
as clinics and schools. The Ethiopia programme focuses on improving
local level information, because the programme delivers resources
for use at the local government level and because there is a particular
focus on promoting local accountability.
[Paragraph 47] We recommend that DFID examines
the long-term viability of budgetary support before it is introduced
in order to reduce the likelihood of withdrawal and that it includes
political governance where appropriate in the criteria for PRBS
[Poverty Reduction Budgetary Support]. We also recommend that
DFID considers immediate follow-up measures to assist countries
in getting back on track, puts contingency plans in place prior
to PRBS being withdrawn and builds NGOs' capacity to track the
effectiveness of PRBS.
PRBS Policy
We agree that we need to consider carefully the likelihood
that we will be able to deliver predictable resources before engaging
in PRBS. We are currently updating our PRBS policy in light of
the findings of the multi-donor evaluation of General Budget Support
in 2006. We intend to strengthen the policy in this area in two
ways. Firstly we will use the framework for choosing financial
aid instruments that is set out in the 2006 White Paper. This
includes an explicit consideration of governance issues when deciding
whether to provide general budget support. Secondly we will set
out a new set of expectations about the benefits that PRBS can
deliver and will emphasise that these benefits are highly dependent
on predictable aid delivery. We will ensure that when we assess
the expected benefits that budget support may deliver, the likelihood
of delivering predictable resources will be taken into account.
Ethiopia
We agree that it is important to assist governments
to get back on track when budget support has been withdrawn. In
Ethiopia, we have recently established a more structured approach
to dialogue with Government on governance and human rights. The
"Newai Group" has agreed on a governance matrix which
includes priority areas of action on governance and human rights.
This will be included in the Government's new national poverty
strategy (the Plan for Accelerated and Sustained Development to
end Poverty) which we expect to be published very shortly. Working
closely with the FCO, we also pursue high level bilateral and
EU dialogue with Government. This often addresses difficult issues
such as governance and human rights.
We expect to set up a programme with other donors
to support these governance objectives e.g. to strengthen federal
and regional parliaments, the Human Rights Commission and the
National Election Board. We are also working in a range of other
areas to build capacity and hope soon to start a new programme
to help improve the effectiveness of the Civil Service.
Contingency Planning
We agree that contingency planning is an important
component of risk management. We routinely undertake risk assessments
when we prepare County Assistance Plans and fiduciary risk assessments
when we prepare a PRBS programme. Decisions are then taken on
what level of risk is acceptable, how to manage that risk and
what contingency plans are needed so that DFID can respond effectively
should risks be realised. We generally maintain a mixed portfolio
of programmes within each country, particularly in higher risk
situations, which ensures that there are options to disburse aid
in effective ways if any part of our programme (either PRBS or
another) is affected by a deteriorating political situation or
a specific event.
Within each country it is not possible to set out
contingency plans for every eventuality. Precisely how we will
respond to any breach of conditionality will depend on the seriousness
of the breach and the impact that any decision will have on poor
people and longer term poverty reduction efforts. For example,
we may be able to continue to support the government through targeted
sector programmes, or we may reallocate resources to other countries.
Role of NGOs
We believe that it is important that civil society
and parliaments are able to demand and interpret information about
government expenditure so that government can be held to account.
We do not, however, believe it is appropriate for NGOs to monitor
how PRBS is spent, nor what it achieves, separately from the rest
of governments' resources. Where appropriate we support both
civil society and parliaments to strengthen their ability to fulfil
this role. For example, in Tanzania we have supported transparent
annual public expenditure reviews and citizens' access to parliamentary
debates. In Zambia we support parliamentary oversight of
public finances, including PRBS, as part of our PRBS programme.
In South Africa, we supported the Budget, Public Accounts and
Local Government committees for 5 years.
[Paragraph 54] We agree with DFID's emphasis on
ensuring the predictability of aid flows, improving public financial
management and addressing the effectiveness of sector institutions.
We recommend that DFID carefully monitors emerging lessons from
the experience of the International Finance Facility for Immunisation
about the potential value of front-loading aid in certain circumstances,
and how this can be balanced with concerns about absorptive capacity.
We agree with the recommendation. The International
Finance Facility for Immunisation (IFFIm) issued its first bonds
in November 2006, raising US$1 billion which has been transferred
to the Global Alliance for Vaccinations and Immunisations (GAVI)
to fund their programme of work.
IFFIm's performance and impact on GAVI activities
will be monitored closely by the GAVI Secretariat. As a member
of the GAVI board, DFID will be monitoring countries' capacity
to absorb GAVI (and IFFIm) funding through GAVI's annual reports,
country level reports and the recommendations of the Interagency
Coordinating Committees (ICC) to the GAVI Board. These should
indicate any lessons on front-loading aid.
At country level, GAVI monitors activities and absorptive
capacity in 3 ways:
i. Recipient countries prepare an annual report
to GAVI, which sets out how funds have been used and their impact;
ii. An annual Data Quality Audit helps evaluate
the quality of a country's health information system and checks
the accuracy of reported data. An ICC convenes at country level
to review the recommendations outlined in the Data Quality Audit
and develop action plans to provide to the GAVI Board during the
next annual review;
iii. Recipient
governments provide a financial audit: the ICC can call for a
more detailed audit if necessary.
[Paragraph 57] We recommend that DFID continues
to monitor the impact of relocation of staff to East Kilbride.
We also recommend that DFID shows in its Comprehensive Review
2007 how future shifts in policy impact on future recruitment
patterns and training. In addition, it would be useful to show
how resources—human and financial—align with Public
Service Agreement targets.
We agree with the recommendations. We will continue
to monitor the impact of relocation of staff to East Kilbride
and we will be looking at identifying the savings available from
the more efficient use of our accommodation. DFID is preparing
a Corporate Plan to ensure that we have consistent, credible and
sufficiently ambitious plans across DFID for how we will achieve
PSA and CSR objectives.
[Paragraph 60] We are pleased that DFID is liaising
with the FCO on how to co-ordinate more effectively to save money
for the taxpayer by sharing services. We recommend that the Comprehensive
Spending Review 2007 contains specific proposals on this.
We agree that close co-ordination with the FCO is
important and have developed, with FCO, a Shared Services Delivery
Plan. That plan outlines how we will build on the already substantial
degree of co-operation between the two departments. It focuses
on increasing the number of co-located offices and increasing
collaboration on procurement and information systems over the
CSR period.
[Paragraph 64] We recommend that future Departmental
Reports give specific examples of how DFID seeks to achieve PSA
targets. We also recommend that DFID provides evidence of corrective
or remedial action it is taking in instances where PSA targets
are not going to be met.
We structured the Departmental Report 2006 around
the Public Service Agreement so that the links between DFID's
work and achievement of the PSA was clear. In future Departmental
Reports we will continue to have an explicit focus on the PSA,
whilst also ensuring that we respond to the requirements of the
International Development (Reporting and Transparency) Act.
We also report on progress towards the PSA in the
Autumn Performance Report. The 2006 Report was presented to Parliament
in December. It included a chapter on "tackling underperformance"
in which we provided further information on what DFID is doing
to address off-track targets. We will include similar chapters
in future Autumn Performance Reports.
[Paragraph 67] We are pleased to see that DFID
is reviewing its evaluation system. We believe that external scrutiny
of projects is important and that there is scope for having a
greater element of external scrutiny than at present. We expect
DFID to report on steps it is taking to improve scrutiny in its
next Departmental Report.
As requested, we will report on the steps we have
taken to increase the scrutiny of projects in the next Departmental
Report.
[Paragraph 69] We recommend that DFID carries
out a full analysis of how its technical assistance can maximise
local capacity development, participation and impact on poverty.
Furthermore, we recommend that DFID outlines the process by which
it evaluates external technical consultants and sets out the proportion
of funds spent on consultancy fees in its Departmental Reports.
We have recently carried out an in-depth analysis
of our approach to technical assistance, including a major evaluation
of our technical assistance for economic management in sub-Saharan
Africa. As a result of this we published a new good practice
guidance note in June 2006. The guidance sets out how to provide
technical assistance to maximise local capacity development and
the participation of the partner country.
During 2007, we will be focusing on disseminating
the new guidance, both within DFID and to external partners.
We will also monitor our White Paper commitments on improving
the effectiveness of technical assistance, pooling our funding
with other donors where possible, increasing our use of local
providers and ensuring value for money.
We will outline the process by which we evaluate
external technical consultants in the next Departmental Report.
The proportion of funds spent on consultancy fees is already
published each year in Statistics in International Development
(see table 3.2 on page 28 of Statistics in International Development
2006).
[Paragraph 75] We recommend that DFID ensures
that key staff in posts such as Mozambique and DRC [Democratic
Republic of Congo] have a level of language skill equal to that
which the FCO would expect to have in post. This requirement will
have implications for assessing what duration of staff posting
is cost-efficient. We look forward to hearing the outcome of the
Permanent Secretary's discussions with his Treasury colleagues
concerning language training for DFID staff.
Most of our posts do not require language training
and we do not expect to make major shifts in investments in language
training. We have put in place language policies for instance
in DRC and Mozambique for staff who need language skills to effectively
deliver our programmes. We have provided additional funds for
immersion training. The HR transformation programme will be looking
at the costs and effectiveness for different lengths of posting.
We will continue to keep this under constant review and continue
discussions with other Government Departments.
[Paragraph 77] We recommend that DFID engages
with other donors to identify and pursue matters of interest regarding
China's operations in Africa. A pragmatic approach would be to
focus on the mutual interest in commerce as a way in to dialogue
with China on governance issues in Africa.
We agree with the need to deepen dialogue with China
about Africa. China is becoming a very significant player in Africa.
Two-way trade is expected to reach $100 billion by 2010, more
than 10 times the level in 2001. Chinese foreign investment was
$6.3 billion at the end of 2005. China has invested more in infrastructure
in Africa in the last three years than all of the OECD countries.
Plans were announced at the China-Africa summit (held in Beijing
last November) to double Chinese aid to Africa by 2009. It is
essential that all countries interested in the development of
Africa, including the UK, work more closely with China.
The UK recognised the importance of engagement with
China at an early stage. In early 2005, the Prime Minister invited
China to provide a representative on the Commission for Africa,
the only non-OECD, non-African country to be invited. Over recent
months we have discussed African issues with the Chinese at senior
official level, working closely with the FCO. These discussions
will continue throughout 2007, notably at the annual meeting of
the African Development Bank in Shanghai in May.
We are encouraging other donor countries to engage
similarly with China. We want to encourage the Chinese Government
to take a closer interest in good governance in Africa, partly
since a well governed country will be a more stable place in which
to do business (as the Select Committee suggest). We would also
like the Chinese Government to become more active in the development
discussions that take place in African capitals and elsewhere;
and for them to take a more substantive role in relevant multilateral
organisations, for example the African Infrastructure Consortium.
[Paragraph 80] We are concerned that the Departmental
Report fails to set out concrete and time-bound policies for meeting
the first failed MDG target seeking gender equality in primary
education. We are also disappointed at progress on gender mainstreaming
within DFID. We expect to see detailed policies relating to both
these areas in DFID's forthcoming Gender Action Plan.
We recognise that we have not made as much progress
as we would have wished in embedding issues of gender equality
and women's empowerment across our development programmes. In
response, the Gender Equality Action Plan will set out how we
will strengthen the impact of DFID's development efforts on gender
equality and women's rights over the next three years in line
with commitments set out in the White Paper.
The Plan will focus on improving gender mainstreaming
across our work and provide an overarching framework for more
detailed plans at country and policy level. It will also
form the basis of DFID's Gender Duty Scheme, to be published in
April 2007, which will bring together our work in support of gender
equality in our development policies and programmes, and in our
own employment practice. The Plan will recognise girls' education
as an important part of our work in promoting gender equality,
but at the same time, that progress on girls' education needs
to be supported by wider improvements in women's rights.
Our commitments on girls' education are set out in
the Strategy Girls' Education: Towards a Better Future for
All. That strategy, launched in January 2005, recognised
that the initial target of getting equal numbers of boys and girls
into primary and secondary education by 2005 was likely to be
missed. The Strategy set out how the UK Government would step
up efforts to support countries that have the largest number of
girls out of school, identifying priorities such as more money
for education, strengthening international leadership and supporting
national governments to develop strong education strategies. We
have also increased our support for international efforts such
as the Fast Track Initiative, to ensure that more money from this
initiative is disbursed to countries with the greatest number
of children, especially girls, out of school.
The first progress report on our Girls' Education
Strategy was published in December 2006. It charts the progress
made in the first year of the strategy and sets out the priority
focus areas for DFID's future work in this area. These
will include helping partner countries to:
1. Improve the quality of education so that more
girls complete primary education with improved ability.
2. Reduce other costs of primary education (eg uniforms,
books, transport) now that tuition fees have been removed in most
our of key partner countries.
3. Support gender-aware HIV and AIDS programmes in
schools.
4. Make schools safer places for girls.
5. Expand opportunities for girls to progress to
secondary schools.
Copies of the Progress Report have been placed in
the House of Commons Library.
[Paragraph 83] We were disappointed with the outcome
of the Hong Kong Ministerial and more so with the decision in
July to postpone indefinitely the Doha Round. The UK Government
has not met the 2005 target that it set for itself despite its
efforts in this regard. In the light of the suspension of the
Doha Round the Government should revise this target and, in the
first instance, work towards ensuring that its partners in the
EU share the same objectives in relation to developing countries
in the event that the Doha Round is restarted.
We share the sense of disappointment that negotiations
on the Doha Round were suspended in July 2006. Informal negotiations
re-commenced in November 2006 and we continue to urge all our
partners—including EU Member States, developing countries
and the US—to work hard for a resolution. DFID and DTI
share a revised Public Service Agreement target for 2005-08 to
this effect, to "Ensure that the EU secures a significant
reduction in EU and world trade barriers by 2008 leading to improved
opportunities for developing countries and a more competitive
Europe". We remain strongly committed to this target and
continue to talk in depth and on an ongoing basis with our EU
partners about wider development objectives for the Doha Round
and trade reform, including the review of the Common Agricultural
Policy in 2008.
[Paragraph 90] The UK Government has said that
it supports the conclusions of the European Council which called
for Sustainability Impact Assessments (SIAs) to be conducted at
an appropriate time. We agree with this conclusion but remain
concerned that a comprehensive and effective Review cannot be
undertaken until potential developmental impacts are known. It
would be irresponsible of the EU not to meet the ongoing concerns
of the Africa Caribbean and Pacific (ACP) group of states about
the lack of a development perspective in the Economic Partnership
Agreements (EPAs). The EU should not wait until the last minute
to do so. Measures must be put in place now, as part of the Review
process. If concerns about the lack of a development perspective
are not met, the EU must be prepared to think about, and discuss
openly, alternatives to the EPAs.
We agree with the Conclusions of the 2006 European
Council, which recognised that Sustainability Impact Assessments
(SIAs) are important tools to be conducted by the Commission at
an appropriate time. We have some concerns, however, about the
timeliness and application of the SIAs which have been conducted,
as these have not always been prepared in good time or used meaningfully
to inform trade negotiations. It is also important that all three
areas of assessment—economic, social and environmental—are
fully addressed within SIAs.
We have been promoting a comprehensive review of
the EPA negotiations that covers the trade and development aspects
of EPAs. We welcome the fact that the terms of reference for
the review, jointly agreed by the EU and the ACP in July 2006,
provided for a more comprehensive review than that foreseen by
Article 37(4) of the Cotonou Agreement. These terms of reference
include an assessment of key development aspects, such as the
development content of trade and trade-related provisions.
We agree that the EPA review process provides the
European Commission with an opportunity to respond to ACP concerns
about the negotiations. We believe that the review should be
conducted in such a way that it enables a genuine assessment of
whether EPAs, as currently being negotiated, will deliver the
intended benefits for development. We also agree that the review
is an appropriate and timely forum for the discussion of alternatives
to EPAs.
Department for International Development
26 January 2007
1 Collier,P. and Hoeffler, A. (2002) 'Aid, Policy
and Growth in Post-Conflict Countries', World Bank Policy Research
Working Paper 2902. Back
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