1 Introduction
1. The Department for International Development
(DFID)'s Departmental Report 2006 sets out DFID's activities and
achievements in the year from April 2005 to March 2006.
2. This year, as in previous years, we held a
short inquiry into DFID's Departmental Report (DR). It gave us
the opportunity to assess major developments in the Department's
work, to explore particular areas in depth and also to assess
whether the DR provides an accurate reflection of the Department's
performance.
3. Written submissions were received from six
UK-based international non-governmental organisations (NGOs):
ActionAid, Dalit Solidarity Network (UK), One World Action, Plan
B, Tropical Health and Education Trust and World Vision. On 11
July 2006 we took oral evidence from DFID officials: Sir Suma
Chakrabarti, DFID's Permanent Secretary; Mark Lowcock, the Director
General for Policy and International; Sue Owen, Director General
for Corporate Performance; and Nemat Shafik, Director General
for Regional Programmes.
4. DFID's DR is structured around DFID's Public
Service Agreement (PSA) targets, many of which are based on Millennium
Development Goals (MDGs). The intention of the PSAs is to hold
DFID accountable to its stakeholders and to provide a mechanism
for monitoring its performance. In previous inquiries, we have
focused on areas where DFID could improve the structure of the
DR. The latest DR shows that DFID has acted upon many of our previous
recommendations such as including a brief overview of the Department's
risk management processes[1]
and including information on the poverty focus of multilateral
donors. [2]
5. 2005-06 was a significant year for DFID. The
UK held the presidencies of both the G8 (from January to December
2005) and the European Union (from July to December 2005). Reducing
poverty in Africa was a key issue for both presidencies. At the
G8 Summit at Gleneagles in July 2005, leaders agreed a package
to support Africa's development. Over US$50 billion in multilateral
debt cancellation was agreed for the most heavily indebted poor
countries and there was a deal to resolve Nigeria's US$30 billion
debt. Under the UK Presidency of the EU, 25 member states agreed
to double their aid to reach over £45 billion in 2010, and
to draw up a common vision for EU development policy.[3]
DFID also had to respond quickly to the South Asian earthquake,
in which over 73,000 people were killed, continue its involvement
in fragile states and provide humanitarian relief to countries
which were affected by the 2004 tsunami in South Asia. [4]
6. One of the major themes in the DR 2006 is
the increase in global aid. This trend is also reflected in the
increases in UK aid programmes channelled through DFID. DFID budgets
have increased significantly in real terms in each of the last
three Spending Reviews. The 2004 Spending Review alone agreed
a 9.2% average annual increase in the DFID budget in real terms
in the next three years. This means that the budget will reach
more than £5.3 billion by 2007-08. It is set to increase
still further in the longer term if the Government meets its commitment
to provide Official Development Assistance (ODA) equivalent to
0.7% of Gross National Income by 2013. [5]
7. DFID has a good reputation amongst other donors
for its innovation in aid. The OECD's 2006 Development Assistance
Committee (DAC) 2006 Peer Review states that, "DFID's knowledge
allows it a position of interdepartmental leadership and has raised
the profile of development co-operation".[6]
However, future increases in aid will have a number of implications
for DFID, which our report explores.
8. Chapter 2 examines whether aid has increased
and the implications of increased aid for DFID. It examines some
mechanisms through which DFID can increase its aid funding while
keeping administrative costs down. These include focusing on core
activities; increasing spending through multilateral institutions
and possibly expanding Poverty Reduction Budgetary Support. Chapter
3 looks at some constraints on delivering aid, including the absorptive
capacity of developing countries and DFID's ability to make efficiency
savings while maintaining the quality of its aid. Chapter 4 explores
some key issues for DFID that have arisen during 2005-06.
1 Eighth Report from the Committee, Session 2002-03,
Department for International Development Departmental Report
2003, HC 825. para 16 Back
2
Eighth Report from the Committee, Session 2003-04, Department
for International Development Departmental Report 2004, HC749.
para 18 Back
3
Department for International Development (DFID) Departmental
Report 2006, Cm 6824, page xv Back
4
DFID Departmental Report 2006, Cm 6824, page xiv Back
5
DFID Departmental Report 2006, Cm 6824, paras 1.17 to 1.18 Back
6
OECD DAC Peer Review: Main Findings and Recommendations,
United Kingdom (2006) The DAC (Development Assistance
Committee) is the main body through which the OECD (Organisation
for Economic Cooperation and Development) deals with issues related
to co-operation with developing countries. Back
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