DFID's graduation strategy
48. As we have noted in the previous chapter, bilateral
donors, with the exception of Australia and Japan, expect to scale
back development funding at or around the time of Vietnam's attainment
of middle-income status, predicted for 2010. Some expect to reduce
funding dramatically or to withdraw aid altogether. DFID expects
to reduce its funding at this time. This is part of what DFID
terms its 'graduation strategy'. The Minister told us:
"I suspect we will see a reduction in our
aid, not an immediate withdrawal from country but a slight scaling
back of our aid."[53]
49. He said that he could not spell out further what
this "slight scaling back" would entail and claimed
that it would "be wrong to start to think at this stage explicitly
about how many staff we would have in-country, what the size of
our programme should be".[54]
We disagree. It is of vital importance that the Government of
Vietnam has the best information available to it to enable it
to plan properly for reduced aid flows. As Dr Gainsborough told
us:
"The important question for me is how aware
is the government in Vietnam that when they reach middle income
status there will be a scaling back, if not a cessation, of aid.
[…] It is very important that this is discussed, talked about
and the strategy and programmes are tailored to deal with a limited
time span, if that is what we are talking about."[55]
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.
51. DFID's draft new Country Assistance Plan prioritises
three objectives for its work in Vietnam: to ensure the poor benefit
from WTO accession; to improve the quality and inclusiveness of
services for the poor and vulnerable; and to promote effective
and accountable governance.[56]
These priorities coincide with those suggested to us by our expert
witnesses and we endorse them.[57]
52. As well as agreeing priority areas for DFID's
future programme in Vietnam, we believe that the ways DFID will
engage in these areas also needs to be examined now. DFID's internal
evaluation report notes:
"The Government of Vietnam is increasingly
looking to grant donors for ideas and assistance in policy change,
as much as for finance."[58]
We were pleased to hear the Minister acknowledge
this change.[59] During
our visit, we heard from several donors, and from DFID itself,
that DFID attaches importance to developing strong research-based
evidence in order to persuade the Government of Vietnam of the
case for policy changes. Ramesh Singh told us that the Government
was receptive to this sort of approach:
"We have to applaud Vietnam as a country.
Their willingness to learn is quite phenomenal. We know from
our own experience that if they are convinced and if they want
to learn and if there is a method and model that we are able to
sell to them, that spreads and becomes deeper."[60]
53. We were told during our visit about DFID's track
record on research-led, pioneering work, such as on HIV/AIDS.[61]
Ramesh Singh told us that there was a need for "innovative
funding, smaller and much more diverse rather than mass blanket
funding".[62]
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.
Role of the UN
55. In the run-up to Vietnam achieving middle-income
status, DFID will continue to focus on improving government capacity,
allowing Vietnam to take full ownership of its own development
strategy and implementation. DFID has also put great emphasis
on building up UN capacity for this period. The aim of this work
is to achieve a UN presence which can act coherently across its
offices in-country ("One UN") and step in where donors
have stepped back, ensuring that Vietnam continues to have access
to advice which draws on international experience and best practice.
This is what DFID has termed its 'legacy strategy'. The Minister
told us about the scale of the challenge to get to that point:
"There is just too much competition too
often amongst UN organisations, making approaches to individual
donors, 'Why do you not fund us to do that? Why do you fund X
other UN organisation to do that, we are better placed to do it?'
We are hoping that the process that is underway in Vietnam to
get that much greater co-operation and collaboration within the
UN system will lead to much better technical expertise being provided
[…]. We are intending to get behind that process."[63]
56. We agree that the UN in Vietnam appears currently
to be far from having the capacity to take on this role. But Ramesh
Singh questioned the capacity of even a strengthened UN presence
in Vietnam to provide the necessary co-ordination and advice:
"The UN's ability to fill a void by the
passing of international donors is not proven anywhere. The UN
plays a particular role that is not about money. The transference
does not take place in the same way. Their ability to negotiate
with the state is not strong because in many ways it is subservient
to the members and the UN's ability to negotiate is very different
from international donor communities."[64]
57. Mr Singh argued instead that a strengthened civil
society, which currently receives little support from DFID, was
far more likely to deliver the continuity DFID sought.[65]
We also heard similar views from civil society representatives
in Vietnam. Mr Thomas told us that DFID was "working with
the UN to develop the capacity of civil society".[66]
But Mr Singh told us that civil society was not seeing the impact
of this work, certainly in relation to ActionAid: "we used
to engage with DFID. […] We do not have that now."[67]
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.
53 Q 53 [Mr Thomas] Back
54
Q 54 [Mr Thomas] Back
55
Q 21 [Dr Gainsborough] Back
56
Department for International Development, Vietnam: Country
Assistance Plan 2007-2011 (Draft for consultation), paragraphs
72-85 Back
57
Qq 22-24 [Mr Singh and Dr Gainsborough] Back
58
Department for International Development, Country Programme
Review: Vietnam, May 2007, paragraph 8.16 Back
59
Q 53 [Mr Thomas] Back
60
Q 22 [Mr Singh] Back
61
Q 63 [Mr Thomas] Back
62
Q 48 [Mr Singh] Back
63
Q 55 [Mr Thomas] Back
64
Q 25 [Mr Singh] Back
65
Q 25 [Mr Singh] Back
66
Q 55 [Mr Thomas] Back
67
Q 39 [Mr Singh] Back
