How DFID's funding choices affect
the poorest
8. DFID's targets are aligned with the Millennium
Development Goals for poverty reduction, but its 2006 White Paper
also considers tackling the very poorest to be very important.
DFID believes that CSOs can often reach the very poorest more
effectively than state providers.[23]
For example, they provide many of the anti-retroviral drugs currently
being distributed in Africa.[24]
But DFID is increasing the proportion of its funds channelled
through budget support, which puts the onus on the state to provide
services and which may mean that CSO skills are not fully used.
In practice, some developing country governments may contract
CSOs to provide some services.[25]
But DFID does not systematically collect information on the extent
to which CSOs are used to target government funds to the poorest.
9. Even where DFID funds CSOs through its various
UK-run schemes and its country programmes, it can be difficult
to benefit the very poorest in a country. Although some of the
smaller CSOs can provide assistance effectively to the poorest
of the poor, they are also often less formally structured and
lack the management capacity to bid effectively for funding, or
give DFID confidence that they can deliver.[26]
10. DFID's Challenge Fund scheme predominantly funds
UK-based CSOs to deliver specific small scale development objectives.
These organisations normally form partnerships with local CSOs
to do so, thus helping DFID to engage with the poorer groups.
But DFID has to strike a balance between reaching the poorest
and ensuring that partner organisations have sufficient management
capacity to safeguard DFID funds at reasonable cost.[27]
Some CSOs have expressed concern that in practice the very smallest
organisations are excluded and they believe that DFID should better
target its funds to encourage smaller organisations working at
the grass roots.[28]
The funds available under the scheme are limited and applicants
without sufficient capacity do not win funding, though if DFID
rejects bids it advises organisations on how they need to improve.[29]
11. Different country programmes have taken different
approaches to targeting their assistance. In Tanzania DFID worked
through a Foundation for Civil Society, which administered funding
requests from individual CSOs. The Foundation had an overview
of the situation in-country and could communicate widely with
CSOs.[30] In Bangladesh,
where CSOs receive 25% of country programme expenditure, a review
of CSO activity showed that DFID funding was not always reaching
the poorest. This finding led to a realignment of the work which
those CSOs were doing to improve targeting of their assistance
to the poorest.[31] Such
analysis is not systematically undertaken throughout DFID, even
where it has a significant programme of funding for CSOs.
12. One of the ways through which DFID country teams
can target assistance to poorer groups is through funding banks
and other credit and lending bodies who provide microfinance.
DFID spent nearly £70 million on microfinance over the past
three years through financing programmes in six countries.[32]
Most of these programmes have built the capacity of small
scale lending bodies to serve greater numbers of poor people.
For example, the Credit and Savings for Household Enterprise project
in India has worked with a large number of self-help groups and
credit co-operatives.[33]
DFID also promotes financial sector reforms and provides technical
assistance to developing country governments and central banks
on issues such as regulation.[34]
Improving targeting through working
with others
13. Donors are increasingly harmonising the provision
of aid in-country but developing countries still receive funding
through a large number of streams, including budget support, projects
and technical assistance.[35]
Country offices are responsible for ensuring coherence
between their own programmes, other donors' approaches, and DFID
funds managed from the UK. This means that communication is very
important if DFID is to target its assistance effectively. Country
offices do this through a series of meetings with development
partners and with recipient governments. But donors, government
officials in beneficiary countries and CSOs all reported dissatisfaction
with DFID co-ordination on its policy for engaging with CSOs.[36]
14. Funding decisions for UK schemes do not always
draw on in-country expertise. The NAO found that, for a sample
of proposed Challenge Fund projects, just 55% of requests for
advice made over the last five years were answered by country
teams.[37] The response
rate has since increased to 70%.[38]
But this still leaves a significant minority of cases where DFID
is not making full use of its expertise when deciding whether
or not to invest in a particular project.
23 Q 35 Back
24
Q 61 Back
25
Q 35 Back
26
Qq 22-23 Back
27
Q 59 Back
28
C&AG's Report, para 2.18 Back
29
Q 60 Back
30
Q 25 Back
31
Q 35 Back
32
Ev 13 Back
33
Q 52 Back
34
Q 54 Back
35
Qq 31-34 Back
36
C&AG's Report, paras 1.14-1.17 Back
37
C&AG's Report, Summary, para 9 Back
38
Qq 64-65 Back
