Examination of Witnesses (Questions 80-98)
GILLIAN MERRON
MP, MR RICHARD
DEWDNEY AND
MS SALLY
TAYLOR
24 APRIL 2008
Q80 Jim Sheridan: But you say that
the donors pledged to reimburse the Bank, dollar for dollar.
Ms Taylor: On the Multilateral
Debt Relief Initiative, yes, but that does not apply under the
HIPC initiative; they are two slightly separate things.
Mr Dewdney: Can I just say on
the MDRI that the latest information that we have shows that our
donors are indeed meeting those commitments for 2006 and 2007,
with the exception of one donor and that donor will meet those
commitments through—sorry, it is a technical term—accelerated
encashment of its contributions to the next replenishment, which
is encouraging.
Q81 Mr Singh: Just to follow up a
little bit at a tangent on what Jim was asking about, the Bank
only lends to about 15 countries which qualify for loans from
the Bank at the moment. Is that correct?
Ms Taylor: Not exactly. As you
know, there are the two parts of the Bank—
Q82 Mr Singh: That is what I am talking
about.
Ms Taylor: Just on the Bank?
Q83 Mr Singh: Yes, on the Bank.
Ms Taylor: I think it is 13 actually.
Q84 Mr Singh: If a country qualifies
for debt relief and goes through all the hoops and various things
that they have to do and the debt is cleared, would they then
become a qualifying country for loans from the Bank?
Ms Taylor: No.
Q85 Mr Singh: So what are the criteria
to get money from the Bank?
Ms Taylor: It is to do with how
wealthy you are, so if you a middle-income country, and credit-worthiness,
so the countries that have had debt-cancellation have all been
low-income countries, they have all been the poorest countries,
so they get either a grant from the ADF or the very concessional
loans which are over 50 years and at very low interest, so it
is to try and avoid debt problems recurring because countries
tend to be—
Q86 Mr Singh: But, in terms of playing
a major role in private-sector development in Africa, as a continent,
it is going to be quite a limited role, is it not?
Ms Taylor: The countries can benefit
from private-sector lending because that is not a government debt,
it is not a government liability; it is into the private sector.
Sorry, we were not perhaps very clear on that.
Gillian Merron: It is probably
worth at this point saying, because the point that Mr Singh raises
is something that is an area of interest to me, that we have of
course got countries that do not fit neatly into one area or another
and we are going to be looking to the Bank to try and respond.
Countries like Ghana which are moving towards being middle-income,
it is difficult to pigeonhole them and be responsive, and the
Bank is aware of that, so we are working quite hard on that to
try and get the governance arrangements and the practical arrangements
to reflect the fact that people do not sit neatly anymore into
one area or another. I think actually there is also an improvement
on the governance side for me which is in terms of the Bank Board
and the Fund Board, that, although constitutionally they are separate,
the recommendation is that they will be the same people on each
one, so again I think that will enable us to have a bit more consistency
and ability to work across countries depending on where the countries
are rather than making the countries fit the Bank.
Q87 Chairman: It is the Bank that
decides whether a country is eligible, nobody else? It is the
Bank?
Gillian Merron: That is right,
yes.
Q88 Chairman: So they could at any
given point say, "We've decided that Ghana can move into
that category"? It would be for the Bank to decide?
Gillian Merron: Or I would put
it another way, which is probably not that helpful, which is they
would move them into that, but, as I say, it is more of the middle
ground, the shades of grey that are of interest to us.
Q89 Mr Singh: Right at the beginning,
Minister, you did allude to the fact that one of the areas that
the Bank should develop is in terms of its knowledge and expertise,
and in fact the High-Level Panel have recommended that the Bank
become a repository of knowledge and expertise. How is DFID supporting
the Bank in becoming that repository?
Gillian Merron: It is an area
that has been not as strong as it should have been in the past,
that is very true, and we do need to see more work in that regard.
There has been an encouraging increase in knowledge products which
we are glad to see and certainly there is a strategy which has
been developed. To specifically answer the point in terms of DFID,
we are considering providing financial assistance through our
Technical Co-operation Agreement to support the Knowledge Management
Trust Fund, so that is where we are in wanting to support it.
Q90 Mr Singh: Sorry, what is the
Knowledge Management Trust Fund? That is a new one to me.
Mr Dewdney: It has not yet been
agreed by the Board because it is pending prior agreement of what
is the draft Knowledge Management Strategy, but there has been
some discussion, including between their chief economists.
Gillian Merron: I do not know
if I was allowed to tell you that, but there you go! I am sure
you will not tell anyone!
Q91 Mr Singh: In a sense, that is
going to be a ring-fenced fund for financing it. In terms of what
DFID is doing now to support the Bank, in what areas are we supporting
the Bank? Are we supporting it in terms of economic analysis or
market surveys or other forms of knowledge and information, other
forms of technical expertise?
Gillian Merron: I think that the
Technical Co-operation Agreement is the one to focus on and, in
the same way as we have talked about the Bank offering more than
just finance, again I think it is important that we emphasise
to the Committee that DFID offers more than just money, way beyond,
and actually the technical expertise that we offer—and I
am just looking for the details on the £13 million, I talked
about it earlier—in addition to our doubling to the Fund,
we have actually committed, through this Technical Co-operation
Agreement, monies to enable a building of capacity within the
Bank, such that they can also build capacity in terms of the technical
aspects, water and sanitation, institutional reform, climate change,
all those other aspects that are extremely important. I think
I would also re-emphasise that our secondment of staff, our offering
of people, it is a huge contribution to the Bank and we are very
glad to make that.
Q92 Chairman: I did say that we would
talk about agriculture as well as infrastructure and it is kind
of appropriate this week that things are perhaps being reassessed.
The implication, if we take agriculture first, is that it is a
very important part of the economy of Africa, but that is, in
a sense, a negative thing in that it is because the industrial
base is so weak rather than that the agricultural base is so strong.
It constitutes, I understand, 30% of Africa's GDP, and of course
that ranges in countries between 15 and 70%, and the majority
of employment is in agriculture or is agriculture-related. Before
we get into perhaps an update in terms of the current situation,
and we have discussed DFID's perhaps lessening of engagement in
agriculture, do you see the increased contribution through DFID
as a way of increasing DFID's support for agriculture? Perhaps
related to that of course is: will you be doing something other
than through the Bank? Let us concentrate, first of all, on whether
you see that support will increase their contribution towards
agriculture.
Gillian Merron: The point I wanted
to make on agriculture and the African Development Bank is that
agriculture is one of its less strong areas of operation. However,
what it has done, and we would very much support, is work in partnership
with the International Fund for Agricultural Development who are
better placed to deliver more, so we are encouraging that kind
of partnership. The whole Committee will of course know about
the meeting at Number 10 on food prices.[5]
President Kaberuka was indeed there and the multilateral development
banks agreed, under leadership obviously through Gordon,[6]
in terms of working together to respond to the situation that
we find ourselves in, so we are again glad that the African Development
Bank is involved in that and we would obviously support them.
Your reflections, Mr Bruce, are true in terms of Africa, but also
in terms of the African Development Bank; they have probably been
more effective on, what I would call, the `hardware' side of things,
building roads, building technical responses. Now, I do not think
that is a bad thing at all and it is certainly not intended as
a criticism of the Bank. I think the important thing for us is
to assist the Bank in playing the part it can with working with
others who have a greater expertise because one of the things
that came out of the High-Level Panel report is that the Bank
had to take on board that it could not do everything to the best
degree and, important though this is, with which I quite agree,
it is whether it is the best placed to do it, so that would be
my view on it. Perhaps Richard could add from his point of view.
Mr Dewdney: Just to complement
a little bit of what the Minister has said, that the Bank is undertaking
a joint evaluation with IFAD, the International Fund for Agricultural
Development, looking at their respective portfolios in agriculture
over the past decades with a view to coming up with recommendations
that might then say something about what an appropriate division
of labour would be between the institutions. Indeed, there is
a sense that the Bank, partly because it has been centralised
for so much of its history, is not well-placed to do some of the
softer aspects of community-building and institutional strengthening
around agriculture and rural development, that they should partner
with other institutions to do that. We are having an interesting
discussion in the Board at the moment in terms of the draft medium-term
strategic framework that we are setting out which builds very
much on the work of the High-Level Panel, and indeed agriculture,
within that, is not a focal sector. However, it is quite clearly
understood by management and the Board that we will continue to
be engaged in agriculture, at the very minimum, through our work
in the other operational focuses that we have, in particular,
on infrastructure, but it is a live debate currently on the Board
and this evaluation which is ongoing should play a useful role,
as indeed will the international discussion on how to respond
to the food price problems that we are seeing.
Q93 Chairman: Well, as you may know,
the Committee is also currently doing an inquiry into the World
Food Programme and we had Josette Sheeran[7]
giving evidence to us earlier in the week. I was also at the meeting
in Downing Street, as was she, and there were a number of interesting
issues which might require the Bank and others to reassess the
priorities. IFAD were represented at that meeting and pointed
out that they were putting a fund together for very basic things,
and the sort of thing that hits you is that farmers in Africa
who are just above the level of subsistence farmers, or maybe
part subsistence/part cash, are really in a bind at the moment
because the cost of seed and the cost of fertiliser are up and
they cannot afford to buy them, so, as Josette Sheeran told us
and told the meeting, they are not planting. IFAD are saying,
"Well, we need to provide them with some kind of credit to
encourage them to plant so that they actually get a harvest",
but what if the consequence of increasing the planting leads to
a dip in prices which means they do not have the capacity to pay?
The question is: should it be in the form of grants towards seed
and fertiliser so that they do not have to repay it or should
they be given some kind of insurance or guarantee on the price
at the end, and you can approach it either way or as a combination
of the two. IFAD had some input on that. Is that something that
the Bank needs to think about? In that context, I think Professor
Paul Collier was also at this meeting and, in his inimitable style,
waded in and said, "Well, Africa needs to rethink agriculture.
What we want in Africa is Brazilian-style agriculture that will
really start to deliver the goods". To cut a swathe through
land rights, traditions, law, everything else, that is not a problem
for a professor, but it might be a problem for politicians! The
serious point is that Africa's capacity to produce food is far
higher than it is achieving. What is the role for DFID and what
is the role for the Bank? I am sorry, this is a statement from
me, but, having been there, the other thing that came through
was that the British agricultural science and research people,
whether they were academic or commercial, were saying, "Actually,
we fed the world through our science and technology. We should
not be marginalised. You need to bring it back in because, if
we are going to feed the world, both the developed world and the
developing world need to raise their game across the piece".
The point of all of that is: does that really mean that both DFID,
in partnership with the Bank in-country in Africa, and the Bank
itself need to do something somewhat more ambitious in agriculture?
Gillian Merron: I think the points
you make raise the point about the need to work in partnership
with other institutions. The other thing for me that it raises
is the importance of the African Development Bank being an African
institution and, therefore, being able to be responsive to the
particular challenges there. In truth, I think it is unlikely
that the Bank itself will be the best people to lend or grant
directly to farmers; I do not think it is set up in that respect
and nor should it be actually. However, the fact that the President
was at that meeting and is committed to being on the working group,
I think, actually does signal that the banks, the multilateral
banks, are looking afresh at what their role is. However, I do
not think we should expect the African Development Bank to be
taking on all of it, nor do I think that that is actually being
suggested, but I welcome the fresh look, the fact that the partners
are working together. It may produce a different role for the
Bank, but I do not think it is likely to be the leader, in truth,
because of the way that it is set up because, for me, the Bank
is about the infrastructure and that actually is probably the
best place to keep it; that is where its expertise is.
Q94 Chairman: Well, that of course
relates to agriculture as well—
Gillian Merron: Yes.
Q95 Chairman:— because a big
problem is the lack of communications, the costs of transport,
so would you argue that perhaps the Bank's best contribution to
agriculture is actually helping to improve the physical infrastructure
to give products a better chance of getting to market commercially?
Gillian Merron: In all honesty,
yes, I would. Infrastructure obviously is about water supply as
well as transport links. The other thing for me is that of course
infrastructure is absolutely critical for reaching the Millennium
Development Goals, and I want to see the Bank, who I do think
are leaders in this area, continuing to lead, so I think that
is their strength and would be a great support to agriculture.
Q96 Chairman: It is probably outside
the scope of this inquiry and may be a question to ask the Secretary
of State, but is there a recognition that maybe DFID needs to
rethink its contribution to agriculture. This Committee, not under
my chairmanship, but in the previous Parliament, did a report
on agriculture and strongly recommended that the agricultural
research capacity in the UK should be better diverted to helping
development.8 I think our honest view would be that we do not
feel that DFID responded to that. Do you think that, given the
attention that is now being focused, that might change or is there
any indication that there are discussions within the Department
about that?
Gillian Merron: I am very happy
to delegate upwards to the Secretary of State, Chairman, but I
will indeed be glad to write back to the Committee on that issue.
Q97 Chairman: On the subject of writing
back to the Committee, can I say also that we have a very tight
timetable for the report because we are anxious to try and publish
it in time for the annual meeting of the Bank. We felt that was
a useful thing to do and therefore there are a number of things
on which you have indicated you will provide notes, and if we
could have notes that are brief and quick, it will be very helpful
to our staff to be able to turn the report round. Thank you for
coming in and giving the evidence. It has been a relatively short
inquiry. Our trip to Tunis was rather shorter then we had intended
due to the vagaries of the Whips, namely that we were retained
here for a vote that did not take place.
Gillian Merron: Why do I still
feel guilty!
Q98 Chairman: I have to say thanks
particularly to Richard's efforts and others that although we
had a very short programme, I think we met a lot of people and
had a lot of intensive discussions. We can report that we were
favourably impressed with the quality of the people that we met
and their engagement but, as you will appreciate, it is a lot
of money going through an institution, and it is right and proper
that we should ensure not only that it is giving good value to
the British taxpayer but, much more importantly, it is meeting
the needs of the poor people in Africa. I hope our report will
be a useful contribution not only to DFID in terms of its engagement,
looking at Richard here, but perhaps the Bank also, and I certainly
think the Bank gave the impression that they were genuinely interested
and appreciative of what we were likely to say. Indeed, Donald
Kaberuka was extremely generous with his time, both in terms of
meeting us and then hosting a lunch within the space of a few
hours really. We will obviously be formally thanking them but,
Richard, if you can also convey from the Committee our appreciation
that people took the time and trouble to engage with us, and all
of you for giving evidence and you, Minister, and we look forward
to seeing you again.
Gillian Merron: Yes, I hope so!
8 DFID's Agricultural Policy, HC 602,
Seventh Report from the International Development Committee in
Session 2003-04
5 On 22 April 2008 Back
6
Brown, the UK Prime Minister Back
7
The Executive Director of WFP Back
|
