Examination of Witnesses (Questions 100-119)
MR SHAHID
MALIK MP, MS
BELLA BIRD,
MR MIKE
HAMMOND AND
MS SARAH
COOKE
2 JUNE 2008
Q100 Mr Singh: I hear what you say
but the ODI did its 2008 survey of donors and came up with the
comments that they came up with based on the evidence that was
seen. How do you explain their view in contrast with your view
about how well you are doing, where they are saying you are either
a little better than average or low by comparison?
Mr Malik: We accept fully that
we are above average. There are some targets that we have met,
there are some that we have yet to meet, but if you look at the
number of surveys and the research that does take place on the
issue of ranking relevant donors, what you find is that DFID is
always up there in the top ten, in some cases number one. I pointed
earlier on today to the Easterly research which is about two months
old and which actually put the UK and DFID as the top bilateral
donor compared to 39 other donors. There was some more research
in 2007 on the Commitment to Development Index which rated the
UK as the eighth best out of 21, so it is a bit patchy in terms
of the league table rankings, but one thing that is clear is that
we are definitely in that quartile, there is no doubt about that
whatsoever and I think everybody would accept that. For many people
we are seen as the lead and this is one of the challenges, Chairman,
that people often do defer to us; it is not that we want to lead
all the time, we have signed up to the DAC principles. Those actually
guide us and I would be more concerned if countries were saying
that we were leading them as rather than donor agencies saying
that we are taking a lead position because obviously our approach
is country-led.
Q101 Chairman: This research you
are talking about, is this published research, is it something
you can make available?
Mr Malik: Yes, I was under the
impression we may have made it available to you but it is obviously
just a couple of months old. I will make sure that each of the
Committee members has access to that bit of research by William
Easterley and Tobias Pfutze, Where Does the Money Go? Best
and Worst Practices in Foreign Aid, Journal of Economic Perspectives,
Vol 22 No 2, Spring 2008. The other thing in terms of aid that
affected us, that I think is useful in the context of this discussion,
is that in 2004-05 it was said that 62% of DFID projects were
rated as meeting their objectives, i.e. being successful, so in
2005 it was 62%. In 2007-08 it has actually improved to 80%. That
says that we have still got some way to go, but we are certainly
moving in the right direction. I do not think we have any laurels
to rest upon, there is more work to be done; we are moving in
the right direction but we must not become complacent.
Q102 Mr Crabb: As co-ordinated donor
action becomes the norm increasingly there is work that is being
funded in part by DFID but where the implementation is being carried
out through other donors, and we saw a couple of examples of that
in Ghana. What challenges do you think this throws up for effective
parliamentary oversight of how British taxpayers' money is being
used, and specifically by this Committee, and what thinking is
going on in the Department about that and how to tackle it?
Mr Malik: Our position is really
that we cannot lead everything. We are committed to a logical
division of labour—that is one area in the Paris Declaration
actually where we have done quite well—and there is an EU
code of conduct in that area as well. Our view is that where we
have a comparative advantage in country then our role would be
to push to lead; the reverse is true where others have a comparative
advantage, and Yemen is an example of a country that I visited
where on, for example, the health sector we have deferred—if
I can use that terminology—to the Dutch and they in turn
have deferred to us on justice. Your question is wider than that
and a really important one about parliamentary oversight and accountability
but what I would say is that we certainly would not be in the
business of deferring to any outfit in country unless it was properly
vetted, unless our own in country team was involved at all stages,
ensuring that it was meeting the objectives that we as DFID would
expect and as a taxpayer would expect, with relevant audit requirements
and so on and so forth. I suppose at some point what this points
to, Mr Crabb, is that we perhaps need to do some kind of desktop
review of those countries where actually we have deferred just
to ensure that we ourselves are confident—which I believe
we are—but also to give confidence to parliamentarians that
the resources that are used are used effectively with all the
kind of checks that you would expect for British taxpayers.
Q103 Mr Crabb: Can you envisage a
scenario whereby someone from the Dutch government is sitting
where you are perhaps, Minister, answering questions from us about
the real nitty-gritty of how British money is being spent on a
project where they are the lead partner?
Mr Malik: That is a really interesting
scenario. That really would be our role, it is our responsibility
to British taxpayers via this Committee to give you confidence
that money is being used in the way that it ought to be used.
That is not to say that we ought not to look at different ways
of working, and who knows what the future holds, but certainly
for now I would say that it is our responsibility as the government
of the day to be held accountable for every penny that is spent
that is UK taxpayers' pennies, irrespective of how it is spent,
so it is our job to satisfy you and if we cannot ultimately then
we have failed in the role that we hold very dear, which is being
accountable to Parliament and to the IDC.
Q104 Mr Crabb: The point that I am
driving at, which you recognise very well, is that in some people's
eyes at least there is a perception, perhaps a misconception,
that greater aid co-ordination, deferring to another donor country,
inevitably entails a diminution of direct national parliamentary
oversight of resources.
Mr Malik: That would be true not
just in the case of individual donors, but in a world where increasingly
we are working through multilaterals it is true of the World Bank,
the UN, the European Commission who we use a lot more and will
increasingly do so in the future.
Q105 Chairman: The European Commission
has to give evidence to this Committee formally; the World Bank
does not, so there is a difference in accountability between those
two organisations.
Mr Malik: Sure, and the important
thing from our perspective is that we have to reassure ourselves
that it is the same standards of reporting and accountability
that are being used by anybody, be it a bilateral donor or a multilateral
donor, or indeed be it any other entity that is leading on a particular
sectoral area of support to a country. It is our job to make sure
that the reporting and accounting systems and the audit systems
are there, and if we are satisfied only then will we move forward,
and I suppose we have to satisfy you that the checks and balances
are in place and that we are doing the job that we ought to do
to give you confidence.
Q106 Chairman: The reverse of that
is that if we are taking the lead and taking other countries'
money—Denmark's or the Netherlands'—what is the response
to that; indeed, do you come under any scrutiny from the parliamentarians
in those countries? Do you have any evidence of that, of them
asking questions?
Mr Malik: I am not aware of any
evidence where other parliaments have requested greater scrutiny
over Danish money that has been deferred to country X or Y but
it is an interesting area and in this world of increasing co-operation
and aid co-ordination it will be an interesting thing as we move
forward. I would like to think that for now the Dutch, the Danish
government, whoever it might be, would be satisfied that their
department or agency has satisfied itself that if it is DFID that
is leading it is doing so in a way which meets the safeguards
that it would expect for its taxpayers' money.
Q107 Sir Robert Smith: One of the
things that there is a growing consensus on, certainly according
to Christian Aid's evidence and the Department's evidence too,
is that ownership is extremely important when it comes to development
policy DFID says "Partner country ownership is important
because, while aid can contribute to poverty reduction, it will
never alone be the solution to global poverty" and ownership
is one of the five key principles of the Paris Declaration. There
is concern about exactly how that is defined and delivered on
the ground and the International Civil Society Steering Group
recommends a reappraisal of the concept. How does DFID define
and measure "ownership"?
Mr Malik: Again, that is a very
good question. We are committed 100% to the principle of ownership
and the importance of ownership in achieving sustainable development
for the long term. Ultimately, our objective and mission has got
to be, I suppose, to make ourselves redundant and we can only
do that if countries are taking ownership and leading. In terms
of precise definition I do not think there is a precise definition
that would give anybody satisfaction; in terms of ownership the
fact is that we will be aware of what the government policy is
in certain sectors and our job is to work with the governments
in those sectors to support the vision and the plans that they
have for their country, obviously in areas where there is some
concurrence on that. Certainly in countries where we give budget
support, for example, by definition almost it is central to ownership,
both financial ownership and country leadership, and those are
perhaps the best examples I would say of ownership where we are
actually able to give budget support to a country because we believe
that it is committed to good principles of public financial management,
it is committed to human rights, it is committed to poverty reduction
and to growth. Those are the countries, I suppose, where ownership
best manifests itself, but in terms of an exact definition that
will give confidence to everybody I am not aware that there is
one single definition.
Q108 Sir Robert Smith: One of the
concerns that we have had expressed to us by UK Aid Network and
others is whether you see initiative as coming from the government
of a country or coming from the people. Is it just the ministry
of finance that you are working with or does it encompass parliaments
and civil society more broadly?
Mr Malik: You are absolutely right.
In some ways it is more about governance than government so we
would take a view that civil society organisations are absolutely
key, parliamentarians are key, including opposition parliamentarians,
and other NGOs are key in ensuring that there is ownership. If
you look at some of our civil society programmes, if you take
the Governance and Transparency Fund where we have committed £130
million over five years, the whole principle of that is to support
southern CSOs and NGOs on having the ability to hold their governments
to account, so in many ways we are supporting the development
of all sectors of society to ensure that it is not just one way
and nobody is able to ride roughshod over any particular sector.
So all stakeholders, we believe, have got a role to play in ownership
and it is not just about governments. If I gave that impression
initially it was not a correct one.
Q109 Sir Robert Smith: Earlier we
were talking about targets and measurements and one of the concerns
put to us about delivering on this key principle of ownership
was the fact that things that are being measured on the Paris
Declaration do not actually measure this particular commitment.
If it is not being measured is there not a risk that most people
will not see it as a priority in trying to deliver on their Paris
Declaration Commitments?
Mr Malik: Undoubtedly where you
do not have tools to measure there is always a possibility that
something is not going to be met or there are arguments about
whether it is met. The Paris Declaration I said earlier on was
the most rigorous and most internationally respected mechanism;
it is not perfect and there is a need actually to ensure that
it is improved and enhanced and I know that DFID is working with
others to do some of that. I know that through the European Commission
we have added four targets that will enhance the Paris Declaration
and all EU members are going to sign up to that. What I would
say is that Paris is not perfect; it was probably the best that
was available at the time and in the same way that we constantly
look at DFID to improve it, Paris must constantly be improved.
Ultimately, you are absolutely right, that if you cannot measure
a target then there are going to be question marks about what
it actually means in real terms, both for the donor and the partner
country.
Q110 Ann McKechin: Minister, if we
turn to issues about technical assistance, DFID is meeting the
OECD guideline target of 50% of technical assistance being co-ordinated,
but I would be grateful if you could perhaps explain to the Committee
what DFID is doing to ensure it sustains that level and does it
have any new target or any target to reach 100%, and if so when?
Mr Malik: You are right to point
out that against the Declaration this is one target that we have
met and we are obviously very pleased we have met it—you
have talked about 50%. I would like to think that at 2010 we can
take a review of where we are respectively against some of these
targets. As I have indicated earlier, our view would be that Paris
is not a static declaration, it is actually something that progresses
and improves and I would think that if we were not able to go
back at 2010 and review the targets, and either bring in new targets
or make the targets more stretching, then perhaps we have failed
in our desire to constantly improve what we do. There is a need
for a global effort on this; the UK itself cannot do it—no
matter what target we set ourselves—unless there is a global
signing-up to Paris and a recognition that there are a number
of non-DAC members who are new and emerging donors who have not
signed up to the Paris Declaration as donors but have as recipients—India
and China are an example—and 2010 might be an opportunity
if not before to get some of those on board as well.
Q111 Ann McKechin: Given the fact
that that is two years hence what steps should be in place currently
to ensure that your level of technical assistance will continue
to meet the 50% target and what reviews are you currently undertaking
to ensure that the cost of DFID's technical assistance is kept
within proper and adequate control? To what extent are you making
sure that your technical assistance is fully demand-driven? What
is the contact with donee nations, how are they actually involved
in the planning processes and what kind of strategic view is being
taken currently of where the technical assistance is going to
be delivered at a time, Minister, when the DFID budget is increasing
substantially and will increase substantially by 2010? This Committee
would be concerned to know how we are using technical assistance
now to make sure that we are actually getting the maximum value
for money from it.
Mr Malik: It is quite clear that
DFID in many ways has been one of the lead bodies with respect
to technical assistance and co-operation. We untied our technical
assistance back in 2001 and as a result it is estimated that it
has lowered the cost of aid by 25%. We are in, some might argue,
a privileged position and there are other countries who, because
of the mechanics of those countries and the way their parliaments
work—America and Japan for example—find that some
of these issues are much more tricky, but all programmes are checked
at approval stage on whether they are in line with the national
priorities. If they are not, then questions are asked as to why.
Q112 Ann McKechin: Can I just clarify
that you are really saying that since 2001 the cost of technical
assistance has actually decreased in real terms for donee nations,
or has it stayed the same or has it increased?
Mr Malik: The World Bank estimated
that if everybody untied aid then it could lead to a lowering
by 25% of the cost of aid.
Q113 Ann McKechin: Is that what has
happened with DFID then or is that actually borne out in DFID's
figures since 2001?
Mr Malik: I can give examples
of some of the technical co-operation, advice and support that
we have given and some of the outcomes that have come from that.
For example, technical experts created a new VAT service in Ghana
which has led to improvements in revenue collection year on year
and in Rwanda the revenue authority has managed to increase its
income by over 40% over two years, money which is now being spent
on things like health and education.
Q114 Ann McKechin: Can I just have
a quick answer, Minister, are there any statistics which DFID
currently holds to show whether or not the transaction costs have
lowered between 2001 and 2008 in line with World Bank estimates?
The Committee would be interested to know whether we have that
kind of statistical information.
Mr Malik: In all honesty I am
not aware of any statistic and as I look around I suspect I am
not on my own. It is a really interesting question; I am not sure
if we could carry out some kind of research that might get to
the bottom of that but it would be interesting. It is something
that we will certainly take away with us and given that I quoted
the World Bank estimate it is useful to see—I can give examples
as I have of where our approach has had benefits, but if you are
asking me globally what has the impact been then I am not sure
that we have an aggregate response to that. Certainly our long
term vision is for a more market-based fully pooled approach to
technical co-operation which partner countries lead. That is the
important thing from a country perspective, that partner countries
do lead on technical co-operation and assistance. There have been
lots of accusations, and I hear them as well, that our aid has
all been spent on UK consultants, for example; it might well be
the case in other countries, I do not know, but it is certainly
not the case in this country. That is something that we are relatively
proud of but there is a long way to go and we need the evidential
base to give you more confidence that we are having an impact
and we are lowering transaction costs in the way that you described.
Q115 Richard Burden: Could I press
you a little bit further on the issue of ownership that Robert
Smith was asking you about before because there is a view that
some have expressed to us that whilst country ownership of aid
may be desirable actually the central objective should be the
quality of the aid, and there will be some situations where actually
ownership has to take second place to that. How do you see that,
what do you see the relationship is between ownership on one hand
and quality on the other?
Mr Malik: In an ideal world we
would like to think that all countries that are recipients would
be central in terms of ownership but quite evidently there are
cases in fragile states where that is not possible. Where it is
possible there are great examples of how ownership and our involvement
has actually paid dividends—Nepal on my right is a great
example where on 10 April we managed to get a constituent assembly
election that nobody thought was possible. It was fairly transparent
and fairly fair; that was because we actually played that leadership
role in a fragile state; we took that role very seriously and
we worked with all the political parties—the eight parties
at the time that were in existence, seven now—it led to
us supporting 20,000 Maoists to remain in cantons, it allowed
us to get rid of mines and explosives, help with elections and
make historic change. I hopefully will be going to Nepal in a
couple of weeks time and will witness the emergence of the first
democratically-elected government in Nepal that is inclusive in
the sense that there are no rebel fighters there any more. There
are other examples where countries are unwilling to meet some
of the criteria that we would expect of them; I spoke earlier
on in terms of public financial management in terms of human rights
and so on and so forth—Burma is a classic example which
I know the Committee has spent a lot of time on. In those countries
obviously ownership means something very different and we have
to work through parallel networks, where we can trying to co-ordinate
with the government but not actually working with the government
to make sure that we maximise the impact that we have, the Three
Diseases Fund being an example. Of course, there are states where
they are simply unable to take the ownership role. We have set
up trust funds, and you will be familiar with one in the Palestinian
Territories.
Q116 Richard Burden: John Battle
may want to ask you a bit more on the conflict situation and the
fragile states situation, but I suppose what I would just like
to get your perspective on at this stage though is really who
decides. There will be cases of good practice where we have felt
we have had to take the lead, go in, poverty has come before ownership,
but who ultimately decides that. There are a number of situations
in Africa and actually the issue of ownership should not necessarily
be an issue of country by country ownership, it might be an issue
of regional ownership. Again, how does that work through and how
does that fit in with Paris? Is there a mechanism for deciding
(a) the priority that should be given to local ownership, (b)
what it means and (c) whether you are looking at the national
perspective or the regional perspective?
Mr Malik: That is a really interesting
question. The answer to that really is that it is kind of horses
for courses; there is not, arguably, as much consistency as there
needs to be, politics does play a role and ideally we look to
organisations like the United Nations to give leadership and even
then there will be a number of countries that will not be content
with the leadership that is given in terms of the regional side
of things. Some Committee members might be aware that I was out
in Thailand speaking to the Thai Prime Minister and the ASEAN
(Assoication of South-East Asian Countries) nations to give support
and act as a humanitarian bridge into Burma. There ASEAN was invariably
going to be the only show that was going to be able to make any
difference in Burma because if the UK decided that we wanted to
lead, or the UN lead or anybody else it just would not happen
because of the regime that exists there. We were actually out
there pushing ASEAN to take a leadership role—pushing is
perhaps too strong a word, certainly encouraging them to take
that role. They recognised that they had that leadership role
to play and now we are starting to broker, painfully slowly I
accept, a mechanism where ASEAN, supported by the UN and then
everybody else is able to give support to the Burmese people who
are suffering because of Cyclone Nargis. In the case of the occupied
Palestinian Territories you will be aware that the UN decided
that the TIM (Temporary International Mechanism) mechanism was
the best one in town; now we have a trust there which starts to
bolster the financial mechanisms and systems of the Palestinian
Authorities which will ensure that the sustainable nature of some
of the inputs now will last for a long, long time. What I would
say is that the UN ultimately one would hope is the body that
gives the leadership and direction; it is not always the case,
there is not consistency out there, but I would love to live in
a world where there was consistency. We do not, however, and we
are ultimately led by need and the International Development Act
has helped us in a way that other countries perhaps are not helped.
Politics is important but it is secondary to poverty, and you
might well cite examples where you might consider that not to
be the case, but we are driven by poverty and we are very clear
about that. Poverty is at the centre of all our programmes and
the International Development Act helps us in that regard. In
fragile states the UN we believe is the organisation that ought
to give leadership and where you are speaking about regional entities
then it could be the European Commission, it could be ASEAN, it
could be a whole number of organisations. The organisation the
Islamic Conference, for example, could play a lead role in some
fragile states.
Q117 Richard Burden: I am tempted
to say was it the UN that decided what local ownership meant in
the Palestinian territories or did somebody else decide that,
but we will park that.
Mr Malik: It is an interesting
question.
Chairman: We will return to that one.
Q118 John Battle: My question is
really around that last cluster of answers where I thought I got
a very clear statement that you look to the UN to give the lead
in the absence of the country, is that right?
Mr Malik: What we are saying is
that in fragile states our position would be that we ought to
look to the UN to give a lead—that is not always a humanitarian
lead, but quite often it is—and to support them. That is
notwithstanding the fact that the UN itself is in need of great
reform; some reforms are taking place and we all are familiar
with the cliché now of 23 UN water agencies competing with
one another across various parts of the world.
Q119 John Battle: If I give you two
examples, one that I know better than the other—on a couple
of occasions I have been to Democratic Republic of the Congo and
the Committee has been as well. There, for many reasons, there
is not much of a push on health because of capacity constraints,
shortage of technical skills and the government is not up to it,
so if you were having a health press on the Millennium Development
Goals then it would be hard-pressed to work through the government,
so are you saying in a case like that it is the UN that would
help out and organise?
Mr Malik: The UN is one body that
would help. There are a number of other multilateral donors that
would already be working in that country and hopefully there would
be some kind of anti-poverty strategy that was in place. I suppose
the whole idea of Paris is that we do not trip over one another
and we are all able to pool resources to meet common objectives,
whether it is around health, education or wherever it might be,
and in the example of the DRC there is a common assistance framework
through which all donors actually, we hope, try to operate, and
in that sense there is not that duplication.
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