Memorandum submitted by the UK Aid Network
The UK Aid Network (UKAN) is a network of UK
NGOs who work together on aid issues. The following UKAN members
have contributed and subscribed to this submission[16]:
ActionAid UK, BOND, CAFOD, Concern Worldwide UK, Oxfam GB, Save
the Children UK, Tearfund and World Vision UK.
SUMMARY
The International Development (Reporting and
Transparency) Act 2006 required the Secretary of State for International
Development to report annually on (inter alia) progress
towards meeting the UN target of 0.7% of gross national income,
by 2013 and the effectiveness and transparency of aid.
The UK Aid Network takes the opportunity of
the Select Committee's hearing on DFID's 2007 Departmental Report
to propose a number of policy recommendations for DFID, which
we believe should be implemented under the forthcoming Comprehensives
Spending Review in order to help DFID to continue its commitment
to delivering more and better aid. Therefore our submission sets
out a range of issues which must be dealt with in the Spending
Review process if the CSR is to be judged a success for aid. In
particular:
1. The CSR should include a year-by-year
timetable setting out how the UK will meet the target of giving
0.7% of GNI as aid. At a minimum, the CSR must guarantee the resources
for the target to be met by FY2012-13, but we believe the Government
should go further and commit to meet the target by 2010. The government
publish a binding timetable, if necessary going beyond the current
spending review period, to outline the year on year increases
in ODA from now until the target is met to guarantee that this
promise will be fulfilled.
2. In addition, whilst recognising the clear
benefits of debt relief for poverty eradication, and the leadership
that the UK government has shown on this issue, we do not believe
that debt relief should be counted as aid for the purposes of
meeting the target, for a number of reasons which we set out below.
3. The CSR should set out principles for
UK aid to be allocated to multilateral agencies in order to maximise
the overall impact of aid on poverty reduction. This means both
assessing the effectiveness of different multilateral agencies
when making allocation decisions, and using UK influence to improve
the performance of agencies receiving UK funds. It is essential
that UK contributions to multilateral agencies take account of
their record in promoting country ownership, and in particular
their conditionality policies.
4. The CSR should include clear and transparent
criteria for allocating bilateral funds between countries according
to need. Allocation criteria must take account of poverty levels
and severity, funding gaps, and the availability of funding from
other sources.
5. Country ownership should be the first
principle of UK aid, but the CSR should continue to emphasise
the importance of basic services for poverty reduction, as recognised
in the MDGs.
6. DFID must demonstrate how it will continue
to improve aid effectiveness, including by meeting (and exceeding)
the commitments made in the Paris Declaration and as a member
of the EU; by increasing the use of long-term budget support;
by continued reforms to conditionality practices; and by making
sure that all technical assistance is country owned and led, with
a focus on building capacity in country.
7. The CSR should reinforce poverty reduction
as the central objective of UK aid, while recognising the importance
of cross-cutting issues such as environmental sustainability.
8. The CSR should emphasise transparency
and accountability—UK aid must be accountable both to UK
citizens and to governments and people in the countries where
it is disbursed.
1. AID VOLUME
1.1 The CSR must include a clear and binding
year-by-year timetable setting out how the UK will meet the target
of giving 0.7% of GNI as aid. If the Government is to meet its
existing commitments to reach 0.56% by 2010 and 0.7% by 2013,
the UK will need to be giving around £8.5 billion per annum
in aid by the end of the CSR period (at current prices). [17]We
believe the Government should go further—the CSR should
provide enough funds for the UK to reach the 0.7% target by 2010.
This means the UK giving around £10 billion per annum in
aid by the end of the CSR period (at current prices).
1.2 We are firmly opposed to the counting
of debt cancellation and relief towards the 0.7% target. Debt
cancellation is a crucial element of securing economic justice
and sufficient resources for impoverished countries: it provides
resources for poverty reduction in a predictable and effective
way. But poor people need aid and debt cancellation. There are
strong reasons for not counting debt relief as aid:
1.2.1 Counting debt relief towards the 0.7%
target effectively means that the value of debt relief is being
offset by a reduction in the non-debt relief aid that would otherwise
be delivered in order to meet the target.
1.2.2 Debt cancellation and aid volumes
are often announced separately, giving the impression that they
are separate amounts of money, when in fact debt cancellation
has been included in aid. This means that debt relief is double
counted and the public are given a false impression.
1.2.3 Debt relief is an issue of justice.
Donors share responsibility for the poor lending/ borrowing decisions
that created many of today's debts. The poor should not pay, through
reduced aid, for the cancellation of debts that cannot anyway
be legitimately claimed from them.
1.3 Throughout this submission, when we
refer to "aid" we mean ODA excluding debt relief.
1.4 In order to meet the Government's existing
commitment to reach 0.7% by 2013, without counting debt relief,
DFID's budget will need to rise by around 14% a year in real terms
over the CSR period, to around £6.2 billion in 2008-09, around
£7.1 billion in 2009-10 and around £8.1 billion by 2010-11
(all at current prices).
1.5 If the UK is to meet the 0.7% target
by 2010, DFID's budget needs to increase by some 22% annually
in real terms over the CSR period, to around £6.6 billion
in 2008-09, around £8.1 billion in 2009-10 and around £9.6
billion by 2010-11 (all at current prices).
1.6 The CSR must provide more than an indication
of when the 0.7% target will be met—it must include a clear
and binding year-by-year timetable setting out how the target
will be met, without including debt relief. Increases towards
the 0.7% target must not be "back loaded" across the
CSR period—at a minimum, the CSR should deliver a straight
line trajectory towards 0.7%. All CSR announcements must make
clear whether debt relief is included in commitments and projections,
and if so, how much. The CSR must also make clear what proportion
of DFID's budget will be scored as ODA, and what proportion of
UK ODA will come from other departments.
1.7 All the figures above assume that levels
of debt relief funded from DFID's budget continue at historical
levels, allowing an additional £30 million a year for MDRI
(around £80 million a year in total) but make no assumption
about the levels of debt relief required outside DFID's budget.
If the Government believes that DFID will require more than £80
million a year to meet its obligations to the HIPC initiative
and the Multilateral Debt Relief Initiative, additional funds
must be provided in the CSR. In addition to the increases in DFID's
budget outlined above, the UK must recognise the ongoing debt
crisis and its shared responsibility for its creation, and cancel
debts accordingly. At a minimum, the UK must make funds available
for cancellation for the 67 countries identified by the Chancellor
as needing full debt relief.
2. ALLOCATIONS
TO MULTILATERAL
AGENCIES
2.1 There are strong reasons to support
multilateral aid. By virtue of their greater size, multilateral
agencies can often engage in a wider range of countries than DFID,
and are a means of the UK funding development activities in countries
where a DFID programme is not appropriate. Multilateral aid can
reduce administration costs and improve coordination at the country
level. Engagement with multilateral agencies such as the World
Bank and the EC gives the UK an important influence over the way
aid resources are spent beyond its own bilateral programme.
2.2 However, funds should not be allocated
to multilaterals by default, or simply as a means to rapidly disburse
aid. UK aid should be allocated to multilateral agencies in order
to maximise the overall impact of aid on poverty reduction. This
means both assessing the effectiveness of different multilateral
agencies when making allocation decisions, and using UK influence
to improve the performance of agencies receiving UK funds. DFID
must ensure that it dedicates sufficient resources to influencing
the policies and practices of the multilateral agencies and funds
that it supports.
2.3 We know that aid is most effective when
it funds programmes developed and led by governments in recipient
countries. It is essential that UK contributions to multilateral
agencies take account of their record in promoting country ownership,
and in particular their conditionality policies. The UK should
also ensure that steps are taken to increase the accountability
of the multilateral agencies that it supports, both for their
operations at country level and for their policies at headquarters
level.
2.4 The UK should ensure that aid channelled
via multilateral agencies goes to meet the needs of the poor—this
means supporting multilateral agencies which allocate funds to
the poorest countries and to programmes which focus on the basic
services which are essential for poverty reduction.
2.5 In particular, the CSR settlement must
take account of the following concerns with respect to particular
agencies:
2.5.1 The World Bank and IMF continue to
impose economic policy conditions on poor countries. The UK government
should repeat its strategy of holding back a proportion of its
IDA contribution contingent on reform of World Bank conditionality,
specifically the phasing out of economic policy conditions and
continued progress on the implementation of good practice principles
in the application of all financing conditions. The UK must also
ensure that the World Bank and IMF adopt a "demand driven"
approach to research and technical assistance which responds to
recipient needs rather than supporting Bank/IMF policy positions,
and which seeks to build the capacity of developing countries
to evaluate all the policy tools at their disposal. The UK should
also push for reforms to the CPIA index used to allocate IDA funds,
including full transparency on how the figures are arrived at,
an independent review of indicators and their weighting, and the
inclusion of outcomes-based indicators. The World Bank and IMF
must be more accountable to poor countries. The UK should support
reforms to governance structures that are tailored to the individual
needs of the IBRD and IDA. In particular, a mechanism for the
systematic participation of recipient countries in the IDA replenishment
process should be elaborated. In the IMF, the UK should push for
comprehensive reform of governance rather than focusing only on
a quota formula change that may reduce the voice of developing
countries rather than empowering them. Disclosure policies in
both institutions should be reformed in line with the recommendations
of the Global Transparency Initiative IFI disclosure charter.
2.5.2 The UK must continue to demand a significant
increase in the proportion of EC aid targeted at low income countries,
based on objective resource allocation criteria applied globally
across all EC development programmes. The UK must also do more
to ensure that all EC aid is accountable, transparent and based
on national ownership of development policies and strategies.
The UK should aim to ensure that EC aid meets the principles of
the Paris Declaration on Aid Effectiveness, particularly on alignment
and harmonisation, increased budget support, more predictable
resource flows and enhanced measures to mitigate shocks. EC development
assistance must be ODA reckonable on DAC terms. The UK should
work towards a radical reorganisation of the European Commission
services in charge of external aid to eliminate duplication, incoherence
and cumbersome procedures and relate policies more closely to
implementation.
2.5.3 All this said, the CSR should recognise
the significant improvements in EC aid effectiveness made in recent
years. Much has undoubtedly been done to increase the speed, accountability,
quality and effectiveness of EC aid and to establish a clear and
robust overall policy framework. The European Consensus on Development
signed in December 2005 sets out a common vision for development,
prioritising poverty eradication in least developed countries,
more effective delivery of aid and better coherence of EU policies
with development objectives. Furthermore, there are some very
positive elements in the EC's new financial instrument for development—the
Development Cooperation Instrument. The European Development Fund
(EDF) has also improved over recent years, with faster and more
effective implementation of assistance.
2.6 UN agencies could play a larger role
in key areas including peace building, humanitarian aid and water
and sanitation. The UK should continue to support the ongoing
reform programme to speed up the process of moving towards "one
UN" at country level.
3. BILATERAL
ALLOCATION BETWEEN
COUNTRIES
3.1 The UK must allocate aid funds between
countries according to need. The allocation criteria must be clear
and transparent, and take account of poverty levels and severity,
funding gaps, and the availability of funding from other sources.
We suggest that DFID continues to allocate at least 90% of bilateral
funds to low income countries and allocates at least 50% to Sub-Saharan
Africa. Allocation according to need must not be distorted by
UK security or foreign policy concerns and priorities.
3.2 Funds should be allocated with a view
to maximising their impact on poverty reduction. We have significant
concerns about allocation criteria based on countries' "policy
environments" given that there is evidence that their impact
is being overestimated:
3.2.1 Indexes such as the World Bank's CPIA
often reflect a specific perspective on what "good policy"
is. Allocations which use such indexes can become de facto policy
conditions—the CSR must ensure that DFID's bilateral allocation
criteria do not contradict the UK policy on conditionality.
3.2.2 Many countries are comparatively under-aided,
often because they are classed as "difficult" to work
with. DFID should lead the way in developing aid instruments appropriate
for each different country context, such as social funds and monitored
budget support, working with local government and other actors.
DFID must also consider balancing the allocation of aid across
sectors within under-aided countries to prioritise a holistic
poverty approach rather than focusing on narrow state capacity
building objectives.
3.3 The CSR should include a clear explanation
of the basis for allocations between countries, including full
transparency about the methodology used to carry out qualitative
assessments.
4. SECTORAL PRIORITIES
4.1 Poverty reduction should continue to
be the central objective of UK aid. Country ownership should be
the first principle, which means ensuring sufficient flexibility
at the country level to reflect local priorities (eg African governments
have committed to allocating 10% of budgetary spend to agriculture).
This said, UK aid should continue to emphasise the importance
of basic services for poverty reduction, as recognised in the
MDGs. Essential services (including health, education, social
protection, and water and sanitation) provide the building blocks
of human development, and it is the primary duty of all governments
to ensure that all groups, including the most vulnerable, have
access to these services. UK aid must support access to such services
by providing appropriate political and financial support at country
level.
4.2 The focus of UK spending on these basic
services must be on building up sustainable country systems which
respond to local priorities and circumstances. DFID must balance
its role as an advocate for the needs of the poor with the need
to respect the outcomes of national policy processes.
4.3 The UK has made, and led, international
commitments to achieve universal access to HIV prevention, treatment,
care and support by 2010, and to ensure that all credibly costed
national HIV and AIDS plans are fully funded. Whilst a number
of these plans are currently being costed, UNAIDS estimates that
a minimum of $23 billion will be needed annually by 2010. In 2007,
the estimated global funding gap is over $8 billion. The UK's
spending on HIV and AIDS must reflect the resources required to
achieve the target of Universal Access by 2010, and help ensure
the funding gap is filled.
4.4 The CSR must also include sufficient
resources to fully fund the UK share of the financing gap for
the achievement of Education For All, which currently stands at
$15-16 billion per annum. The UK must continue to support the
Education For All Fast Track Initiative, and must ensure that
the FTI is expanded to cover conflict affected fragile states.
4.5 In the recent White Paper, the government
outlined its approach to governance and anti-corruption, an approach
that is broadly supported by UKAN members. In particular, we welcomed
the recognition that it is important to respond to the causes
of corruption, rather than just specific cases, which requires
a long-term investment by donors in supporting the evolution of
effective and accountable governance systems. We also welcomed
the recognition that it is important to support elements in society
that can hold government to account—parliament, auditor
generals' offices, academia, media and civil society. However,
DFID's governance and anti-corruption work must be rooted in the
practical realities and experiences of individual countries rather
than simply imposed from outside—country leadership in this
area is vital. The CSR must ensure this more holistic approach
to governance underpins DFID country programmes and that there
are sufficient resources for supporting "demand side"
governance in a more coherent way.
5. AID EFFECTIVENESS
5.1 The CSR must continue the progress which
DFID has made in making its aid more effective. This will be challenging
if it is expected to deliver a much larger aid programme with
fewer staff.
5.2 The departmental strategy must demonstrate
how staff will be deployed strategically to maximise effectiveness
across the aid system including multilateral aid and other bilateral
programmes. DFID must maximise its impact on other donors in international
fora such as the OECD DAC and the EU to ensure that all aid is
untied, predictable, and targeted at the needs of the poor; and
is delivered in ways which are transparent, accountable and based
on national ownership of development policies and strategies,
rather than externally-imposed conditions.
5.3 With respect to the DFID bilateral programme,
the CSR must deliver real progress in a number of key areas:
5.3.1 DFID must continue to use a mix of
aid instruments. Direct budget support is particularly important
in building country systems and supporting country policy choices.
DFID should provide at least 50% of bilateral programme spending
as budget support, and should increase the use of long-term budget
support compacts. DFID must also develop more effective instruments
for engagement in countries where direct budget support is not
appropriate.
5.3.2 Although multi-year budget support
arrangements improve predictability, DFID must do more to ensure
that its aid allows country governments to make long-term policy
decisions. One key aspect of this must be to make DFID decision-making
more transparent—the criteria upon which budget support
(and other aid) will be disbursed or withdrawn from particular
countries should be clear and transparent to recipient governments,
parliaments and civil society.
5.3.3 DFID must continue reforming its conditionality
practice to ensure country policy choices are country led, not
donor led. This means making sure that there is real change in
practice at country level in line with the conditionality policy,
and requires full transparency of all UK conditions.
5.3.4 All UK technical assistance (TA) must
be country owned and led, with a focus on building capacity in
country. All TA should be "on budget", and aligned to
national plans and capacity building strategies, with a greatly
increased proportion using country systems. The CSR should also
commit DFID to increasing the proportion of TA supplied from countries
in the South. This is a significant efficiency concern—although
DFID untied all its aid five years ago, the overwhelming majority
of DFID TA contracts (by value) still go to UK firms, which suggests
that there are serious issues of market openness and competition
that need to be examined.
5.3.5 Increasingly, aid effectiveness will
be determined by the quality of relationships at country level.
DFID must do more to improve and assess its partnerships at country
level, focusing in particular on the degree to which bilateral
programming is aligned with national policy priorities and administrative
systems, but also through increased transparency and accountability
(see below), and by taking into account DFID's wider relationships
and influence, including with other donors. DFID should support
the development of in-country public forums for the discussion
and evaluation of aid, involving donors, recipient governments,
parliaments, and civil society.
5.3.6 DFID's delivery strategy must demonstrate
how it will meet the commitments made to improve aid effectiveness
in the Paris Declaration, and as a member of the EU. DFID should
aim to exceed these commitments and demonstrate best practice
in all the areas identified in the Paris Declaration, across its
whole aid programme.
6. ACCOUNTABILITY
AND TRANSPARENCY
OF UK AID
6.1 UK aid must be accountable both to UK
citizens and to governments and people in the countries where
it is spent. Many of our recommendations above, on conditionality,
clear allocation and disbursement criteria, and transparency,
relate to this fundamental concern. The CSR must also deliver
progress on some more general accountability/transparency issues:
6.1.1 There is a need for more transparency
across the board about UK aid. Information about policies, allocations,
commitments, disbursements, conditions and results should be available
both to parliament, CSOs and citizens in the UK; and to governments,
parliaments, CSOs and citizens in the countries where DFID works.
This requires more than making information available on request—DFID
should adopt a policy of automatic disclosure, with a strict regime
of exceptions, and should work proactively to ensure that information
is accessible, for example by translating into appropriate languages
or disseminating information through the media.
6.1.2 UK aid should be subject to more regular
independent evaluation. We suggest that the CSR includes provision
for the establishment of a genuinely independent evaluation capacity
with the mandate to examine the allocation, disbursement and effectiveness
of all UK bilateral aid, reporting publicly to parliament. Evaluation
should be responsive to the concerns of recipient governments
and of civil society in recipient countries and the UK. DFID should
also establish an independent complaints and arbitration mechanism
accessible to all affected by DFID aid.
6.1.3 Given the importance of multilateral
institutions in delivering UK aid, it is important that there
is transparency about the government's negotiations with them
on issues relevant to aid effectiveness. Information about votes
cast, positions taken and results achieved should be made available
to parliament and the public.
7. CROSS-CUTTING
ISSUES AND
THE POVERTY
FOCUS OF
AID
7.1 The current strong focus of UK aid on
poverty reduction must not be weakened, and DFID's position as
the clear lead on development and aid must not be undermined.
This said, we support the Government's efforts to increase cross-departmental
working on issues such as climate change, natural resource management
and conflict, which have significant impacts on development and
poverty reduction, and believe that DFID could play a greater
role in some of these policy areas to ensure that the needs of
the poor are taken into account in wider government policy making.
7.2 DFID should play an increased role in
climate change (mitigation and adaptation) and natural resource
management, working closely with DEFRA, but we stress that this
can only be done if the CSR provides additional funds. For example,
we support the UK dedicating more funds to climate change adaptation
in poor countries—we have a responsibility to compensate
poor people who will be the first to suffer the consequences of
climate change caused by our actions—but specific climate
change funding must be additional to existing aid commitments.
These commitments were based on costings for the MDGs that did
not take account of the huge costs of climate change.
7.3 However, we also note that DFID can
contribute to progress on these cross-cutting issues by changing
the way it works. DFID must do more to ensure that UK aid helps
developing countries draw up development strategies which enable
them to safeguard and sustainably manage their natural assets
in support of poverty eradication, and encourage other donors
to do likewise. This means better mainstreaming of environmental
issues into work at country and regional level, and climate change
proofing of aid investments. In particular, the UK should push
the World Bank to lay out a timetable for phase-out of its support
for oil, gas and coal as called for in its own Extractive Industries
Review and seek to realise a progressive phase-out of multilateral
public finance which subsidises greenhouse gas producing extractive
activities, accompanied by an explicit and aggressive timetable
for increased support to renewables and energy efficiency.
7.4 In relation to security, we are concerned
that aid increases in recent years have reflected the global and
regional security interests of donors, with Iraq and Afghanistan
accounting for over half of the increase in net ODA from 2001
to 2004. The UK must uphold the principle that its aid should
benefit the poorest people in the poorest countries. UK aid must
never be diverted or allocated according to the UK's perceived
national security or foreign policy interests and the determination
of country and sector priorities should be based solely on the
principle of poverty eradication and pro-poor development.
7.5 All the figures given in Section 1 above
assume that DFID's funds continue to be used for poverty reduction—any
expanded mandate for DFID must be matched with additional funding
in the CSR. While it may sometimes make sense for UK aid funds
to be spent via other government departments, DFID must retain
a clear policy lead, and there must be clear and transparent reporting
of non-DFID aid spending. We see no strong argument for non-DFID
aid spending to increase above current levels.
8. SUGGESTED
TARGETS FOR
DFID
8.1 Like all other government departments,
DFID should be accountable to UK citizens for its delivery. However,
unlike other departments, DFID should also be accountable to people
in the countries where it works. New targets and objectives for
DFID must take this complexity into account, and should include
measures which reflect the experiences of those who are affected
by DFID's work around the world.
8.2 DFID should continue to be held to account
for poverty reduction outcomes, and for progress towards the MDGs
in the countries and regions where it works. The PSA and DSOs
must also clearly articulate a commitment to reflecting cross-cutting
issues, such as environmental sustainability, in DFID's work.
8.3 However, it is also important that the
CSR and associated departmental strategy documents include targets
which (a) give the department clear priorities for improvements
to policy and practice and (b) allow for external scrutiny of
performance. This means focusing on what DFID does—delivering
the UK bilateral aid programme, building relationships at country
level, guiding the policies and practices of multilateral agencies,
and influencing other donors. It also means paying particular
attention to transparency and accountability at all levels. We
have suggested some targets below—we will monitor DFID's
performance in these priority areas in the coming years.
8.4 Delivery and Effectiveness of Bilateral
Programme
8.4.1 Meet and exceed the commitments made
to improve aid effectiveness in the Paris Declaration (and follow-up
agreements) and as a member of the EU, and demonstrate best practice
in all the areas identified in the Paris Declaration across the
whole bilateral aid programme.
8.4.2 Allocate at least 90% of bilateral
funds to low-income countries, with at least 50% to Sub-Saharan
Africa.
8.4.3 Deliver at least 50% of bilateral
programme spending as direct budget support, with a greatly increased
proportion of this delivered via long-term budget support compacts.
8.4.4 All UK technical assistance to be
"on budget" and aligned to national plans and capacity
building strategies, with a greatly increased proportion using
country systems.
8.5 Relationships at Country Level
8.5.1 Support country-led policy making
and country systems, including through changes to conditionality
practices, confirmed by positive feedback from recipient governments,
parliaments and civil society.
8.6 Multilateral Aid
8.6.1 Work with the World Bank, IMF and
other donors to end the imposition of economic policy conditions
by the Bretton Woods Institutions.
8.6.2 Work with the EC and other EU donors
to increase the proportion of EC aid going to poverty reduction
in low-income countries to at least 70%, based on objective and
transparent resource allocation criteria.
8.7 Influence on Other Donors
8.7.1 Work with the OECD DAC, the EC and
other donors to ensure that all donors meet the commitments made
in the Paris Declaration to increase aid effectiveness, and all
EU donors meet European commitments in addition to this.
8.7.2 Work with like-minded donors to achieve
a progressive consensus on the use of conditionality, with a view
to ending the use of economic policy conditions across the whole
aid system.
8.8 Accountability and Transparency of
UK Aid
8.8.1 Full transparency about DFID's policies,
allocations, commitments, disbursements, conditions and results.
8.8.2 Regular independent evaluation of
DFID's effectiveness, including feedback from governments, parliaments
and civil society in recipient countries.
16 This is a revision to an earlier submission made
by UKAN to the Chancellor of the Exchequer and The Secretary of
State for International Development in February 2007. Additional
agencies which contributed to and signed up to the earlier submission
included Christian Aid, HelpAge International, Jubilee Debt Campaign,
Quaker Peace and Social Witness. Back
17
This, along with all other figures in this submission, is based
on a relatively conservative assumption of 2.5% pa economic growth.
If growth rates are expected to be greater than this, the amount
of aid, and DFID's budget, will need to be increased accordingly. Back
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