Examination of Witnesses (Questions 1-19)
MR JIM
DRUMMOND, MS
LINDY CAMERON
AND MR
PETER HOLLAND
23 OCTOBER 2007
Q1 Chairman: Good morning and thank you
for coming to give evidence in our first session on development
assistance in insecure environments with the emphasis on Afghanistan
for which you have particular DFID responsibilities. Mr Drummond,
perhaps for the record you would first introduce the members of
your team and their particular areas of expertise and responsibility.
Mr Drummond: My name is Jim Drummond
and I am the director for South Asia in DFID. I started this job
at the beginning of the month and so I am a relative new-comer.
On my right is Lindy Cameron who in September finished a period
of 18 months or so as head of the DFID office in Afghanistan based
in Kabul. On my left is Peter Holland who is head of the Afghan
Drugs Inter-Departmental Unit, generally known as ADIDU. Mr Holland
has been in his job for a while and therefore also has considerable
expertise on the subject. ADIDU is responsible for the counter-narcotics
effort but is also the lead on policing and justice issues and
so Mr Holland will help with questions that you may have on those
subjects.
Q2 Chairman: When the international
compact for Afghanistan was signed in London in January 2006 the
Committee had the opportunity to meet informally a number of the
Afghan representatives. Obviously, that was a significant development
and there were high hopes as to where it would lead. By any standards
Afghanistan is a very poor country and presumably would always
be a priority for funding by DFID regardless of the current situation
and recent history. Can you give an indication of how that country
fares in terms of the aid it receives compared with other post-conflict
countries in recent times and to what extent the scale of the
poverty in Afghanistan is being taken fully into account? In some
of the written evidence we have received from a variety of sources
a number of people have commented that the resources being made
available are inadequate for the scale. Can you provide an indication
of what resources per capita are being made available and to what
extent the extremity of poverty in Afghanistan is being taken
into account in setting the level of aid that the country receives?
Mr Drummond: Perhaps I may start
with a little background to that question. The development challenge
in Afghanistan is still huge. We started from an extremely low
base in development terms in 2001 when the Taliban regime fell.
From the statistics we have, in 2004 life expectancy in Afghanistan
was 46 years and adult literacy was 28% compared with the average
in Least Developed Countries of 52.4 years and 63%. One in five
Afghan children dies before its fifth birthday. That is an improvement
from one in four dying at the end of the Taliban regime, but it
is still a very serious state of affairs. Half the population
lives on less than $1 a day and about one third of the population
eats less than the minimum daily calorie requirement. Afghanistan
will miss the Millennium Development Goals but it has a target
for meeting them by 2020. Set against that, there have been some
pretty remarkable achievements in the past five years. We now
have 5.4 million children in school, one third of them girls.
As you know, the Taliban excluded girls from school. Nearly five
million refugees have returned to Afghanistan. There have been
improvements in infant mortality rates and the immunisation of
children. It is estimated that immunisation against measles has
saved about 35,000 lives annually. Attendance at school and access
to basic healthcare have improved. There is a mixed picture of
achievements from a very low base but which often go unreported.
It varies around the country as you will know. In terms of the
resources that DFID puts into Afghanistan, Ministers made a commitment
to provide £330 million over a three-year period. The last
year of that is the next financial year. We expect to meet that
commitment. If you look at the resource allocation model from
which DFID starts its process—obviously, resource allocations
are political decisions but they are based on evidence of poverty—Afghanistan
would get about one third of what it gets now. We have made extra
provision for Afghanistan.
Q3 Chairman: I completely accept
the statistics you have given us and the scale of improvement,
which is welcome. I also accept your answer in terms of DFID's
particular commitment, but, to put that in context, the International
Crisis Group—I accept this is historical—says that
in the first two years after the removal of the Taliban the international
aid commitment was $52 per Afghan compared with $1,400 per person
in Bosnia. I do not query what DFID does—it is probably
one of the big donors—but what is the context? What is everybody
else doing, and what is the level per head now and how does it
compare with others?
Mr Drummond: We may need to write
to you with precise figures because we do not have them in our
heads.[1]
We acknowledge that there is an international issue about how
we balance the response to conflicts. You will be familiar with
the figures for the DRC[2]
because you have been there recently. In that country the response
per capita is much lower than for Sudan and many other post conflict
countries. Afghanistan is clearly much better placed than DRC
in terms of the response to the crisis it faces and the amounts
of aid available to it, but it is less well aided than certain
parts of the Balkans.
Ms Cameron: We believe that aid
is being disbursed along the lines pledged at the London conference
two years ago to which you referred. Therefore, the issue you
are describing is a known one: Afghanistan has consistently received
lower levels of per capita aid than some other countries. One
must also recognise that Afghanistan in 2001 did not have the
capacity to absorb very high levels of aid because it had such
a limited government capacity. Every year we have seen a dramatic
increase in the ability of the Government to spend money—in
most years it has risen between 50 and 100%—so from our
perspective we are probably less worried about the level of aid
it is receiving. There is a longer term issue about ensuring it
receives sustained aid to enable it to continue to make the dramatic
progress we have seen so far. Afghanistan started from a dramatically
lower base than either Bosnia or Kosovo in particular in terms
of both much higher levels of poverty but also much lower levels
of state capacity to do something with the aid. It had a programme
that was much more focused on humanitarian assistance to start
with, transitioning to development. It is less focused on reconstruction
per se because there has been less to reconstruct. The infrastructure
in Afghanistan was much more devastated but also there was much
less of it in the first place. Most Afghans have seen very little
of the Afghan state historically and therefore there is an awful
lot more to do. We have not seen a dramatic change in levels of
aid since the London conference but certain countries, particularly
the US and Canada, have made increased commitments. The Canadians
have raised their level of commitment since then partly because
of the perception of increased need in the south. The international
development banks are also clear that the need they previously
identified—to maintain levels of post-conflict assistance
-is still there. We have a dialogue with both the World Bank and
the Asian Development Bank about the need to maintain the higher
levels of post-conflict assistance that they have been delivering
to Afghanistan.
Q4 Chairman: Do you reject some of
the evidence we have received which suggests that the levels of
aid are inadequate for the need? Do you also accept that the limited
capacity to absorb aid has been a problem that has been overcome?
In that context is DFID trying to encourage other donors to contribute
more? Is that part of the department's broader objective?
Mr Drummond: I do not think we
would say the problem about capacity has been overcome. At the
starting point, there was a Taliban regime which really did not
run a government budget that we would recognise as such, disbursing
maybe $100 million as a central government budget. There is now
a government budget of $2.6 billion which the evidence shows is
being disbursed pretty well. There is a little lag on the investment
budget side, but the recurrent budget is almost all spent. Five
years into a post-conflict situation that is not bad, but there
is still a major issue about the capacity of some ministries to
spend. Some quite innovative things are being done in particular
ministries. For example, the Ministry of Health does not try to
be a deliverer of health services; it subcontracts to NGOs and
others to deliver those services around the country. I believe
that has been relatively successful.
Q5 Chairman: In parallel we are running
a separate inquiry on maternal health in developing countries.
Is that improving? The information we have is that access to antenatal
care stands at 30% of the eligible population. The worst figure
is in Balochistan where 6,500 women die for every 100,000 babies
born. Is maternal health a priority, and does DFID have a particular
engagement with that?
Mr Drummond: DFID is not directly
funding the health sector. When Ashraf Ghani was Minister of Finance
in Afghanistan he was very clear as to what he wanted donors to
do. He did not want them to work in any more than three sectors.
In terms of donor effectiveness that was pretty good leadership
from the government of a country that had emerged from a conflict
only two years before. DFID made choices for its three sectors.
It did not include direct involvement in health, but the money
we put into the Afghan Reconstruction Trust Fund goes to pay the
salaries of health workers, so we are making contributions indirectly.
You are absolutely right that maternal and child health is a very
serious issue in Afghanistan. There have been significant improvements
in the past five years, but it still puts Afghanistan way down
the league table.
Ms Cameron: The figures have improved
dramatically specifically for antenatal care. Access has gone
up from 5% in 2003 to 30% in 2006, so that is a six-fold increase.
That is a very good example of the extraordinarily low base that
we are talking about. Similarly, one in five children used to
die before the age of five; now it is one in four. They are still
appalling figures, but there have been dramatic improvements over
the past few years.
Chairman: That is a problem with which
the Committee will be wrestling. We are trying to gain information
both here and when we visit the country in due course. Clearly,
a very mixed picture emerges. In terms of sustaining international
commitment one needs to have identifiable and measurable results,
but obviously there are many anecdotes about areas where nothing
is happening, or nothing is being reached, which raise the whole
question of the capacity to absorb aid and the role of government.
Sir Robert Smith will explore a little further the status of budget
support.
Q6 Sir Robert Smith: When we looked
at the annual report of the department in July we heard something
about the Afghanistan Reconstruction Trust Fund—I believe
that 66% of DFID's spend goes through that mechanism—as
a means of coping with the fact that the Afghan Government was
not ready to receive direct budget support. What sort of assessment
have you made of its effectiveness? I know that the Afghan Government
has found it a welcome means.
Mr Drummond: In the first couple
of years when we provided assistance to Afghanistan it was based
very much on the direct funding of humanitarian agencies. After
two or three years we got to a point when we wanted to make a
decision about what should be the role of the Afghanistan Government
and how we could strengthen its capacity to deliver services.
At that point a conscious decision was taken to switch funding
into Afghanistan's own budget systems in order to start giving
it some authority over the way in which donors worked. Obviously,
if one has donors doing just direct funding of individual agencies
in particular parts of the country then that is not very visible
to the Government. Compared with the problems we have had in trying
to help governments set up budgets that work in other post-conflict
countries I believe that the ARTF[3]
has been very effective. It is not direct budget support in the
sense that we have a conversation with the Government and we are
satisfied with its procedures and allocation process; it is a
stage removed from that. The ARTF has within it accountability
mechanisms. It is a trust fund that is managed by the World Bank
and audited by PriceWaterhouseCoopers. We reimburse and do not
pay upfront. It is divided into two main segments with a recurrent
cost element that pays the salaries of teachers, nurses and so
on. There is also an investment budget which runs four or five
different national programmes, some of which have worked better
than others, but there is good evidence of money getting down
from the centre into the community certainly through the National
Solidarity Programme. Studies that have been made of Afghan systems—the
World Bank has done the work—demonstrate that the ARTF process
has made them stronger. In a sense it is building up systems from
absolutely nothing.
Ms Cameron: An external review
was made a couple of years ago and a second one is now taking
place.
Q7 Sir Robert Smith: By whom?
Ms Cameron: I believe it is being
made by independent consultants hired by the World Bank. As a
contributor we input into the terms of reference and the World
Bank essentially sets up the review. Obviously, we all contribute
to that and I am sure they will also be interested to hear your
views. The review is expected to be in two parts. One is backward-looking
and assesses the effectiveness of the ARTF so far; the second
part is forward-looking and assesses how the ARTF can respond
to the changing needs of a post-conflict country five years later.
The expectation is that they will look at both the recurrent and
investment parts of the ARTF to consider the different kinds of
results flowing from it. As to recurrent spending, it has been
a very effective way to mobilise a range of different countries'
funds to contribute to what is essentially a gap between Afghan
tax revenue and the costs of running even the most basic level
of government. The results in areas like health and education
are pretty good. For example, in healthcare the basic figures
show that access has grown from 9% to 82%. We were so shocked
by those figures when we looked into them. In some areas the differences
in the very basic levels of service are very impressive. Similarly,
in education the number of kids in school has gone from something
like one million to over five million. Nearly two million of those
are girls. The basic services that the Government delivers, funded
by that recurrent investment, have clearly delivered some very
good results. The investment programmes funded by the ARTF need
to be looked at individually. Recurrent reviews of those programmes,
that is, the micro-credit programme, the National Solidarity Programme
(NSP), the National Rural Access Programme (NRAP), and so on,
take place and we engage as they happen.
Q8 Sir Robert Smith: Approximately
what proportion of development aid to Afghanistan will go through
the trust fund from around the world?
Ms Cameron: That is a very good
question. This year about $474 million is disbursed by it. The
total commitment of the London conference over a five year period
was $10 billion. I do not have the figures to hand for the precise
percentage this year; they will probably not be available until
next year, but we can write to you with that information or provide
it during the inquiry.
Mr Drummond: The total Afghan
budget is about $2.6 billion for the current year. Of that, about
$500 million will be delivered through the ARTF. It is probably
also worth noting that DFID has about 80% of its expenditure in
Afghanistan on budget, so the Government clearly knows what is
happening to it and has some power to direct that, but two-thirds
of the aid money going into Afghanistan are still off-budget,
so there is quite a serious issue about how much control the Afghan
Government has over the whole piece.
Q9 Chairman: Does that mean there
is about $5 billion of bilateral aid of one sort or another that
does not go to the Government?
Mr Drummond: On budget the Government
itself raises about $500 or $600 million. That is tiny compared
with what most governments raise, but it has risen from $100 million
five years ago. The amount of money on budget on top of that is
$2 billion from other sources, largely donors, and there is also
money off budget. I will have to check the figure but you are
about right in terms of orders of magnitude.[4]
Q10 Sir Robert Smith: The permanent secretary
said that the department was looking to see whether this could
be replicated in other post-conflict states. How far progressed
is that assessment? How much is the department itself assessing
that as a model for use elsewhere?
Mr Drummond: We have struggled
in a lot of post-conflict environments to find the mechanism which
bridges the gap between the humanitarian phase and government
taking control. I do not know of other examples where the exact
Afghan model has been replicated, but I know that in DRC which
you have visited and in Sudan it has been quite a struggle to
get trust funds moving.
Ms Cameron: And also in Iraq.
The idea is that the trust fund model is an effective way for
the international community to pool resources rather than set
up a series of parallel bilateral interventions.
Q11 Sir Robert Smith: Who controls
the priorities of the trust fund?
Ms Cameron: It is a negotiation
between the Government and steering committee. Essentially, there
are two committees: one comprises the Government, the World Bank
and key donors to the ARTF. Essentially, that discusses the way
the trust fund is managed. In terms of the actual disbursements,
there is a smaller committee comprising the World Bank and a number
of other key partners such as the ADB,[5]
UN and government which decides exactly how the money should be
allocated. That is precisely to try to ensure there is some separation
and to lower the level of preferencing so that, rather than donors
using it simply as a bank account to transfer money to specific
projects they want to implement, the Government has a certain
discretion over those funds and can prioritise them.
Q12 Sir Robert Smith: What other action
is DFID taking to try to assist the Government of Afghanistan
to develop its own accountability and ability to deliver services?
Ms Cameron: Two key parts of our
programme are the state building component and the economic management
component. We work with the Ministry of Finance both to raise
more tax revenue but also to manage the tax revenue that it collects
effectively. We work closely with both the revenue department
and also the budget department to try to ensure that the Afghan
Government has the best possible control and oversight of its
own budget and as much visibility as possible of donor funds within
that budget. We are also a very strong advocate in the donor community
for transparency so that government can see what donors are doing.
We chair the External Advisory Group which is the committee of
donors that interacts with the Government on the Afghanistan National
Development Strategy (ANDS). I believe that we are the primary
advocate for the use of the strategy as a vehicle for donors to
co-ordinate what they are doing. That strategy is now in development
and will be produced by next spring. We would like to see donors
producing a collective response which says, "If this is the
Government's strategy this is how we as donors will prioritise
the assistance available from us to respond to it." In our
own programme we help to build accountability mechanisms for government
to disburse the budget but we also act as a lobbyist and advocate
within the donor community for ways to help make donors easier
to manage by government. Within our state building programme we
also look particularly at the public sector and the role of the
civil service. In the past we have done a number of pieces of
work with the Government on civil service reform, looking at how
the whole public sector can become more effective to make sure
that pay is at the right level, that the size of government is
appropriate and that, for example, a department has the civil
servants it needs rather than people in place who perhaps are
not appropriately qualified.
Q13 Sir Robert Smith: Some NGOs have
expressed concern that since 2003 the support channelled through
them has been reduced quite dramatically. Does that leave a gap
in delivery of services on the ground?
Mr Drummond: We are very conscious
of NGO concerns about this. We made a conscious decision to try
to shift the way we did business to give the Government authority
over it, but when we look at the way government does business
a lot of the money put through it is then delivered by NGO programmes.
The health sector is a good example. The Ministry of Health subcontracts
NGOs to deliver programmes. So they still have a big role to play.
Obviously, there are things that NGOs do which are beyond service
delivery, and we need to ensure the capacity of advocacy NGOs
is still being built up to hold government to account. A number
of NGOs get resources from DFID pots of money held either centrally
or, in one or two cases, at country level for advocacy work on
gender, for example the Womankind programme. As the security situation
improves in some places but not others there is a constant question
in our mind as to how to deliver services in the less secure areas.
One must also take account of where the NGOs are able to deliver.
If NGOs are to help to deliver services in the more difficult
places where the Government's national programmes find it hard
to operate we should think hard about helping them.. If the NGO
proposals for delivering services are in places where the Government's
programmes can start to reach, then there is much more of a case
for the delivery of those services to be provided or subcontracted
by government.
Q14 Chairman: In its evidence to
us BAAG[6]
made one or two comments that slightly concerned us. One understands
that the NGOs have their own agenda and naturally they will lobby
for it, but, first, BAAG makes the specific complaint that British
NGOs remain particularly challenged due to little direct support
from their national government. Second, it says that since NGOs
have become so closely associated predominantly with government
programmes—you say that the Government is using NGOs—they
are now considered to be representatives of the Afghan Government
and so are targeted by the insurgency. Do you think there is any
substance to those concerns?
Ms Cameron: British NGOs have
the option to apply for funds that DFID has centrally. It is true
that we made a significant shift in the way we run our bilateral
programme, but we are the biggest contributor to the ARTF and
NGOs received $450 million of funding from the Afghan Government
in 2005-06. Therefore, there is very significant DFID funding
available via the Government to NGOs for service delivery. In
a sense, the method of funds being channelled through NGOs for
service delivery from the UK Government is indirect rather than
direct. That means British NGOs have to compete with the full
range of other international and Afghan NGOs for those funds from
the Afghan Government. I believe that that helps to ensure that
they are accountable to the Afghan Government for the services
they provide. In terms of security, obviously that is a huge concern
in terms of ensuring that NGOs have as good security as possible.
I have not seen any specific evidence to support that particular
view, but obviously perception is key. Ensuring that NGOs' security
is managed as well as possible is a key concern, particularly
for some of them working in extremely difficult areas. For example,
Afghanaid has done some excellent work in challenging areas in
the east of the country.
Q15 James Duddridge: When the Select
Committee on Defence returned from Afghanistan it asserted that
failure to address corruption was holding back the Afghan Government.
Specifically, it came back with a request from the Afghan Attorney
General for support in relation to corruption. What support has
DFID been able to provide?
Mr Drummond: Perhaps I may provide
some context for the way we view corruption. Corruption in Afghanistan
is undoubtedly a serious problem and we do not deny it. If one
looks at the perception surveys that have been done, the International
Corruption Perception index rates Afghanistan as 117th out of
159. Perhaps given its circumstances one may think that is not
too terrible. If one asks the Afghan population, they report concerns
about rising corruption particularly in municipalities, customs,
and the justice and security sectors. The Afghan Government has
done some good things on corruption. It has signed up to the UN
Convention on Corruption, established a task force that we have
supported on corruption and implemented a number of new laws.
A civil service law has led to merit-based recruitment for 1,500
senior appointments. It has also passed a public expenditure and
financial management law and a procurement law and has introduced
an internal audit function. DFID has been providing advice to
the Government throughout this process. The Government has started
to restructure state-owned enterprises. A lot has been done. Clearly,
this does not match the perceptions of ordinary Afghans that there
is an increasing problem. It is said quite often that what is
required is leadership from the Government in dealing with the
tougher cases. Do we have hard evidence? The answer is: not very
often.
Q16 James Duddridge: My question
was very specific. Has DFID provided any support to the Attorney
General following the passing on of a request by the Defence Committee?
Ms Cameron: As far as I am aware,
DFID has not provided specific support to the Attorney General.
The drugs team does, however, work with the Attorney General.
Mr Holland: We work specifically
with the US to establish an anti-corruption unit and that will
be linked to the Criminal Justice Task Force on counter-narcotics,
so it will look specifically at corruption cases relating to counter-narcotics.
That will work with the Attorney General. It is not exactly clear
what he wants; he wants a unit specifically in his own department,
but the Criminal Justice Task Force is an already established
justice mechanism and we feel it is more appropriate to set up
an anti-corruption unit under that structure rather than a new
one.
Q17 James Duddridge: What gives us
the right to decide that is more appropriate? It is their country,
not ours.
Mr Holland: That has been the
subject of discussion with the Afghan judicial authorities about
where it would be best to site it.
Q18 James Duddridge: Effectively,
the Attorney General has been gazumped by other Afghans, not external
agencies?
Ms Cameron: The Attorney General's
view is only one view of what the institutional arrangements should
be. There are a number of different Afghan Government views on
what the arrangements should be for anti-corruption, which I do
not believe have been fully resolved yet. It is perhaps worth
adding that in terms of DFID's role we are one of the five key
donors who helped to draft a proposed anti-corruption roadmap
to give the Government some ideas on the first steps it could
take to tackle corruption. We are one of the key partners who
work closely with the Government. In addition, the work on public
financial management to which I referred earlier is a key part
of improving the Government's own systems to ensure that both
we and the Afghan Government have confidence in its systems for
spending its own money. In particular, the ARTF not only provides
a good deal of reassurance about our funds but also gives the
Government a very good role model in terms of how to provide that
level of transparency and accountability. The Government has adopted
some of the techniques that the ARTF uses to scrutinise expenditure
for the entire government budget because it sets a good example
and this has demonstrably improved the financial performance of
the Government over time. The level of what is called ineligible
expenditure, which is not capable of being reimbursed by the ARTF,
has gone down over time because of better compliance with things
like procurement rules but there are also incentives: one is not
reimbursed unless the transaction is seen to be valid and fair.
Therefore, it provides better incentives for the Government to
improve its own financial management performance. That has spread
not just within the ARTF funds but to the whole government budget.
Q19 James Duddridge: Is there any
estimate as to the cost of corruption? For every £1 that
goes in how many pence are lost through corruption or inefficient
spending because of corruption?
Ms Cameron: I have not seen a
good estimate of that figure.
Chairman: Obviously, the UK Government
is heavily involved in Helmand province on which I will ask Mr
Burden to ask some questions.
1 Ev 60 Back
2
Democratic Republic of Congo (DRC) Back
3
Afghanistan Reconstruction Trust Fund (ARTF) Back
4
Ev 60-61 Back
5
Asian Development Bank (ADB) Back
6
British and Irish Agencies Afghanistan Group (BAAG) Back
| 
