Examination of Witnesses (Questions 95-99)
MR EDWARD
BELL, MS
HELEN COLLINSON
AND MS
ROMILLY GREENHILL
13 DECEMBER 2007
Q95 Chairman: Thank you for coming in
for this second part of the evidence session. We are obviously
continuing to look at the World Bank and DFID, but in the context
of specific locations: Africa, Latin America and fragile states.
I would appreciate it if you would introduce yourselves so that
we have that on the record.
Mr Bell: My name is Edward Bell,
I am Senior Programme Adviser at International Alert, which is
a London-based, peace-building organisation, working for over
20 years with conflict-affected communities and on policy issues
relating to those countries.
Ms Collinson: My name is Helen
Collinson. I am here on behalf of CARE International UK. I should
explain that most of the staff in CARE who work on this issue
are either unavailable or in the region. I am an independent consultant
who has been brought in to share some of the findings of a research
project which I co-ordinated for CARE this year, on the implications
of changing donor policies in Latin America for the civil society
organisations, with particular reference to DFID's regional assistance
plan. If there are specific questions which I cannot answer, CARE
has an adviser based in Lima, Peru, Mike Clulow, who works specifically
on the IFIs[15]
in Latin America and CARE's engagement with the IFIs, and I can
direct questions to Mike Clulow in Lima.
Ms Greenhill: I am Romilly Greenhill.
I am a Senior Policy Officer with ActionAid. ActionAid is an international
NGO, working in between 40 and 50 countries worldwide, including
a large number of African countries. I work in the UK policy department
with a particular focus on aid, World Bank and debt issues.
Q96 Chairman: Thank you very much
for that. We did have some discussion when we were talking to
World Bank officials in Washington about middle-income priorities.
As you know, the context for the UK is that we have, by Acts of
Parliament, bilateral aid targeted 90% to low-income countries
and only 10% to middle-income countries. But, of course, we are
also giving money to multilateral institutions. There was some
concern expressed that there are a lot of poor people in middle-income
countries and that DFID does not have a very strong engagement
with them and, to the extent that they do, it is through the Bank.
I wonder if you could give a view, first of all, of whether you
think that this 90/10 split is right; whether DFID is sufficiently
engaged with poverty reduction in middle-income countries; and
whether you think the arrangement in terms of its working through
the Bank, which the Department would probably argue is the way
they reach these people, is the most effective way to do it and
if it works?
Ms Greenhill: From an NGO perspective,
most NGOs think that the 90/10 split is appropriate for DFID.
There are some very interesting questions about aid allocations
and how we make the international system for allocating aid more
effective, but DFID has quite a strong comparative advantage in
the highly aid-dependent poor countries in terms of their expertise
and their policy advice. Middle-income countries generally have
more options in terms of alternative mechanisms for raising finance
for development through the private sector—domestic taxation
and so on. Most NGOs would be loath to see DFID moving away from
that 90/10 split.
Mr Bell: Just to add a generic
point on that. There are estimated to be about 40 fragile states,
40-50 fragile conflict-affected states worldwide. A recent World
Bank study put the economic cost of each of those states at about
$100 billion, that is, about twice the annual aid budget. There
are very good reasons in terms of conflict mitigation and conflict
prevention that would argue for that to be the right proportion
of assistance.
Q97 Chairman: I am not really challenging
the 90/10 split, it is more about how effectively DFID can reach
poor people in countries that are not low-income countries and
whether the Bank is the best way to do it. I am sorry, the way
I asked the question probably led you down that track. The question
is, how effectively, given we have that split, can DFID reach
those people and is their partnership with the World Bank an effective
way of doing it?
Mr Bell: It depends on how you
go about doing it. Certainly, we would argue from our experience
that it is an expert, labour-intensive process by which the incentives
for staff performance, for institutional performance, have to
be adapted to that context and in some cases you see DFID doing
this extremely well and in some cases, you see the Bank doing
it extremely well. From the research that we have done, it is
quite unsystematic. It is very ad hoc, based on the personalities
involved. The Bank is capable of operating extremely effectively
but we would also suggest that it is not as effective as it could
be.
Ms Collinson: What came clearly
out of the research that CARE has done in Latin America is that
the decision to channel much of a very reduced budget for Latin
America through the World Bank and the IDB[16]
was a response to big budget cuts. With the small amount of money
that was available to DFID in Latin America, the view was that,
well, we are such tiny players now, we therefore need to look
at linking up with much bigger partners. The basic concern is
that there was not an analysis of what is the best way of spending
money in Latin America to reduce poverty and inequality. The starting
position was that our budget had been cut to virtually nothing
in Latin America, so how can we make the most effective use of
these very reduced funds? It is a reaction to a reduction in budget.
Q98 Chairman: If that budget starts to
rise again, which it should do given (a) there is a rising budget,
and (b)—well, it is a questionable (b)—but the draw
on funds that have gone into Iraq might diminish, therefore more
money should be available, do you think they should change the
approach?
Ms Collinson: We feel very strongly
that they should change the approach. We feel that there should
be a proportionate increase in the budget for Latin America in
line with the 11% increase projected in the recent CSR.[17]
When I say we, I am talking about CARE in this case. It may well
be strategic to link up with the World Band and the IDB in Latin
America because DFID will still be a very small player and obviously
those institutions are much larger. But the way in which DFID
is engaging with those institutions at the moment, we would have
serious questions about, and we are not the only ones that have
raised some quite serious questions. There was a very weighty,
interim evaluation undertaken of DFID's Regional Assistance Plan
by the ODI,[18]
which came out earlier this year. A major concern at the moment
is the very hands-off approach that DFID has in Latin America,
which is in very stark contrast to the way that a relatively small
DFID team worked in Latin America up until 2004. They had a very
high reputation for high-calibre staff that really understood
the realities in those countries, right on the ground. There was
some very interesting feedback from CSOs[19]
in Bolivia about how DFID staff would go out there and cross rivers
and really understand what was going on for poor people, facilitate
dialogues between the IFIs and the Government and CSOs, etc. That
rather abruptly came to an end in 2004 with these big budget cuts
and the decision to channel the funding primarily through trust
funds in the World Bank and the IDB and decentralised funds in
addition to channelling funding through INGOs.[20]
But in both cases, whether it is going through the World Bank
and the IDB or INGOs, there is this very hands-off approach now.
We have had the closure of offices in Lima and in Tegucigalpa
The added value that DFID had in terms of understanding the realities
in those countries on the ground, and having quite a lot of influence
on the World Bank and the IDB on the ground, has largely been
lost with the exception, arguably, of Nicaragua, where DFID still
has a bilateral programme and our evidence suggests that the influence
on the very institutions which the Regional Assistance Plan is
saying it wants to influence, i.e., the World Bank and the IDB,
has been greatest in Nicaragua where they still have a bilateral
programme and they still have people on the ground.
Chairman: A very clear and interesting
piece of evidence. We will have to go and vote again and I will
come back to that.
The Committee suspended from 4.08 p.m. to
4.20 p.m. for a division in the House.
Q99 Chairman: I am going to take questions
slightly out of order in the hope that John Battle's leg gets
him back here in time so as not to lose his question. This question
is to Mr Bell. The constitution of the Bank says it should issue
its financing without regard to political considerations but whenever
we take evidence there is clearly a political dimension to it;
political perspectives, priorities and so forth. First of all,
do you think the Bank is, in the proper sense of the word, a non-political
institution? And, when it is working with fragile states, where
by definition there is a lot of politics going on, what are the
key factors that the Bank should take into account, legitimately,
when it is dealing with fragile states if it is trying to do it
in a way that, if it is political, it is not politically biased?
Do you think the Bank actually does that?
Mr Bell: It is certainly capable
of doing so. One of the questions that was asked in the first
evidence session of this Committee was on how you build up active
citizenship, how you increase accountability from the bottom up,
and I think the work that we have done in International Alert
is really showing that any kind of project, whether it is in the
health sector, education or infrastructure, can act as a change
agent on those states to society relationships. In that sense,
you are having an inevitable political impact but it can be done
in an extremely positive fashion. The other element that needs
to be highlighted is that where something is extremely explicitly
and overtly political, then bilateral donors that are partners
of the World Bank in country have an enormous role to play in
taking that explicit political dialogue forward. It can be seen
in a number of countries in Africa, Asia or elsewhere.
15 international financial institutions Back
16
Inter-American Development Bank Back
17
Comprehensive Spending Review Back
18
Overseas Development Institute Back
19
Civil society organisations Back
20
International non-governmental organisation Back
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