Examination of witnesses (Questions 1-19)
DEPARTMENT FOR
INTERNATIONAL DEVELOPMENT
4 JUNE 2007
Q1 Chairman: Good afternoon and welcome
to the Public Accounts Committee. In today's hearing we are considering
the Comptroller and Auditor General's Report, Tackling rural
poverty in developing countries. We welcome back Sir Suma
Chakrabarti, the Permanent Secretary at the Department for International
Development. Sir Suma, would you like to introduce your team?
DEPARTMENT FOR
INTERNATIONAL DEVELOPMENT
Sir Suma Chakrabarti: On my far
left is Jim Harvey, head of profession in the livelihoods group
in DFID. On my immediate left is Dave Fish, Director for Eastern
and Central Africa. On my right is Sam Sharpe, the new Director
of the Finance and Corporate Performance Division.
Q2 Chairman: Thank you. Do you accept
the Report's broad conclusion that three quarters of the poor
in developing countries live in rural areas?
Sir Suma Chakrabarti: As a rough
estimate, we accept it.
Q3 Chairman: So why did the Department
spend two thirds of its budget in rural areas?
Sir Suma Chakrabarti: On the basis
of the sample that the National Audit Office considered, we spend
two thirds of our direct bilateral assistance budget in rural
areas, but we spend a lot more than that in ways that are not
accounted for in the calculation. For example, one third of our
research programmes are concerned solely with agriculture and
natural resources, and the other two thirds also have an impact
on rural areas and are not included in the calculation. Our multilateral
share has a focus on rural areas and is likewise not included
in the two thirds portion that you mentioned. So spending is more
than the £1.7 billion that the two thirds represents.
We also do a lot of policy work that has
an impact on rural areas, which is mentioned only occasionally
in the Report. It includes work on climate change, trade reform,
supermarket supply chains, microfinance and the like. We lead
the way on the international approach to rural development—we
championed the joint approach towards it among the donors. So
we are also doing all those other things beyond financial help
which are important to improving the lot of the rural poor.
Q4 Chairman: So essentially you reckon
that compared with urban areas, the rural poor get a fair share
of the Department's spending.
Sir Suma Chakrabarti: We maximise
the impact that we can make. I hope that we shall get a chance
to say more about what we are doing to try to improve the activities
of national Governments in helping rural areas. That work is to
some extent evident from the Report, but we see it as a major
responsibility.
Q5 Chairman: On that point, I know
that you are trying to increase the amount of the Department's
aid that is given to developing countries through their Governments.
Might those Governments have some bias against rural areas, given
that such areas are politically less volatile and therefore less
likely to cause trouble? If more resources are channelled through
developing country Governments, there might be a tendency for
those Governments to place more emphasis on urban areas.
Sir Suma Chakrabarti: Quite a
lot has been written about urban bias in development economics,
and what you say was historically true. Most developing country
Governments have tended to give privilege to manufacturing and
urban sectors, but that has changed in the past 20 years, during
which time we have been trying to shift the policies of those
Governments. For example, in the past, developing countries used
to keep food prices down so that the urban and manufacturing sector
would benefit. That simply exacerbated rural poverty. The countries
used to privilege the urban sector in terms of resource allocation
for services and so on but, again, that has started to shift quite
radically in the past 20 years. That is partly down to the rise
of democratic politics—things are beginning to change even
in parts of Africa. In non-democracies, I think that the worry
of social unrest because of the inequality of rural and urban
areas has concentrated minds.
We are seeing many developing countries
shifting resource allocation toward rural areas, which is why
poverty in rural areas has fallen rapidly in the past 10 years
in a number of countries. The Department has been a part of that
story, because it has been arguing for the right policies to help
rural areas, and because it has increasingly tried to shift resource
allocation and service delivery capacity to rural areas.
Q6 Chairman: Historically, as resources
increase slightly in rural areas, there has been a tendency for
people to take flight to the cities. What is the latest research
that you have on whether any of the aid budgets for which you
or national Governments are responsible actually exacerbate that
problem? In other words, when you give people more money, they
then have the extra resources that they may use to flee to the
cities, and so the vicious circle continues.
Sir Suma Chakrabarti: Urbanisation
has been growing apace in a number of countries—no one would
disagree with that. In some places, that is partly about agricultural
stagnation, but it is partly about the rapid growth of job opportunities
in urban centres. We see that happening to a large extent in India.
At the same time, in other countries, we are increasingly seeing
a rejuvenation of the agricultural sector. For example, Malawi
has had bumper harvests in the past two years, which has rapidly
reduced agricultural and rural poverty, and so has stemmed the
flow of migration. The relative growth rates for the two sectors
are important, and it differs between countries.
Q7 Chairman: You mentioned other
agencies such as the World Bank. Paragraph 3.3 of the Report states
that only a quarter of its funds went to rural areas. Are you
sure that other multilateral organisations' budgets are not biased
against rural areas?
Sir Suma Chakrabarti: I think
that we are attempting to have tailored strategies for different
multilateral organisations. Clearly, the 2003 study was a wake-up
call for the World Bank. We have been pushing the bank to rebuild
its agricultural expertise, which used to be very strong. Rather
like DFID, the bank has a broad-based strategy, so its help for
agricultural areas is not only through agriculture and livelihoods
work, but through health and education services and so on.
We have been saying that the African Development
Bank (ADB) must do more on rural roads, because it is more focused
on infrastructure. Such roads help in terms of rural poverty because,
for example, they help farmers to get goods to market. That has
been something that the ADB has not emphasised enough, in the
Department's view, in the past few years.
The Rome agencies—the Food and Agriculture
Organisation and the International Fund for Agricultural Development—have
had a rather mixed performance in the past 20 or 30 years. The
Department has been trying to lever up their performance, because
they are crucial to getting the right policies and standards for
the rural sector.
Q8 Chairman: Okay. The amount of
days that your staff spend in rural areas is dealt with in figure
18 on page 27. It shows that your staff spend an average of five
days a year in rural areas, but sometimes they spend as few as
two days a year. Do they spend the rest of the year in the capital
city? How can they know what is going on, if they are spending
as little as two days out in the field?
Sir Suma Chakrabarti: Well, visits
are undoubtedly an important part of being knowledgeable about
the rural sector. We have investigated the data set further since
the Report was published. If we represent the data without doing
so on a per person basis, they look quite different. That is important,
because not everyone in the Department's country offices needs
to visit a rural area to get the knowledge.
I shall read out some of the data and present
it differently. Country offices in Kenya, Malawi, Pakistan, Rwanda,
Tanzania, Uganda and Vietnam make 30 to 60 visits to rural areas
per year; offices in Bangladesh, China and India make between
60 and 100 visits to rural areas per annum; and offices in Indonesia
and Nigeria make more than 100 such visits per annum. We do not
expect every person in a country office to do everything that
everyone else does, so if we do not divide the total number of
visits between people, we get a different outcome.
Q9 Chairman: So the figure is misleading?
Sir Suma Chakrabarti: It gives
a misleading picture. The figure is accurate, but it is misleading
because the visits are divided between everyone in an office.
I agree that every country office needs to build the importance
of visits to rural areas into its business plan so that they can
get the reality check that such visits provide. At the moment,
the office in Tanzania does that. Dave Fish is ensuring that all
the African offices do that in future as well so that we have
a more consistent picture across all our offices.
Q10 Chairman: Paragraph 4 in the
executive summary states that you do not have specific targets
for the rural poor. How do you assess what your aid is achieving?
Sir Suma Chakrabarti: We do that
by looking at what progress we are making against each of the
Millennium Development Goals. In many countries that we work in,
the data are not good enough to tell us exactly what the divide
is between rural and non-rural. Therefore, the key issue for us
is to improve the statistics in those countries, so that we have
various classifications of data, including rural and non-rural.
That is what we are working to do. For example, we are the leading
financier of statistics development in Africa. At the moment,
the world, not just the DFID, does not have data broken down in
that way, because the countries that we work in do not have the
capacity to do that.
Q11 Chairman: You say this research
is adequate, but paragraph 9 of the executive summary states that:
"the country teams and non-governmental organisations we
consulted were dissatisfied with the dissemination of findings."
Why do you think that is?
Sir Suma Chakrabarti: Sorry?
Chairman: The dissemination of findings.
That is in paragraph 9.
Sir Suma Chakrabarti: Do you mean
the research findings? We do not do it, but the vast majority
of research findings are between partner organisations in the
UK and other developed countries dealing directly with partner
organisations in developing countries. The NGOs, or the country
teams, that were consulted as part of the Report on which that
statement is based are not seen as a conduit for that research.
They would be seen as a conduit if they added value to the research
in its application in developing countries. Where that is the
case, the country teams play a very important role. We have a
£37.5 million research-in-use programme in which the
central research function headquarters, the country teams and
the national partner Government institutions work in a virtuous
circle. We have plenty of examples that we can share with you
that prove that that is working very well.
Chairman: All right, thank you.
Q12 Mr Touhig: Parts of this Report
are pretty damning, would you not agree?
Sir Suma Chakrabarti: I do not
agree. Overall, the Report paints an impressive picture.
Q13 Mr Touhig: Not complacent, are
you?
Sir Suma Chakrabarti: No, I never
am.
Q14 Mr Touhig: You do not agree then?
Sir Suma Chakrabarti: No, I do
not.
Q15 Mr Touhig: In paragraph 1.15,
we see that "DFID has increased its assistance to social
sectors and also governance, despite evidence that productive
sectors such as agriculture are particularly effective in reducing
poverty." You are going in the wrong direction.
Sir Suma Chakrabarti: There is
quite a lot of contested argument about how far agriculture drives
poverty reduction. The NAO Report cites evidence—
Q16 Mr Touhig: You have agreed that
Report with the NAO, have you not?
Sir Suma Chakrabarti: We have
agreed it, but we can also cite plenty of evidence that indicates
that it is an open debate. There is a 14-country piece of work
that has come out recently that says there is not a linear relationship
between agriculture, development and poverty reduction. Let me
cite two examples, one on both sides of the argument. As I said
earlier, the bumper harvests of the last two years in Malawi are
directly related to poverty reduction and national economic growth.
That is why the team in Malawi is focused on the agricultural
sector, and quite rightly so. In India in the '60s and '70s, there
was a direct relationship between agriculture development and
national economic growth and poverty reduction, but that has broken
down. Therefore, the Indian team, quite rightly, has a much more
mixed strategy, focusing to some extent on the rural sector but
also on other sectors as well.
Q17 Mr Touhig: Look at the overall
picture. Your own estimates tell us that the rural poor receive
less direct help per head compared with the non-rural poor.
Sir Suma Chakrabarti: As I said
earlier, that is the direct bilateral assistance. However, that
does not include our research programmes or our multilateral assistance.
It does not include all the policy work, which is also seeking
to make the terms of trade better for the rural sector.
Q18 Mr Touhig: In looking at this
big picture that you refer to in your responses, it seems that
you are missing a key area. This Report is about tackling rural
poverty in developing countries, and you seem to be coming back
with various answers that give a broader, very good, overall picture.
I just wonder whether you are missing the fundamental concern
here, which is what are we doing to improve the lot of the rural
poor.
Sir Suma Chakrabarti: In our view,
the fundamental issues that would help the rural poor are the
very ones that DFID is working on. One is trying to get the policy
framework right in countries. As I said in answer to the Chairman,
there has been an urban bias in the policies and resource allocations
of many developing countries, so the key issue for our country
offices is whether we can shift that bias to help the rural sector
much more—that is a fundamental issue of political economy
in many of those countries. Secondly, this is to do with working
on resource allocations. The Report gives three country examples
where our country teams are working hard to shift the way in which
policy makers think about the rural sector and to give them a
stronger voice, if you like, at the table. Thirdly, quite a lot
of this is about service delivery capacity in rural areas—as
in the UK and other developed countries, much service delivery
capacity is stronger in urban areas—so we have been trying
to increase capacity in rural areas in, for example, health and
education services.
Q19 Mr Touhig: I appreciate that
that is important, but putting food in somebody's belly is a bit
more urgent and necessary than help with health and education,
however right and worthy. However, the Report deals with tackling
rural poverty in developing countries, and I would like to develop
a point raised by the Chairman. You have carried out little analysis
of the effectiveness of your interventions, and I do not quite
see how you can justify that, which is why I think that the Report
is damning in that respect.
Sir Suma Chakrabarti: There is
actually quite a lot of evaluation material and survey work that
shows the impact of our work and other donors' work on rural areas.
| 
