Supplementary memorandum submitted by
the Department for International Development
Question 51 (Derek Wyatt): Under the UK-India
education research initiative, which the Prime Minister launched
in September 2005, are you working with science, horticulture
and agriculture departments of any universities in Bangalore or
Hyderabad to help rural groups there
The UK-India education research initiative (UKIERI)
aims to improve educational links between India and UK, and provide
an opportunity for high level dialogue between the two countries
on areas of mutual policy interest such as quality assurance and
international standards in education. HMG has pledged £12
million through contributions by the Department for Education
and Skills (DfES), the Foreign and Commonwealth Office (FCO) and
the British Council (BC) and the private sector has added £4
million. The Department of Science and Technology (DST), Government
of India has also pledged matching funding for science related
collaboration under the initiative.
DFID's cooperation with universities in India
is not directly under UKIERI, since UKIERI is not directly focused
on poverty reduction. DFID India and DFID's Central Research Department
complement UKIERI's work through strengthening primary education
for poor people and building the capacity of Indian research organisations
to deliver research results to meet the needs of poor farmers.
DFID has worked with the science, agricultural
and horticulture departments of Universities in both Bangalore
and Hyderabad. For example, funding has been provided to the Department
of Plant Pathology, University of Agricultural Sciences (Bangalore)
for research on tomato leaf curl virus disease, and to the Tamil
Nadu Agricultural University; University of Hyderabad for research
on mildew resistance of pearl millet hybrids.
Question 53 (Derek Wyatt): Has anyone from
the Department visited Nokia in Helsinki? Are you aware of what
it is doing with the rural poor in Africa and India
DFID recognises the high potential impact of
mobile technology for development. For example, our work on financial
inclusion involves supporting the development of mobile phone
banking and other new technologies. These have the potential to
reach poor people in developing countries who are beyond the reach
of branch networks and other providers of formal financial services.
DFID works in close collaboration with a wide
variety of private sector partners, as well as other donors, governments
and multi-laterals to encourage innovation and to ensure that
new technologies are harnessed to benefit the poor. Recent examples
include:
— DFID and Nokia are both members of
Vodafone's Socio-economic Impact of Mobiles (SIM) Panel, a programme
of research focusing on the impact of mobile phones in Africa.
The panel, which last met in Helsinki, aims to increase access
to information and communications technology and to bridge the
digital divide.
— Through the Financial Deepening Challenge
Fund, DFID provided a grant to Safaricom, a Vodafone subsidiary
in Kenya, to pilot M-Pesa, a mobile banking solution for unbanked
people to send and receive money through their phones. Already
there are 90,000 users in Kenya. Vodafone and Citigroup have now
announced international remittances service from the UK to Kenya.
— DFID has supported Opportunity International
Bank of Malawi in using fingerprint recognition technology to
deliver cash transfers to illiterate beneficiaries in remote regions.
Over 10,000 individuals are already benefiting from this service.
— DFID is a founding member of the
Consultative Group to Assist the Poor (CGAP)—a consortium
of 32 donors including the Gates Foundation and the Dell Foundation.
DFID is working with CGAP and the GSM Association in ten countries
to create a regulatory environment that encourages business models
that harness new technology to reach the poor.
— DFID supported a project with the
Department of Communication, University of Hyderabad to work on
information technologies to benefit communities and poor people
in developing countries including rural areas from 2003-05.
Question 59 (Derek Wyatt): Regarding GPS,
which is the key means of spotting lots of things now in rural
areas, have we research anywhere in Africa or India that is putting
together mapping, the Google mapping system and GPS systems to
find things out, right down to the smallest detail in the field
DFID staff have not had any discussion with
Google about the One Laptop Per Child initiative. DFID staff have
had a very preliminary exchange of ideas with Google on the wider
questions raised by Mr Wyatt about the potential use in development
of geographical data and Google products such as Google Maps and
Google Earth.
We agree the use of GPS and information technology
presents exciting opportunities to get research and knowledge
to rural communities. DFID research has focussed on both generating
new knowledge and the use of IT for its dissemination. For example,
we support, among other institutions, http://www.research4development.info/ResearchContacts.asp?OrgID=1520
the Department of Civil Engineering, Indian Institute of Technology,
and the GB Pant Institute of Himalayan Environment and Development;
Resources Development Division, Regional Research Laboratory to
develop an interactive web-based/standalone GIS on the Management
of upper water catchments, especially in dry forests in India.
We have also funded research on use of GPS and
satellite imagery. In Ghana we supported a project which developed
a new methodology for collection of natural resource and socio-economic
information. This combined the use of satellite image base maps
and GPS. The use of historic maps and recent satellite imagery
proved to be very useful in examining and quantifying the direction
and rate of recent (and rapid) urban growth from which village
characteristics and nature may be implied.
A new methodology for collection of natural
resource and socio-economic information was devised and tested.
The aerial digital photography (ADP) products, combined with the
use of satellite image base maps and GPS, proved to be very useful
for more detailed collection of natural resources (eg: extent
and type of crops, water courses). The ADP images produced at
large scale provided a stimulus and new perspective in discussions
with local dwellers. Most dwellers (literate or illiterate) were
able to interpret the imagery and draw information about their
local environment from it. The images were found to be useful
for demarcating land and village boundaries, and also for raising
issues and providing information on such issues as pollution of
water courses, and allocation of land for housing developments.
In East Africa we supported a programme investigating
the impact of brucellosis on public health and animal health.
GPS was used to select study villages and map households. This
enabled livestock densities and the prevalence of disease in these
areas to be mapped, and has helped in identifying where animal
husbandry practices need improving.
All of the details of DFID funded research are
available on a dedicated web portal—www.reseach4development.info.
This is directly linked to Google's search engine, and all information
is available to the Google mapping system.
Question 92 (Mr Ian Davidson): May I go back
to the example of grow bags, and the corruption that it embodies?
Presumably you gave support to the Malawi Government not imagining
that that would be the result. As I understand it, the Malawi
Government have been better recently, but clearly that was a failure.
What happens in circumstances where there has been a degree of
failure
This question refers to the Starter Pack Programme
and the Targeted Inputs Programme (TIP). Over the 1998-2005 period
DFID support to these two programmes amounted to £34.2 million.
The Government of Malawi contribution to these programmes more
than doubled the total amount spent on the programmes.
DFID support had a strong monitoring and evaluation
component. A readable summary of the evidence produced is available
in the book Starter Packs: A Strategy to Fight Hunger in Developing
Countries? edited by Sarah Levy and published in 2005.
The key finding is that the programme proved
cost-effective relative to other available alternatives, in particular
maize importation. However, the total impact varied depending
on the size of the programme. In 1999-2000, when almost three
million households (virtually all households in the country) received
the pack the additional maize production was estimated at 346,000
tons (16% higher than it would have been otherwise). When the
number of packs was reduced to 1.5 million and one million households
in 2000-01 and 2001-02 respectively, the impact of the programme
was dramatically reduced to an additional maize production of
just 54,000 and 34,000 tons.
DFID support was also used to pre-register and
distribute the packs to beneficiaries. This system helped mitigate
the risk of the packs being used as a political reward. However,
during the 2001-02 and 2002-03 seasons there were substantial
leakages from the system with 19-25% of packs distributed not
reaching the intended beneficiaries. This reflected the fact that
some beneficiaries chose to trade within their own villages the
vouchers that entitled them to the packs. A more serious problem
that emerged during 2002-03 was leakage in distribution—it
was found that 10% of packs never reached the intended villages.
As a result a penalty system was introduced, whereby distributors
were charged for every unaccounted for pack—the result was
that in the following year (2003-04) less than 0.5% of all packs
was unaccounted for.
Overall, the programme was deemed to have made
a positive contribution towards the country's food security. This
impact was disproportionately diminished when the programme was
scaled back to target half or less of the country's population.
Moreover, the attempt to target according to basic socio-economic
criteria failed. The conclusion from the DFID-funded evaluation
was that the rationale for a targeted programme was much weaker
than for one aiming to benefit all farming households.
The Government discontinued the TIP in 2005
to replace it with a seed and fertiliser subsidy. The subsidy
builds on the TIP evidence and systems, and has been successful
in contributing to two consecutive record harvests in 2006 and
2007.
Question 94 (Mr Ian Davidson): Perhaps you
could tell us whether or not you picked this up. I know that in
my area—I am sure that this is the same for my colleagues'
areas—people are supportive of aid to the third world, but
they often want to be reassured that it is not being wasted or
stolen
Systems to ensure that DFID's funds are used
as intended
As a manager of taxpayers' money, DFID has to be
able to provide assurance: (a) that we have paid money to the
intended recipient and (b) that funds have been used for the purposes
agreed. This is a key part of our broader responsibility for ensuring
that our spending represents Value for Money (VfM) and contributes
to delivery of the Millennium Development Goals (MDGs).
DFID has established a strong set of controls
to manage the risk of misuse of funds, and throughout the management
of our programmes, there is a strong emphasis on establishing
comprehensive arrangements to guard against fiduciary risks. The
rules of UK Government accounting are rigorously applied.
DFID's internal rules and processes are available
on the website: DFID Essential Guide to Rules and Tools. Responsibility
for implementing these rules has been delegated to DFID's spending
Divisions. Our corporate governance arrangements include individual
annual assurances on the risks and controls operating in the organisation
from each of our Directors. In implementing these rules, Divisions
are supported by DFID's Financial and Corporate Performance Division
(FCPD), who provide guidance on the design and implementation
of effective programmes, and a specialist procurement function
to manage international competitions for goods and services.
To ensure adequate evidence of the proper use
of funds, these rules require that:
— Evidence that we have paid money
to the intended recipient is obtained.
— Evidence that funds have been used
for the purposes agreed is obtained through regular project monitoring.
— All DFID funding is formally audited.
Evidence of payment
Evidence that we have paid money to the intended
recipient is normally generated through the standard payments
system (eg for all financial aid, Crown Agents Bank (CAB) provides
us with a satisfactory degree of assurance that payments have
been transferred to the intended recipient; and for non-financial
aid our own accounting and banking systems provide this assurance).
Monitoring arrangements
A primary responsibility of DFID's country offices
is the regular monitoring of all projects and programmes. One
of the main reasons DFID has offices overseas is to enable us
to maintain regular contact with programme implementers, and to
review progress on the ground.
DFID's Country Assistance Programme documents
must set out the overall objectives of our country programme,
and how results will be tracked and measured. Wherever possible,
we link our results framework to the country's own poverty reduction
strategy.
We also monitor each individual spending commitment.
All DFID's project and programme documents must set out how regular
monitoring will be conducted. All commitments with a value of
more than £1 million must include a Logical Framework setting
out the quantitative indicators against which progress will be
measured, and the means by which the relevant data will be obtained.
DFID offices are required to review projects and programmes regularly;
and to score progress on each programme annually on a scale of
one to five to provide a readily accessible overview of progress
to DFID management. A full Project Completion Report is required
at the end of the project.
Where we are providing aid as Poverty Reduction
Budget Support, programme monitoring includes tracking progress
against specific benchmarks agreed for the programme, as well
as monitoring of overall budget spending (see answer to Q 143
for an example of this in the case of Mozambique). Wherever possible,
the agreement of benchmarks and monitoring of performance is carried
out jointly with other donors.
Audit Arrangements
For financial aid other than Poverty Reduction
Budget Support, where there is a detailed specification of what
funds are to be used for, and where money is being reimbursed
to the partner government for local expenditure, DFID require
either: Annual Audited Statements (AAS) from the Auditor General
which confirm that the partner Government has used DFID finances
as intended; or an alternative audit discharge through independent
continuous audit or other external audit.
For financial aid expenditure and where DFID
itself buys goods and services, DFID requires invoices and supporting
vouchers and documentation associated with the payment to confirm
what the money has been spent on.
For programme and project grants to international
organisations DFID relies on the organisation's own audited accounts,
or special audited statements. Requirements are set in standard
(MOU) texts.
For Accountable Grants to Civil Society Organisations
(CSOs)/Non Government Organisations (NGOs) others, DFID requires
Annual Audited Accounts which show funds received from DFID, or
a separate audited statement specific to the DFID grant. Requirements
are set out in a standard Accountable Grant letter.
For financial aid in the form of Poverty Reduction
Budget Support (PRBS), the basic accounting discharge is provided
by Crown Agents Bank, which confirms that funds have reached,
for example, the Consolidated Fund of the partner country concerned.
For appraising and implementing budget support proposals, DFID
has formulated a Fiduciary Risk Policy, which has been scrutinised
by NAO. This requires DFID to undertake a Fiduciary Risk Assessment
(FRA) as part of our appraisal, and to ensure that arrangements
are in place to strengthen weaknesses identified through the appraisal.
Where possible DFID draws assurances about the use of funds from
partner Governments' Reporting and accounting systems, and the
Reports of the partner Government Auditor General. Where necessary,
this is backed up by seeking additional information or safeguards.
In most cases, assessment and monitoring are part of a common
Reporting and audit framework for all funders, and there will
often be an agreed financial management reform programme to support
and strengthen these local systems.
Assurance on the strength of DFID systems
DFID's Internal Audit Department (IAD) provides
an independent and objective opinion on the adequacy of systems
of risk management, control and governance, by measuring and evaluating
their effectiveness in achieving DFID's objectives.
DFID's work is also subject to regular review
by the National Audit Office (NAO). In addition to conducting
a programme of reviews and visits to support their audit of DFID's
annual accounts, the NAO conduct periodic value for money studies
on aspects of DFID's work.
DFID's Audit Committee provides assurance to
the Accounting Officer, by monitoring and reviewing the risk,
control and governance systems in the organisation, and the associated
assurance processes. The Committee provides oversight and guidance,
where necessary, on the work of FCPD. It also reviews the work
programme of IAD. Until March 2007, the Committee included three
independent members recruited from outside DFID and two DFID Directors.
Two additional external members are currently being recruited
to replace the internal Directors, so that the Committee will
be entirely made up of external members.
Response to Allegations of Fraud
The nature of DFID's programmes and activities,
and especially of the difficult environments in which we work,
means that fraud and corruption have both been identified within
DFID's risk registers as significant risks to the UK aid budget.
In response, DFID has established a clear counter-fraud
strategy and supporting procedures. DFID's policy states that
the Department is committed to ensuring that the UK international
development budget will be used only for the purposes intended.
Fraud and corruption against DFID funds will not be tolerated,
and appropriate disciplinary and/or criminal action will be taken
against anyone found to have engaged in such activities including,
wherever possible, action to recover any funds that have been
lost.
To help manage the fraud risk within DFID's
programmes and other activities, the Department has established
a specialist counter-fraud section—the Fraud Response Unit
(FRU), with skills and expertise including accounting, procurement
and fraud investigation. The FRU resides within the Internal Audit
Department, and Reports via the Head of Internal Audit to DFID's
Audit Committee and Management Board.
The FRU's mandate includes proactively assisting
DFID management with strengthening safeguards to ensure that the
UK aid budget is spent as intended, as well as leading reactive
investigations into allegations of fraud and corruption when these
arise. The Unit's cases have ranged from procurement frauds, through
thefts of cash and assets, double-billing by grant recipients
and tax irregularities, to diversion of salary payments. The FRU
liaises with other donors and counter-fraud agencies to share
intelligence, and works together with other agencies on fraud
cases where this is appropriate. It also supports DFID's partners
to help them address the weaknesses which enable fraud and corruption
to take place, and there are a number of other DFID teams which
are engaged in similar capacity-building activities within the
aid effectiveness agenda.
Assessing the Impact of DFID spending
DFID's Evaluation programme is managed by Evaluation
Department (EvD). EvD evaluations have two purposes—lesson
learning and accountability. Lesson learning studies seek to learn
from experience through discovering whether particular development
interventions have worked or not, and through understanding why
they have been relatively successful or unsuccessful in particular
contexts. Accountability studies set out to account for the use
of resources to ourselves, parliament, taxpayers and our partners.
In reality, there are elements of lesson learning and accountability
in all of our studies.
Evaluation normally takes place when the project
or programme has finished and involves a combination of methodologies
and in-depth analysis. Whilst evaluations make use of and inform
internal performance assessments, they are distinct from these
activities in that they usually involve external, independent
views and lead to an independent Report.
The Reports of evaluations undertaken on DFID
programmes around the world and in specific sectors are published
on the DFID website: DFID Evaluation Study Reports.
Hilary Benn announced on 9 May new arrangements
to strengthen the independence of DFID's evaluation work. A new
Independent Advisory Committee on Development Impact will be established
to determine which programmes and areas of UK development assistance
will be evaluated and when; to determine whether relevant standards
are being applied; and comment on the overall quality of the programme
of evaluation work carried out against these. The Committee will
be made up of six members appointed under Nolan procedures. Members
of the Committee will chair the steering groups responsible for
major DFID evaluations. The Chair of the IACDI will write an open
letter to the Secretary of State every year, providing an overview
on lessons learned and giving advice on how evaluation efforts
can be improved.
Question 105-108 (Mr Sadiq Khan): Trends
in rural spending by DFID
Unfortunately, we do not hold data in the form
requested by Mr Khan, and it would be very difficult for us to
calculate this accurately.
There are a number of reasons why the data is
not directly available:
— DFID's statistical systems record
expenditure against sectors and countries. This means that it
is possible to identify precisely how much has been spent on health
or HIV/AIDS and the countries where that expenditure was made,
but not to identify spending on a particular section of the community.
— Developing country and donor plans
and expenditures are not disaggregated by rural and non-rural
categories. It would be expensive for DFID to maintain expenditure
classifications which are not available from developing countries
and other donors.
— Statistics are maintained by sector
codes and the Millennium Development Goals (MDGs). None of the
MDGs (except for water) separates out rural and non-rural.
— There is no standard international
definition of "rural". Different countries use different
definitions to suit their own purpose.
— Rural poverty is a cross-cutting
issue and hence is an implicit a factor in all of DFID's targets
and fund allocations.
The NAO Report included an overall estimate
of DFID's spending in rural areas. This was done through estimating
the rural components of a sample of DFID's bilateral projects.
DFID's field staff undertook the estimates which covered work
from the late 1980s to the present.
To estimate how far the proportion of rural
spending has changed over time would require us to conduct further
special surveys to assess the rural and non-rural percentage of
all the projects in our portfolio in each year. The exercise would
be more extensive and expensive (in staff time) than the survey
undertaken for the NAO Report. It is impossible to undertake this
in time for 20 June deadline. In addition, even by using considerable
resources, the survey can at best provide only an indication of
spending and trends since we do not have a detailed methodology
for assessing retrospectively the proportion of each project which
was considered rural. Disaggregating the NAO survey data between
those projects started before 2000 and those started after 2000
showed no significant difference in the percentage of spending
classified as rural (66% of total commitment value for projects
before 2000, 68% for projects after 2000), but it is not possible
to say whether the sample is representative of the overall shape
of our portfolio for the two periods. Therefore, it would not
seem to be good value to conduct an expensive survey if the final
data adds little to the information published annually in Statistics
in Development.
What we do of course know is that the proportion
of our spending going to the poorest countries has risen substantially
since 1997, that many of these countries have a high percentage
of rural poor, and that our partners' strategies as well as our
spending is increasingly focused on achieving the MDGs, including
through increasing access to basic services for previously underserved
areas. This suggests that the proportion of DFID spending reaching
the poorest groups will have significantly increased.
Question 114-116 (Mr Sadiq Khan): Your consideration
of the sustainability was said to be limited
The NAO Report (paragraph 2.7) says that "Issues
regarding sustainability were considered in more detail at the
design than evaluation stage."
The Report is correct that sustainability is
a key consideration for DFID in design and appraisal of new commitments.
Our guidance to staff planning new investments is set out in our
Essential Guide to Rules and Tools—the Blue Book. This is
available on our website: www.dfid.gov.uk/pubs/files/blue-book.pdf.
The guide includes social, economic and institutional analyses
which consider the stakeholders' and partner's ability to maintain
the impact of the project after funding ends. The system is rigorous
in ensuring quality and consultation in project design and implementation.
Assessing the sustainability of benefits is
implicit in our monitoring of programmes. Most of DFID's projects
are very successful. Figure 3 in Report shows NAO recognised over
94% of projects performed satisfactorily (scores of one to three)
and over 70% were good or better (scores of one to two). Given
the capacity constraints in the countries where DFID is working,
this is a very high level of success.
DFID's Evaluation Department undertakes independent
evaluations, including of Country Programmes, using the usual
DAC evaluation criteria. These include impact and sustainability
of programmes. The Reports of evaluations undertaken on DFID programmes
around the world and in specific sectors are published on the
DFID website: DFID Evaluation Study Reports.
The Report highlights the issues arising for
DFID in cases where successful project activities are not self-sustaining
without continued donor funding. In some cases, it may be right
to extend donor funding, particularly if there is a prospect that
the activities may become self-sustaining. But in others, it will
be right for DFID to take the tough decision to withdraw funding
because resources can be better used elsewhere. It is important
to distinguish between the sustainability of programme activities
and the sustainability of programme benefits. The fact that programme
activities have to stop at some point does not necessarily mean
that the benefits which have been delivered during the period
of DFID funding are unsustainable.
Question 140 (Mr Richard) Bacon: If you could
send us a summary and perhaps an internet link as a note, that
would be great. (Reference to Q79, Tony Killick Report on Mozambique)
Extract from the Summary of the Report on the
Programme Aid Partners "Perfect Partners?" of May 2005
Maputo, Mozambique:
The Report provides an assessment of the performance
of the Programme Aid Partners (PAPs) during 2004 and Reports on
Mozambican perceptions of donors' activities.
Principal points from the assessment of PAP
performance include:
— The question[13]naire-based
survey and the PAPs' PAF reveal that, overall, the situation is
good and improving, with Mozambique's donors in advance of their
counterparts in most other countries.
— More donors now provide at least
two-thirds of their aid as programme aid and more aid is coming
on-budget. Overall, PAPs are well aligned with GoM processes.
Predictability of disbursements has been improved, and a high
proportion of disbursements occurs in the early months of the
fiscal year. There seems little tendency for donors to seek to
enforce conditionality over and above that in the MoU.
— A system of scoring of individual
donor performances is introduced. This shows only one PAP classified
as a "strong" performer, but none was "weak".
The rest were in an intermediate group but with four donors at
the bottom end of that category.
— Among the principal remaining weaknesses,
Reporting to DCI is still patchy, as is delegation of authority
from head offices. Progress in harmonising bilateral agreements
with the terms of the MoU is slow; there has been limited progress
in reducing administrative burdens on the GoM, with modest increases
in joint missions and an increase in the total number of missions.
The indicators and target values chosen for the PAPPAF have been
unambitious and should be made more demanding.
As regards Mozambican perceptions, (the study
team) found clear and strong support for increasing the share
of DBS in total aid. However, there was awareness of some risks
in this and the desirability, therefore, of a gradual transition.
The predictability of DBS was seen as having improved but less
so than our PAP evidence indicated. Much the same was true with
respect to harmonisation and alignment. The MoU's PAF for the
government was regarded as capturing GoM priorities reasonably
well but as still too elaborate and unfocussed. The MoU was seen
as having reduced transactions costs but the overall burden was
still viewed as excessive, relative to departmental capacities.
Partly as a result of donor encouragement, interactions between
the GoM and CSOs has been improving but the capacities of the
latter remain weak and donors should be more active in this area.
We caution against assuming the existence of a consensus from
the apparent absence of controversy about the policies associated
with the MoU and PAPs.
Full Report can be accessed: http://www.pap.org.mz/downloads/pappa_Report.pdf
A further and recent Report can be accessed
at:
http://www.pap.org.mz/others_Reports.htm
Programme Aid Partners Performance Review 2006
Question 143 (Mr Richard Bacon): Perhaps
you could send us those minutes and also, if there are very specific
concerns, it is not uncommon to write a letter saying so. Any
evidence that you could send to the Committee would be helpful
The explanation below sets out how DFID presents
its concerns to the Government of Mozambique and how those representations
have been acted upon. The internal documents referred to can be
provided to the Committee if required.
The primary policy dialogue between the Government
and donors in Mozambique takes place through the structure of
a Group of 19 donors, known as the G19 or Programme Aid Partners
(PAPs). The G19 are in regular dialogue with the Government of
Mozambique through 29 working groups in areas such as education,
health, decentralisation, budget execution and public financial
management. Policy dialogue continues throughout the year, and
twice a year at the "Mid Year Review" and "Joint
Review" there are assessments of the Government's performance.
During these reviews key policy concerns and issues are formally
relayed and discussed with Government.
DFID is represented in the key working groups,
either directly or through bilateral partnerships with other like
minded donors, for example the Irish currently represent DFID
in the Agriculture working group and in return DFID represents
the Irish in the Roads Working Group. During 2006 and 2007 DFID
led the Human Capital pillar for the Joint Reviews which means
that DFID had a lead role in the dialogue and messages to Government
on health, education and water.
Working group papers reflect not only the concerns
raised by the donor community with regards to rural poverty but
also include key recommendations for action. The Reports show
how DFID Mozambique, through its participation in working groups,
has addressed the issues raised in the NAO Report namely: poor
resource allocation; politicisation of regions; public financial
management; regional variations in service delivery. Copies of
all working group papers in addition to papers on both the annual
mid year and joint reviews are available from the PAPs' website:
http://www.pap.org.mz/working_groups_Reports.htm.
These working group papers not only represent
a formal minute of the concerns raised by the donor group but
form an integral part of both the Mid-year and Joint Review and
reflect the basis of dialogue between donors and the Government.
Comments are not specifically attributed to any individual donor
given the importance of presenting consistent messages to Government.
However, as the largest budget support donor, DFID plays a key
role in contributing both to the assessment of Government performance
and the final policy recommendations.
Below is a summary of some of the key points
raised by the Donor Community, including DFID, in the Working
Groups.
Working Group on Budget Execution
— In 2005, Donors called on the Government
to start discussions "on new, improved indicators for spending
priorities (including spending in provinces/districts" http://www.pap.org.mz/downloads/wg_Reports_jr05/bag_jr05_en.doc
— In 2006, the Donor group went further
and called for further decentralisation and deconcentration of
spending, resource allocation and public administration to province/district
level.
http://www.pap.org.mz/downloads/working_groups_Reports_jr06/pillars/pillar1_growth_and_macro/budget_execution_en.doc
Working Group on Decentralisation
— In 2006, Donors called for greater
prioritisation of institutional and human capacity development
at the provincial, district and municipal level; support to districts
and municipalities in the areas of planning, budgeting and implementation
of their plans and improvement of the participation and accountability
mechanisms.
http://www.pap.org.mz/downloads/working_groups_Reports_jr06/pillars/pillar2_governance/decentralization—en.doc
Working Group on Education
— In 2006, the Working Group considered
lesson learning resulting from joint visits to the provinces and
called for more strategic action to tackle inequalities at district
level: "The PARPA commitment to reduce regional, gender and
poverty disparities should be transformed into methodologies to
prepare budgets that enhance equity and encourage expenditures
geared to the fight against poverty. Likewise, the actions of
the Ministry of Education and Culture should focus in particular
on the districts with higher disparities (recommendation from
the 2005 Report and from the PARPA);"
http://www.pap.org.mz/downloads/working_groups_Reports_jr06/pillars/pillar4_human_capital/education.doc
Evidence of Behavioural Change
The focus on rural poverty is not only raised
by DFID through the formal working groups, but through negotiations
with the Government of Mozambique on specific programmes. As the
negotiations underpinning these strategic agreements are lengthy
actual minutes do not exist of each meeting but the conclusions
are reflected in the DFID Programme Documentation which accompanies
each submission for funding.
Education
The MoU on the Second Education Sector Strategic
Plan (ESSPII) signed between the GoM and the Cooperation Partners,
including DFID, in May 2006, clearly highlighted decentralisation
as one of its key goals:
1.3 "Improving the management of education
through the strengthening of institutional and human capacity,
systemic restructuring and reform—including decentralisation,
and improved procedures for financial management and procurement,
as well as human resource management and development, is considered
key to a successful implementation of the proposed reform agenda
that the ESSP II represents".
The Education Performance Indicator Framework
which accompanies the signed MoU provides a number of clear indicators
and actions which will measure progress in tackling regional disparities
in the education sector. (Component 1: Universal Completion by
2015; Component 2: Literacy; Component 12: Institutional Development-Guarantee
an efficient decentralisation of the education system management
to the districts and the schools with respect to planning, implementation
and accountability at all levels).
Similarly the Programme Document accompanying
DFID's ten year commitment to Education Sector (Oct 2006) recognises
the need for "targeted regional programmes that ensure resources
are disproportionally channelled to the districts with the worst
indicators" and that "Greater pro-poor prioritisation
and allocation of resources, both through systemic and targeted
programmes, will be necessary to address both gender and geographical
disparities." (Education Sector Support 2007-2016 DFID Programme
Document, p.11)
The Programme Document makes clear that responses
to these weaknesses had already been considered and a number of
solutions were proposed including:
— "DFID will also support and
promote greater use of targeted allocative funding formulas by
Ministry of Education and Culture as part of the overall annual
strategic planning and budgeting process. In addition, current
wider discourse on targeted social protection mechanisms, in particular
types of cash transfers for marginalised groups, may provide a
basis for developing strategies to improve education opportunities
for the poor in Mozambique. This is an area where DFID may provide
policy advice in cooperation with other Cooperation Partners (especially
the World Bank, Netherlands and UNICEF)."
The commitment to supporting targeted allocative
funding to districts and marginalised groups is not simply an
empty promise. DFID, the Dutch and UNICEF have been rigorous in
challenging the Ministry of Education and Culture on regional
service delivery disparities. The donor group used the first annual
evaluation to call on the Government to allocate additional funding
to districts and provinces in 2007 and 2008. Furthermore, the
Donor Group, represented by UNICEF, used their speech at the annual
review meeting to highlight their concerns at the disparity in
the education indicators between sectors and provinces. The Donor
Group called for the implementation of clear recommendations to
address these disparities and to ensure that these were well communicated
to ensure widespread public and political support.
Net Impact of Donor (including DFID) influence
The Ministry of Education and Culture planning
department recently developed a formula to ensure that the 10,000
or so new teachers that have been agreed in the budget will be
allocated to provinces against a formula, so that those with the
worst pupil teacher ratios (such as Zambezia) get preferential
HR allocations. (Ministry of Education: New Admission Criteria
2007)
Roads
DFID Mozambique is planning to contribute £19.54
million programme of support to the Mozambique road sector PRISE
programme over ten years, 2007-17. (Funding not yet formally approved)
DFID has been played a leading role in the design of the three
year Roads investment programme, placing great emphasis on the
need to address resource allocation to unclassified roads.
Net Impact of Donor (including DFID) Influence
Road Investment plans are very well distributed
nationally with 54% of unpaved road maintenance funds and 63%
of paved road maintenance funds being spent in the north of the
country. Overall the urban sector has been allocated just 1.7%
of the total funding.
Although the programme uses a classification
system that is strongly poverty weighted to select roads, DFID
will continue to emphasise the importance of improving interventions
at this level in the medium-term through its involvement in the
Working Groups.
Question 158 (Mr Richard Bacon): Is it possible
for you to send us a note that tells us the story of microfinance
in the past few years, how it has grown, how much money you have
put in, what its effects are, and where you see it going
Two billion people worldwide lack access to
basic financial services—many of them live in rural areas.
Microfinance has shown its potential to reduce poverty and now
serves nearly 100 million poor people. For DFID, support to microfinance
is part of a broader strategy to promote stronger and more inclusive
financial sectors that benefit the poor.
The majority of the world's poor live in rural
areas. Most lack access to any financial services and where they
exist they can be expensive, inflexible and unreliable. Expanding
access to financial services can help to reduce poverty and vulnerability
to shocks.
The UK's 2006 White Paper on International Development
commits to tackling barriers to access to markets and financial
services, and supporting microfinance initiatives in partnership
with banks and regulators.
DFID is currently supporting 79 microfinance
and financial sector programmes in 28 countries. DFID works in
close collaboration with other donor governments and multilateral
institutions, such as the World Bank, who are also providing financial
and technical support for many of these programmes. For example,
in Bangladesh, DFID has committed £40 million over seven
years to PROSPER, a Financial Sector programme which includes
capacity building for microfinance institutions, which seeks to
leverage a further £33 million from other donors and national
partners.
A recent, brief review of the largest programmes
shows that by the end of 2006 more than 20 million people had
benefited from microfinance initiatives that received support
from DFID in the last five years.
In total, DFID has spent over £165 million
to support microfinance and financial sector projects and had
committed £140 million more at 31 October 2006.
DFID has funded a number of country-level initiatives
to strengthen rural financial markets for the poor:
— In India, DFID support enables partners
to offer micro-finance, including micro-insurance and pensions
to farmers using internet portals to lower costs and expand access.
DFID direct support is now reaching over seven million people
in India and is expanding quickly:
— In South Africa, DFID set up the
FINMARK Trust, which seeks to "Make Financial Markets Work
for the Poor". Since 2004 over two million people have opened
"Mzansi" basic bank accounts, 60% of whom had never
had a bank account before.
DFID has also been successful in leveraging
financing from the private sector to support international initiatives:
— DFID provided a first-loss facility
of £820,000 via the Financial Deepening Challenge Fund that
generated a total fund of £40 million from 13 institutional
investors for the Global Commercial Microfinance Consortium. 10
of this facility's institutional investors had not invested in
microfinance before. The Consortium has approved funding for 30
microfinance institutions in 26 countries with 1.4 million clients.
— The Africa Enterprise Challenge Fund
is a multi-donor fund, due to be launched in June this year with
an expected capital of around £25 million, of which DFID
will contribute around £10 million for the first three years.
The fund will leverage private sector resources and expertise
to support projects with a focus on agriculture and financial
services to improve the lives of poor people in rural areas.
13 DFID is categorised as the only strong performer.
See page 56 of the Report. Back
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