Examination of Witnesses (Questions 80-99)
DEPARTMENT FOR
INTERNATIONAL DEVELOPMENT
3 MARCH 2008
Q80 Geraldine Smith: What about Tanzania?
Figure 23 indicates significant levels of corruption in Tanzania
and Uganda so how do you know that UK funds are not being used
to fund corruption?
Dr Shafik: In Tanzania the data
presented here is a little bit old and also obviously is from
one very narrow sector which is notoriously difficult. The construction
sector in most countries has elements of corruption which is very
problematic. More recently in Tanzania we have seen, for example,
an external audit to the Bank of Tanzania which showed that a
hundred million dollars had been misused and given to 22 companies
from the Central Bank. As a result of that the head of the Central
Bank in Tanzania was sacked. We are starting to see real concrete
examples of governments actively pursuing corruption and taking
action and holding people to account. That is an important complement
to the more systemic work that we are doing on public financial
management.
Q81 Geraldine Smith: If you are helping
a government, even if there are free and fair elections, you are
giving an unfair advantage to the incumbent if they are getting
all sorts of aid. Do you accept that?
Dr Shafik: That is an interesting
point. It becomes particularly sensitive around elections as you
would expect and so in countries, particularly around elections,
where we think governments are misusing public funds for electoral
purposes, we have done something about it. Uganda is a good example
where we felt that some of the actions taken by the Ugandan Government
were clearly trying to disadvantage the opposition in the run
up to the election and we cut £20 million off their aid programme
and spent £15 million on humanitarian needs in the north.
We have taken action where we think governments are behaving unfairly.
We did the same in Sierra Leone where, during the municipal elections,
we felt that the government was mishandling the municipal elections
and was biasing towards its own favour. We took action and blocked
budget support in the case of Sierra Leone.
Q82 Geraldine Smith: How do you draw
the line between straying into Foreign Office issues and Foreign
Office territory rather than just aid?
Dr Shafik: For those types of
issue we work hand in glove with the Foreign Office and consult
very closely with them on issues of political governance and human
rights.
Q83 Mr Davidson: Potentially there
is a bottomless pit into which we could give money. What do I
say to poor people in my constituency who are undoubtedly poorer
than wealthy people in poor countries about the reasons why we
are transferring money when clearly that country is not addressing
the inequalities in their own state?
Dr Shafik: One of the things we
do is to monitor very closely how much of the government's budget
is being spent in what we call pro-poor ways. We are not interested
in supporting governments that are using public funds to make
income distribution worse; we are only interested in supporting
governments that are willing to shift public resources in ways
that benefit poor people in that country. The numbers you see
in the Report for countries like Ethiopia and Rwanda show that
there has been a clear shift from 40% of money in Ethiopia going
to pro-poor spend.
Q84 Mr Davidson: So all the countries
for whom we are providing budget support you will be able to demonstrate
that there has been a pro-poor shift and a reduction in inequalities.
Dr Shafik: We consider it one
of the three key partnership commitments that are pre-conditions
for us doing budget support and they are a clear commitment to
poverty reduction. That can best be tested by the way public resources
are being spent.
Q85 Mr Davidson: Has that happened
in all those cases up to now?
Dr Shafik: Yes.
Q86 Mr Davidson: Can I just follow
up the question about your budget support because apart from the
point about being seen to condone inequality, is there not a difficulty
that you are bearing part of the burden and then allowing those
countries to spend the money on other things? Tanzania is spending
money on British radars and so on. You can see why people in my
constituency would see that as being a complete waste of time.
In Zambia the military expenditure has gone up, why should we
be paying for that?
Dr Shafik: If we did not do budget
support we would not have a seat at the table to kick up a fuss
about those issues.
Q87 Mr Davidson: How effective was
your seat at the table when the Tanzanians bought a British radar?
Dr Shafik: That has a long history.
Q88 Mr Davidson: I know that, but
having a seat at the table did not do you any good, did it? I
understand this argument about you having to be there to participate
in the negotiations, it is a bit like the EU where you just surrender
and it does not actually do you any good being there, does it?
Dr Shafik: We did our best in
that case; you cannot win every argument.
Q89 Mr Davidson: Surely, if we keep
asking you to hold these governments to account, there is a danger
that they end up accountable to you rather than to their own citizens.
How do you manage to overcome that?
Dr Shafik: In every country where
we are doing budget support we now have important elements of
support to build in domestic accountability. There is a risk,
as you say, and I think some of the governments we support feel
that. However, our main objective is for us to put ourselves out
of business and for these governments to be self-sustaining, which
is why we put a huge emphasis on supporting revenue collection
in many of these countries and getting them to build up their
own tax system so that they can generate their own revenues and
be held to account by their own people.
Q90 Mr Davidson: Whilst travelling
about bits of Africa I have met various civic organisations who
are very often just self-proclaimed leaders and represent nobody
but themselves. How do you overcome that? I remember when I was
in Mozambique with a delegation we met the leaders of 38 opposition
parties; I have never met so many presidents and general secretaries
and so on in my life. Some of them are clearly parties of two
men and a dog and the main demand they had was funding for opposition
parties so that they could have an office and they wanted office
equipment and they wanted a car so that they could go and visit
their people. The focus on building up civic society quite clearly
potentially falls into that trap of supporting the opposition
in exile or the wanabees.
Dr Shafik: Absolutely, and I think
our offices locally have to have very good political antennae
and judgments. I think one of the most powerful things that we
have found that is able to circumvent this problem is transparency.
One of the most powerful things we can do is get information into
the public domain, get budgets published and get local budgets
published. In Kenya, where we were not comfortable using government
systems, we made every school that we provided funding for textbooks
for to put its budget on its door so that every parent in the
local community could know how much money the school got from
the central government and how it was being spent. Transparency
is quite a powerful accountability tool that avoids some of the
problems you identified.
Mr Davidson: You made an interesting
point about the question of the political antennae and judgments
of your staff. I have been abroad and met Foreign Office staff;
they generally all tend to be public school toffs who went to
Oxbridge. Are your staff very different and can you prove it?
You have had all day to think about this.
Q91 Chairman: He wants to know if
you are a public school toff.
Dr Shafik: I do not think I really
look the part, do I?
Q92 Mr Davidson: It is an important point
because Britain's representatives abroad, in an area like this,
ought to be representative of the country they are there to project
and the Foreign Office staff is not. I do not trust their political
antennae much and I am just wondering whether or not, since you
placed an emphasis on the importance of your political antennae,
are they any different? Do you have information on the social
and educational backgrounds of your staff?[3]
Dr Shafik: I would say that DFID
staff is probably the most diverse of any department in Whitehall.
Q93 Mr Davidson: Diverse in what
way?
Dr Shafik: In terms of gender,
racial mix, number of disabled staff, sexual orientation.
Q94 Mr Davidson: What about class?
Dr Shafik: It is hard to collect
data on that.
Q95 Mr Davidson: Do you have a lower
toff count than some of the other departments?
Dr Shafik: I cannot say we have
scientific data based on a toff count.
Q96 Mr Davidson: Why not? If you
measure gender, sexual orientation, race, everything else, why
do you not measure something to do with social origin? Is it an
assumption that that is not important? For a department that is
meant to be dealing with the poor and those of modest backgrounds,
to be blind to these factors surely is a tremendous disadvantage.
Dr Shafik: I think defining the
category might be a little bit difficult.
Mr Bacon: Why would it be difficult?
If you go to the World Bank people spend their whole lives defining
socio-economic groups, they just happen to be on the basis of
economics rather than on the basis of skin colour or race. Why
is it difficult? It is not difficult at all. Economists do it
all day. That is a rubbish answer.
Mr Davidson: My toff friend has come
to my assistance.
Dr Shafik: It just shows you need
a mix, toffs, non-toffs; diversity is important.
Q97 Mr Davidson: I want to check
whether or not you have got that. If the armed forces can provide
me with figures for substantial numbers of their staff I do not
see why you cannot. Chairman, maybe we could have a paper on that
demonstrating that you do actually recruit from a wide range of
social backgrounds. Dr Shafik, following up the point that Geraldine
Smith made about elections and being supportive of the government
and so on, in Mozambique we had nothing but a litany of complaints
from Renamo that basically the government had got everything and
they got nothing. Considering their history I can understand that,
but it did mean that aid and budget support was seen to be a live
political issue. How do you cope with that without being seen
to be partisan?
Ms Turner: One example in relation
to Mozambique, as you know DFID does ten year development partnership
agreements in several countries and we have actually decided not
to do one. We were going to do one and we have decided not to
do one this year because we are getting close to the election
and we actually took the decision, particularly because of this
point, that to be seen to do a ten year commitment now with the
current ruling party might give the wrong political signals. I
think generally civil society in Mozambique understands that the
nature of the way we give aid is that we are giving aid to support
the people of Mozambique and we are not giving aid to support
one specific political party. I think generally if you were to
talk to Mozambique civil society that is what they would say;
we try to be savvy to these issues and we try to take those types
of decisions like the one I have just said.
Q98 Mr Davidson: A final point I
want to pick up is about the question of strengthening political
institutions. It does strike me that that is an area to which
you do not provide enough support. I think it was the Germans
who funded the seminars for Namibians, for example, but it was
pretty clear that some of these guys who were genuinely representative
of their communities were way out of their depth in terms of being
elected to positions. They did not have the education for it or
the training and they were being given virtually no support. They
were clearly there wanting to argue on behalf of their communities
and they did not know how to access the machinery. It seems to
me that the emphasis you place on non-governmental organisations
misses that opportunity to strengthen those who are already within
the system. Does budget support go with any sort of support to
people who are involved in politics as distinct from bureaucrats?
Dr Shafik: It is very difficult
for us to support political parties; we cannot support political
parties with our aid programme because of course the primary purpose
has to be poverty reduction. However, we can build the capacity
of public institutions, so we can build the capacity of local
government officials like we do in Ethiopia where we try, as you
said, to help them build the capacity to tap into central government
resources and local government officials. We can build the capacity
of PACs; we can build the capacity of parliament as an institution
but obviously we cannot earmark that to one party or another.
Q99 Mr Davidson: When I did the seminar
it was run by the upper house of the Namibian Parliament itself
and it was all these people who were in the equivalent of the
second chamber, across parties, and they did not seem to have
much support at all. Do you pay for people, say, from the NAO
to go across and help:
Dr Shafik: Definitely. We have
an existing agreement with the NAO to help support us build the
NAO equivalents in many countries in which we work and that is
a very important resource for us.
Chairman: Far be it from me to defend
the toffs in the Foreign Office, Mr Davidson, but my Clerk, who
is a former Foreign Office diplomat, reminds me that the aim of
the Foreign Office is not to represent Britain, but the best of
Britain.
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