Supplementary written evidence submitted
by the Department for International Development
INTRODUCTION
1. This memorandum supplements the written
evidence provided for the Financing For Development Hearing on
21 January and the oral evidence given then by the Secretary
of State for International Development, Douglas Alexander, and
senior DFID officials. The memorandum focuses on:
(i) DFID's analysis of the impact of the economic
downturn on developing countries and what we are doing to mitigate
this through bilateral and multilateral programmes;
(ii) Our assessment of the impact on global development
asssistance and our work with other donors to ensure current commitments
are met;
(iii) The impact on public support for development
expenditure and DFID's strategy for strengthening public support
for its work.
IMPACT ON
DEVELOPING COUNTRIES
AND DFID'S
RESPONSE
Analysis of the Situation
2. While developed countries have been most
immediately affected by the economic crisis, developing countries
are vulnerable to the impact of declining global growth and trade
opportunities, with negative impacts in many cases coming on top
of the effects of the volatility of food and oil prices and of
climate change. The impact will be most severe on the poorest
people and in the poorest countries. DFID has estimated, based
on World Bank figures, that an additional 140 million people
have been pushed into extreme poverty over the last year by these
combined crises. The latest IMF projections are for slower growth
in Africa (3.5% in 2009 compared with 5.2% in 2008). Domestic
revenues from taxation and private resource flows are also affected,
so that developing country governments will have less money available
to invest and support those most in need.
3. We have assessed country vulnerability
using a vulnerability matrix, country office reports, and World
Bank and IMF assessments. The indicators in the vulnerability
matrix are grouped around foreign currency reserves expressed
in months of imports, the extent of reversible external capital
flows, the state of the economy in terms of macroeconomic fundamentals,
openness to trade, and commodity dependency, and assessments of
fiscal balance and food vulnerability. The countries include the
22 PSA countries, plus China and South Africa—in particular,
because of their importance to Africa as a whole—and Guyana,
Indonesia, Jamaica and the Kyrgyz Republic to make the matrix
geographically more representative in terms of DFID's activities.
Indicators are cross referenced with World Bank and IMF assessments,
and are being supplemented with information from country offices
on a regular basis. Together they inform our understanding of
the crisis as its effects are experienced in the countries we
work in.
4. In addition DFID has commissioned quick
response research to understand the crisis better. DFID and the
Dutch Ministry of Foreign Affairs are supporting a team of six
Overseas Development Institute (ODI) researchers and research
collaborators in ten poor countries (in Asia: Indonesia, Cambodia
and Bangladesh, in South America: Bolivia and in Africa: Benin,
Ghana, Kenya, Nigeria, Uganda and Zambia) to examine the effects
of the global financial crisis. The main research questions include:
— What are the elements of the shock at
national level;
— What are the effects on growth, investment,
poverty and inequality and debt; and
— What are the possible policy implications?
The team will also produce thematic papers on private
financial flows, remittances, and trade.
5. The research will be completed by the
by the end of March and will provide important country specific
understanding to DFID. In addition DFID has commissioned research
on developing country interests in financial regulation, trade
effects, trade credit in Africa, China's response to the crisis
and attitudes to the crisis in the developing world.
DFID's Response at Country Level
6. Based on these findings, DFID is working
to mitigate the risks around the potential impact of the financial
crisis for developing countries through its country programmes
by reviewing the current country programme composition. In those
countries which were already vulnerable before the crisis or where
impacts are already being felt, the challenge is to consider where
there is currently scope in the bilateral programmes to support
adjustment. In those countries where the impact has not yet been
felt, there is an opportunity to produce contingency plans based
on analysis of potential impacts on either the aid budget or the
real economy. Re- allocated resources for country programmes in
2009-10—2010-11 have already been provided as follows:
— Ethiopia—£15 million
for social protection
— Additional funds for social protection
in Bangladesh and Mozambique
— Scale-up of emergency aid in Kenya and
Ethiopia
— Bangladesh—£2 million
brought forward for education to address shortfall created by
donor currency depreciation
— Pakistan—adjustment to Financial
Inclusion Programme through partial credit guarantee, and work
on social protection programmes.
7. DFID will also make additional investments
in infrastructure to help sustain growth prospects, including
£67 million to reduce bottlenecks and increase trade
flows along the North-South Corridor in Southern Africa, and £20 million
for other new regional infrastructure projects. DFID is also increasing
investment in basic services, in line with commitments previously
made for education, water & sanitation and health. Examples
include £26.5 million for education and health services
in Kenya and £17 million for similar purposes in Ethiopia.
8. Reallocation between programmes will
occur where agreed with partner governments, although the optimal
degree of re-allocation is not likely to be very large since existing
allocations are already poverty focused.
Multilateral Programmes
9. The Multilateral Development Banks (MDBs)
have a key role to play in responding to the crisis. They plan
to increase their financial support in 2009 compared to 2008.
For example, the International Bank for Reconstruction and Development
(IBRD) stands ready to almost triple lending both in 2009 and
over a three year period (to $35 billion and $100 billion
respectively, compared to $13 billion in 2008). The World
Bank Board has approved the creation of a Fast Track Facility
to frontload at least $2 billion of the $42 billion
available to the poorest countries following the fifteenth replenishment
of the International Development Association (IDA 15). The World
Bank's private sector arm, the International Finance Corporation,
has launched four Trust Funds on infrastructure, bank recapitalization,
trade finance and microfinance. We are pushing the MDBs to do
more on issues such as social protection and trade finance.
10. Innovative financing is more important
than ever in the context of pressures on traditional donor budgets
due to the financial crisis. It can play a key role in both increasing
the amount of resources available (through leveraging in from
new sources or frontloading) and improving the effectiveness of
how resources are used. We are working to ensure that we fully
utilise the potential of innovative mechanisms and have led the
way on innovative finance mechanisms such as the International
Finance Facility for Immunisation (IFFIm) and the Advance Market
Commitment (AMC) pilot for pneumoccocal vaccine.
IMPACT ON
GLOBAL DEVELOPMENT
ASSISTANCE AND
DFID'S ADVOCACY
STRATEGY
11. Commitments made by donors, notably
at the Gleneagles G8 summit in 2005, were estimated to mean
that ODA would rise from $80 billion in 2004 to $130 billion
by 2010 in order to achieve the Millennium Development Goals.
At Toyako the G8 recognised that further increases will be
needed beyond 2010.
12. Although total ODA fell in 2006 and
2007, this was mainly due to the completion of exceptionally large
debt relief programmes agreed in 2005 for Iraq and Nigeria.
Writing off debt was one of the key Gleneagles commitments. Excluding
debt relief, global aid volumes increased by 2% in 2007, and global
aid flows are increasingly poverty-focussed. Total net ODA to
the Least Developed Countries (LDCs) has nearly doubled in real
terms over the last 10 years. But we are concerned by the
report from the OECD DAC last year, which said that over $30 billion
still need to be programmed into donors' aid budgets if their
aid commitments for 2010 are to be realised. We believe the
$30 billion number is too large, but we agree the pace of
scaling up has been too slow and rapid increases are now needed
to meet the targets agreed in 2005.
13. The Government has set a strong example
with our plans for increasing our ODA volumes. At the Comprehensive
Spending Review in October 2007, we announced increases which
put us on track to meet the EU collective target to provide 0.56%
of GNI as ODA, and our commitment to provide 0.7% by 2013.
14. We will meet our share of the Gleneagles
commitment to double aid to Africa between 2004 and 2010.
DFID expects to provide over £3 billion to Africa by
2010/11 compared to £1.3 billion in 2004. Spending
by other government departments will ensure the total UK figure
for ODA to Africa is higher still. Since 2000 the UK has
almost tripled its ODA to the least developed countries and we
have already met the UN target to provide 0.15% of our GNI to
the least developed countries.
15. We will also deliver our commitments
at the Accra High-Level Forum on aid effectiveness, to ensure
that our aid has the greatest impact. This is even more important
at a time when budgets are under pressure.
16. The financial crisis and the global
economic downturn increase the urgency of donors meeting their
commitments. It was therefore important that at the Doha Conference
on Financing For Development last year the international community
recognised these emerging challenges and reaffirmed existing ODA
commitments. As part of the follow-up to Doha, the UN will hold
a high-level conference in June on the impact of the financial
crisis in developing countries.
17. Most of the additional aid from 2005 to
2010 will come from the EU which remains committed to achieving
a 0.7% ODA/GNI ratio by 2015 and an average ODA/GNI ratio
of 0.56% by 2010. The EU's Agenda for Action as agreed at the
Council in June 2008, and the EU position for Doha agreed in November,
were important political commitments on increasing ODA and getting
the MDGs back on track.
18. We support the EU decision that Member
States should set out rolling multi-annual indicative timetables
showing how they will reach the agreed ODA/GNI targets. The Government
has set out a timetable to 2010-11. We will announce plans for
2011-13 following the next spending review.
19. The European Commission will publish
in May its annual report on the plans that EU Member States have
made to increase or maintain their ODA commitments in line with
the EU Agenda for Action. This has specific targets for each Member
State. The Commission's report will be discussed at the EU Development
Ministers meeting in May. The OECD will also publish in May a
report on estimated aid flows to each recipient country for 2009-11.
Both of these important reports provide opportunities to compare
commitments with delivery plans.
20. The Government has emphasised the importance
of meeting its ODA commitments in many meetings with other donors
during 2008, especially the Doha conference. The Government intends
to continue to play a leading role in maintaining pressure for
ODA promises to be kept.
PUBLIC SUPPORT
FOR DEVELOPMENT
Analysis of the Situation
21. We are concerned about the adverse effect
of the financial downturn on public support for development. DFID's
most recent annual survey, "Public Attitudes Towards Development"
(Aug 2008), showed:
— the percentage of people who strongly
support increased spending on MDGs has fallen from 24% to 16%
with background support for increased spending remaining constant;
— the percentage of respondents making
charitable donations has dropped slightly from 74% to 72% of those
surveyed and the average number of charities donated to has dropped
from 2.5 to 1.8.
22. Recent anecdotal evidence is that support
for development has further declined in recent months but we lack
evidence of this. We are therefore in the process of undertaking
an interim survey to ascertain how public attitudes have changed
since August 2008. Fieldwork will be undertaken during February
and results will be available in March.
DFID's response
23. There is much to be done in order to
meet head-on the challenge of making a case for development during
a downturn. DFID's communication with the UK public aims to demonstrate
the rationale and benefits of the work that DFID funds in the
developing world, why it is important that this work continues
in the current climate and its relevance to the UK public.
24. DFID's communication strategy with the
public predominantly covers Press, Media, Web and events, including
public consultation in advance of DFID's fourth White Paper scheduled
for July 2009. In addition we continue to invest in longer-term
work to build public awareness of and support for development
in the UK.
25. Over the past year, we have worked to
significantly increase coverage of development issues in the media,
for example:
— the take up development related stories
in the popular press has improved markedly eg pieces in the Sun
on Afghanistan, the Mirror on DRC and a News of the World centre-spread
on Basra;
— the DFID Christmas story was picked up
with at least nine regional articles and five regional broadcasts;
— articles in regional press highlighting
the importance of continued development work, relevance to and
impact on the UK public.
— regional hometown stories highlight the
day to day work of DFID from a human interest perspective and
help raise awareness in regional papers across the UK.
26. DFID's public website has been refreshed
and information is now presented in a more intuitive and easily
navigable format. We have seen strong growth in use from the public:
over 2008 the average number of unique users rose by 15%.
We have had numerous positive endorsements from across the Government
digital communications community and more widely from other aid
agencies including the Australian development Agency.
27. In autumn 2008 we launched DFID
blogging; with staff in country offices telling the story of development
in a personal way to engage the audience. The web team in DFID
have also worked to expand use of available web technology to
increase audience reach by far greater use of film, video and
photos through Youtube and Flickr; creating more personal and
direct communication with certain segments of the public.
28. Longer-term building support for development
work focuses on the education and media sectors and on creating
opportunities for British people to engage directly in development
work, as follows:
— Education: DFID has been supporting
activities in schools and the wider formal education sector for
about ten years, currently spending around £8 million
per annum on formal education project activities and products.
The primary aim has been to embed the "global dimension"
in the UK school curriculum consistent with the 1997 DFID
White Paper. Partly due to work we have funded, all four UK nations
have changed their secondary curricula to include a commitment
to incorporating an international perspective into teaching. We
support a network of regional development education coordinators
to help schools and teachers make a reality of this commitment
as well as a programme to support links between UK and developing
country schools. The new phase of this programme, due to start
in March, aims to link 5000 schools by 2012. Our competitive
funding mechanisms, the Development Awareness Fund and mini grants
programme, each year provide around £2 million in new
grants to development education projects around the UK, the majority
of which focus on the education sector.
— Broadcast Media: Our research
indicates that television is the most important source of information
about poor countries and development issues for people of all
ages in the UK. At the same time, development issues are not widely
covered on television partly due to the expense of developing
programme ideas. DFID therefore funds a scheme run by the Commonwealth
Broadcasting Association to enable producers to spend time in
the developing world researching programme ideas so they can offer
strong international programme proposals to broadcasters and commissioners.
The scheme has funded 192 programme projects in the past
7 years and has a very high commissioning success rate compared
to the industry average. High profile programmes resulting from
the scheme include: "Geldof in Africa", "Africa
School", "The English Surgeon", "Kumari, Living
Goddess", "China School", "Made in India".
— Opportunities to get involved:
Following the emphasis in the 2006 White Paper on the need
for involvement to promote understanding of development issues,
DFID has started three major initiatives. Our Platform2 volunteering
scheme creates opportunities for less advantaged young adults
to work in development projects in low income countries and to
share their experiences with their own communities on their return
to the UK. The Diaspora Volunteering Scheme enables diaspora organisations
to send skilled professionals to development organisations in
their countries or continents or heritage. Our new Community Linking
programme will complement our school linking work by enabling
all types of community groups to make links with community organisations
within developing countries.
Working with NGOS
29. We are working ever more closely with
NGOs in order to pool our efforts in making the case for development.
We are stepping up our joint work with them to communicate the
message that development becomes ever more important in a downturn.
We continue to explore ways in which Government and the NGO community
can work together to build the case for development in the current
climate.
Widening the Support Base for Development
30. We are also working on a number of fronts
to leverage non-traditional partners in our drive to increase
awareness of development. For example, we are working with FIFA
and others on the possibilities afforded by the 2010 World
Cup in South Africa to raise awareness of development, and through
our partnership with the new Malaria No More (UK) charity we are
leveraging the support of a range of media and sporting figures
for our cause.
THE WHITE
PAPER
31. The new DFID White Paper will set out
how the UK Government and DFID in particular intends to maintain
the momentum to eliminate poverty globally. This will set out
in detail the case for supporting development in a downturn and
the ways in which both the UK and the wider donor community need
to respond. A significant consultation process will take place.
A public Consultation Document will be available from the DFID
website in due course for a 12 week period. The process will
also include dialogue with a broad range of UK citizens including
civil society, academics, trade unions, diaspora groups, children
and young people etc. We aim to publish the White Paper in summer
2009.
Department for International Development
February 2009
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