Supplementary memorandum submitted by
the Department for International Development
23 September 2008
DFID ANNUAL REPORT
2008—EVIDENCE SESSION
(15 JULY) FOLLOW
UP
Thank you, and your colleagues for holding our
recent oral evidence session on DFID's Annual Report 2008. I and
my colleagues, Sue Owen and Mark Lowcock, welcomed the opportunity
to explain the work of the Department in more detail and to answer
the questions of the committee. We find this exchange valuable
and constructive.
During oral evidence in response to questions,
we said we would provide a note of:
(a) the funding of civil society projects in
Latin America; and
(b) DFID's involvement with the Comprehensive
Africa Agricultural Development programme.
This is attached as Annex A and B to this letter.
We also said that we would let you have a note on how we derive
our estimate of the number of people DFID helps lift out of poverty
from a model. This is attached as Annex C.
Many thanks and kind regards.
Minouche Shafik
Annex A
NOTE TO QUESTION 83 INTERNATIONAL DEVELOPMENT
COMMITTEE HEARING DFID ANNUAL REPORT 2008 TUESDAY 15 JULY 2008
NOTE ON
DFID FUNDING TO
CIVIL SOCIETY
IN LATIN
AMERICA
1. To better address persistent poverty
in Latin America, DFID is increasing its financial support to
the region and changing the way it is provided. One of the changes
is an increase to our support to Civil Society Organisations (CSOs).
CSOs are at the frontline of tackling the social exclusion and
inequality responsible for persistent poverty in Latin America,
and therefore channelling more support through them will help
address these important issues.
2. DFID funding for UK CSOs working in Latin
America will increase from £7 million to £13 million
per year by 2010-11. Based on a competitive process, 12 of our
existing Programme Partnership Agreement (PPA) partners have been
selected to receive the additional funds as from 2008-09. The
successful partners are:
3. The selection criteria were based on
the following thematic priorities for work in the region:
— supporting and promoting accountable
public sector and political systems that are responsive to poor
people and their needs;
— increasing access to markets and
economic opportunities for poor people;
— tackling gender inequality and social
exclusion;
— addressing HIV and AIDS;
— climate change mitigation and adaptation;
and
— promoting the exchange of experience
and lesson learning from Latin America.
4. Our PPA partners work though national
and local partners in Latin America and engage in processes that
will strengthen government accountability such as participatory
budgeting. For example ActionAid in Brazil has engaged in participatory
budgeting in the region of Recife, and promotes the experience
by sharing lessons with other countries, including African countries.
5. We are currently developing a joint action
plan with our PPA partners who work in Latin America in order
to strengthen our mutual learning by establishing mechanisms for
collaboration.
6. Though we will be closing our offices
in the Andes and Central America, which will no longer be needed
to deliver our new regional programme, we will maintain a programme
of £4 million per year in Nicaragua as it becomes a middle
income country. We will switch the funding for the government
to providing support through alternative channels, including other
donors and civil society.
7. DFID's Civil Society Challenge Fund (GSCF)
also provides support for UK CSOs working in partnership with
local civil society in Latin America. Currently 15 CSOs receive
funding from the CSCF to promote women's rights and children's
rights, and to tackle social exclusion amongst other important
issues. These projects have a duration of three to five years
and entail a total commitment of over £5 million.
8. Through its Governance and Transparency
Fund, DFID is supporting a number of international civil society
organisations based in or working in Latin America—the Wildlife
Conservation Society in Guatemala (£1.33 million over five
years), Associacion Benefica PRISMA in Peru (£4.56 million
over five years), and Global Witness in a number of countries
including Honduras (£3.75 million over four years). A successful
Transparency International bid included Euros 50,000 a year for
five years for the core work of Etica y Transparencia—this
represents almost 60% of Etica's annual budget.
DFID
September 2008
Annex B
NOTE TO QUESTION 66 INTERNATIONAL DEVELOPMENT
COMMITTEE HEARING DFID ANNUAL REPORT 2008 TUESDAY 15 JULY 2008
NOTE ON
COMPREHENSIVE AFRICA
AGRICULTURAL DEVELOPMENT
PROGRAMME (CAADP)
1. CAADP is the Africa Union/New Partnership
for Africa's Development (NEPAD) programme for accelerating progress
towards MDG1 (on income poverty and hunger) in Africa, agreed
by African leaders in 2003. The Commission for Africa recommended
that donors should back CAADP. This was reflected in the Gleneagles
communiqué. The UK's leadership on CAADP led to the EU's
Advancing Agriculture Africa Strategy of 2007 aligning with CAADP.
2. Through CAADP, African governments are
committed to raising agricultural productivity by at least 6%
per year. African governments have agreed (Maputo Declaration)
to increase public investment in agriculture to a minimum of 10%
of their national budgets—substantially more than the 4
to 5% average they commit today. Mali, Madagascar, Namibia, Niger,
Chad and Ethiopia have met or surpassed the 10% goal. Governments
including Zambia, Malawi, Kenya and Rwanda have boosted their
agriculture budgets significantly.
3. The CAADP initiative contains a set of
principles and targets to (i) guide country strategies, (ii) enable
regional peer learning and review, and (iii) facilitate greater
alignment of development partners. Under the CAADP framework,
African governments have established four continent-wide priorities
for investment and action in agriculture, forestry and fisheries:
(i) extending the area under sustainable land
management and reliable water control systems;
(ii) improving rural infrastructure and trade-related
capacities for market access;
(iii) Increasing food supply reducing hunger
and improving responses to food emergency crises; and
(iv) improving agriculture research, technology
dissemination and adoption.
4. DFID supports CAADP because it is Africa
led, 70% of the poorest in Africa are engaged in the agriculture
sector, and it provides an important mechanism for alignment and
harmonisation among donors. Though there is much more to do, CAADP
has had significant impact both in individual countries and across
the continent. African governments are beginning to invest more
in agriculture and the donors are beginning to respond more effectively.
CAADP provides the framework that enabled an African led response
to recent high food prices and food insecurity situation.
5. DfID's financial support to CAADP is
done through a number of channels. Several country programmes
provide support that address CAADP's objectives on agricultural
growth and addressing hunger. In addition, DFID has provided an
initial £5 million to regional and pan-African institutions
(NEPAD, regional economic communities) to enable them to leverage
better and higher levels of investment from African governments.
Our leadership here will likely draw other partners—the
EC, USAID, Japan, Netherlands, SIDA, France and Germany—into
a second phase of support through a multi-donor trust fund, hosted
by the World Bank. DFID's five year £400 million pound research
funding for African agriculture is aligned to CAADP's mandate.
Achievements to date include:
— Increased Investments by some African
countries. Mali, Madagascar, Namibia, Niger, Chad and Ethiopia
have met or surpassed the 10% goal for national budget allocation
that Africa leaders set for themselves in 2003. Governments including
Zambia, Malawi, Kenya and Rwanda have boosted their agriculture
budgets significantly.
— A framework for delivery of Paris
principles. Donor coordination has improved. Our initial investment
of £5 million to help the CAADP accelerate has leveraged
the establishment of a multi-donor trust fund (managed by WB)
with initial contributions of around $80 million. CAADP has provided
the framework for joint donor trust funds for African research
organisations (through which some of DFID's research funding will
be channelled). It is an African led agenda that the G8 and others
(including TICAD) align behind.
DFID
September 2008
Annex C
NOTE TO QUESTION 77 INTERNATIONAL DEVELOPMENT
COMMITTEE HEARING DFID ANNUAL REPORT 2008 TUESDAY 15 JULY 2008
THE CALCULATION
THAT "DFID ESTIMATES
THAT IT
HELPS TO
LIFT AT
LEAST THREE
MILLION PEOPLE
PERMANENTLY OUT
OF POVERTY
EVERY YEAR"
1. DFID estimates the number of people our
aid helps to lift out of poverty using a model based on a methodology
developed by Collier and Dollar which explored the link between
aid, economic growth and poverty reduction in over a hundred developing
countries using data from the 1970s to 1990s. Their research suggests
that donors can affect growth through their allocation of aid,
and that growth in turn will typically lead to poverty reduction
in low-income countries. It further suggests that if donors wish
to use their aid to maximise the reduction in poverty, aid should
be allocated to countries that have large amounts of poverty and
good policy.
2. DFID uses estimates of the effect that
aid has on growth (and therefore poverty reduction) drawn from
Collier and Dollars research to estimate the total number of people
DFID helps lift out of poverty, given our allocation of aid across
countries.
3. The statistic that DFID helps lift an
estimated three million people out of poverty every year was generated
in 2006, by using the approach set out above. It was based on
aid allocations that were, at the time, our estimated bilateral
and multilateral allocations for 2007-08. The model suggested
that DFID's allocations in this year would help to lift 3.45 million
people out of poverty. This was rounded down to three million
for simplification and to help ensure that our estimate remained
conservative.
4. Table 1 below provides an example of
how the calculation of the impact of DFID's aid is made in an
individual country. It shows that the average efficiency of aid
in a particular country is 500 which implies that, for each million
pounds of aid spent, on average 500 people will be lifted out
of poverty. As DFID spends £150 million in this country,
the total number of people that we estimate we would lift out
of poverty is 75,000.
Table 1: Example of estimating the poverty
impact of aid in a particular country
| Average Efficiency of Aid
| Bilateral Allocation (£m) |
Multilateral Allocation (£m) | Total Allocation (£m)
| Estimated number of people lifted out of poverty
|
| 500 | 100 | 50
| 150 | 750,000 |
5. We used this methodology to estimate DFID's aggregate
impact in all countries in which we deliver aid, but we do not
use the country breakdown of the estimate to infer any estimate
of impact in any individual countries. This is because estimates
are subject to statistical margins of error. Also the model is
based on an assumption that other influences on growth rates (except
aid) remain constant. While this is a common assumption in economic
analysis, and a necessary assumption to allow estimation of the
impact of aid on growth, it does mean that individual country
estimates will not always be borne out.
6. To illustrate this more clearly, the results of this
methodology could be compared with a medical trial that says;
"1,000 people given a new treatment lived on average 5.2
years longer". If we repeat this with another group (or at
another time) we do not expect to get exactly 5.2 again; if circumstances
change (eg patients start smoking) the result may change; and
it is certainly not true that all patients live exactly 5.2 years
longer. This last point in particular makes clear the difficulty
with looking at each country (patient) separately.
7. While this methodology is a reasonable way of estimating
the impact of DFID's aid on poverty reduction, we recognise that
is it imperfect. We will continue to invest time and energy into
developing alternative measures of our impact.
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