|
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: o What are the elements of the shock at national level; o What are the effects on growth, investment, poverty and inequality and debt; and o 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 - £15m for social protection · Additional funds for social protection in Bangladesh and Mozambique · Scale-up of emergency aid in Kenya and Ethiopia · Bangladesh - £2m 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 £67m to reduce bottlenecks and
increase trade flows along the North-South Corridor in
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 bn and $100bn respectively, compared to $13bn in 2008). The World Bank Board has approved the creation of a Fast Track Facility to frontload at least $2 bn of the $42 bn 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
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
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
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
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
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
20. The
Government has emphasised the importance of meeting its ODA commitments in many
meetings with other donors during 2008, especially the
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
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
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 e.g. pieces in the
Sun on · 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 · 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
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 · 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 · 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
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
Department for International Development February 2009 |