Examination of Witnesses (Question Numbers 1-19)


30 NOVEMBER 2009

  Q1 Chairman: Good afternoon. Welcome to the Committee of Public Accounts. Today we are considering the Comptroller and Auditor General's Report on Aid to Malawi. We welcome Dr Nemat Shafik, Permanent Secretary of the Department for International Development, Sam Sharpe, Director of DFID's Finance and Corporate Performance Division, and Gwen Hines, Head of DFID Malawi. Ms Hines, perhaps I might address my questions to you as you are on the spot. Would you like to look at figure 4, please? Why did you only hit 60% of your targets for Malawi on time?

  Ms Hines: Thank you very much. What we hit was 61% of the targets on time with another 14% within the following 12 months. Many of those targets, the further 14%, were achieved within one or two months of the original deadline. It is important to note that when it says they were achieved late, that does not mean there was no progress achieved. For example, one of the targets we hit late was drilling for boreholes where the drilling equipment came in a few months later but we did meet the target and, in fact, exceeded the target; it was just that it was achieved a few months late.

  Q2  Chairman: Why did you only achieve 36% on governance? That is fairly crucial, is it not?

  Ms Hines: Absolutely, governance is very important.

  Q3  Chairman: Why so low?

  Ms Hines: One of the issues that we did have with the results framework which we established for our Country Plan was that we had a whole range of targets within that, a mixture of process targets, outcome targets and output targets, as the NAO's Report acknowledges. Some of those targets, particularly on governance, were things that were not actually within our control. For the past five years Malawi had a minority government which meant that very few laws were passed, so it made it very difficult when we had targets within our own results framework which were about laws were being passed to actually achieve that progress. I am not trying to excuse that, but what we have done since is we have designed a new results framework which is much more closely focused on a small number of targets which are within our control, which are those most critical for the development programme, and we are now aiming to really focus on those targets to achieve a higher percentage next time.

  Q4  Chairman: Education is also very low down at 33%, fairly vital, I thought. What action are you now taking to improve progress in governance and education?

  Ms Hines: Absolutely. Maybe I will start and then—

  Q5  Chairman: You are on the spot, it is much better, just go on and answer it. You are actually working on the ground.

  Ms Hines: I am happy to do so. Education is critically important in Malawi and we have had a programme over the last few years which has still achieved a huge amount. For example, we have built something like 4,200 classrooms since 1996 which benefit nearly half a million Malawian students. We have also bought 18 million textbooks as part of a curriculum rollout designed to improve the quality of education in Malawi. Having recognised that not enough has been achieved in education in Malawi, we are now working very much with the government of Malawi and with the other development partners in Malawi and we hope early in 2010 to launch a whole new programme which is a joint programme between the government and the development partners to bring about radical change. If I might give you one example of that, one of the critical issues in Malawi is the lack of classrooms and the lack of teachers. Malawi is currently training around 3,000 teachers per year. One of the policy reforms we have agreed with the government that is going to be done from next year is to train an addition 4,000 teachers per year who are going to be recruited from surrounding villages to the schools, so they are much more motivated to work in the rural areas, and they will then be trained.

  Q6  Chairman: I will stop you there. We know that if you put enough money into any scheme you will achieve something, but we are a value for money committee, we are looking at efficiency. Would you please look at paragraph 10 of the Report where it says: "Specific evidence on value for money in implementation is harder to find. Most of DFID Malawi projects have either `mostly' or `partly', rather than `fully', met their objectives. Very few project indicators relate outputs directly to inputs". How can you drive improvement in Malawian government programmes when you seem to know so little about their efficiency? How can we judge how efficient you have been in your disbursement of public money?

  Dr Shafik: I think the NAO Report does also say that the DFID programme in Malawi has contributed clearly to poverty reduction.

  Q7  Chairman: I am not arguing about that. That was precisely why I said what I said. If you spend enough money you are going to achieve something, but what I want to know is how can we as a value for money committee be assured that you are achieving value for money when clearly you are lacking in data about how effective your programmes have been in terms of value for money?

  Dr Shafik: It is not saying we are lacking any data. The NAO rightly is raising the bar and saying we always need to get better data. I can give you several examples which prove that. For example, the food security programme: if you look back in 2005, Malawi had a serious food security crisis where we had to deliver over £21 million of food aid just to get people fed and to prevent hunger. The programme that we have funded, which costs directly £5 million and an addition £1.8 million through budget support, a total of £6.8 million, has resulted in four years of Malawi having—

  Q8  Chairman: You are not answering my question. We can spend the whole session hearing about the wonderful work you are doing in Malawi, and I am sure that you are doing very good work, but we want to try and get to the bottom of how much we know about how efficient these programmes are. Would you please look at paragraph 2.9? This is very important. This is drugs, which are obviously very important: "We did not find robust measures relating specific outputs and outcomes to the associated costs such as the unit cost of drugs or the cost per episode of treatment". Why do you not analyse unit costs of drugs, or the cost per episode of treatment, given this is where so much of the DFID money goes? Ms Hines, perhaps you can answer this.

  Ms Hines: Absolutely. We have, in fact, got unit cost analysis for the cost of drugs. I can tell you, for example, that for antiretroviral drugs, which are obviously a key issue in Malawi with such a high HIV prevalence rate, the unit cost in Malawi is $85 per person compared to $155 in most other countries in Africa. That shows that there are efficiencies within Malawi. There are also some other examples where we have done a lot of unit cost analysis. We have built a lot of classrooms and we have done a unit cost analysis to benchmark the cost in Malawi to show that it is well within and, in fact, below the regional average; the same with the unit cost of elections and the same with a roads programme we are currently developing. We are doing this. What the NAO rightly criticised us for was that we had not made that unit cost analysis so explicit in our monitoring frameworks in the past and we are now doing that.

  Q9  Chairman: You are giving out more aid, but you have got fewer staff to manage that aid. Does that not mean that, in effect, you are relying on weak local systems to assess how well the money is spent?

  Dr Shafik: The staffing we have in Malawi is much more in the normal range of what we have in other African countries. On average we have about 40 staff and Malawi has exactly 39; it is in the normal range.

  Q10  Chairman: Look at paragraph 1.3 where you have increased the aid from £54 million to £70 million a year, and just at the time when you are increasing aid you are cutting your staff and, therefore, you have to rely on weak local systems of assessments, and that is what worries me.

  Dr Shafik: No, I do not think we are relying on weak local systems of assessment. The NAO says that DFID performed well against international criteria used to measure how effectively donors and partner governments are working together, and that for most indicators DFID's performance has improved and is performing better than other donors in Malawi.

  Q11  Chairman: Can I ask this to the Treasury: you have trebled the amount of aid that DFID has given out in Malawi but you are cutting the running cost budget that you allow DFID to spend on this. Are you not putting at risk the value for money?

  Mr Gallaher: I think decisions about how administration costs are incurred is a matter for the Department themselves. We do not micromanage departments on how they spend their resources, so if they choose to operate and produce a better product for less money we welcome that.

  Q12  Chairman: So cutting the running costs is down to them, not to you?

  Mr Gallaher: Overall, we will—

  Q13  Chairman: There is no pressure you put on them to try to reduce staff?

  Mr Gallaher: No.

  Q14  Chairman: Never?

  Mr Gallaher: We would actually say to them, "Run an efficient operation, run it well", and we would give them a global budget and they can make their own decisions.

  Q15  Chairman: You never make any comment on staffing?

  Mr Gallaher: We will, of course.

  Q16  Chairman: Of course you do, that is what I am putting to you. You are constantly pressurising them to cut their staff while you are trebling the budget and, therefore, they have to rely more on weak local systems of assessment rather than their own staff who are far more able to assist this Committee.

  Mr Gallaher: I think they have got to make a judgment. They know better than we do; we are not out in Malawi, we are in London.

  Chairman: I agree with that.

  Q17  Keith Hill: Let me put this first to the Permanent Secretary. I think I understand the principle of budget support. It is about empowerment and also about not overstretching the limited personnel resources that can be available in some of the administrations with which you deal so that individual officials in the Malawian government, for example, are not subject to endless bilateral negotiations with external parties, et cetera, but there is a downside of this arm's length relationship and that seems to be that often it is very difficult to know what is going on and what is being delivered. Is that a fair judgment?

  Dr Shafik: I do not think that is the case. The biggest power of budget support is that it enables us to use whatever resources we have to try and shape everything that the government is doing. For example, in the input subsidy programme, which we think has been incredibly successful at delivering bumper harvests and food self-sufficiency for Malawi in the last four years, we contribute less than 5% of that programme. The government provides most of the funding, but we have a voice at the table and are able to make sure that programme is more effective, better targeted and has civil society participation to make sure that the government is actually delivering on the ground. It is that leverage, I think, that is the truly most powerful thing that budget support gives us.

  Q18  Keith Hill: You are bound to be limited in the influence that you can exert when, for example, the data you are dealing with are so inadequate. The NAO Report has a series of findings about the inadequacy of data on, for example, the maize harvest, on poverty statistics, on the way in which different districts in the country are using DFID's money. This is bound to be tremendously limiting in both making a judgment about the effectiveness of programmes and also even knowing where you need to intervene to ensure an improved performance, is it not?

  Dr Shafik: I think we respond to that in two ways. One is investing in better data. We are investing in a new household survey next year and have invested a huge amount in improving the tracking of drug procurement and spending on drugs, and so on. The second way we respond is by getting information from other sources. For example, when I was in Malawi in September we visited a school which was very typical of what Gwen described. This school had 600 children in two classrooms. We run a programme where we give schools the equivalent of about $2,000 and a parents committee with the headteacher get together and decide how to spend that money. Every penny they spend has to be posted at the front of the school so that they track it. What did they do? The parents got together and built four more classrooms with their own hands, which we visited, and used the additional resources to hire a teaching assistant, thereby bringing the ratio of kids to teachers from 600 in two classrooms to 600 in six classrooms with two teachers in each room.

  Q19  Keith Hill: I have heard of that programme and I think it is an extremely good idea. It is about efficiency and governance as well, so first class, that seems to be a really good achievement in Malawi and ought to be adopted elsewhere. It is only one example, is it not? The truth is if you look overall at the statistics on delivery, to which the Chairman has already alluded, in figure 4, the fact of the matter is, even if you allow for some delays, almost half of the programme is not delivered. Perhaps this is a question for Ms Hines: how would you improve its performance against its Country Plan in Malawi?

  Ms Hines: I would be happy to answer that. As Minouche has said, there are a number of different ways that we can get at the data that we need. Some are things we need as DFID specifically and some are things we help the government to get, so we are strengthening their own national statistical office, and some are things we do jointly with other donors. Norway, for example, has recently funded a study on agriculture to look at the harvest issues. We do this very much as a collaborative effort. We do regularly go out to schools. I was in a village 10 days ago looking at exactly how much maize they have in that village, and we do that all over the country to spot-check, to a certain extent, what is around and what is not.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2010
Prepared 26 January 2010