Examination of Witnesses (Question Numbers
1-19)
DEPARTMENT FOR
INTERNATIONAL DEVELOPMENT
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.
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