Examination of Witnesses (Question Numbers
100-119)
DEPARTMENT FOR
INTERNATIONAL DEVELOPMENT
30 NOVEMBER 2009
Q100 Mr Mitchell: The maize subsidy
cannot be channelled. I do not know what these districts are in
figure 2 because I have not done any tours in Malawi, like Machinga
and Nsanje but the cities are down at the bottom in terms of poverty.
The maize subsidy cannot be channelled to the poorest areas and
the poorest people, can it?
Dr Shafik: The maize subsidy is
supposed to target the productive poor.
Q101 Mr Mitchell: It is a universal
subsidy which is not directed at the poorest areas.
Dr Shafik: Within each community
it is targeted within the village to those households which could
benefit most.
Q102 Mr Mitchell: But the poorest
areas according to 3.8 have most difficulty in collecting it and
they have to hang around when they have gone to get it for two
or three days or nights and have the furthest distances to travel
and have the most expensive fertiliser. In other words, they are
not benefiting substantially in the same way as the richer areas.
Ms Hines: This is very much a
nationwide programme. If you were to go to Malawi this month in
fact this is the key month when the fertiliser is being distributed
all over the country. There are trucks now rolling across the
whole of Malawi and it is done largely through a para-statal organisation
called ADMARC which is in every town and every district all over
the country. If you are in the region of Chitipa far up in the
north or Nsanje far down in the south you are anyway cut off by
nature of the geography of the country. You are up in the hills,
the transport is bad, so, yes, in those areas it is much more
difficult to actually get these things to people, but this is
a nationwide programme and a lot of time and effort and money
(because part of the programme is the transporting) goes into
getting these things to everybody. It is also important to realise
that this programme, as we have said, does not target the very
poorest of the poor. The very poorest of the poor can then buy
maize in the villages and, as Minouche has said, the rural wage
has gone up faster than the price of maize so some people who
do not have land do buy maize. The other thing that has happened
in the last few years is the government has collected the excess
maize for what is called a strategic reserve and that strategic
reserve is being used instead of food aid to target those who
are at risk of food insecurity, or hunger to put it more simply,
because there is a hunger period in Malawi between
Q103 Mr Mitchell: You talk fast,
Ms Hines, but not fast enough to avoid my last question, which
is why is DFID concentrating on pushing the private sector into
fertiliser distribution and the maize distribution system when
clearly the Malawi government does not want it there?
Dr Shafik: We think it is part
of building a sustainable market in agriculture.
Mr Mitchell: Is it a question of ideology?
Q104 Mr Curry: No, it is economics
and commonsense.
Dr Shafik: I will let your colleague
answer that.
Q105 Chairman: Why do we read in
paragraph 3.9 that the Malawi government has incurred an estimated
US$35 million of extra cost by buying surplus fertiliser at peak
prices? Where were you when this was going on?
Dr Shafik: This was in 2008 which,
as we know, was an exceptional year. Food and fuel prices skyrocketed
and the price of fertiliser more than doubled for Malawi. They
had very little choice as to what price they could buy fertiliser
at. We did speak to the Malawi government and express our concern
about the financial sustainability of what they were doing and
Gwen can say a little bit about the specific interventions we
made.
Q106 Chairman: It does not say all
that in this Report. "It bought some of the extra fertiliser
in 2008-09 in December 2008 at mid-2008 prices, not the lower
prices available ... " It seems to me grotesque bad management.
This is what you are supposed to be doing to protect our investment.
Were you asleep on the job?
Ms Hines: No.
Q107 Chairman: This is a dirt poor
country and we have wasted US$35 million on needless fertiliser.
Ms Hines: As Minouche has said,
it was largely due to the very high price of fertiliser last year
why this cost is so high. Yes, they did over-procure fertiliser
Q108 Chairman: So what were you doing
at the time? What were you doing to help these people?
Ms Hines: I was one of the first
who went in to see the Minister of Finance as soon as this came
to our attention. It came to our attention through the Logistics
Unit which we fund as one of the safeguards. They made us aware
of this over-procurement and we immediately went to see the Malawi
government and what we did manage to do was to work with the Malawi
government to hold back that supply of excess fertiliser for this
year's programme. The reason that is showing as such a high figure
is because with the IMF we made the Malawi government be transparent
and put the full cost of the excess fertiliser on their budget
last year to reflect the decision they took, which we do not defend.
What we did do was minimise the damage in terms of holding 83,000
tonnes of that over for this year's programme, so this year they
have only bought 77,000 tonnes. They have only bought the extra
amount which they actually needed rather than buying the whole
lot from scratch. It is also important to remember that it takes
something between two and three months to get fertiliser into
Malawi, so the Malawi government was genuinely concerned in December
that there was not going to be enough fertiliser for the programme,
which is why they bought stocks from people who already had it
in-country.
Q109 Chairman: But none of the extra
fertiliser was distributed.
Dr Shafik: Deliberately because
they had excess so instead of wasting it they saved it for the
next year.
Q110 Chairman: So all the money that
we have spent is just stored, where presumably it will be filched
by people, rot away, or whatever?
Ms Hines: No, not at all and in
fact an audit was done as part of the agreement with the development
partners to hold it over for this year's programme. It is now,
as I say, being rolled out as part of this year's programme. For
this year's programme they reduced it from 170,000 to 160,000,
they used the 83,000 they had stored, they bought another 77,000
to make up the difference, and that is the fertiliser which is
being used for this programme.
Chairman: Thank you. Ian Davidson?
Q111 Mr Davidson: A lot of the improvement
in Malawiand it seems the country is improving far better
than it has for a long, long timehas been due to the policies
of the Malawi governmentpro-poor policies, the agricultural
subsidies and so on. To what extent do you think you are spending
enough on capacity building to help Malawians do this for themselves
as distinct from doing it for them?
Dr Shafik: A huge part of the
reason we do budget support is because we build their capacity
alongside them. I would like to think that some of these better
policies have been a result of our own efforts to try and work
with them to shape the agricultural input subsidy in a way that
maximises the benefits to the poorest communities. Similarly on
the health side, the essential health package which the Malawi
government is rolling out is something that we worked on with
them using international standards from the WHO as to which health
investments had the highest rate of return, so I think we have
contributed to that improvement
Q112 Mr Davidson: I know that you
are well thought of by the government of Malawi having been there
not all that long ago. Indeed, I was there over 30 years ago when
the Young Pioneers forced me to get a haircutindeed, days
have changed since then for me and for them! In terms of what
you are doing to improve governance, there was a focus earlier
on, quite understandably, on anti-corruption and on audit but
you did not actually discuss much else. There is not much else
in the Report about what you are doing to help both political
and civil service and administrative governance in the country.
Can you clarify for me how much you spend on that?
Dr Shafik: In Malawi we spend
quite a lot. 11% of our programme is spent on improving governance.
That is work supporting Parliament, the NAO, the Anti-Corruption
Bureau, the Electoral Commission, civil society and the media.
In our recent White Paper we have committed that we would spend
at least 5% in countries where we are doing budget support, precisely
to ensure that where we are doing budget support at the same time
we are strengthening the institutions of accountability to make
sure that that budget is being well-spent. In Malawi we are spending
11%.
Q113 Mr Davidson: Right. Can I turn
to the question of civil society. Again, I have been there and
I have met representatives of civil society introduced to me by
yourselves and other people representing the UK. They all seem
to be well-educated and sharp-suited and not necessarily typical
of Malawians. To what extent are you dealing with people like
yourselves? When I went to see the trade unions, for example,
they said they had no contact with any representative of the UK
at all. Indeed, their relationships with the Malawian government
were not particularly great either. Ought you not to be picking
up that aspect of society?
Ms Hines: Absolutely, and, as
you will know from your visit, civil society is a very broad term
in Malawi, from those who are based in the city to very different
groups. We are working with various trade unions in Malawi. As
part of the educational programme that we are now developing,
I have been to talk to the teachers' union to understand their
own concerns about what is working and what is not in the education
sector in Malawi. We are also doing a range of interventions which
try to get below the top level of civil society. One of the things
we are working with at the moment is to develop community-level
score cards of what people at that level think of the Malawi government.
We are piloting it at the moment. We are trying to roll it out
nationwide once the pilot is done. There is a range of different
ways that we are trying to tackle it.
Q114 Mr Davidson: Rather than go
into this in great detail maybe you could just let us have a note
of what in particular you are doing there to develop capacity
amongst the trade unions and amongst what could be seen as ordinary
people.[1]
Could I move on to ask about how you work with other agencies
and organisations in the country. There is a large number of people.
Norway has a big programme, the EU is active. It has been the
case in the past that some governments have played off one donor
against the other. The Japanese never used to talk to anybody
else. How do we know that where you press the Malawi government
to do particular things, particularly related to good governance,
they do not simply go off and get the money from somebody else?
Dr Shafik: In Malawi donor co-ordination
works pretty well. I think the NAO acknowledges that we play quite
an important role in corralling the donor community and having
a shared position. Budget support is one vehicle for doing that
but we jointly fund many of the programmes. Gwen, do you want
to say something about how that works on the ground?
Ms Hines: At a process level there
is a monthly meeting of the heads of mission of donor countries,
and also heads of co-operation for those who are not diplomatic
agencies, where we get together and we talk about issues. Also
within the sectors the Malawi government is developing itself
an aid effectiveness architecture in what they call the Development
Assistance Strategy which includes sector working groups, because
they themselves now see the advantages of having donors and also
civil society over time coming together to talk about issues on
a thematic basis, so there is a health sector working group and
an agriculture one. Something else we are doing as DFID Malawi,
I am in the process of setting up a joint agriculture and resilience
unit with a Norwegian agency and the Irish Government, which will
bring together both my own staff in those sectors and their own
staff, which is another good way of using our staff so that we
get more out of them. We also have joint programmes and it is
actually very effective because it means that for example whereas
in the past we might each have sent one person to the same meeting,
we now send one person who reports jointly to all of us and we
make sure that we are very co-ordinated in taking positions.
Q115 Mr Davidson: The question of
co-ordination and assessment is measured in some way and assessed
centrally? There is a mechanism for ensuring that is there?
Dr Shafik: Yes, in fact there
is an international mechanism called the Paris Declaration whereby
we measure how many times we send joint missions, are we doing
our analysis together, how much of our funding is pooled.
Q116 Mr Davidson: Okay, that is fine.
What happens when there is a conflict? You are not the governor
general or the district commissioner of Malawi. There will be
occasions presumably when people who have been elected in Malawi
disagree with the advice that they have been given. How do you
cope with that?
Ms Hines: There are obviously
cases where we do disagree. Malawi is a sovereign government and
there are obviously limits to what I can do, but what I do do
is I explain the British Government's position and I also explain
why we think that something should be done or should not be done.
The case of the fertiliser over-procurement is a classic case
where it was the Malawi government's decision to over-procure
that fertiliser. What I did do was to work with the finance minister
to understand the financial implications for their budget of doing
that and to think about the best way of limiting damage over time.
It is their choice to disregard that advice. The same as if I
am talking to another donor, we may disagree.
Q117 Mr Davidson: Give us another
couple of examples where you have had a disagreement?
Dr Shafik: The examples you mentioned
about international treatment on health would not be our choice.
These are very difficult choices with children who have cancer
and governments are entitled to make some decisions.
Q118 Mr Davidson: That is one. Give
me another one.
Ms Hines: I can give you another
one on education. It is not a disagreement per se but something
where we have felt for a long time there was a better way of approaching
education in Malawi. It is one of the reasons why for example
the results that we tried to achieve did not happen, because we
felt for a long time that as well as building more schools and
training more teachers, the Malawi government needed to make more
radical policy choices, and they were not at the time ready to
do that. Through the course of the past three years we have done
a lot of work trying to explain why we think this would work better,
the best practice which supports this, and we have also done some
pilots down in Dedza district using this local community-based
approach which you have heard about before. On the strength of
that evidence and through a lot of dialogue with government they
have now agreed to make some of those choices but, as I say, it
is their choice because if they do not want to do it then it will
not be as effective down the line.
Q119 Mr Davidson: The final point
I want to pick up is the question of co-ordination between yourselves,
other British influences in the field, as it were, the High Commissioner,
the British Council, but also people like the Scottish Government
who have programmes. Glasgow City Council are developing health
links and there is a school in my constituency, Govan High, which
has a link with Milonde Secondary. I get the impression that the
Glasgow ones, the Govan one and the Scottish Parliament one are
not really co-ordinated with anybody else and that there are no
real links between themselves and yourself to make sure that they
are slotting into a coherent programme. Is that fair?
Dr Shafik: Not quite I think.
We co-ordinate with the Scottish aid programmes in two ways; centrally
and also in the field. I will let Gwen say what it looks like
in Malawi. Centrally, as you probably know, we have quite a strong
presence in Scotland. I have about 500 staff in East Kilbride
and the head of our office in East Kilbride meets regularly with
the Scottish Executive to discuss their aid programme and co-ordinate
and liaise and make sure that our efforts are coherent from a
headquarters-to-headquarters point of view. In Malawi?
Ms Hines: I met Lisa Bird, who
runs the Scottish development programme in Malawi, when she was
last in Malawi. We went through some of their strategic priorities
in the next few years, the same as ours, and talked about areas
for co-operation. In between those visits we talk regularly by
phone or email as they wish. Just last week they were asking me
about some work they would like to do with the Parliament in Malawi.
We are also supporting Parliament so I passed on some of the benefits
of what we have been doing. We are always happy to provide that
kind of information. It is really for the Scottish Executive to
choose how much they wish to co-ordinate with us.
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