Examination of Witnesses (Question Numbers 100-119)


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 Malawi—and it seems the country is improving far better than it has for a long, long time—has been due to the policies of the Malawi government—pro-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 haircut—indeed, 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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