International Development CommitteeWritten evidence submitted by the UK Aid Network and Bond
About the UK Aid Network
The UK Aid Network (UKAN) is the coalition of UK-based development NGOs carrying out joint policy and lobbying to advocate for more and better aid. UKAN’s work mostly focuses on the UK’s ODA policy and practice, however, its remit also extends to the European and international levels. Members of UKAN’s Steering Group include: ActionAid, Action for Global Health, Bond, CAFOD, ONE, Oxfam, Publish What You Fund, Save the Children, Tearfund, UNICEF UK, WaterAid, and World Vision UK. www.ukan.org.uk
About Bond
Bond is the membership body for UK international development organisations. Established in 1993, it has 360 members ranging from large bodies with a world-wide presence to smaller, specialist organisations working in certain regions or with specific groups of people. Bond promotes, supports, represents and leads the work and interests of the UK international development sector by creating opportunities for organisations to work, learn and take action together. www.bond.org.uk
This submission includes analysis and recommendations on five of the seven areas of the inquiry:
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Executive Summary
1. Trends in DFID’s expenditure and total UK ODA
1. We welcome the UK Coalition Government’s commitment to deliver 0.7% of UK GNI as official development assistance (ODA) from 2013.
2. Changes to the amount of ODA have been accompanied by changes to the way it is allocated. We outline five concerns:
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3. Recommendation 1: the IDC should hold DFID accountable for the commitments it made in Paris and reaffirmed in Busan, and to ensure that necessary action is taken.
4. Recommendation 2: DFID should reverse the decline in its use of budget support and take on the challenges in addressing its value for money.
5. Recommendation 3: DFID should reverse the decline in its use of Programme Based Approaches.
6. Recommendation 4: the UK Government should undertake a slower phase-out of DFID’s programmes in India, given that the country is home to one-third of the world’s people living on less than 80 pence a day.
7. Recommendation 5: DFID should ensure it balances the purchase of essential materials such as vaccines, with investment to improve the capacity of the recipient country’s health sector.
8. Recommendation 6: DFID should publish further details of its private sector development programme including which businesses it is supporting and how they will generate pro-poor outcomes, and be transparent and accountable for their impact.
2. DFID’s ability to spend the large increase in its 2013–14 budget efficiently and effectively
9. With UK ODA set to increase to £11.55 billion in 2013–14—equivalent to an increase of 33.5% since 2010–11—it will be even more important for the IDC, ICAI and NGOs to scrutinise how it is spent.
10. Recommendation 7: DFID should ensure that future assessments of multilateral agencies strongly emphasise the issues of country ownership, results for the poorest people, transparency and accountability.
11. Recommendation 8: the IDC should monitor DFID’s plans for spending the large amount of ODA which remains unallocated for 2013–14.
3. DFID’s results framework, including the choice of indicators in its Annual Report and the reporting of progress
12. We have three major concerns:
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13. Recommendation 9: DFID should measure progress in areas beyond aid that are relevant to international development.
14. Recommendation 10: DFID should ensure its results indicators have a direct link to poverty reduction and make public the rationale and evidence base for their choice of proxy indicators.
15. Recommendation 11: DFID should use the Official List of MDG indicators as the basis for measuring DFID’s results.
4. Whether DFID’s current staffing levels are adequate
16. We believe that DFID’s human resources need to be at a sufficient level to deliver its aid programmes effectively. We are concerned that a rising DFID budget is not matched by a rising DFID headcount. We do not think that an arbitrary departmental headcount is the best way of ensuring value-for-money.
17. Recommendation 12: DFID should rethink its human resource requirements to ensure its staffing levels enable it to spend a growing budget effectively.
5. DFID’s use of consultants and whether they offer value for money
18. There is currently a lack of data on DFID’s commercial contractors which makes it difficult to judge whether they offer the best value-for-money for the work they are contracted to undertake.
19. Recommendation 13: DFID should instruct all commercial contractors and consultants to release open data conforming to the International Aid Transparency Initiative (IATI) by the end of 2013.
UKAN/Bond Submission
1. Trends in DFID’s expenditure and total UK ODA
DFID is not fully implementing the UK’s aid effectiveness commitments
20. Research undertaken by UKAN, which aggregated data from the DFID projects database, shows a clear decline since 2008–09 in the percentage of DFID’s aid budget that addresses key aid effectiveness commitments (see chart 1).1
Chart 1
DFID’S AID TO FOCUS COUNTRIES WHICH MEET AID EFFECTIVENESS COMMITMENTS
21. The research found that less than 50% of DFID’s bilateral aid in 2012–13 is allocated to projects that meet the aid effectiveness indicators, compared with 52%–70% in 2008–09.
22. Whilst a focus on results and value-for-money complements the Paris principles, it is not necessarily synonymous with effective aid. We are concerned that the drive for measurable results may be at the expense of long term impact and country ownership.
23. Recommendation 1: the IDC should hold DFID accountable for the commitments it made in Paris and reaffirmed in Busan, and to ensure that necessary action is taken.
DFID is moving away from aid modalities which build country ownership
24. We are concerned that since 2008–09 DFID has been moving away from aid modalities that promote country ownership—a strong determinant of aid effectiveness and the first Busan principle.
25. The value-for-money agenda must recognise that countries without effective governance and systems to deliver public services will never be able to “graduate” from aid, so the most valuable aid will build these systems.
Budget Support
26. UK NGOs have supported DFID’s ambitious use of budget support, which at its height in 2007–8 was used to deliver 29% of DFID’s bilateral programmes. This figure fell to 24% in 2009–10—the final full year overseen by the previous Government—to 20% in 2010–11 and 15% in 2011–12.2
27. The Coalition Government is accelerating the trend that began under the previous Government to reduce the share of bilateral aid being channelled through GBS. Large reductions in general budget support (GBS), have only partly been compensated for by increases in sector budget support (SBS).3
28. Where the right pre-conditions4 for budget support exist, it has the benefits of supporting greater country ownership of aid, reducing bureaucracy, and enhancing coordination. Its demise poses new challenges in those areas.
29. Recommendation 2: DFID should reverse the decline in its use of budget support and take on the challenges in addressing its value-for-money.
Programme-based Approaches
30. Previously DFID had been a leader in using “programme-based approaches” (PBAs), which have similar benefits to budget support. Donors committed to deliver two-thirds of their aid through PBAs.5
31. The Paris Declaration survey found that DFID delivered 58% of its aid through PBAs in 2005, which increased to 70% in 2008, but then fell to 60% in 2010.6 Analysis carried out by UKAN suggests that around 50% of total DFID programmes were delivered through PBAs in 2010–11, a figure which is expected to fall steadily to 34% in 2012–13.7
32. We are concerned that DFID’s use of stand-alone project approaches for delivering aid is likely to increase further in the coming years. Whilst such aid can still deliver development benefits, it is often harder to deliver sustainably and be country-led.
33. DFID’s reduced use of PBAs is not consistent with agreed aid effectiveness targets and principles, and risks undoing much of the progress towards an aid system that is more recipient-driven.
34. Recommendation 3: DFID should reverse the decline in its use of Programme Based Approaches.
The withdrawal of the UK’s aid programmes in India is too rapid
35. We are concerned by the Secretary of State for International Development’s statement regarding the UK Government’s complete withdrawal of aid to India by 2015.8
36. India does not have enough riches among the “rich” to come close to closing the poverty gap by redistribution alone.9 DFID should consider the needs of poor people, not just poor countries, and recognise that national average incomes can be a poor proxy for need.
37. Furthermore DFID is delivering essential support to services in the poorest states of India and DFID’s support for health and education in India received a high score in a recent evaluation by the Independent Commission for Aid Impact (ICAI).10
38. DFID’s priority states of Bihar, Madhya Pradesh, and Orissa are mired in sub-Saharan African rates of poverty.11 If Bihar was an independent nation it would be DFID’s fourth biggest priority country by population.
39. Recommendation 4: the UK Government should undertake a slower phase-out of DFID’s programmes in India, given that the country is home to one-third of the world’s people living on less than 80 pence a day.12
Thematic allocations
Health Sector
40. Sectors receiving the largest share of bilateral aid in 2011–12 are those most closely associated with the MDGs (education, health, water and sanitation and poverty, hunger and vulnerability), which are collectively expected to see their share of DFID sector spend increase from around 55% in 2010–11 to 60% in 2014–15.13
41. Within the health sector, the new DFID administration has identified reproductive, maternal and neonatal health and malaria as its main priorities, with the former receiving 27% of total bilateral aid to the health sector during 2010–11 to 2014–15 and the latter 8%. We are concerned that DFID is over-prioritising investment in physical resources, such as drugs and under-investing in health personnel and health systems.
42. Recommendation 5: DFID should ensure it balances the purchase of essential materials such as vaccines, with investment to improve the capacity of the recipient country’s health sector.
Other Sectors
43. DFID’s country Operational Plans provide information on future sectoral allocations. Whilst this data set does not cover all DFID bilateral aid it suggests that the proportion of DFID bilateral aid to:
health, education, wealth creation and climate change programmes will grow;
governance and security will see rises in the next couple of years, before experiencing a fall; it will remain one of the largest sectors;
water and sanitation programmes look likely to fall, although recent announcements that DFID will increase the number of people it reaches with water programmes suggest this may change;
poverty, hunger and vulnerability programmes also look likely to decline despite the attention drawn to malnutrition at the Hunger Summit held at Downing Street in August 2012;14 and
within the health sector possibly up to two thirds of programmes will be focussed on reproductive, child and maternal health by 2014–15, malaria will receive around 15% and a falling share will go to HIV/AIDS.
44. Question to ask DFID:
Given that progress on reducing global hunger has flat-lined in recent years and that the FAO estimates that there are still 870 million people who don’t get enough to eat why is DFID planning to allocate proportionally less to tackling this problem?
DFID’s private sector programme remains opaque
45. The UK’s spending on private sector development is increasing and DFID has committed to spend 8% of its budget (£920 million) on/through the private sector by 2015. Yet DFID has provided very little clarity on how funds will be spent.
46. Recommendation 6: DFID should publish further details of its private sector development programme including which businesses it is supporting and how they will generate pro-poor outcomes, and be transparent and accountable for their impact.
2. DFID’s ability to spend the large increase in its 2013–14 budget efficiently and effectively
47. With UK ODA set to increase to £11.55 billion in 2013–14—equivalent to an increase of 33.5% since 2010–11—it will be even more important for the IDC, ICAI and NGOs to scrutinise how it is spent.
48. In particular, conflict affected and fragile states will experience a dramatic increase in bilateral aid from DFID. Between 2010–11 and 2014–15, bilateral aid to Somalia is set to increase by 208%, Nigeria by 116%, and Pakistan by 107%.15
49. DFID’s multilateral aid—now at 45% of DFID’s total spending—has been increasing since 2010–11.16
50. Recommendation 7: DFID should ensure that future assessments of multilateral agencies strongly emphasise the issues of country ownership, results for the poorest people, transparency and accountability.
51. DFID is set to receive a growing share of UK ODA between 2010–11 and 2013–14. However a large amount of DFID ODA remains unallocated for 2013–14.17
52. Recommendation 8: the IDC should monitor DFID’s plans for spending the large amount of ODA which remains unallocated for 2013–14.
3. DFID’s results framework, including the choice of indicators in its Annual Report and the reporting of progress
DFID is only tracking results relating to the UK aid programme rather than a range of results covering other areas of UK policy relevant to international development18
53. International development is about much more than just aid. Yet all of DFID’s results relate to what has or has not been achieved as a result of UK aid, spent both bilaterally and multilaterally. No attempt has been made to measure progress in other areas critical to reducing global poverty, such as UK tax reform to benefit developing countries, fairer trade rules, biofuels, or remittances.
54. Recommendation 9: DFID should measure progress in areas beyond aid that are relevant to international development.
55. Questions to ask DFID:
Why has DFID chosen not to track results across the full range of international development issues?
MDG8 calls for a “global partnership for development” and includes targets on development finance beyond aid, trade, affordable medicines and new technologies. What progress has DFID made against these targets?
Not all of DFID’s chosen indicators have a direct link to poverty reduction
56. Four of DFID’s nine “key headline results” announcing the success of its bilateral aid programme have questionable relevance to poverty reduction:
Improved the land and property rights of 1.1 million people.
Supported 26 African countries to agree an Africa Free Trade Area.
Enabled 11.9 million people to work their way out of poverty by providing access to financial services.19
Supported freer and fairer elections in five countries.
57. In addition, DFID’s target to “focus 30% of our aid on war torn and unstable countries by 2014”20 is an input rather than an outcome and should not be used as a results indicator.
58. Recommendation 10: DFID should ensure its results indicators have a direct link to poverty reduction and make public the rationale and evidence base for their choice of proxy indicators.
59. Questions to ask DFID:
What evidence do you have that improved land and property rights reduce poverty?
What poverty impact assessments has DFID commissioned in relation to the proposed Africa Free Trade Area?
What evidence do you have that shows that access to financial services is a key driver of poverty reduction?
How does DFID judge whether an election is “freer and fairer”?
What studies has DFID commissioned that compare elections before and after DFID’s support?
Important indicators relating to the achievement of the Millennium Development Goals have not been included
60. The range of indicators does not reflect the MDGs or their targets as fully as it should.
61. There are eight MDGs, 21 targets, and 60 indicators for monitoring progress.21 Yet DFID’s “Results Commitment” relate to seven of the eight MDGs and only 12 of the 21 targets.
62. The most glaring omissions from “DFID Results Commitment—by 2014–15”22 are any indicators for:
Decent work.23
HIV and AIDS.24
A global partnership for development.25
63. Recommendation 11: DFID should use the Official List of MDG indicators26 as the basis for measuring DFID’s results.
64. Questions to ask DFID:
Why has DFID chosen not to include the decent work target or report to any indicator relating to employment and job creation?
Why has DFID chosen to not include any target on HIV and AIDS in its results commitments?
Why has DFID ignored MDG8 (“Develop a global partnership for development”) and its targets completely?
4. Whether DFID’s current staffing levels are adequate?
65. We are concerned that a rising DFID budget is not matched by a rising DFID headcount. According to the Comprehensive Spending Review DFID will have to reduce the share of expenditure spent on running costs from 4% to 2% of the total budget.27 We do not think that an arbitrary departmental headcount is the best way of ensuring value-for-money.
66. In particular a lack of specialist experts will undermine DFID’s ability to identify and support programmes with the most transformative potential or achievements.
67. Recommendation 12: DFID should rethink its human resource requirements to ensure its staffing levels enable it to spend a growing budget effectively.
68. Questions to ask DFID:
What is the maximum amount of expenditure that a single DFID member of staff should be responsible for spending?
Has DFID undertaken a human resources review to prepare it for a 30% increase in its budget?
5. DFID’s use of consultants and whether they offer value for money
69. There is currently a lack of data on DFID’s commercial contractors which makes it difficult to judge whether they offer the best value-for-money. At present DFID requires higher standards of transparency from NGO grantees than for commercial operators. This is a loophole that should be closed as soon as possible.
70. Recommendation 13: DFID should instruct all commercial contractors and consultants to release open data conforming to the International Aid Transparency Initiative (IATI) by the end of 2013.
71. In recent years there has been a gradual increase in grant management being contracted out to external consultants. This trend has accelerated under the current Coalition Government.28 While this cuts the DFID headcount, in line with Whitehall requirements, it means that institutional knowledge and understanding of grant management is held in a variety of different organisations and is often lost to DFID as a result.
72. Questions to ask DFID:
Why does DFID require higher levels of transparency from NGO grantees than for commercial contractors?
Is DFID concerned about the loss of institutional memory that can result from its new grant administration systems?
How does DFID consider the transaction costs and reduction in accountability when deciding to use a consultant instead of investing in in-house capacity?
November 2012
1 UKAN, (forthcoming), Post Busan: DFID’s Challenges in Implementing the Aid Effectiveness Commitments, alongside its Focus on Promoting Results and Value for Money. The indicators are proxy indicators for effective aid. Key: GOV SEC (aid contributed through the Government Sector), NAT LED (engages National Leadership), DON CO (whether there is a formal process for Donor Coordination). CSs (whether the project uses Country Systems), PBA (whether the aid is delivered through a Programme-Based Approach).
2 Statistics on International Development 2007-08–2011-12, DFID, October 2012.
3 For examples see the joint UKAN/Bond submission to DFID’s Annual Report and Resource Accounts 2010–11 and Business Plan 2011–15, page 5.
4 DFID defines these as sufficient levels of financial management, accountability, respect for human rights and commitment to poverty reduction.
5 The Paris Declaration on Aid Effectiveness and the Accra Agenda for Action, page 12.
6 “Aid Effectiveness 2005-2010: Progress in Implementing the Paris Declaration”, OECD Publishing, 2011.
7 UKAN, (forthcoming), Post Busan: DFID’s Challenges in Implementing the Aid Effectiveness Commitments, alongside its Focus on Promoting Results and Value for Money.
8 Written Ministerial Statement by the Secretary of State for International Development on aid to India http://www.dfid.gov.uk/News/Speeches-and-statements/2012/Justine-Greening-Update-on-aid-to-India/
9 M Ravallion, Should we care equally about poor people wherever they live? http://blogs.worldbank.org/developmenttalk/should-we-care-equally-about-poor-people-wherever-they-may-live
10 Evaluation of DFID’s Support for Health and Education in India: http://icai.independent.gov.uk/publications/
11 World Bank, India Development Policy Review 2006, page 3: http://siteresources.worldbank.org/SOUTHASIAEXT/Resources/DPRGraphs.pdf and Oxford Poverty and Human Development Initiative, Country Briefing India, 2010, page 6: http://www.ophi.org.uk/wp-content/uploads/Country-Brief-India.pdf
12 DFID Annual Report and Accounts 2011–12, page 51: http://www.dfid.gov.uk/Documents/publications1/departmental-report/2012/Annual-report-accounts-2011-12.pdf
13 DFID Annual Report and Accounts 2011–12, page 44: http://www.dfid.gov.uk/Documents/publications1/departmental-report/2012/Annual-report-accounts-2011-12.pdf
14 The Hunger Summit saw £120 million of the existing UK aid budget reallocated for three new initiatives. See http://www.dfid.gov.uk/Documents/Transcript-of-the-Hunger-Summit-closing-session.pdf
15 DFID Bilateral Aid Review Technical Report, March 2011, Annex F, page 33.
16 DFID Annual Report and Accounts 2011–12, page 201: http://www.dfid.gov.uk/Documents/publications1/departmental-report/2012/Annual-report-accounts-2011-12.pdf
17 The Bilateral Aid Review Technical Report, March 2011, page 14 stated that: “£1.5 billion has been retained for allocation in the later years of the Spending Review Period”.
18 In the EU making other policy areas consistent with poverty reduction objectives is called “Policy Coherence for Development”.
19 DFID-supported research from last year concluded that “no clear evidence yet exists that microfinance programmes have positive impacts”. See M Duvendack et al (2011), “What is the evidence of the impact of micro-finance on the well-being of poor people?”, London, EPPI-Centre, Social Science Research Unit, Institute of Education, University of London), p 2.
20 DFID Annual Report and Accounts 2011–12, page 13: http://www.dfid.gov.uk/Documents/publications1/departmental-report/2012/Annual-report-accounts-2011-12.pdf
21 http://unstats.un.org/unsd/mdg/Host.aspx?Content=Indicators/OfficialList.htm
22 See pages 11 to 14 of DFID’s Annual Report.
23 MDG1: target 1.B “Achieve full and productive employment and decent work for all, including women and young people.”
24 MDG6: target 6.A “Have halted by 2015 and begun to reverse the spread of HIV/AIDS”; MDG6: target 6.B “Achieve, by 2010, universal access to treatment for HIV/AIDS for all those who need it”
25 MDG8: target 8.A “Develop further an open, rule-based, predictable, non-discriminatory trading and financial system”; MDG8: target 8.B “Address the special needs of the least developed countries”; MDG8: target 8.C “Address the special needs of landlocked developing countries and small island developing States”; MDG8: target 8.D “Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long-term”; MDG8: target 8.E “In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries”; MDG8: target 8.F “In cooperation with the private sector, make available the benefits of new technologies, especially information and communications”
26 http://unstats.un.org/unsd/mdg/Host.aspx?Content=Indicators/OfficialList.htm
27 http://www.publications.parliament.uk/pa/cm201011/cmselect/cmintdev/605/60507.htm
28 The new Global Poverty Action Fund (GPAF) is managed by an external consultant (Tripleline) and the evaluation of Programme Partnership Agreements and GPAF is also managed externally (by Coffey International). Due diligence of all new DFID grants is now managed externally (by KPMG).