International Development CommitteeSupplementary written evidence submitted by the Department for International Development

1. Multilateral Organisations: Reductions in Administration Costs

The information on multilateral administration costs (Table 1) and trends (Table 2) is attached in Annex A. This is based on a review of annual reports, budgets, audited/unaudited financial statements and dedicated administration cost papers. Due to a number of caveats, these figures are approximations. We believe this is the best information currently available and provides a reasonable indication of the extent of administration costs across these organisations. The main caveats are:

(a)The classification and reporting of administration costs varies across multilaterals, which makes comparative analysis difficult. The definition of admin costs varies across organisations, as well as within organisations over time. The lack of consistency between agencies makes it difficult to benchmark or use progress in one agency to challenge another and to track how costs are changing. The treatment of “cost recovery” also has implications for the reported level of admin costs, particularly for UN agencies—with some organisations reporting both gross and net admin costs. For organisations with programmes/projects, programme administration costs might be reported as part programme spend and not be captured in overall administration figures. For some funds, their administration costs might be reported as part of the “parent” organisation’s programme spend figures and so their administration figures will be understated. The admin cost ratio is also affected by the chosen denominator—it can vary depending on whether core, voluntary or both types of contributions are used, and in the case of the multilateral banks whether commitments or disbursements are used.

DFID recognises these are key issues which require donor coordination to address and has recently embarked on a piece of work to understand better cost classification and reporting across multilaterals. DFID is also working with other donors through MOPAN to establish a cross-donor consensus on these issues and to encourage a more systematic approach to cost classification and reporting. This is a priority for DFID for the first half of 2013 and we are working with the USA on a joint paper for a Senior Donor Level Meeting.

(b)The nature of the work carried out by different organisations varies and this has implications for administration costs. Staff costs are a large proportion of administration costs and as such organisations that do a lot of policy/advocacy work as opposed to programmes/projects tend to have higher administration costs—but this will depend on how the organisation defines admin costs as some organisations will only count the costs associated with the programme/project work that they do. These organisations also tend to require specialist/niche staff input which can be expensive. Other organisations manage funds and do relatively less policy or implementation work and as such require relatively less staff input, which contributes to lower administration costs.

(c)Some organisations have recently undergone significant structural changes, and as a result recent administration costs figures are abnormally high. This is particularly the case for Global Fund and UN Women.

2. Contractors Employed by DFID in Afghanistan and Pakistan

The numbers of contractors employed by DFID in Afghanistan and Pakistan are shown in the tables below. The first row in each table shows the number of consultants employed to perform a “DFID role” (ie. a vacancy on the DFID organogram that cannot currently be filled and therefore a contractor has been engaged on a temporary basis). The second row shows the number of individual contracting agencies (“suppliers”) who are currently engaged in delivering contracts in each location. In each case a supplier may be involved in delivering more than one contract in that country, and may be employing more than one individual to carry out the contract.

AFGHANISTAN

Category	Number
Number of individuals employed by DFID to perform a DFID role	0
Number of contractors (including any solo consultants)	11
TOTAL	11

PAKISTAN

Category	Number
Number of individuals employed by DFID to perform a DFID role	1
Number of contractors (including any solo consultants)	24
TOTAL	25

3. Language Skills of DFID Staff

DFID holds data on each member of staff showing which languages they are able to speak, read or write. For each language and for each mode of use, people self-assess and record their capability using a three point scale (slight, moderate or fluent). This data is held centrally and is also published within DFID on our intranet. The Department currently has staff with fluency in a total of 46 different languages (see Annex B for details). As the Permanent Secretary said in evidence, DFID does hold this data and uses it when necessary (eg when there is a requirement to identify people with a specific language skill). One benefit of DFID’s new Human Resources “Passport” system will be the improved speed with which the Department can extract reports on language skills after April 2013.

DFID makes language training available to staff and is currently engaged in a Government wide e-learning solution for language learning in 31 spoken languages. The learning is suitable for a range of students, from beginners to level A2 of CEFR (Common European Framework of Reference). This learning is paid for centrally by DFID and is the first option for individuals who need to develop their language skills at this level. Where language learning is required above this level it may be supported through a variety of options eg extensive—one or two days a week; intensive—one-to-one training (short and long periods as required); and immersion—generally prior to taking up post.

The Department aims to recruit the best person for a post based on a range of skills and competencies, rarely making language skills a mandatory requirement. Where language skills are considered necessary to be able to function effectively in country intensive language training is provided to DFID staff. In terms of length of posting, it should be noted that three years is not a maximum but is the standard tour length in most countries. There are many occasions where DFID staff have remained in-country for significantly longer, sometimes up to six years where it suited business needs. Even where a UK Civil Servant is fluent in the local language they will often be accompanied by a local member of staff at key meetings as local dialects can make it difficult to be confident in interpretation.

4. Publishing Information on Expenditure on Technical Cooperation by Purpose

The Department has been and continues to consider how we use suppliers to deliver the aid programme. As previously advised to the Committee, DFID publishes data on technical cooperation by sector in our annual Statistics in International Development (SID) data. In addition, all large supplier contracts and payments are published on the Government’s “Contracts Finder” website, which provides information and visibility of the work being undertaken by suppliers.

The collation of technical cooperation data further split by “purpose” is complex and requires significant manual intervention. At this stage our analysis has focussed on ensuring the appropriate use of suppliers for DFID’s work, as opposed to designing systems to provide data for publication. This analysis has identified that the majority of recently awarded supplier contracts (by value) have been to commission suppliers to perform the following activities: programme delivery; fund management; technical assistance; research and; monitoring and evaluation. In practice, many supplier contracts contain a mixture of these different types of services.

We found that more than 70% of supplier contracts (by value) are managing the delivery of programmes or managing the distribution of funds to deliver programmes on behalf of DFID. This means they are performing a role that delivers real results on the ground. We do not currently propose to specifically gather any further information for publication, but will continue to review and consider the way in which we use suppliers to support delivery of the aid programme to ensure that we maximise value for money and meet our results commitments.

5. Payment By Results: DFID Supported Pilot in Uganda

In Uganda, Private-Not-For-Profit (PNFP) health facilities provide at least a third of all health services. The Uganda pilot is working with PNFP health facilities in Northern Uganda to incentivise improvements in health results through a results based financing (RBF) mechanism. The pilot will run from October 2011 to March 2015, and will pay out a maximum of £10.6 million, depending on results achieved.

To capture lessons, the PNFP facilities have been divided into “treatment group” receiving financing through RBF mechanism and “comparison group” receiving financing through the traditional “input based financing” (IBF) mechanism. Payments to PNFP facilities in the treatment group are being made on a quarterly basis to reward improvements to the quality and quantity of maternal and child related health care. Payments are made against five core indicators such as completion of ante-natal care, facility based delivery, full immunization of a child, and new outpatient consultations for children and adults. Improvements to quality are also encouraged through increasing the amount of payment based on a quality score—a “quality multiplier”. Payments to PNFPs in the treatment group are only made after the independent verification of results by Government of Uganda district health teams.

The pilot has now completed one payment cycle, and, although it is too early to draw any conclusions on the success of the programme, initial responses from PNFP facilities taking part in the RBF programme look impressive, with clear attempts by the facilities to try and improve results. The Government of Uganda is also very interested in the pilot, and is considering ways to expand the pilot beyond the private sector in the future.

DFID has contracted an evaluator to carry out an independent impact evaluation of this pilot and capture lessons on whether and how this mechanism works. Lessons from this pilot will have immediate policy implications for the Government of Uganda, DFID and other donors on the effectiveness of RBF as a mechanism for aid delivery as well as how to improve access and quality of maternal and child health services in Uganda.

6. DFID’s Research: Priorities, Impact and Use

DFID is strongly committed to commissioning world class research which directly improves people’s lives, and ensuring that it is readily available to those who can use it around the world. DFID also aims to use the best evidence in its own decisions, and to evaluate our research programmes so that we can learn lessons from them.

DFID’s Research and Evidence Division (RED) is responsible for commissioning research to generate new technologies and knowledge for international development. It enables the Department to be more systematic in demonstrating evidence of our impact on global poverty reduction through rigorous research, evaluation and active engagement with policy makers. RED is also responsible for supporting research into innovation in DFID programmes and for evaluating what works and what does not in achieving the Millennium Development Goals so that as an organisation we get better at what we do and deliver higher value for money. DFID has six broad priority thematic research areas; growth, sustainable agriculture, climate change, health and education, governance in challenging environments and future challenges and opportunities.

DFID has strengthened its Business Case process so that evidence of both need and impact must be presented in all Business Cases (which cover all of DFID’s investment decisions). RED’s “Evidence into Action” team has designed critical appraisal training to support advisers to improve their use of evidence. This training builds on good practice from the cross-Government Social Science Service. Use of evidence is monitored with new ways to quality assure and package evidence being designed to support front-line staff (such as the Systematic Review programme for development that has been pioneered by DFID).

In order to gain the best possible results from our research DFID works with expert partners from the public and private research sectors, including many of the world’s leading universities, the UK Research Councils and Foundations, other UK Government Departments, major multilateral agencies, and in product development partnerships with the private sector. DFID has funded world-class research and innovations which have both saved lives and significantly improved the quality of life for millions of people in the world’s poorest countries. Examples of the impact of our research include:

Scuba rice for Asia. Paddy field loss due to flooding in Bangladesh and India alone amounts to an estimated 4 million tons of rice lost per year—enough to feed 30 million people. DFID has funded the development of new rice varieties (tested in India and Bangladesh) which can survive up to two weeks of complete submergence in water, providing farmers with protection against short-term flooding. The flood-resistant SUB1 gene, when transferred into popular rice varieties, allows them to retain their characteristics. This research has led to the official release of flood-tolerant local rice varieties across Asia.

Drought-tolerant maize for Africa. DFID and Bill and Melinda Gates Foundation funding has supported the development of 34 new drought-tolerant maize varieties (produced by conventional crop breeding methods) for farmers in 13 African countries. An estimated 2 million smallholder farmers are now using the drought-tolerant maize varieties and have obtained higher yields, improved food security, and increased incomes. This project won the UK Climate Week Award for the best technological innovation in 2012.

New drugs for malaria. Drug resistant malaria is a substantial threat—every 30 seconds a child dies of malaria in the developing world. Through the Medicines for Malaria Venture (MMV) DFID is investing in a pipeline of new and reformulated drugs for falciparum and vivax malaria. Five drugs have already been released and are being widely used in Africa and Asia.

Global Alliance for Veterinary Medicines (GALVmed). The programme delivers animal drugs and vaccines in Africa and Asia where 500–900 million people living in rural areas of developing countries depend on livestock for food security, nutrition and transportation. DFID carried out a series of technical analyses and consultations with the private sector and farmers to develop a solution to treat and prevent some of the key diseases—with drugs and vaccines for East Coast Fever, Rift Valley Fever and other diseases now sustainably developed and deployed. In November 2012, DFID won the Civil Service Innovation Award for GALVmed.

M-Trac (mobile tracking). Africa has some of the highest prevalence rates of malaria, particularly amongst children (eg. 45% in Uganda). Due to the challenges in procurement, distribution, and supply chain management, the availability of anti-malarials at public health faculties is very inconsistent—less than 30% of children presenting with a fever receive the recommended drugs. DFID is supporting the Ugandan Ministry of Health (through WHO and UNICEF) by funding the m-Trac programme—which uses mobile phones to generate timely, accurate and regular data from public health facilities on availability and use of anti-malarials. Key outcomes include improved local availability of anti-malarials, increased numbers of children receiving prompt treatment, and reductions in under-5 mortality rates.

Pay-as-you-go energy for solar lanterns. M-Kopa, a small start-up based in Nairobi, and funded by DFID, has developed an innovative cellular communication technology that is integrated into the circuit boards of electronic products that allows consumers to purchase energy for products (eg solar lanterns) on a “pay-as-you-go” system using their mobile phones. Information is transmitted from the solar lantern to a central database, allowing M-Kopa to “top up” credit on the product for use by the customer. M-Kopa is now expanding their solar lantern business to reach over 350,000 people.

Annex A

Table 1

MULTILATERAL ADMINISTRATIVE COSTS

Multilateral Organisation	Admin cost incurred/budgeted (£000s)	Total Expenditure (£000s)	Admin as % of total expenditure	Year
UN organisations (excluding humanitarian)
UN Womeni	33,875	120,125	28.2%	2011
UNFPA*	182,625	1,094,875	16.7%	2012–13
UNEP*ii	11,021	85,438	12.9%	1998–2007
UNAIDSiii	42,768	377,993	11.3%	2010–11 biennium
WHO	264,142	2,717,879	9.7%	2010–11 biennium
UNESCO*	28,540	318,750	9.0%	2012–13 biennium
UNICEF	373,621	4,640,194	8.1%	2011
EFW	12,578	176,087	7.1%	2012
UNDP	245,051	3,480,338	7.0%	2011
FAO*			6.5%	2012–13 biennium
OHCHR	7,503	132,719	5.7%	2011
PBF*	1,375	62,125	2.2%	1/07/2010 to 31/12/11
IFAD			2.2%	2010
Global funds for health, education and climate change
UNITAIDiv	9,806	87,005	11.3%	2011
GFATMv	190,478	1,897,975	10.0%	2011
GAVI	23,125	798,125	2.9%	2011
GPE*	6,750	250,000	2.7%	2012
CIFs	28,519		2.7%	2009–11
GEF			2.1%	2010–11
Multilateral development banks, with a focus on the concessional funds
CDBvi	15,563	104,063	15.0%	2011
World Bank	1,491,875	22,062,500	6.8%	11–12
IADB	375,000	6,500,000	5.8%	2011
IFC	498,750	9,663,750	5.2%	2011–12
AfDB	149,508	3,575,000	4.2%	2011
AsDB	302,813	8,764,375	3.5%	2011
EBRD	202,439	7,358,537	2.8%	2011
European Commission excluding humanitarian
European Commission budget instruments and EDF	451,886	7,490,309	6.0%	2011
Humanitarian organisations
OCHA	22,133	153,453	14.4%	2011
ICRC	78,441	712,290	11.0%	2011
GFDRR			<10%	2012
UNHCR	124,522	1,363,125	9.1%	2011
CERF	23,987	267,776	9.0%	1 January 2011—December 2011
WFP	169,188	2,345,875	7.2%	2011
IFRC	10,253	296,553	3.5%	2011
IOM	27,684	818,569	3.4%	2011
Other organisations
ComSecvii	11,700	50,600	23.1%	2011–12
PIDG	7,206,250	313,412,500	2.3%	2011

* budget

Footnotes

i. UNWomen—the reason for the particularly high admin spend is due to the transition to UN Women, which is a new organisation, but this is something DFID will be monitoring closely in 2012 figures to ensure that admin costs fall.

ii. UNEP—charges a 13% programme support cost (PSC), which are the overhead charges applied within the UN Secretariat to expenditure on voluntary contributions.

iii. UNAIDS—is more about coordinating the global AIDS response and therefore has very little programme spend.

iv. UNITAID—in 2011 the Board decided to halt all new approvals as UNITAID was redesigning its appraisal and resource allocation model—so as a result the admin cost ratio became proportionately higher.

v. GFATM—during 2011 there was a reduction in the amount of funds spent as the Secretariat became increasingly cautious about signing grants in light of press reports of fraud and corruption in Global Fund supported programmes. Also the costs include spend on the Local Fund Agents—firms such as PWC and KPMG who provide the Fund with a degree of in-country financial scrutiny, monitoring and assurance; and the in-country Country Co-ordinating Mechanisms, which are the country’s own committees which oversee the design and implementation of Global Fund grants.

vi. CDB—total programme/approval fell dramatically by about 50%, due to borrowing countries not being able to borrow due to fiscal constraints and austerity—so as a result the admin cost ratio became proportionately higher.

vii. ComSec—because of the small-scale nature of ComSec’s programme activities, the number and size of its projects, and its high fixed infrastructure costs, it struggles to get the admin/programme ratio down to that of bigger agencies.

Table 2 highlights some trends in administration costs. The general trend across all multilateral organisations, for which we had data, is for a slight reduction in administrative expenditure. However, as can be seen in the table this is not true of all organisations.

Table 2

ADMINISTRATIVE TRENDS

		Admin ratio
Multilateral Organisation	2010	2011	2012	Difference
PBF		6.6%	2.2%	-4.4%
UNDP		12.9%	7.0%	-5.9%
GAVI		3.7%	2.9%	-0.8%
ICRC	9.3%	11.0%	N/A	1.7%
UNFPA		9.5%	16.7%	7.2%
UNEP		7.0%	12.9%	5.9%
CommSec			23.1%

The table shows there have been some significant reductions in administrative costs for some organisations. However, it is clear that there is still significant variation between agencies. It is likely that these differences may be fully justifiable, however, without a significant improvement in transparency and consistency in reporting it is difficult to draw direct comparisons between organisations. Frequency and availability of cost reports could also be improved. While it may not be appropriate to compare administration costs between organisations with different mandates, it would be useful to be able to track administration costs within an agency in order to track improvements/reductions in administrative costs.

The last section of the table highlights three organisations where admin costs increased as a percentage of expenditure/budget between 2011 and 2012. It was not possible to identify the reasons for the increase in administration budget; again there could be a number of justifiable reasons. This again highlights the importance of greater transparency allowing us not only to track administration costs but to understand the drivers of administration costs.

January 2013

DFID LANGUAGE SKILLS

Jan-13
Description	No. of fluent speakers	Location	Appointee Type
Afrikaans	1	UK	HCS
	2	Overseas	SAIC
Amharic	19	Overseas	SAIC
Arabic	2	UK	HCS
	4	Overseas	HCS
	16	Overseas	SAIC
Azerbaijani	1	UK	HCS
Bantu	3	Overseas	SAIC
Bengali	3	UK	HCS
	35	Overseas	SAIC
	3	Overseas	HCS
Bislama	2	UK	HCS
	2	Overseas	HCS
Burmese	3	Overseas	SAIC
Chichewa	14	Overseas	SAIC
Danish	3	UK	HCS
	2	Overseas	HCS
Dutch	4	UK	HCS
	1	Overseas	SAIC
Farsi	2	UK	GRADUATE PLACEMENT
	3	UK	HCS
	6	Overseas	SAIC
Finnish	1	Overseas	HCS
French	2	UK	GRADUATE PLACEMENT
	92	UK	HCS
	57	Overseas	HCS
	33	Overseas	SAIC
Gaelic	1	UK	HCS
German	2	UK	GRADUATE PLACEMENT
	15	UK	HCS
	16	Overseas	HCS
Greek	2	UK	HCS
Gujarati	1	Overseas	SAIC
Hindi	4	UK	HCS
	7	Overseas	HCS
	66	Overseas	SAIC
Indonesian	2	UK	HCS
	1	Overseas	HCS
	2	Overseas	SAIC
Italian	1	UK	GRADUATE PLACEMENT
	11	UK	HCS
	8	Overseas	HCS
	3	Overseas	SAIC
Japanese	1	UK	HCS
Khmer	1	Overseas	HCS
Malay	2	UK	HCS
	2	Overseas	SAIC
Mandarin	2	Overseas	HCS
	4	Overseas	SAIC
Melanesian Pidgin	1	UK	HCS
	1	Overseas	HCS
Ndbele	1	Overseas	SAIC
Nepalese	1	UK	HCS
	1	Overseas	HCS
	22	Overseas	SAIC
Polish	2	UK	HCS
Portuguese	28	UK	HCS
	9	Overseas	HCS
	23	Overseas	SAIC
Punjabi	1	Overseas	SAIC
Russian	4	UK	HCS
	3	Overseas	HCS
	6	Overseas	SAIC
Shona	1	UK	HCS
	3	Overseas	SAIC
Singhalese	1	UK	HCS
	1	Overseas	HCS
Slavic	1	UK	HCS
	0	Overseas	SAIC
Somali	1	UK	HCS
	1	Overseas	SAIC
Spanish	4	UK	GRADUATE PLACEMENT
	44	UK	HCS
	32	Overseas	HCS
	3	Overseas	SAIC
Swahili	7	UK	HCS
	7	Overseas	HCS
	56	Overseas	SAIC
Tagalog	1	Overseas	SAIC
Tamil	1	UK	HCS
	6	Overseas	SAIC
Telugu	1	UK	HCS
Thai	1	Overseas	HCS
Tigrinia	1	Overseas	SAIC
Turkish	1	UK	HCS
Urdu	6	UK	HCS
	3	Overseas	HCS
	29	Overseas	SAIC
Vietnamese	12	Overseas	SAIC
Welsh	0	Overseas	HCS
TOTAL	797

January 2013