CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 11 9 -i

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

International Development Committee

The Development Situation in Malawi and DFID's Development Programme in Zambia

Wednesday 13 June 2012

Michelle Kwamy, DianA Noble AND Rod Evison

RIGHt Hon. Andrew Mitchell MP

Stephen O’Brien MP and Mike Hammond

Evidence heard in Public Questions 1 - 67

USE OF THE TRANSCRIPT

Oral Evidence

Taken before the International Development Committee

on Wednesday 13 June 2012

Members present:

Right Hon Malcolm Bruce (Chair)

Richard Harrington

Pauline Latham

Jeremy Lefroy

Mr Michael McCann

Alison McGovern

________________

Examination of Witnesses

Witnesses: Michelle Kwamy, Country Programme Manager, Southern Africa, World Vision, Diana Noble, CEO, CDC, and Rod Evison, Managing Director, Africa, CDC, gave evidence.

Q1 Chair: Welcome and thank you for coming in to give evidence this morning. Before the introductions, may I just explain that the format of the session this morning has been slightly changed? The Secretary of State is giving evidence at 10 past 10 specifically on Malawi, and then after him Stephen O’Brien and Mike Hammond will give evidence on Zambia; so, obviously, we will be aiming to finish this session at 10 past 10 for the Secretary of State. Having said that, again, welcome. Thank you for coming in to help us with this inquiry. For the record, please introduce yourselves.

Michelle Kwamy: Good morning. My name is Michelle Kwamy. I am the Regional Manager for Southern Africa region for World Vision UK.

Diana Noble: I am Diana Noble. I am the new-ish CEO of CDC. I joined at the beginning of November.

Rod Evison: I am Roderick Evison, the not-so-new Managing Director for Africa in CDC.

Q2 Chair: This question is slightly divided; I will start with World Vision if I may. Obviously circumstances have changed somewhat dramatically, in Malawi particularly, since the Committee met both the then President and the somewhat isolated then vice-President. However, the level of deterioration that has happened in Malawi is such that the question really is: was budget support continued for too long? Should it have been suspended earlier? Do you have a view about that?

Michelle Kwamy: I think the issue of budget support is a political decision, beyond the response of World Vision as an NGO working within country. Whatever decision was made, one of the key things to consider is the impact of the decision on the most vulnerable within country, and whether there was ongoing support for programmes outside of the country.

Q3 Chair: I suppose that is part of the point of that question: if you had a Government where the relationship with donors, and with the people, was deteriorating, was there not an apparent danger that budget support would not be getting to the people or would be misused, and that in fact it would have been better to make sure that the money was directed precisely to the people who you were most concerned about?

Michelle Kwamy: There are several examples from neighbouring countries, for example Zimbabwe, of where mechanisms such as the Multi-Donor Trust Fund have been used to facilitate the disbursement of aid through other mechanisms when it is difficult to use the direct budget support. Our experience of that and our view of similar funds that arise in the Malawi context, such as the Tilitonse Fund, are positive. I am sorry; I am not sure I am addressing your question.

Q4 Chair: Let me help you the other way around. We have a change of Government, we have a new President. Does World Vision have a view as to how it thinks the aid relationship should now proceed under the changed situation?

Michelle Kwamy: DFID has clearly remained engaged with the new Government since they came to power recently, and those communication channels should continue to remain open. We have continued to have positive dialogue with them as well, and there has been an openness on the part of DFID to continue to have a dialogue with us as members of civil society on the experience we are seeing on the ground.

Q5 Chair: You say that DFID has failed to focus adequately on the most offtrack MDGs. If you think budget support is a decision for the Government and not something World Vision has a strong view about, and having said you think DFID has failed to tackle the most off-track MDGs, what do you think they should now do?

Michelle Kwamy: DFID has only recently, within the last couple of days, published its country operations plan for Malawi, which is most welcome, because obviously we were keen to have a bit of clarity on the direction DFID are focusing on for Malawi over the next period up to 2015. Reviewing the vision that is within that document, we would wish to affirm their commitment to support economic recovery and to protect the poor; their recognition of the specific needs of girls and women; the scale-up in water and sanitation, which perhaps does not come through as clearly as it might; girls’ education and so forth; the empowerment of local citizens to engage with their Government at local and other levels; and increasing the local accountability and space for dialogue. All of these areas we would very much affirm. The areas that we believe would potentially require additional investment are focused on health and education: maternal and child health specifically, and gender equity within the education sector. We would also look at teacher development and supporting teacher training.

Q6 Jeremy Lefroy: Turning to the DFID programme in Zambia, World Vision makes a number of recommendations. Is there anything you would particularly like to emphasise from your written evidence as to where you think DFID is on the right track, and perhaps where you think it should be doing more, or doing less?

Michelle Kwamy: We believe that generally the right priorities are laid out in DFID’s programme for Zambia, with a focus on human and social development, governance and wealth creation. Wealth creation is an essential focus, particularly where that relates to activities in the rural areas, given that the highest levels of poverty are experienced there. What we think is important in the response, under that particular sector, is that some level of differentiation is made between subsidised programming for those below the poverty line and those who are on or slightly above that, in terms of support and selfsustaining programmes, leading more towards support through microfinance.

Q7 Jeremy Lefroy: My colleague Richard Harrington will come on to wealth creation, but I would like to explore a little more with you other areas such as health and education. For instance, one thing the Permanent Secretary at the Ministry of Health, Dr Mwaba, said to us was that there is a real problem with the shortage of qualified staff in the health sector. Can you point to things that DFID could do more of, or was doing, to assist the Ministry of Health, or perhaps in other ways assist the Minister of Health? I think all of us felt there are some excellent people in the Ministry of Health, particularly Dr Mwaba himself, who gave us a great deal of confidence. But how could DFID help more?

Michelle Kwamy: It is an area we would wish to provide a written response on. I do not feel I am adequately equipped to give you the response that you require. If you are happy with us submitting some further written evidence, I would be very happy to supply it.

Jeremy Lefroy: Yes, we all felt that this was an important issue. We were talking about wealth creation, and Mr Harrington is going to ask about that.

Q8 Richard Harrington: In your submission, I think you are quite concerned about some aspects of DFID’s wealth creation programmes. That is important to us, not just for the country we are talking about today, but maybe it is generic to DFID’s wealth creation programmes throughout the world. As we know, it is a very important, hugely accelerated part of DFID’s activities, so we would appreciate it if you would comment on that, but particularly, can you expand on your concerns about DFID’s wealth creation programmes, and what mistakes do you think they are about to make? It was not clear from your submission, yet it is hugely important to us.

Michelle Kwamy: In reviewing the submission that we made to the development commission, two areas were highlighted. One relates to the copper mining; I do not know whether it fits, in your mind, within the wealth creation aspect, or simply under poverty and hunger.

Q9 Richard Harrington: But you are criticising DFID’s wealth creation programme, which I assume to be the programme they are undergoing to assist private sector commercial development in these countries.

Michelle Kwamy: I think the point that we were trying to make in our submission focused on the concern that whatever programming or aid is made available for wealth creation reaches the poorest of the poor and is able to work from the bottom up, rather than relies too heavily on a trickledown through investment in those who are higher up.

Richard Harrington: I am sorry; I do not understand what you are talking about.

Michelle Kwamy: Sorry, I am slightly nervous.

Richard Harrington: So am I, don’t worry.

Michelle Kwamy: Oh good, thank you. Our concern as an NGO would be that the poorest and most vulnerable are able to participate in any wealth creation programmes, and that they would be supported through capacity building initiatives.

Q10 Richard Harrington: I will give you an example of some things I would call wealth creation: helping microfinance; helping groups of subsistence farmers to buy agricultural machinery so they could start a more commercial type of farming operation. Would you support that kind of wealth creation programme?

Michelle Kwamy: We would be in support of it. We would also wish to see support that would enable participation for those individuals at the poorer level of society who may not have had prior experience of engagement in the market, for example group savings activities and training in capacity for those groups, to bring them into the market.

Q11 Richard Harrington: So on the other side of that coin, to give us some red warning signs, what kinds of wealth creation projects have DFID gone into that you would not think are the right things to support? In your submission you warn us about these, but can you give us some examples?

Michelle Kwamy: I am sorry; once again I may have to-

Richard Harrington: Don’t worry; it’s not the Leveson Inquiry. We are just interested.

Q12 Chair: You may want to come back to us afterwards. The point Mr Harrington was rightly making is: we believe wealth creation is part of a process of reducing poverty. You are clearly saying, "Yes, provided you do it in the right way." What we are looking for is what you think is the right way, and what might be the wrong way. You have said it needs to be accessible to very poor people. But what would be helpful, whether you want to tell us now or write to us afterwards, is what kinds of projects you think fit that bill. Are there projects that DFID is supporting that do not, or that you feel are too pro the middle classes or the already better off? That is the sort of thing we are looking for. If you cannot answer that question now, that is fine, but you might want to give us a note afterwards.

Michelle Kwamy: Yes. I would certainly wish-

Q13 Richard Harrington: Bear in mind that our job is to scrutinise what DFID is doing, and an important plank of DFID’s expansion or focus is towards getting the private sector going in the various countries in which it operates. We are very interested in your views on that. Your concern about it was flagged to us because you actually mentioned it in your own submission.

Chair: If you want to come back to us, that is fine.

Michelle Kwamy: I would appreciate that, in order for us to consult with the World Vision funded MFI within Zambia about their experience. There is certainly a place to support private sector engagement, but that needs to be balanced with programmes that would make it more accessible to the poor and vulnerable.

Chair: Thank you for that. Moving on to CDC, obviously it is undergoing some transformation, of which this Committee was very much in favour. You will be aware of the Report we produced last year and the extent to which the Government appears to be following quite a number of our recommendations. Pauline Latham will start the questions.

Q14 Pauline Latham: Your memo states that the process of switching to undertaking more direct investment will require the recruitment of new staff and skills and will take time. Do you now have those required staff in place, how many do you have and what skills have they brought? Have all the changes that you planned been undertaken now?

Diana Noble: I think it might be helpful to put my answer in the context of all the changes that are happening at the moment; it will be easier to understand our recruitment needs in that context. Firstly, it is a pleasure to be here and give an update to the Committee, because you have provided invaluable advice to CDC, which, as you say, we have largely incorporated into our plans going forward. CDC is changing, but we are also trying to keep what is best and build on that as well. The changes fall largely into four areas. The first is remuneration, which we will come back to in specifically answering your question. We made changes to remuneration to make it fit for purpose; it was one of my first priorities when I joined in November, and it was implemented for all new staff from 1 January. So we moved very quickly on that.

Q15 Pauline Latham: But not old staff?

Diana Noble: The old staff will transition from the old system to the new, because there are contractual arrangements that need to run out. After that transition period, which will take 18 months, everyone will be on the same compensation system. The second change that we are making is that we are shrinking our geographies to focus exclusively on Africa and South Asia, which was a recommendation of the Committee. But we are actually going further than that. We are putting in place a methodology to ensure that enough of our capital goes to the poorest regions and countries in Africa and South Asia. The third thing we are doing is to start rebuilding, as you say, our ability both to lend and to provide equity directly to companies, but this will definitely take time, and we need to be cautious in the way we do it. Today, we have only 15 investment professionals across all regions and products. Therefore, it is sensible, as we recruit and add to that team, that we start to re-enter those markets cautiously and alongside other lenders and investors who can lead those transactions and have the networks and resources to source due diligence and monitor investments; we can follow on behind them. That is our strategy in the first couple of years.

The fourth change we are making is to put development impact absolutely at the heart of what we do. From my background at the Clinton Foundation, I understand that defining and measuring development impact is an interesting, challenging and big topic. At CDC, we have used that knowledge to focus on a definition of development impact that we think works for us. We have also put in place a methodology to ensure that our investments across all the things we do, whether it is funds or investing directly, meet that definition and can deliver on it, and our compensation is tied to it as well.

So those are the four big changes we are making, but we are not throwing any baby out with any bathwater, we hope. I have with me today Rod Evison, who as you know has been 20 years at CDC and has been leading the fund selection part of CDC. I know the Committee looked at that carefully last time, and endorsed the value CDC brings through its funds business. Clearly, we will keep that and continue to do the valuable things, particularly in terms of backing new teams in Africa and South Asia. That strategy has brought us investment in 1,126 companies, which pay $3.5 billion in tax and employ 976,000 people. So, that is the core of what we do today, but clearly we are changing to build on that.

The last important thing that I want to say is that, even though we are focusing on development impact, we are not over-steering away from financial return. We will take more risk, and it is important that we do, in getting capital to harder places such as Malawi. However, we must look at everything through the lens of a very commercial approach. Bringing it back to the question you asked, we must hire people with the skills and ability to make good judgments about where our capital goes in these countries. So, we are putting in place a lot of effort. In fact, I spend at least 50% of my time on recruitment, because today, as I say, we only have 15 investment professionals; we only have 47 people in the organisation. As a comparison, PROPARCO, a DFI in France, is about our size in terms of their balance sheet, but they have 150 people. So, that gives an idea of the scale of the challenge and why it is going to take time to build CDC back to what the strategy says, in time, we should be.

Q16 Pauline Latham: You said that you were going to come back to the remuneration point.

Diana Noble: The philosophy behind the remuneration framework we have put in place is that CDC should not be a place of work for people who are motivated solely by personal financial gain. They should be people with the highest possible investment skills but who are really motivated to use those skills to achieve development impact in the countries we want to. We know those people exist; they are only a small proportion of the market, and we have to work hard to identify them and bring them on board, because they will not be paid what they would be paid, for example, in the alternative-in private equity firms. The new remuneration framework specifies absolutely that we no longer benchmark ourselves to private equity, so it is explicit to people that they are taking a discount to come and join us, but that is a good test that their motivations are what we want them to be: to achieve impact in these countries.

Q17 Pauline Latham: In doing so, will you get the right calibre of people to come and join you? And what is the general package, in terms of salary, that you are talking about?

Diana Noble: In the last few months, we have upgraded our recruitment processes to ensure that we only hire people of the calibre we want. It is hard to invest in our regions and have good judgment. We now have an assessment day that everyone must go through, where they do a case study; they have an hour-and-a-half structured interview; they have to give a presentation themselves; they meet their peers; and we test that they are really engaged. At the end of that day, we have a pretty good view on whether they have the skills we want. We also have psychometric profiling and things like that we can do if we have any other questions. Through that process, we have hired six or seven people so far. So, we are making progress but, as I say, it takes time.

Leading to the remuneration framework, it is up on our website and anyone can read it, so we are being totally transparent. The base salaries are benchmarked to other DFIs, so it is very clear that we are no longer benchmarked to private equity, as I say. There is a small annual bonus, capped at 20%, which we feel is important to motivate people annually, based on personal objectives. Then there is a long-term scheme, which is driven by development impact, not just by financial return as it was in the past, and it is a much smaller proportion than it was. The total package people can earn has been brought down dramatically. Speaking personally, I am at a much lower salary level than the previous CEO. Again, that is transparent; I think it is in the annual report and up on the website as well.

Q18 Jeremy Lefroy: It is very encouraging to hear that a lot of the recommendations from our Report have been put into practice. You talk about development impact. Could you explain what you mean by that? It is a rather general phrase.

Diana Noble: We have done a lot of thinking about this, to try to narrow it down. The core of what we think about as development impact is supporting the building of businesses; so our capital must be going where it has opportunities to grow that business, not just either to provide leverage to create value or price arbitrage. We want to take companies from a certain level and really grow them so that they then create jobs. Our main purpose is to create jobs, but also the environment for jobs. Putting in place essential infrastructure-building a power station for instance-may not in itself create a huge number of jobs, but of course, as the power starts flowing, you create the environment where lots of businesses can flourish in time. So it is direct and indirect job creation, but also doing that in the poorer regions in Africa and South Asia so that enough of our capital goes to those regions.

That is the core. Having said that, that is not everything we will measure. As we have in the past, we will track other measures such as taxes paid, such as the development of the private sector. But we are actually going to put more resources into place in looking at this area than we have in the past. We have just defined a new role, Director of Development Impact, and have put a spec out. DFID are working with us to try to identify this person who will really be able to make sure we track and measure the right things going forward.

Q19 Jeremy Lefroy: Have you disinvested from or sold any investment because development impact has not been up to scratch in the last year?

Diana Noble: No. However, looking across our portfolio, I think it is fair to say that there are a lot of great examples. One of the things we have probably not done well enough is to communicate those examples of great impact. We cannot guarantee that every single one of our investments will do what we want it to do; that is why we have a portfolio. However, certainly when I came in and looked at the things that were already happening before we even put our new strategy in place, there were some really fantastic examples of our capital going to build businesses and create jobs in hard places. We just have to do a better job of communicating that.

Q20 Jeremy Lefroy: What I was trying to get at was: an investment may initially be extremely good at creating jobs, but there will come a time when it is quite mature and perhaps the money will be better spent elsewhere, and that investment, even though it may be providing good return to CDC, is not actually providing great additional development impact. Therefore it would be better to sell and move the money somewhere the development impact could be greater. Are you looking at that?

Diana Noble: In the funds business there is an inherent pressure to sell business. Interestingly, one criticism of the fund business is that the capital is not long term enough. As I am sure everyone around the table knows, private equity funds have a 10year tenure; they invest over five years and then realise over five years. There is always an end date giving a momentum to turning the capital over, realising the investments that have been made, and making new ones. As we make our own direct investments, the question will become more pertinent as to how long we should hold them. Should we hold beyond a certain period? One of our strategies, as you will have read from the submission, is to develop in time some corporate pioneering platforms where we back management teams to buy and build businesses across lots of different countries over time. When we find a great management team, it makes sense over 10 or 15 years to keep giving them more capital if they have a successful strategy to add new countries and new operations, and create lots of jobs over that period. But we will clearly need to be very close to that management team so we can say, "You are running out of steam, and we think you have come to the end of that period." I think you are right.

Q21 Jeremy Lefroy: DFID clearly have a lot of people on the ground in the countries in which you are making investments. We have tended to find there is not as much synergy between the work of DFID and CDC as we would like to see. DFID staff can often identify in the course of their work, even if it is tangential to it, projects that could potentially be invested in. We did not seem to see a consistent way of bringing those to the attention of CDC, or even of thinking that we should perhaps raise that with CDC. Is that something you are addressing?

Diana Noble: It is a really interesting topic. In the first six months, I have focused on what we need to do ourselves and to get some real clarity on that. Now we know what we want to do, I think there is an opportunity to engage much more with DFID, both in London and in the offices, to see how their growing and exciting private sector initiatives can be synergistic with ours. For example, when I was in Malawi, we had some really interesting conversations with the Malawi DFID team about how they can help us and how we can help them. These are really early stage conversations, and it is a theme that you are right to highlight. It needs to be on our agenda over the next year, from both sides, frankly: from ours and from DFID’s.

Q22 Alison McGovern: Returning to your comments about remuneration, have you, as a new broom, conducted a gender pay audit yourself? Do you plan to do that going forward?

Diana Noble: Do you mean a gender pay audit within CDC?

Q23 Alison McGovern: Yes, of people who are directly employed by CDC.

Diana Noble: No, I have not done that specifically. As you can tell, I am a woman in charge of CDC, so it matters to me that we have good gender balance. Actually, I feel we do, but I have not specifically done an audit.

Q24 Alison McGovern: The reason I am asking that question is that, when we previously conducted our Report, it was something I asked the previous CEO, who looked quite surprised by it. If I may, going forward, it would not be a bad idea, given the issues of finance and women’s place in financial roles. I think it would be helpful.

Diana Noble: Fair enough. We would be very happy to do that. If you came to our offices, which you are very welcome to do any time, you would be pleased to see the proportion of women that we have in CDC.

Alison McGovern: The purpose of doing a pay audit is so that we know the facts about whether there is a pay gap or not. There may not be.

Q25 Richard Harrington: In the remaining time, to continue with what Jeremy Lefroy was saying, as a member of the Committee I find this issue very confusing. We are here today to discuss Malawi and Zambia specifically, in which the private sectors are very different. One is comparatively advanced to the other one. When we go to countries there is always this strange line: we do not know where DFID finishes and CDC starts, a very good example being Malawi Mangoes. You are probably familiar with it; it is a tiny project but, given there is almost no private sector in Malawi that we could see, it is very important. It is a group of people-they have lawyers, bankers and farmers-involved in a Western project to develop commercial mango farming. You may be very familiar with it-far more than I am. As a case study, it seems to me very interesting. DFID have given them some money to help them do business plans and this kind of thing, but they are really in need of proper private equity capital to expand the business. It was explained to us that the consequences for Malawi, where there is almost no private sector, are very significant in terms of employment, export earnings, etc-the usual things. They were asking us if we could persuade DFID to give them more money. They did not understand where the line stopped. I do think it is very confusing.

If you do have any specific knowledge about Malawi Mangoes it would be interesting, because they were very confused by CDC. They said, "They were interested and then they weren’t interested, then they’re reorganising and then they’re not." They seemed very professional people on the surface, from what we saw. Could you comment specifically on that? Also, Ms Noble, for the future, for us, where that dividing line is is very important. Is CDC just another source of funds that people trying to do private sector projects go to? Is DFID, as effectively the owner of CDC, a kind of lead introducer to CDC? And are DFID staff being trained to address this very question: do they know when to bring CDC in? It seems to us, again using this micro example of Malawi Mangoes, that they were desperate for us to tell them where they could get capital from.

This is not a criticism of DFID’s operation; they actually brought us that example, so they were not hiding anything. However, it seemed very, very confusing. Could you both comment on that, on the macro and the micro? It would be very useful.

Rod Evison: If I may, I will start with the highlevel environment, then I will come to Malawi Mangoes. I have been in CDC for 20 years, and where DFID ends and CDC starts has changed for both of us during that period. Whatever I say about DFID will probably not be the best description because they should answer for themselves. Going back to the time of Project Atlas and the creation of Actis, DFID was thinking more about health and education, and CDC was thinking more about capital mobilisation. We were moving in rather different directions at that point in time, which was not helpful from the point of view of co-operation. There are clear strengths to each. Now we are in a much more interesting phase, where each of us is coming to meet the other. Certainly we in CDC are excited by the possibilities for much more active dialogue with DFID, both here in London but also on the ground with the offices. As Diana has mentioned, at the moment our constraint is people and resource: people to have the conversations. Clearly, you won’t be satisfied if all we do is talk; we have to do things. So, we have to get the balance right there.

On Malawi Mangoes, we are clearly aware of that example, but I do not want to talk too much about the specifics of any one particular investment.

Q26 Richard Harrington: I am sorry: I mention it because it is the only one we actually saw, but it could be typical.

Rod Evison: As you would hope, we get a lot of investments coming to us. It is our role, in a way, to use our judgment to try to select those that absolutely meet the development goal Diana expanded on, including the sustainability goal. We have questions around that. You will know the history of CDC and investing in primary agriculture-the £100 million subsidy that it was viewed we gave to that in the past. It is a different era now, so let’s see where that goes.

Q27 Chair: Diana, you were in Malawi with the Secretary of State. Was there anything particular arising from that that you are able to tell us now? Does Malawi offer a real prospect?

Diana Noble:, Although I know Africa very well from my time at the Clinton Foundation, it is fair to say that it was very exciting for me, on my first trip to Africa with CDC, to go with the Secretary of State and demonstrate that CDC and DFID are thinking about things in a joined up way, and also that it should be in somewhere like Malawi. Our strategy in Africa, as I have said, is to try to ensure that more of our capital does not go to places that have lots of capital, like South Africa and increasingly Nigeria, but to pioneering places like Malawi, where we know very little capital goes today. I am not going to go through all of the reasons why Malawi does not get capital today; I am sure you are as familiar with them as we are.

What is more pertinent is: what did I think when I came back, in terms of what CDC could do in Malawi? The most obvious place to start would be to build on the skills that we have in starting and nurturing new private equity funds. It is something that we have done increasingly over the last couple of years. I am sure the Committee is aware of the fund we backed in the eight poorest states of India, called Pragati, when no one else wanted to start a fund. We anchored it, found the management team, and that was all our capital. That was very pioneering. This year we have anchored and started the first private equity fund in Ethiopia, a country that is very different from Malawi but not dissimilar in that the private sector is extremely nascent and it has had very little private capital in the past. These kinds of funds are very pioneering, and you would not envisage that we would make high returns from them, but we definitely think it is something we should do as part of our portfolio, provided we balance it with some rather safer investments. One of the conversations that we had with DFID was: "Could you find us a high quality team who understand investing and the region, which we could put a small amount of capital behind to start a pioneering fund?" That is an obvious place to start in somewhere like Malawi.

Chair: The Secretary of State is outside, so can we keep this very quick?

Q28 Jeremy Lefroy: I raised this before, and do not think I have had an answer. This was more to DFID and CDC. The Africa Enterprise Challenge Fund, which is invested in substantially by DFID, helps set up or grow a lot of businesses around Africa. It is purely grant driven. DFID retains no equity stake, which I think is a mistake. I have said this before; having been involved in one of the projects, I thought that actually DFID should have had a stake. I have said in the past that CDC would be a very good organisation to run these stakes once the investment had been made through AECF. Is that being looked at since we have raised it in the past? I believe the taxpayer should get some return from these grants through AECF, out of some of which businesses do very well.

Diana Noble: It is a really interesting question. To be honest with you, it has not hit my radar yet and I am glad that you have raised it now. We will look at it. I do not know the most appropriate way to respond.

Chair: You can write to us.

Diana Noble: Okay.

Q29 Mr McCann: Mr Evison, you dodged the question on Malawi Mangoes. Can you commit to give us a written response on whether Malawi Mangoes’ bid for support has been supported or not, and can you provide in writing the reasons why a decision has been taken either way? I also visited it and thought it was very worthy of investment support.

Rod Evison: I am happy to do that.

Chair: Not every member of the Committee made that visit, but those who did would appreciate that.

Thank you for very much. Obviously it is your first appearance in front of the Committee, but I suspect it will not be the last, not least because the reorganisation and refocus of CDC is of real interest to the Committee. We may very well want to ask you back sometime in the future to get an update on how things are changing. You will also get from the questions that we have asked you today that when we visit anywhere on the ground, we will be asking what the relationship is between DFID and CDC and how is it coming together. We expect to see a lot more exchange. But thank you very much indeed, and thank you as well, Michelle Kwamy from World Vision. Again, if you feel able to follow up on those questions with specific examples, that would be appreciated. I am sorry if you were slightly wrongfooted on one or two of the questions; don’t worry about that.

Examination of Witness

Witness: Right Hon. Andrew Mitchell MP, Secretary of State for International Development, gave evidence.

Q30 Chair: Secretary of State, thank you very much indeed for coming in to give us your up-to-date take on the situation in Malawi, which has obviously changed quite dramatically since the Committee visited. Obviously, you have been there very recently, and the questions will basically be on your take on where we are now. Just to take us a step back, when we were in the country, we had a meeting with President Mutharika, less than three weeks before he died, and the interesting point was that he did discuss devaluation, and he did make lots of positive comments about the relationship between Britain and Malawi. Indeed, the discussion then was, taken at his word, was he going to change? Well, obviously he did not have time to do so.

The regime changed, Joyce Banda became the President, and quite a lot of the things that were under discussion have actually happened. In that context, two questions have been asked about what happened to budget support before, and what might happen now. Did we wait too long to suspend budget support? People might worry that, given the way the previous administration was heading, the money was not getting to the right places. And do we think it would be appropriate to reinstate budget support, or do we have to go through a number of processes? That is just context, but feel free to give your current assessment of the situation.

Mr Mitchell: Given that the Committee is spending time and effort on Malawi, I thought it was better that I came rather than the UnderSecretary, as I have got back from Malawi just in the last week or so and can give the Committee an update on what is happening. I went to Malawi basically to reboot the relationship. In respect of the specific points you make, it may be helpful if I say what we now want to do, which is to address this issue in three distinct phases.

The first is the immediate phase; the devaluation of the currency by nearly 50% clearly imposes very significant strains and stresses on Malawians. I think that we should applaud the brave decision of President Banda in grasping the nettle when she came to power and devaluing. That was essential if Malawi is to make progress. Britain, as a longstanding historic friend and partner of Malawi, responded immediately-the first of any country or multilateral organisation-in producing British taxpayers’ hardearned cash to help. I brought forward payments of £33 million, with £10 million as an immediate assistance to provide drugs. I went to the main hospital in Blantyre and saw for myself the people queuing up, waiting for drugs, mercifully some of which were available but some of which were not. We have moved promptly to help with that £10 million. A further £23 million went to assist with programmes in health, education and agriculture.

Q31 Chair: Are they new programmes, or programmes that had been held back?

Mr Mitchell: In respect of the £23 million, I am bringing forward programmes we were hoping and planning to fund in any event, and the £10 million is in respect of drugs they need urgently now. That is the first phase, as it were, to try to address the immediate effects of the devaluation and to help them address immediately the very changed circumstances in Malawi.

The second phase is our existing programme, which needs to be rejigged following the change of Government. We now have an ability to do more, and to do it differently; we are actively looking at making some changes to the programme. I will consider whether or not we can restore budget support, and if I think that we can achieve the results we want and I am clear that British taxpayers’ money will be spent well and we will get full value for it, then I will restore direct general budget support in due course.

Then, of course, there is a third phase, which is why when I went to Malawi I took with me the new Chief Executive of CDC, whom you have just been talking to, because I want to send a very clear signal that the way in which Malawi in the longer term lifts itself out of poverty is by all the things we have discussed in the past-engaging with and bringing to bear the private sector. CDC, which in the past did have a strong involvement in Malawi, will, I hope, be able to engage there in due course. As I say, that is why I took the Chief Executive with me on that visit.

Q32 Chair: One of the things under discussion when we were there was the restoration of the diplomatic relationship-the high commissioners. Our understanding is that both countries have identified new high commissioners but they are not in place or announced yet. Are you able to tell us what the situation is?

Mr Mitchell: When I was there, both countries had just signed it off, so we hope very much that our new High Commissioner will be there shortly, and the new High Commissioner from Malawi to the Court of St James’s will be in London. I should pay tribute to the chargé, the number two who had carried the burden in the absence of the High Commissioner in Lilongwe, as well as two minor officials. At a difficult time in UK relations, they were intent on ensuring that, through the rejigged programme-you referred to the stopping of general budget support, Chairman, in your opening remarks-we were able to ensure our relationship with the people of Malawi continued. During the very difficult period, I authorised quite significant sums for both seeds and fertiliser through one of the very specific programmes, in order to ensure that, although we were having difficulty in terms of the way we delivered British support, we were still able to meet the needs we were trying to address on the ground.

Q33 Chair: That was something the outgoing President was very keen on; his argument was that fertiliser support was something he had done that had been very successful, but he resisted devaluation because he said there were not enough measures in place to protect the people from the effect. What was said to us was that it had happened de facto anyway; they were suffering the consequences. So what is going to be put in place in practical terms to help the ordinary poor people cope with devaluation?

Mr Mitchell: That is why we authorised this payment of £33 million in terms of foreign currency to help. We will do more to assist: I have had discussions with the Governor of the Bank of England about giving technical support from his officials to the Reserve Bank of Malawi, and that is in place. We are working now with officials to ensure we are able to give additional support as Malawi takes these extremely necessary but difficult decisions, of which the key is devaluation.

It is only one of the changes; there has been a refreshing change of direction as a result of President Banda taking over, which we all welcome and which we want the international community to support. I am talking to other colleagues in other countries who have an engagement and a link with Malawi about reengaging as well. I talked specifically to the Bank and the IMF while I was in Malawi about the importance of them engaging too. To be blunt, the difference in talking to Ministers in Malawi now under Joyce Banda’s leadership, compared with the rather difficult meeting I had at the AU summit in Addis earlier this year with the late President, is very clear indeed.

Q34 Mr McCann: Secretary of State, the devaluation of the kwacha is expected to have a significant impact among the urban poor. Do you believe that DFID should be scaling up its social protection work and following in the footsteps of UNICEF, Germany and the EU, who are all already involved in supporting cash transfers in Malawi?

Mr Mitchell: We are looking at all these things. In the changed circumstances, there will be new difficulties, which, as one of Malawi’s key friends and supporters-and I think also by some way the largest bilateral donor in Malawi-we will address. We will be monitoring very carefully the difficulties ordinary people in Malawi are facing and taking the appropriate action. It is one of the reasons why, for example, through the Farm Input Subsidy Programme-FISP-I authorised in addition to the programmes last year some £9 million to purchase seeds, and over £10.5 million in respect of fertiliser. So, because we have a very strong office on the ground in Malawi, we are very clear about the events that are now taking place-quite fast moving, in view of the devaluation-and we will respond and help with that.

Q35 Mr McCann: Can I press you a bit more on that? Mrs Latham and I visited the cash transfer projects in Zambia while we were there, and saw the valuable work that those small amounts of cash could provide for families with children, adults with disabilities and indeed older people who had no other means of support. I just wonder why you could not commit to the same type of project in Malawi, when it has taken place so successfully in its neighbouring country Zambia, supported by DFID.

Mr Mitchell: Let me reassure you on that point; I am a very strong supporter of social protection programmes. While I was in Opposition, as the Opposition spokesman, I had the opportunity to follow the way in which social protection worked in some detail on the ground in Ethiopia. I think we are absolutely right to say that social protection is a key way of stimulating markets; of protecting the poor from deep food insecurity; of helping them very directly in a way that, so long as you are satisfied that the systems of delivery protect British taxpayers from their money being used corruptly, we should be doing more of. It is a feature of the work of the Department while I have been there.

Q36 Mr McCann: Just to be clear, the cash transfer, for example, is on the table as an option for Malawi.

Mr Mitchell: Certainly. I am not in a position today to tell the Committee how we will change in that respect, but I can reassure Mr McCann that we are intent on using social protection for the reasons that he has described.

Q37 Jeremy Lefroy: You have just talked, Secretary of State, about the FISP programme, the seeds and fertiliser, which has been generally regarded as a success. We were very pleased that the UK Government has played a major role in that. Do you see that DFID will continue to provide funding to this programme, first of all?

Mr Mitchell: From memory, I think the funding is continuing into the future anyway; we need to make further decisions on how long it will go on for. I went to see a community that had benefitted from this programme while I was in Malawi, so that I could see for myself the way it was working on the ground. It is clearly greatly appreciated by those who are the recipients, as well as by the Malawian authorities. So we are very warm to continuing that. As I say, during the difficult times over the last year, I have specifically boosted the FISP programme in respect of seeds and of fertiliser.

Q38 Jeremy Lefroy: The private sector is very important in the distribution of this; it cannot be relied on just to come out of Government stores. We saw that the private sector is involved in the distribution of seeds but not fertiliser. Is that something that you are looking at as well, in order to enhance the effectiveness of the logistics?

Mr Mitchell: We are always looking at the best possible way to distribute. Often, as you rightly say, it is through the private sector. In some of the most remote parts of Africa, you find that the private sector has a distribution and supply mechanism that the state does not get anywhere near having, so we certainly seek to take advantage of that.

It might perhaps be helpful if I just said a word, Mr Chairman, about the private sector and the opportunities and the future, because there has been a significant recognition, by the Minister of Finance and others, of the serious errors that were made in the last part of the Mutharika regime, when, for example, they imposed a turnover tax. Members of the Committee will understand that taxing turnover without account for profitability is a direct way of killing the goose that lays the golden eggs, and we were very keen to make sure the importance of encouraging and attracting the private sector is seen as a key way in which Malawi can help lift itself out of poverty.

I think there is a new atmosphere and a new welcome for the work of the private sector, which certainly Diana and I discovered when we were there, and I hope that will continue. We are very keen to give them support in encouraging the private sector. I went to visit a company that, I think, employed thousands of people but was facing very considerable constraints in terms of the supply of raw materials, power outages, and so forth. A focus on how you improve the atmosphere and the ability of the private sector to work and be effective is now a high priority of the Banda Government.

Q39 Jeremy Lefroy: One final thing, specifically on FISP: in the past, people have been somewhat reluctant to support subsidised agricultural programmes such as FISP. I have always taken the opposite view-that they have a role to play, particularly as we saw in 2006-07 with the famine in Malawi. It needed to get out of that position. Do you think there are positive lessons to be learnt for other places from this particular programme, and is the Department perhaps looking at this as something of a case study for other countries?

Mr Mitchell: We are doing an enormous amount of work on trying to move very insecure communities. I went last year to see the community in northern Uganda, in Karamoja, where there is considerable success, which Britain and the World Food Programme have worked on, in trying to move people, who are, on an annual basis, suffering from deep insecurity of provision of food, to a much more resilient place. A lot of the work we are doing is trying to honour the old adage that if you give a man a fish, you feed him, but if you teach him how to fish, he or she is then able to survive on their own.

A lot of the work that we are doing, such as the Paddy Ashdown report that was so helpful in this, underlines the importance of the longer term work we do trying to make communities less foodinsecure and much more capable of handling these inevitable difficulties that will occur due to the weather and the climate. The work that we are doing, through our research, on making seeds more robust is enormously important; it is a very strong emphasis of the Department.

Q40 Jeremy Lefroy: Just finally, Chairman, the reason I ask that question is that in our AllParty Group on Malaria we see how the kinds of things that are being done now, effectively to tackle malaria, were being done in the 1960s, and then the ball was dropped, and we have had to relearn so many things; these are fairly basic things that have been done through FISP and have been quite successful. How can we make sure that gets into the DNA of the development community so we do not have the same as we have had with malaria, where we have had to relearn at the cost of several million lives in the meantime?

Mr Mitchell: The answer to your question is not to drop the ball. As you know, this Committee has, on a number of other occasions, identified areas where the ball has been dropped; I am thinking particularly of water and sanitation, where the Committee played a major role in ensuring that Governments took more account of the difficulties there. The short answer is to continue to make progress in the way that I have described, so that you build in sustainability and you do not always have ad hoc reactions.

Q41 Richard Harrington: To go back to what you were saying about the private sector, it seemed to me striking, as a firsttime visitor to Malawi, how little the country has going for it in terms of there being few natural resources-I think there is a bit of uranium in the north, but nothing like the example of the Zambian copper reserves. It is landlocked, with very much a subsistence agricultural basis. Then we have DFID, who are helping in a small way, through the example we saw of a project called Malawi Mangoes; in that case, they were providing funding to do business plans, etc. We now hear, very encouragingly, that the new CEO of CDC was with you on the visit, and we in fact questioned her on that very project just before you came into the room. However, it just seems to me that few people are aware of the implications of your vision, which is DFID actually helping tremendously to develop private sectors in these various countries, and how it could work in a country like Malawi. Where is the borderline between DFID’s activities-for example, in this case providing the funding for the business plan-and CDC, when there is almost no private sector? Will DFID simply be a lead introducer for CDC? Will DFID, in countries like this, directly, or via NGOs, fund startups? Could you give us some idea on that, because it seems to me that Malawi is a very, very difficult country to do this type of operation in?

Mr Mitchell: What Mr Harrington says is true. There are three programmes at the moment that are being worked up that will give specific support to the private sector. One is a programme to upgrade rural roads, which Mr Harrington will appreciate is enormously important in getting goods to markets and developing markets and so forth. The second one enables access to financial services, and the third will be specifically aimed at helping agribusinesses; the Committee will be aware of the various challenge funds that can also be accessed: retail challenge funds and others as well, which we have introduced and which can help.

The whole purpose in travelling with the new CEO of CDC was to talk about how DFID and CDC work much more closely together. That is one of the most significant changes that has taken place in the Department. We now have a private sector division within the Department. The pathway between DFID and CDC is now one that is trod far more often than it used to be. I know that the new CEO was considering whether or not, in due course, at the right time, it might be possible for CDC to set up a fund in Malawi that would then support entrepreneurs and invest, through local businesses, in opportunities that are there. That is quite a good model; I know it is one that CDC are looking at. It depends on having both competent and reliable local interlocutors to run your fund, because you cannot do something like this from back in the UK. That is the way in which you drive forward the sort of business that you are quite rightly identifying as critical to growth and success in Malawi in the future.

Q42 Richard Harrington: I find that very encouraging, because I think one of the problems, having met DFID staff in Malawi and other places, is that, while they very much buy in to what DFID is trying to do in the private sector, it is not in their particular field of experience to get involved in commercial undertakings as quasiinvestors. It is perfectly understandable. It is the same in the Foreign Office; when one speaks to ambassadors about how to help British trade, they really want to do it, but it is just not their background. Is the way round that for DFID, in countries such as Malawi, to recruit specialist people with commercial experience to work for DFID, or is it to subcontract that to another entity, like CDC?

Mr Mitchell: It is both, and we are recruiting; we have recruited a significant number of new people with private sector experience. We are looking all the time for secondments; we have now got some secondments from the private sector. One of the great advantages of a Department like DFID is that it attracts extremely clever and committed civil servants, who are learning about what can be done to boost the private sector. India is probably the programme that is furthest ahead; I have launched a number of specific new private sector programmes there, with the use of returnable capital, which we have discussed before on this Committee. It has some of the characteristics of a sovereign wealth fund.

This is the way in which you empower and drive forward the private sector. India is a little bit ahead of others. The offices crossfertilise. The bank of knowledge among officials in this area is increasing every day, and, following the new direction in this area set out by the coalition Government, it will continue to be driven forward. I think we will see increasingly the justification and the success of this approach, which the Committee has endorsed, for which we are most grateful.

Q43 Chair: When we were on our visit, we met with President Mutharika, but immediately afterwards we met with President Banda. At that time of course she was beleaguered and almost trapped in her house, claiming that she was in fear of her life. Things have changed rather dramatically. Generally speaking, the transition, after a little concern, seems to have moved relatively smoothly, but there has been quite a lot of activity, such as the sacking of officials and MPs crossing the floor and so on. Politically, are you comfortable that the new president is taking people with her, that her actions are consistent with a positive regime, and that-it is difficult to predict, obviously, what the political outcome will be-the new administration has the capacity to follow through and deliver constructively, both for the people of Malawi and in relation to the donors, who, in Malawi’s case, are crucially important?

Mr Mitchell: One must be aware, Mr Chairman, of prophesying, particularly about the future, but what I can say is that she has made an outstandingly good start. She has started with immense goodwill; I was very conscious of that in what I saw during my visit to Malawi. She has made the right decisions. She has made it clear that she will reverse some of the bad laws, as they are described locally now, that were brought in under her predecessor’s regime. On abuses of human rights, particularly in terms of journalists been deprived of the ability to ply their trade, she has made it clear that she will reverse those negative characteristics of the previous regime. It is extraordinarily welcome, too, that she has made it clear that she is looking to dispose of the presidential jet, or to lease it as a means of raising revenue for the country, and to get rid of some of the other fripperies that caused great concern under the previous regime: very large numbers of expensive Mercedes motorcars and so on.

Her determination to divest herself of these at a very difficult time for the Malawian economy sends incredibly good signals, and through the discussions with the IMF that I had while I was there, and with the World Bank, I think that the international community is engaging as fast as it can. Britain has set a very good example and a very good lead. Other countries, too, are coming back. We are crowding in support, as we should do, to help her in the brave reforms that she is making. Britain is a very long-standing friend and partner of Malawi, and we will continue to do everything we can to help the president as she makes these brave decisions and sets Malawi on a new track.

Q44 Chair: But the objective, presumably, is to ensure that there are working institutions that have continuity. There will be elections at some point. Who knows what the outcome will be? Is this not a window where it is really important to get in place some good, open institutions that will carry through to any future?

Mr Mitchell: Yes, and we are giving specific help in that respect, and we will respond to any request from the Government of Malawi to help in building up the strength and capacity of their own administrative systems.

Q45 Chair: If that leads to the restoration of budget support, when do you think you will be able to make that decision? How do you distinguish between direct budget support and sector budget support, which I gather continued throughout?

Mr Mitchell: Yes, where we were happy with sectoral budget support and could see the way in which the money was being effectively spent, delivering services on the ground, we did continue with it, so that is continuing anyway. I cannot tell you when we would restore general budget support, but we are certainly looking at it. My hope is that before the end of this year we will be able to return to that, but I must ensure that British taxpayers’ money spent in that way is delivering 100p of value on the ground for every pound that we disburse.

Q46 Chair: You mentioned the World Bank. What about the other donors? Who are the key other donors within the EU and elsewhere?

Mr Mitchell: The EU, certainly; I had discussions with the EU while I was there. The Scandinavians and the Germans have been supporters in Malawi, and we are engaged, and my officials are engaged, in explaining to them what we think and trying to make sure that we crowd people back in.

Q47 Chair: I do not have any other questions. Is there anything that you want to say to us, in addition to what we have already asked? Clearly, we set out on an inquiry in one situation and we conclude it in a different, and hopefully much more positive, situation, and our Report, I hope, will reflect that. I hope that obviously if there are any significant changes in the time between now and when we finalise the Report, you will ensure that we are advised on that, so our Report can be relevant, specifically on such things as budget support or any specific initiatives that you may take.

Mr Mitchell: I will certainly, Mr Chairman, ensure that, if there are any developments, we advise you of them as soon as we can. In addition, we will be very interested in the Report that the Committee produces as part of what is quite a rapidly moving situation.

The only other thing I would wish to add is that, during the course of the time where there has been such difficulty in the relationship between Britain and Malawi, we have continued to ensure that help gets through to the poorest: feeding nearly 4 million people or providing some basic level of food security to them; trying to ensure, as we did last year, that there was a significant increase in pupil-teacher ratios; trying to ensure that we are able to assist in the education of not much short of 500,000 children in primary school, of whom over 200,000 are girls; making sure that more than 100,000 people have access to clean drinking water and improved sanitation; and there is the work we are doing through our health programmes in improving maternal and child health. Britain has stood by the people of Malawi.

Because, of course, the governance is now set to improve so significantly, there will be much more we can do through working with the Government, rather than having to go around it, as was the case during the recent difficulties. That, more than anything else, will help Malawi lift itself out of poverty much more quickly.

Q48 Chair: I think the Committee would state that in both Malawi and Zambia the attitude towards the United Kingdom, wherever we went, was very positive and very important. It is always quite sobering, when you go to a country, to realise that perhaps they look to us more than we expect sometimes, and that they look to the relationship as being crucially important, which puts an obligation on us to ensure that what we do does in fact meet the real aspirations and needs of the people, and is not just about trying to impose our own ideas. I think that kind of dialogue was very difficult under the previous president but hopefully will be much more constructive now.

Mr Mitchell: Yes, I completely agree, Mr Chairman. While I was there, in Blantyre, I had the opportunity-organised by the Honorary Consul-to meet very large numbers of the British community. As ever in these situations-I am sure the Committee would share this view-one is humbled by the contribution that is being made from all parts of the United Kingdom, particularly Scotland, to deliver, help and assist Malawi in its development. It is a very clear example of Brits going the extra bit to really help as part of this deep, historic relationship we have with Malawi.

Chair: It is no accident that the largest town in Malawi is called Blantyre and has not changed its name.

Mr McCann: It is where my mother was born.

Chair: Thank you very much indeed, Secretary. We appreciate the time that you have taken.

Examination of Witnesses

Witnesses: Stephen O’Brien MP, Parliamentary Under-Secretary of State, DFID, and Mike Hammond, Head of Office, DFID Zambia, gave evidence.

Q49 Chair: Good morning. I would normally ask people to introduce themselves, but I am simply going to say welcome to Stephen O’Brien, Parliamentary UnderSecretary, and Mike Hammond, head of DFID in Zambia. Thank you both for coming in to give us evidence in our inquiry into Zambia, where, I suppose it is worth stating, the relationship has not changed dramatically in the last few weeks, as it has with Malawi.

However, what has changed is that the programme has been updated, and I just wondered if I could start by asking a couple of questions on that, because effectively, as we understand it, there has been a switch in the emphasis of the programme, from wealth creation, governance and security, HIV/AIDs and poverty, to spending on health, education, reproductive, maternal and newborn health, malaria, and water and sanitation. Can you give us a reason why that switch has been made? Is it simply to do with phasing of spending and the status of the programmes, or does it have greater strategic significance? The Committee certainly felt that Zambia was a country where wealth creation had real capacity and DFID had a real responsibility to try to help it happen, so I just wondered if you could explain what is the significance of those changes.

Mr O’Brien: Thank you very much indeed, Chairman. The straight answer to your question is that it is a bit of all that. Let me just try to disentangle it a bit. You will be aware that, given the committed programme that we have-and I believe you have had an update of where the operating plan has been adjusted-I think I am right in saying from memory that now 85% of our programme is effectively programmed, so what you have got is an update of some of that increasing amount of detailed programming coming through.

Secondly, rather than giving up on what you have listed as the initial operating plan, it is now adjusted so there is a new calibration of where the effort is going in. It is not one replacing the other; the readjustment of focus is because there is recognition that, as Zambia’s broad condition is changing, we need to focus more and more of our programmes on what is really going to help underpin those who are the poorest. There is also the phenomenon within Zambia, which I daresay we will come on to, where one has a range of things that are really very encouraging but there is still a very stubborn, large element of very impoverished people and continuous challenges. Therefore, boosting public service delivery, particularly as we urge Zambia to generate more of its own resources, is where we can deliver the best effect and impact to really tackle poverty, because we have a number of MDGs in Zambia that are very seriously offtrack; we want to try to focus on that, so the health one clearly comes through, as well as education, which I know you have been interested in.

Q50 Chair: What was made clear to us was the disparity between the urban and the rural situations. Can I take it from what you have said that these programmes will be targeted at delivery in the rural areas, which seem to offer the biggest challenge?

Mr O’Brien: That is absolutely right, and that is the way that the programme has been designed and indeed motivated. I think all of us are very well aware, whether it is in Zambia or elsewhere, that there is a continuing, very serious challenge in terms of the poverty of urbanising, not least in the case of those on the periphery and in periurban areas of many cities across subSaharan Africa, and that is as true of Lusaka as it is of many other places. However, there is this opportunity with Zambia’s current growth rate-and we do recognise that the question is about how much of that growth is reaching the poor, rather than serving the small but emerging middle class and the existing elite-and where we can have greatest impact is being able to seek to get programmes that address that veryhardtoreach rural poor, outside Lusaka and outside the immediate part of the Copperbelt, albeit, as we well know, the Copperbelt, while it may have quite a lot of the earnings potential, does not necessarily house a huge amount of the population or the employed.

Q51 Chair: Does that explain the switch on budget support? You are reducing the direct budget support to the Zambian Government, partly because of corruption. Is that the main reason, or is it partly because you feel that the Zambian Government does not have the capacity to deliver in the rural areas and so you need to do it differently? Is there a reasoning behind that?

Mr O’Brien: I would not quite characterise it like that, Chairman, because I would say that, as I think you are aware from elsewhere, our approach to general budget support is to see that diminish as a proportion over time, but that is being put into the sector budget support side, and in particular that therefore is able to push on the services. Doing that not only provides greater focus but a much greater ability for the transparency, accountability and capacitybuilding of the particular Ministries, whether they are Health or Education, through the sector budget support rather than general budget support. In a sense, it is a reflection-you are right-of pushing down the basic services element of growth in a more focused way. At the same time, it is the direction that we want to go in, in order, over time, to try to bring down the general budget support, for reasons that we can go into but of which I think you are aware, in Zambia and elsewhere.

Q52 Chair: I am going to pursue this slightly, because obviously part of the argument for budget support is that it gives more ownership to the government of the country in question, and that it helps to build capacity. You could argue that sector budget support perhaps does it in a more targeted and effective way, but if corruption is not the problem, and clearly it was in the Ministry of Health, what is the reason for not maintaining budget support? There is an argument that this was a good way of building up the capacity of a central government to deliver its own services.

Mr O’Brien: This is a judgment; it is also not a blackandwhite issue, as you well know. This is a question of where one has the balance.

Q53 Chair: We are obviously moving into more fragile states.

Mr O’Brien: More fragile states indeed. The primary reason for the small decline in general budget support versus sector budget support is motivated by the idea that, as domestic revenues grow, we want to scale down the proportion of general budget support. By going through the sector budget support, you get the benefit of getting that greater focus and the concomitant capacitybuilding that goes along with being able to direct and focus your effort through those particular sectors.

However, you are also right in identifying why general budget support came to be the phenomenon it was; it was because of that level of ownership and being able to give that sense of a partnership, where the backing was to a governmentowned strategic approach. It is not to say, therefore, that this has been switched off. It is a question of balance between the two, and not, as I say, an absolute choice of one versus the other.

Q54 Jeremy Lefroy: On one of our visits, we passed enormous maize warehouses that were absolutely full and were about to be decanted into trucks to take the maize to Zimbabwe for sale at well below the cost to the Zambian Government. The maize subsidy consumes an enormous proportion-I think up to 15%-of the Zambian budget, and clearly it is a very different animal from that we have just been discussing in Malawi, where the focus is very much support at the grower level for seeds and fertiliser. What, as far as you understand, is the Zambian Government’s current position, and has it changed since we were there? Then, it was clear that it could see the problems with it but had not made the decision about whether to cut or eliminate this maize subsidy. Clearly this is a very large sum of money that could be spent on schools and health but is not; it is being spent, effectively, on paying too much for maize.

Mr O’Brien: If I may say, Mr Lefroy, you summarise the position very well, because I think this is one of the greatest challenges for Zambia. The straight answer to the particular question you asked, about whether a decision has been made, is that, as far as I am aware, it has not yet been made. However, there are lots of representations, as you can well imagine, being offered to and received by President Sata, who will obviously have to make the final choice as to how they proceed.

By any test, if you are paying $100 a tonne above the regional market price, you have a structurally builtin unsustainable economic position. The question is: how much of this decision is truly economic and how much of it is political, given that there is a massive expectation, across a wide proportion of the Zambian population, that maize needs to be bought at these particular prices in order to protect them? I say "protect them", rather than necessarily protecting vulnerability, which is the test we would prefer to see.

On the smallholder maize market position, the information I have-it is going back to 2008, so inevitably is somewhat dated but is the best we have, and I can certainly give the source on the record if that is helpful-is that the people who are helped by this subsidy are the maize netsellers; that represents 28%, and they are mainly largescale farmers. Those who are not directly affected, that is those who do not buy or sell maize-for various reasons: maybe just being able to get to the point of sale-is 23%, and those who are actually harmed by this process are the maize netbuyers, which is 49%. As I say, I am talking about the smallholders here, as well as the urban consumers.

Therefore, if one was making a clear choice sitting as we are in this room, it is difficult to see how that would be a choice that is made, so one has to understand the political context in which this sits in Zambia. You are quite right; it puts it in a position where it is not actually, at any kind of economic level, exportable.

Q55 Jeremy Lefroy: Just to put it into context, the cost to the Zambian Government budget is greater than DFID’s entire bilateral programme on an annual basis, as far as I can tell.

Mr O’Brien: I think that is right. I think you mentioned 15% of revenues, and I think that is the number that we understand it to be, too. The other point that needs to be made, of course, is what else one could do with those revenues as an alternative if that subsidy were not in place. Not least, there are 5,000km of unpaved road network that needs to be upgraded, not least so it can withstand the very seasonal attack-

Q56 Chair: We saw large numbers of school children who aspire to go to secondary school but there were not any places.

Mr O’Brien: That is exactly the right thing. In fact, we have actually run the numbers, as part of making the representations within the strong partnership that, as you know, exists between us and the Zambian Government. Indeed, the Head of the DFID office, Mike Hammond here, is able to have a series of very useful and important conversations, but one of the ways of arguing this is that it would actually deliver universal access to secondary education, by providing free schooling for 300,000 children, constructing 50 new high schools, and employing 10,000 more teachers; these are alternatives you then have in place. The question is what to do about it, and it is difficult, because it is ultimately a political decision within Zambia. However, we can all see that the rational, economic arguments make it very difficult to justify. Mike, is there anything you want to add on that?

Mike Hammond: I think what we found with the PF Government is it is in their manifesto that they will do something about it; they recognise it. The cost to the budget, as the Minister has said, is actually around 8% of the budget. It is larger than the DFID programmes; it is 1.7 trillion kwacha a year. We have been lobbying very hard, with others, and we have been trying to provide a political alternative: "This is what you could do with the money that would not dent the popularity of the PF Government." Their main concern is that they would lose the rural vote that helped get them into power. They are a new government, 20 years in opposition; they are wary about making changes.

They have not made a decision yet. There has been lots of lobbying both ways, and we continue to lobby, using budget support as an instrument to get ourselves to the table, and the Secretary of State raised it with President Sata when he was here in London last week.

Mr O’Brien: It is our hope that it will be grasped as soon as possible, because now is the time, in terms of the political cycle and political capital, to expend on this; if there is a potential political cost, it can only get more difficult to make that decision the longer it is left. I think I have made my point.

Q57 Jeremy Lefroy: Has DFID suggested that they look at what has happened in Malawi, and at least convert part of that expenditure into a support programme for the smallholders in terms of access to seeds and fertiliser, rather than a guaranteed abovemarket price?

Mr O’Brien: I will ask Mike to add anything if I do not cover all of this, but certainly on our programming, as against our lobbying and representations, the new programme will work with suppliers of fertilisers and seeds. In many ways you are quite right; there are comparisons, but very different points of consideration, both in Malawi and in Zambia. We are working with suppliers of fertilisers, seeds and other farm inputs to supply 250,000 smallholder farmers, but it is above all helping the suppliers to build up networks of agents to create demand, to aggregate the orders and to teach farmers how to best use these inputs, something that, you will recognise well, Mr Lefroy, is always a challenge of these growing markets-and by that I mean agricultural markets-of subSaharan Africa. That will reduce their transaction costs, and that helps them to serve a new, previously untapped, smallholder market.

We will also be giving 100,000 farmers access to the markets they need in order to sell their produce, so we are working with farmer organisations to aggregate milk from smallholder dairy farmers, to supply large dairy processors such as Parmalat. The whole idea is to get the right products to the smallholder farmers, so that one is getting to the bottom of the pyramid, if I can borrow the Collier analogy. I think it is common ground between the Committee and us that that is the objective in terms of development: to reach those most vulnerable, so that they are brought in to economic activity that is contributory to the national effort, rather than sidelined by it.

Q58 Mr McCann: I think it would be worthwhile just to record our appreciation, first of all, for how well we were looked after when we were in Zambia, by both Mike and his staff. It was a very wellorganised trip, which we thoroughly enjoyed. One of the other areas that we wanted to focus on was contraception: in 1964, the population of Zambia was 3 million. In 2010, it was 13.2 million. Little has changed in relation to fertility rates and, sadly, in maternal mortality as well. In terms of the evidence we received, we were advised that longterm methods of contraception-injections and implants-would be best in relation to making progress in this area. We were wondering how DFID could support such initiatives, and whether DFID also supports the ability to prescribe being devolved down to nurses and midwives, rather than just being retained by doctors, as it is at the present time.

Mr O’Brien: Obviously it is very important to respect the standards that are in place in any country where they decide for themselves who is appropriately qualified to give various procedures. So far as family planning is concerned, it is certainly my point of view, and DFID’s point of view, that it would be perfectly acceptable, as well as much to be encouraged-assuming all the necessary confidencebuilding measures were in place in Zambia-to enable implants and injectables to be carried out by people who were not recognised, qualified doctors, and to enable community health workers of a particular training and skill to be able to do that; that would make a lot of sense in terms of the ability to scale up, reach out and access those for whom it is very difficult to have access to those services. Therefore, broadly the answer to the second part of your question is "yes".

However, I am also extremely careful to say that this is not something that one goes around imposing; it is a discussion, because a lot of it is to do with confidencebuilding. Whether it is in this country or elsewhere, anybody who has stayed close to the health service knows there is a very important aspect, which is to do with ensuring that there are proper standards, proper skills, and proper training to enable confidence. Implants and injectables are things that the body is affected by, and therefore you need to be extremely careful that you get them right. Therefore, we need to have people of the highest skill, as you would expect. Whether that has to be a doctor is the question, and I think at the moment that is possibly an impediment to scaleup, rather than an opportunity.

I think as far as family planning is concerned, you made the point well. By 2015, within our programming, we will have provided contraception to 200,000 additional couples. As you know, we are always pretty focused in trying to identify what result and what impact we are trying to achieve with our programming, and that puts a number on it.

DFID’s regional programme on prevention of maternal deaths from unwanted pregnancies is strengthening public and private provision of familyplanning and safe abortion services. This is in the context of Zambia being way offtrack in reaching the Millennium Development Goal 5: to reduce maternal mortality. Only 46.5% of deliveries are assisted by a skilled birth attendant, so on the one side you raise the issue of contraception and family planning access and skilled operatives, but also there is the context of having sufficiently skilled attendants at births, so we are funding three programmes directly aimed at improving maternal health in Zambia, through scaling up family planning, improving community demand for services, and providing key obstetric care equipment to facilities. In addition to supporting 32,200 additional women delivering using a skilled birth attendant by 2014-15, I think the work on community health assistants is probably some of the most important work we do. I have seen it myself, both in my pre-ministerial days and since, and I am sure you have seen yourself the enormous importance of this, which is effectively the right tailored approach to the tailored context of what needs to happen in Zambia, and indeed other parts of subSaharan Africa.

Q59 Mr McCann: We also heard evidence that was quite extraordinary, if you consider the context, that contraception services were being targeted towards older women, who are perhaps exiting the years at which they would be having children, rather than at adolescent girls and young women, where the problem is more prevalent in terms of the number of births and so on and so forth. Do you think that suggestion is justified, and, if so, how do DFID propose to change that?

Mr O’Brien: I am very interested in this. It is a very important point, because I had also picked up that that is what you had heard on your visit. It does not resonate with the evidence that I or Mike have been receiving. I have talked to MSI, who I think may have been one of the interlocutors you were able to meet, and others. If it was true that it was being targeted at older women, we would want to say something fairly robustly about that. Quite clearly, the effectiveness of a family-planning programme is dependent on it being at the very least equal, and possibly even more weighted towards adolescent girls and young women, because of issues surrounding their health, their empowerment and their choice, but above all-and what is going to help the broad context-the test is birth-spacing, and that is at the younger end. It is important, particularly if we are seeking also to address the phenomenon through empowerment-retaining girls at school-that we enable them to have the capacity to postpone when they get married, so that they do not find themselves on this track of childbearing and without the real choice of birthspacing.

It is important, to the extent that you picked up that evidence on your travels, that we know about that and find out what lies behind that evidence, because we would want to address it if there was some substance to it. I am rather with you. I think if it is proven to be true, we would want to do something about it; if it is not true, then I am glad that it is not.

Q60 Pauline Latham: You have just been talking about community health assistants and how good they are. However, there are still problems in hospitals with the brain drain of doctors and nurses from Zambia. Do you think that you should be doing more to help? I do not think this country is still actively pursuing the recruitment of nurses from African countries; if they are, I do not think they should be, because the places where they are being trained, and where they need them more than we do, are in those African countries, to bring the health systems up to date. Do you feel you should do more to help the increase in the number of doctors and nurses, and in fact the retention of them within their own country?

Mr O’Brien: It is a very important point. If I may, I will try to tackle it from two perspectives. The first is that, so far as I am aware, the UK, as you have observed, is not in any sense actively seeking to recruit, and therefore attract, as was one of the problems in the past. There is a programme through which a number of nurses are now coming through the pipeline in Zambia, which is good; it is never going to be enough, but it is more than there was in the past.

Part of the challenge, therefore, is not necessarily about the UK, but actually the attraction of going off to work in South Africa, Botswana, and other neighbouring countries. The Zambian Government has sought, as I understand it, to address this by giving very significant pay increases to nurses in particular; community health workers are in a slightly different category. There is also a bigger recognition that the training can often be geared to what is truly needed in Zambia, which may not necessarily therefore equate to what is recognised either here or in other countries. That, in a sense, is a good protective measure to try to retain the capacity of this skilled workforce: tailor it to your own country needs in Zambia, rather than necessarily being, effectively, a training ground for an international cadre of those who perhaps find differential salary levels an attraction and understandably find it difficult to resist the temptation. You make an important point.

The other point I wish to add is our commitment, which I know, Mrs Latham, you have picked up, to the international health partnerships. Even yesterday, I was at Guy’s Hospital proselytising the benefits, and encouraging the idea that it should become the norm for our qualified doctors, nurses, midwives and technicians to go to countries like Zambia for three or six months-often at a young age, but even in midcareer or in retirement-as part of what is their professional development. They will be able to offer what they can. Because they are qualified, they will not need the supervisory capacity that is not necessarily available. They will gain a most phenomenal experience of public health administration and practice, which will benefit the NHS when they return, so we are doing our very best to try to really make that come to life and be a reality in the NHS. It is my hope-I hope not forlorn-that in two or three years’ time the natural question for anybody who is seeking their next job in the NHS is, "So why didn’t you spend three months in Zambia?"

Q61 Pauline Latham: I also think, if I can come back on that, that it is a very good opportunity for people who have retired, doctors and nurses, to give something back by going and doing that-going at the end of their career as well as at the beginning of their career. There is plenty of room for both scopes, and there are a lot of people perhaps at the end of their career more likely to do that than when they are desperately trying to get up that ladder, although I think if we can get it embedded in that one of the questions they are asked is, "Why didn’t you go and do something?" then that would be a very important incentive for them. Equally, at the end of their career they have nothing to prove and nothing to lose. They can go and do this as voluntary service for perhaps a year when they are first retired; I think that would benefit Zambia.

Mr O’Brien: I was much encouraged that there were those very people in the room yesterday, as much as there were people at the younger end of their career. That was very encouraging.

Pauline Latham: That is encouraging.

Q62 Jeremy Lefroy: Following up on what Mrs Latham was saying, when we had a meeting with the permanent secretary at the Ministry of Health, he was very, very keen not just on people coming to practise, which he would welcome, but even more so teaching in medical schools. It is quite clear that there is an undertraining of doctors and nurses in Zambia, as indeed there is in many other countries. Here is a great opportunity for people to do that. In fact, I was with a recently retired British doctor last week who was about to go and spend some of her time teaching in a medical school in Malawi, precisely for that reason. Are we focusing on teaching as well as on clinical practice?

Mr O’Brien: You are absolutely right about this. I can assure you that we, as DFID, are using and utilising the UK expertise to train Zambian health specialists and nurses. Nine extra doctors and 67 extra nurses per year, by the end of this year, and 160 nutritionists, by 2016, will be trained through support from the Zambia UK Health Workforce Alliance, so you are absolutely right. The more we can build on the good experience and the work we are doing in that way the better, but you cannot simply flick a switch to increase the volume of training. It has-quite rightly if it is going to be quality, useful training-necessarily got to be well designed and done well, and you have got to get the commitment of the people to go and do it. The biggest challenge, at the moment, for those who are in posts, whether academic or in practice, is actually getting the backfill here, within the NHS.

Q63 Richard Harrington: Extending what you said about training medical people, it seemed to us also, looking at the educational side of Zambia, that there is this huge gap in the training of professionals, not just in health, but, for example, in agriculture and the general commercial field. I realise we are very short of time, but my first question is: what does DFID intend to do, for example, in terms of links between universities in the UK and there?

Secondly, bringing it on to a bigger question, would you care to comment on training a business class to help in DFID’s expansion in the field of private enterprise? There seems to be a huge gap there. We have seen the Minister before, and the new chief executive of CDC, but to what extent do you feel DFID’s expansion into the private sector can help the Zambian economy, and what plans are in place to do that?

Mr O’Brien: While, of course, in the recalibration of our operating plan we are looking to make sure that we are really focused on our mission-the MDGs, the vulnerable and the poor, getting basic services right, and encouraging Zambia to increase the amount of its own domestic resources it can make available-that is not to exclude the work on either governance, which is the context by which the private sector is very much helped, or training, which you have identified. In the private sector, a lot of this is now focused on agriculture: the smallholder farmer area. Rather than looking at that as a subsistence activity, it is about looking at it as a series of small businessmen and, I should say, businesswomen, who are very importantly part of that scene.

Secondly, there is a need to recognise that there is a lot of training that can come through support. For instance, you will be aware of ColaLife and the leverage of the distribution chain to get essential medicines out to rural communities. That carries with it the private sector and training issues, not in any particularly prescriptive way, but in a way that will have the necessary concomitant benefit.

The challenge for us is that quite clearly we cannot do everything, nor should we try. We also need to make sure that, while there may be some areas in which we do not do funding, we are encouraging the Zambian Government itself to be putting priority on things. To some degree, that then reads across to your education question, about secondary and tertiary education and the links. The universities here in this country are increasingly making very good connections, and that is happening without, necessarily, DFID having to take any kind of position other than to encourage it, through the British Council and others. I do not know, Mike, if there are any more specifics that you can add, in answer to that question.

Mike Hammond: There are two things that have happened since the Committee visited. Firstly, we have approved an access to finance project, which is targeted at rural areas, which is a point the Chairman made earlier on. Secondly, we have also looked at the rural markets project, and that has been approved, which is again the point about access to seeds and supplies. That is what is reflected in the operational plan: the heavy spend on health and education, with the other stuff coming online later on, because these plans are refreshed every year, so next year the balance will shift back again slightly.

On the education side, we very much took on board what the Committee said during its visit there, and we were looking at sector budget support to education anyway. With the amount of money we have, we cannot take on an education sector, but we can make sure that that education sector spends its money effectively and efficiently; that is what we are aiming to do. We are aiming to work with the Ministry of Education, particularly around tertiary and secondary education, to get that money spent properly, which will therefore produce more resources towards the tertiary education system, allowing them to train. We are also looking at ways, with the British Council, THET and Lord Crisp, to bring in more health professionals and other professionals to link in with some of the shortterm training coming up. Indeed, we recently persuaded the Indian Government to build a new health training centre, and we will pay for the costs of training community health workers in that training centre. As the Minister has said, we have been using our leverage to bring others into this area, because we cannot do everything.

Q64 Mr McCann: In terms of governance, we took the opportunity to meet with a number of Zambian Members of Parliament, which was really helpful and interesting. We met a lot of interesting characters and people who have a real future ahead of them in the political system. Can I ask you when and how you will know that DFID’s governance programmes are being effective? A second direct question is: will DFID support CPA UK’s proposal for a Member of Parliament exchange system between the UK and Zambia?

Mr O’Brien: On that latter point, I am a very big champion of, and am very happy to see, the CPA’s ideas. I welcome them enormously, and I hope that support for the Zambian parliament will carry on. Certainly, DFID officials in Zambia are more than happy to see how much we can take that forward and take those discussions forward, so the answer to that is "yes". It would need to be well discussed, well thought through, and well articulated in terms of a design.

So far as the other aspects, I think it is mainly to do with the capacity of parliamentarians in Zambia to be able to hold their Government-which is quite a strong presidential system-to account, but also it is to do with increasingly improving transparency and accessibility of information on public spending; I think there have been notable improvements on that. That will then give parliamentarians-particularly the ones whom you met whom you obviously found encouraging-the wherewithal to do their job: to hold their Government to account.

Equally, it needs to be done on the basis that there is a transparent and clean payroll. As we know from the previous problems in their public sector, there have been ghostworkers. We need to make sure that part and parcel of what is good governance is also to bear down and make it absolutely clear that corruption and these other kinds of practice are simply unacceptable; that will help empower the good parliamentarians to hold their Government to account and ensure that the resources they are able to mobilise are properly expended and deployed. Anything that we can do in our public financial management and in our governance, democracy and accountability programmes-you will be as aware as I am of what we are doing, so I will not go into detail on that-is absolutely fundamental to making sure we have a good programme that enables us to then look at some of these public service enhancements, as well as the other things that we are doing.

Q65 Chair: You have a timetable for graduation for Zambia, and in fact we think there has been a misunderstanding between the Committee and the Department; we had suggested that the Government ought to have an exit strategy for every programme, whereas the Government’s response has been, "Where we have an exit strategy, we have one, and where we do not, we do not." Why is there one for Zambia, and what is the timescale? Why is there not one for other countries in the region that are in a similar situation?

Mr O’Brien: There may be some misunderstanding about this, because your questioning seems to imply that we have a timetable; we do not. In Zambia, we do not have a timetable for graduation. If you have sensed or picked up some kind of timetable, that is an imputation that has not come from Ministers, I can assure you. The right mindset for the way we design our programmes and approach for all of us, beyond humanitarian, is that we should all be seeking over time to graduate from being in an aid relationship, and to move towards proper statetostate trade and other diplomatic and political relations. Whether that is going to be in five years or 50 years-on certain projections, one could look at Zambia and extrapolate figures that suggest it could be 70 years.

There is not a set timetable. It is because this approach helps to school and discipline the thinking behind making sure that we are doing the right things either to address MDGs or to put in place essential basic services, essential infrastructure, essential pumppriming of economy, essential governance and other issues. That also includes climate change adaptation and mitigation these days, which is easily overlooked. Therefore, the straight answer to your question, Chairman, is that there is no timetable for Zambia. There is an approach that is trying to make what we do consistent with a trajectory, which is to graduate over time.

Q66 Chair: So it might have been more of a comment along the lines of, "In 10 or 15 years’ time, the relationship might have changed to that situation," but nothing more specific than that.

Mr O’Brien: I have never said 10 or 15 years. What I have said is that our aim should be to graduate at all times, and some will be earlier graduates than others, simply because of the journey that they are on.

Q67 Jeremy Lefroy: I am just looking at my notes from the final meeting we had in Lusaka, and the conversation was around the following: that for Zambia to graduate from aid in 10 years is a very tall order. It needs to look at the quality of its services, to consult with users, and to be smarter about its use of resources to build that capacity. That is the conversation that we had: that it was a very tall order to graduate.

Mr O’Brien: Rather than splitting hairs, I am glad to see that there was some speculation about that. That does not sound like a commitment to 10 years; it was just saying that, if one picked 10 years, it would be a tall order and difficult to get out of. I do not know if you want to comment further, Mike.

Mike Hammond: What may have prompted it is that, of course, the Dutch, the Danes and the Canadians have withdrawn from Zambia. They have withdrawn their bilateral aid programmes. However, those decisions were more about a desire to focus on particular countries and not others. In Zambia’s case, it is a reasonable assumption to say that Zambia is a prospect to graduate from aid, but if you look at their current rate of fall of poverty, it would take 50 years. Obviously, that is an incentive for us to change the rate at which poverty is falling, and then you have to decide at what point in time is the level of poverty sufficient. So, yes, there is a track for Zambia, but I do not think anybody has a timescale for how long that track is.

Chair: I am glad we clarified that. I think it was quite important that we did. Sorry that this got slightly compressed; the circumstances dictated that. Thank you both very much for coming in. May I echo what Michael McCann said to you, Mike? We had a very good visit. I know we put you under an awful lot of pressure in a short space of time, but we appreciated it, we learned a lot, and actually we had a very positive view about Zambia itself and the attitudes of many people we met in government, and also the relationship between the UK and the Zambian Government, which seems to be mutually supportive and beneficial, with obviously some problem areas. Good work, and we appreciate it. We will conclude our Report in due course and make further recommendations we think are appropriate. Thank you very much.