1 Introduction
1. There are a number of changes affecting
developing countries and development finance, such as the changing
geography of poverty, an increasing focus on global public goods
and the emergence of new sources and types of finance. The future
strategy of the Department for International Development (DFID)will
need to set out how it will respond to these changes, and we therefore
decided to undertake an inquiry into the Future of UK Development
Cooperation. In October 2012 we published a call for evidence,
inviting comments on the main global factors affecting poverty;
the future role of development aid; whether DFID should offer
concessional loans; the impact of non-aid policies on development;
the UK's ability to influence the future global development agenda;
and what the future of UK development cooperation should look
like. We received a number of useful submissions which helped
us to plan the phases of our overall inquiry, and decided to begin
with an inquiry into aspects of development finance.
2. We published a further call for evidence
in May 2013, seeking views on whether the 0.7% aid target will
be appropriate in the long term; whether DFID has the right mix
of financial instruments;[1]
whether the UK should establish a new, independent development
finance institution; whether DFID has the right balance between
bilateral and multilateral aid; what lessons can be learned from
other national donors; and how DFID should monitor and influence
expenditure by multilateral institutions, especially in countries
and regions where DFID does not have a bilateral programme.
3. We received 20 written submissions
from a range of organisations and individuals, and held four oral
evidence sessions between June and October 2013. We also held
informal briefings with the Overseas Development Institute (ODI)
and with experts from Chatham House, and held informal meetings
with the President of the World Bank and with the Japan International
Cooperation Agency (JICA). This inquiry was also informed by our
visit in September to Washington and Brazil, where we held meetings
with the World Bank, the Inter American Development Bank, the
Brazilian government and other development organisations.. We
are very grateful to all those who provided oral and written evidence,
and to those who contributed to our informal meetings and to our
overseas visit. We would like to thank our specialist adviser,
Dr Dirk Willem te Velde of ODI.
1 The term financial instrument
is used to refer to the different ways of providing finance, such
as grants, loans, equity and other forms of finance Back
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