International Development CommitteeWritten evidence submitted by VSO

VSO is an international development agency with 55 years of experience working in poor countries around the world. We take a unique approach to tackling global poverty, by placing committed volunteers with carefully selected partners—from grassroots orgnanisations to government ministries. Our volunteers use their skills to improve the impact of aid efforts for poor and marginalised people. By working closely over time with partner organisations, they provide the right support to help ensure that local development efforts deliver the greatest impact and lasting change.

VSO welcomes the opportunity to submit evidence to this inquiry on the future of Development Cooperation. Our short submission will focus on two aspects of the inquiry: the appropriateness of the 0.7% ODA target in the long term, and whether DFID has the right balance between bilateral and multilateral aid.

Whether the 0.7% ODA target will be appropriate in the long term

1. Around the world, VSO volunteers have seen the impact of UK aid and our partner organisations have benefited from the UK’s historic commitment to development. We welcomed the commitment in the Coalition Agreement in 2010 to enshrine in law our commitment to spend 0.7% of national income on international development assistance.1 This followed commitments made by all parties prior to the 2010 General Election to reach this target and meet the ambitions set by the global community in the 1970s.

2. VSO welcomes the Government’s continued commitment to development and applauds the UK Government for meeting its target to spend 0.7% of GDP on International Development Assistance, as announced in the March 2013 budget.2 With dwindling resources for aid internationally and with many Governments stepping away from their previous commitments, we believe it is more important than ever that the UK continues to play a leadership role. We are disappointed, therefore, that the Government’s plans for the next Parliamentary session did not include plans to enshrine the 0.7% commitment into law. Legislation would send a powerful message to donor Governments, including those who pledged support for development at Gleneagles in 2005, and would help to encourage other developed countries who have not yet met the 0.7% target to do so.

3. Whilst seven European countries have already met or exceeded ODA targets, Europe as a whole missed its collective target in 2010, leaving a development financing gap of 18 billion Euros.3 It is critical that governments in Europe and beyond realise and build on the 0.7% commitment before starting new debates about alternative financing mechanisms.

4. The UK has a long and proud history of providing overseas development aid. The work of the Department for International Development alone is estimated to have lifted around three million people out of poverty in recent years.4 UK aid has saved lives around the world meaning that four million fewer children are dying now than in 1990.5 This work is well documented, but UK aid has also strengthened communities around the world by making them more resilient and capable of taking control of their own development.

5. Aid has also allowed countries to develop to a point where they require less assistance. Countries such as Vietnam and Thailand have seen the proportion of aid they receive decrease as economic growth and private sector development has taken hold. In India, the development assistance the country receives as a percentage of GDP is 10 times less than it was in 1968.6 Among the “next 11” emerging economies identified by Goldman Sachs, several are currently in receipt of UK Aid or have been in the past including Bangladesh, Nigeria, Pakistan and Vietnam.7

6. In countries such as Malawi, VSO volunteers have seen the impact that donors, national government and NGOs working together can have on the lives and livelihoods of poor people. The Sector Wide Approach (SWAp) that was adopted in the Malawian health sector brought together DFID, the Malawian Government and NGOs such as VSO to strengthen the country’s health system.

7. A 2010 evaluation of the SWAp found that the coverage of health services across the country had been extended and health outcomes had improved at “a more rapid rate than comparable countries”.8 The presence of a number of international donors had “leveraged more support” from Government and donors and improved outcomes for poor people. This approach is only possible, however, due to the support of DFID who provide around a third of the Malawian health service’s budget. This has meant that the impact of support offered by NGOs has been multiplied by both greater co-ordination and targeting of aid through the SWAp and the ability to attract even greater support.

8. In an increasingly interconnected world, the fortunes of people in the UK are linked to the fortunes of people in developing countries. It is therefore in our national interest to support international development efforts. The untapped potential of developing nations represents lost customers, lost trade and, ultimately, lost economic growth for the UK and the global economy.

9. Investing in effective development means investing in new markets for UK companies abroad. The UK is a world leader in a number of important sectors such as construction and electrical, optical and high tech goods, all of which are expected to grow significantly in developing and emerging economies between now and 2020. As UK aid is used to lift more people out of poverty and to provide developing countries with opportunities to enter international markets, UK companies will have an expanded market as new companies develop and consumers have increased disposable income. The Confederation of British Industry (CBI) has estimated that the impact of the UK working in new markets in these sectors could lead to a £20 billion boost to the UK economy.9

10. Effective aid, particularly when targeted at fragile and conflict affected states, can assist in averting security threats and instability. For example, with 43% of the world’s population now under the age of 2510 concentrated in some of the world’s poorest nations, well targeted aid can provide better life chances and opportunities to young people who would otherwise face a future with little or no prospects.

11. Research by the Overseas Development Institute found that poor information on aid flows means that governments in developing countries frequently have to make decisions on the basis of “partial, inaccurate and unreliable information.”11 Legislation committing governments to a particular level of spending on overseas development assistance is particularly important, therefore, for the long term health and sustainability of the economies of developing countries.

12. Binding commitments to aid spending also goes some way to averting the dramatic consequences which can result from unforeseen cuts in aid budgets. As a result of the economic crisis, many donor countries are reversing previous aid spending commitments, with $3.4 billion cut from aid budgets between 2010 and 2011. The OECD expects aid to stagnate after this year as the full effects of the global downturn are felt. This comes at a time when the World Bank has warned that developing countries are running out of policy options to avert the worst impacts of the economic crisis hitting the poorest people.12

13. As the High Level Panel on the Post 2015 Development Agenda reported in May 2013, official development assistance (ODA) that flows to developing countries is still a very important source of financing: 55 cents of every dollar of foreign capital that comes into low-income countries is ODA.13

Whether DFID has the right balance between bilateral and multilateral aid

14. VSO welcomes the Government’s reviews of both bilateral and multilateral aid in 2010, and efforts to re-focus its development efforts on the poorest countries around the world. We understand that DFID needs to focus its resources and to change its funding allocation as countries develop. We agree with the Government’s approach to invest more resources in least developed countries (LDCs) and fragile states. In general, these countries require most effort to reach the MDGs. VSO has recognised this in our latest strategy and is working to increase our work in LDCs and fragile states. For example, in July 2011 VSO opened a new programme in South Sudan focussing on Health, Education and Good Governance.

15. VSO has also changed its approach in middle income countries such as China: VSO is the first NGO to be assisting Chinese people to develop their own volunteering programmes which will work to address poverty within their own countries and other countries in the region. China has a wealth of professional skills that can be shared with communities within its own country and in others parts of Asia, in the Pacific and Africa.

16. As stated in our submission to DFID’s bilateral aid review in 2010,14 VSO believes that DFID should continue to invest in strong public services in the countries in which they work. High levels of investment in recruitment, training and retention of health workers and teachers are essential to provide quality healthcare and education in developing countries.

17. Both bilateral and multilateral aid should be harmonised with local and national strategies to avoid duplication and ensure country ownership. VSO is a member of Bond, and supports their calls to improve the quality and impact of development cooperation, in line with the Paris Principles and subsequent Busan Partnership for Effective Development Cooperation. Effective cooperation between donors is essential if poor countries are able to plan their own aid programmes. The Busan agreement goes much further than previous aid effectiveness commitments in recognising this, placing more emphasis on democratic ownership of development and accountability to aid beneficiaries.

June 2013

1 “The Coalition: Our Programme for Government”; HM Government 2010

2 VSO Press release, 20 March 2013, available at: http://www.vso.org.uk/press-releases/uk-budget-confirms-the-uks-position-as-a-world-leader-in-fighting-global-poverty-says

3 Ibid.

4 “Small Change, Big Difference”; ONE/Development Initiatives, 2012

5 Save the Children, 2012

6 Living Proof, Bill and Melinda Gates Foundation, 2009

7 “It is time to redefine emerging markets”, Goldman Sachs, January 2011

8 “Impact Evaluation of the Sector Wide Approach (SWAp)”, DFID, June 2010

9 “Winning Overseas: boosting business export performance”, CBI, 2011

10 “State of the World Population”; UNFPA, 2011

11 “Greater Aid Transparency: crucial for aid effectiveness”; Overseas Development Institute; January 2010

12 “World Bank Projects Global Slowdown, with Developing Countries Impacted”, World Bank Press Release, 18 January 2012, retrieved from http://goo.gl/V91wf.

13 “A New Global Partnership: Eradicate poverty and transform economies through sustainable development” The Report of the High Level Panel of Eminent Persons on the Post 2015 Agenda

14 VSO Submission to DFID’s Bilateral Aid Review, October 2010

Prepared 11th February 2014