2 DFID's work
DFID's
teams and programmes
6. The DFID Nepal office is organised into three
teams: Governance and Service Delivery; Economic Development;
and Resilience. DFID informed us that staff work together to achieve
progress in three broad areas:
"i] Harnessing opportunities for transformational
change by: a) removing barriers to growth in key sectors like
hydro-power, transport, agricultural markets and banking; b) strengthening
public sector governance through improvements in financial management
and statistical capacity, economic policies and regulations, and
also by supporting change in each sector in which they work-from
health to forestry and local government to climate change.
ii] Delivering immediate benefits for poor people
by: a) providing jobs and other economic opportunities for poor
people by focusing on strengthening access to financial services
and products, market development, and job-based skills training;
b) strengthening quality service delivery by strengthening local
governance, delivering improved health outcomes and improving
security and access to justice, including combating violence against
women and girls.
iii] Safeguarding Nepal's future from future
shocks and stresses by helping to strengthen the policy and implementation
of climate change adaptation approaches at the local level and
supporting disaster risk reduction and strengthening local disaster
management capacity.
7. DFID informed us that all its programmes focus
on inequality, women and girls and climate change. The latest
Operational Plan (for 2014/15 and 2015/16) as well as committing
'DFID Nepal to increase their economic development work and strengthening
those institutions that underpin growth' also increases 'support
to women and girls and marginalised groups, and will do more to
help people to adapt to the effects of climate change.
8. DFID added that it could draw on a wide range
of technical expertise and, although it had a long track record
in Nepal, it was increasingly looking to develop new and innovative
ways of working. DFID summed up its approach as follows:
'This Operational Plan therefore balances new,
and potentially transformative, programmes (e.g. economic policy
reform, private sector development and interventions on gender-based
violence) with scaled-up proven approaches (for example in health
services and rural infrastructure).'
9. DFID Nepal has reduced the number of 'project
lines' in its budget from 32 in 2012 to around 20 in 2014/15.
At the same time the budget has almost doubled from £60m
to £103m. Their average annual spend per 'line' has risen
from around £1.65m to closer to £4m. DFID states that
this indicates a much greater efficiency in programming. DFID
informed us that they had achieved this by scaling up strongly
performing programmes and closing down marginal or less effective
programme lines. DFID's local governance programme, approved in
December 2013, was their largest ever.
10. Despite the reduction in the number of programmes,
DFID Nepal still seems to have a broad portfolio. Asked whether
the programme could be further streamlined, The Minister replied:
The strength of breadth is that you are spreading
the risk... I wonder if your report, when you come to write it,
will ask us to do more of anything because undoubtedly, as I say,
we are doing an awful lot. We are working at capacity. …we
have cut down over the last three years from some 30 programmes
to 20 in order to be able to focus more particularly on the women
and girls agenda …. We have moved out of primary education,
largely because we felt there were other donors there who are
capable of stepping up to the plate.[4]
11. We also questioned whether it would be possible
to coordinate better the many DFID programmes which involving
working with communities. Mark Smith, Deputy Head of DFID Nepal,
informed us:
DFID has invested a lot in making sure the structures
exist to co-ordinate development in an environment where there
are not locally elected officials and where Government capacity
is weak. We recognise that, particularly in the livelihoods area,
this is a risk—you are working with one bilateral programme,
there are other donors working and there is a Government that
lack the capacity at the local level to monitor delivery. We are
doing a study at the moment; we have got a senior livelihoods
adviser spending two months in Nepal looking at the coherence
of our livelihoods work and making sure that the programmes fit
well together and that they are not duplicating, and looking at
what more we could do to build the capacity of district officials.[5]
Deciding the priorities for DFID's
programmes
12. DFID's priorities are determined by a number
of factors, including the priorities of the Government of Nepal,
DFID's own Country Poverty Reduction Diagnostic and the areas
where DFID has a comparative advantage relative to other donors.
13. When we met the Minister of Finance of Nepal,
he stressed that his Government's priorities were roads and energy.
Kul Gautam and RESULTS UK informed us:
development of infrastructure-e.g. hydro-electric
power, public transport system, etc has been grossly inadequate,
hampering other development efforts. Chronic shortage of electricity,
in a country with huge potential for generating clean energy,
has kept the country literally in darkness, and led to serious
environmental damage. The recent closure of Nepal's only international
airport with a single runway for many days showed Nepal's extreme
vulnerability in coping with major natural disasters. As a major
donor to Nepal, DFID ought to play a leadership role in coordinating
with other donors and investors to ensure that infrastructure
development, e.g. for energy, water resources, public transport,
and environmental protection receives adequate attention and support.[6]
14. We asked our Minister how DFID decided on its
programme and how much account it took of the Government of Nepal's
priorities and how much of DFID's own country poverty reduction
diagnosis. He replied:
First of all, we reinforce success. Clearly,
there are programmes that are very successful because of the length
of time—and commitment—that we have been involved
in them…Then we use the diagnostic to identify where we can
make critical differences to those things that are holding back
development. We identified jobs and water, the Investment Board,
protection against climate change and the importance of women.
With respect to the Government of Nepal and aligning with their
priorities, it is essential that we do so if we are going to have
the leverage and be able to work with the Government and through
their systems. Happily, much of their concern with large infrastructure
developments is shared with us. I would say that they are less
inclined to share our commitment on inclusivity and social developments
of that sort. What we cannot have is them picking and choosing
and interfering, and I have made that clear.
My first stop was at the Ministry of Finance.
We want a better quality of dialogue with that ministry. We have
excellent access to ministries and we also have excellent access
at the technical level, but there have been in recent history
a number of delays in securing approval for our projects and that
difference of emphasis with the ministry, which concentrates more
on the big projects—big infrastructure—without concentrating
as much on capacity to maintain afterwards, which we regard as
vital, and all the social and inclusivity agendas that we bring
with it. These are as important to us and we have to try to educate
the Government to ensure that they become their priorities too.[7]
Mark Smith agreed that the Minister of Finance's
policy priorities were infrastructure and support on budget, but
those do not always align with the needs as we
see them. That is an area where we could work to improve the relationships,
but in terms of day-to-day relationships, we have great access
and good working relationships, especially with line ministries.[8]
Donor Coordination
15. Development Initiatives noted that spending by
the UK as a proportion of total donor funding to Nepal was significant-comprising
12% (US$359 million) of all donor contributions during 2011-2013
(US$3 billion): 'The UK has become an increasingly visible donor
in Nepal-its contributions to overall donor spending in Nepal
increased from 6.6% in 2011 to 11% in 2013.'[9]Figure
1: ODA disbursements to Nepal (2011-2013).
Source: Development Initiatives based on OEDC DAC
CRS.
16. The UK was the largest annual government donor
to Nepal consistently during 2011-2013, disbursing US$360 million
during this period, which is significantly higher than the disbursements
of the second largest government donor, the US, during this period
(US$205 million). During the same period, the largest donor to
Nepal was the World Bank's International Development Association
(IDA), which disbursed US$622 million. Following the IDA, the
Asian Development Bank was the second largest donor, disbursing
US$455 million of 'Special Funds' during this period.[10]
17. Development Initiatives informed us that DFID
Nepal was acting as a champion of donor best practise on transparency
in Nepal; for example, DFID's reporting to IATI of spending in
Nepal can be seen via Nepal's 'D-portal' platform[11]-an
information platform that aims to provide governments, parliamentarians
and civil society with the information required to assist in the
planning and monitoring of development activities. The organisation
argued that to strengthen donor accountability and coordination
in Nepal more widely, DFID should mobilise other donors to also
publish to IATI, and report on support to gender through use of
the OECD DAC Gender Equality Marker.[12]
18. We had a sense from our visit that donor coordination
was not as good as it might be and DFID pointed out that the Ministry
of Finance had a difficult role to play as a donor coordinator.[13]
Asked about co-ordination in respect of UNICEF and the women and
girls programmes, DFID informed us:
There is no question that there is available
to UNICEF a whole range of experience and best practice on the
issue, and it is our job to ensure that our partners attend to
that. One of our principal roles is co-ordinating and ensuring
that those lessons are learned and used. [14]
Delivery
19. DFID informed us that its
'investments in Nepal are all designed in partnership
with the Government of Nepal. Programme funds are channelled through
different aid mechanisms, including: Government of Nepal systems,
private contractors, multilaterals and NGOs.'
DFID claims that this range of mechanisms enables
it to balance risk across its portfolio. Selection of project
partners, whether multilateral, NGO or private sector, is based
on careful consideration of value for money and ability to deliver.
20. DFID stressed the importance of working with
the Government of Nepal:
working through Government of Nepal systems is
essential to ensuring sustainable approaches to poverty reduction
over the longer term. It also means that they can achieve results
at a national scale for comparatively lower costs. We have gradually
increased the amount of funding provided through Government systems
over the Operational Plan period. At the same time, we have provided
increasing amounts of support to improve public financial management
and also to ensure that specific measures are put in place to
mitigate the risk to UK funds. Where the risks to their funds
are too great, we will provide direct delivery while also ensuring
that this is aligned with Government priorities.
We questioned DFID whether it could achieve a better
dialogue with GoN Ministers and senior officials and were told
by the Minister:
We have got to work together collectively with
the other donors. This is a joint enterprise, and I made that
clear. I do not think we should over-emphasise the difference.
We and the Government are working to the same end, with perhaps
a slightly different emphasis, but we are on the same side. I
am confident that with the access that we have and by the reinforcement
of ministerial input from our side we can get to where we want.
I believe that we are making significant improvements in terms
of the dialogue that we are getting.[15]
Nevertheless, working with the Government is not
easy. Mark Smith, the Deputy Head of DFID Nepal told us about
how DFID approached the high turnover of staff:
The long-term approach is about building relationships
with a lot of people in a ministry, not just one contact who then
moves. It is about seeking to really build a relationship between
the DFID office as a whole and, say, the Ministry of Health and
with technical assistants in key positions who can also be part
of the mix. That is one way in which we address the problem of
people changing, but people do change, and in every policy dialogue
we have with the Government of Nepal we do raise this as an area
of concern—critical people moving at critical times.[16]
21. DFID plans to work more with the private sector
including: substantial new investments in the agriculture, and
transport sectors: the promotion of small businesses and poor
people access to money to boost investment and job opportunities;
and helping change Nepal's economic and investment policies and
laws so that is easier to do business.
22. DFID is also working closely with other UK Departments
to deliver in areas where they have comparative advantage, for
example working more closely with the FCO on political analysis,
and funding the Gurkha Welfare Scheme to provide water and sanitation
through the MoD.
Conclusions and recommendations
23. DFID has a broad portfolio of programmes in
Nepal. We commend DFID Nepal for reducing their number and for
examining the coherence of its livelihoods and communities' programmes.
We recommend that in its response to this report, DFID report
on the findings of this examination.
24. The Minister of Finance of GoN told us that
he would like DFID to make roads and power an even greater priority;
these are vital for Nepal, but we see DFID's task as using its
influence as the world's largest provider of ODA to ensure they
invest significantly in these sectors. We broadly support DFID's
current bilateral portfolio, but DFID must ensure that its programmes
are in line with the priorities of GoN and that it is aware of
the political implications of its work.
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