DFID's bilateral programme in Nepal - International Development Contents

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]


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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© Parliamentary copyright 2015
Prepared 27 March 2015