Oversight of the Private Infrastructure Development Group - Public Accounts Committee Contents


10. The United Kingdom's investment in PIDG is considerable. Between March 2012 and March 2015, the Department plans to invest up to £700 million in PIDG. Whilst PIDG is a multilateral agency, made up of nine donors, the United Kingdom is by far the majority donor. For example, between 2002 and December 2013, the Department's contribution to PIDG represented 70% of its contributions. Recent investment has seen that proportion increase to 88%. Furthermore, the United Kingdom is one of only three countries currently adding new funding to PIDG.[16]

11. Despite the Department's significant financial contribution to PIDG, it has the same voting rights as other donors. The Department told us that because PIDG is a 'shared endeavour', with collective decision making, it lacks the level of control it would have over a directly funded organisation. The Department noted that there were pros and cons of seeking to help poor countries by funding multilateral agencies such as PIDG.[17]

12. The Department told us that its 2011 review of multilateral aid had informed its decision to invest further in PIDG. That review had characterised PIDG's approach to transparency and accountability as weak. However, the Department did not make improved governance within PIDG a condition of its increased funding.[18]

13. PIDG is reliant on a large number of positive impacts from a small number of projects, creating a risk that performance could be seriously undermined if one of these projects fails or if the information on the benefits generated is incorrect. One project to support satellite telecommunications in India accounted for 45% of all jobs created across PIDG's portfolio. Some 75% of the jobs PIDG expects relate to its support for an Indian financier of commercial vehicles. Neither the Department nor PIDG consider risks to the delivery of impact claims across PIDG's portfolio.[19]

14. Given the size of the United Kingdom's contribution to PIDG, the Department needs a regular and independent evaluation of the value generated from its investment. External and independent assurance is currently limited however.[20] The Department is currently over­reliant on information it receives from PIDG to complete its evaluations of PIDG projects—the Department's approach to monitoring projects relies on reports from the organisation in receipt of funding. The International Development Committee observed that the Department's involvement in Trademark South Africa had been characterised, in part, by a 'lack of credible scrutiny' and that it '…relied too much on the success stories given to it by programmes managers.' The Department agreed that it needed to expand its programme of independent evaluations. PIDG is completing its own review of how it can increase the independence of its own evaluations.[21]

15. The Department's investment in PIDG is large and increasing, and focused on economic development, an area of policy the Department is targeting.[22] PIDG does not draw sufficiently on the knowledge accumulated by the Department's country teams to improve its investment decisions. The Department supports a network of country teams which have, amongst other things, an interest in infrastructure. Almost all the country teams surveyed by the National Audit Office identified the absence of adequate infrastructure as a major barrier to economic development. We are aware of examples of the Department's country teams working successfully with PIDG—for example, reducing the costs of one of PIDG's projects by almost 60 per cent.[23]

16. The Department has a formal role in assessing projects for two grants—DevCo (which supports transaction advisory services to governments for projects with private participation) and Technical Assistance Facility (which provides grants for technical assistance or subsidies to support PIDG projects). The National Audit Office reported positively on the impact of the scrutiny from country teams.[24] Considerable gaps exist in the Department's use of country teams. Its formal role does not extend to PIDG's other investments, such as InfraCo Africa. Nor are country teams consulted sufficiently regularly about infrastructure projects—56% of country teams never or rarely considered PIDG as an option when developing business cases for infrastructure projects. The Department told us that, in taking forward its economic development approach, it was looking to identify priorities in each country and how PIDG might contribute to these.[25]

16   Qq 11, 69, 70, 80, and 83; C&AG's report, paras 1.25, 1.27 Back

17   Qq 70, 187, 195 Back

18   Qq 165,170 Back

19   Q 206; C&AG's report, paragraphs 3.12 and 3.13 Back

20   Qq 206, 219  Back

21   Qq 65, 206, 213; C&AG's report, para 3.6 Back

22   C&AG's Report, para 14 Back

23   Q 99; C&AG's report, paras 2.31, 2.34 Back

24   C&AG's Report, para 2.31 Back

25   Qq 99, 103; C&AG's Report, paras 2.30, 2.36 and Figure 1 Back

previous page contents next page

© Parliamentary copyright 2015
Prepared 29 January 2015