2 IMPROVING
PERFORMANCE
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
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