Government response |
The UK is committed to economic development and job
creation which are both key to improving the lives of poor people.
The Government therefore welcomes the opportunity to respond to
this timely report on Jobs and Livelihoods from the International
DFID is delivering an ambitious economic development
strategy. In addition to country team resources this includes
a dedicated directorate and over 80 private sector development
advisers, who are bringing new skills to all parts of the organisation.
We are working with companies to support them doing what they
do best - investing, creating jobs, producing goods and services
and supporting income opportunities for local entrepreneurs.
This work is achieving results across Africa and
South Asia. Recent findings show that CDC-backed businesses contributed
to the creation of nearly 1.3 million new direct and indirect
jobs in 2014 alone.
No country can achieve sustained economic development
if half its population is locked out of economic opportunities.
DFID's Strategic Vision for Women and Girls includes ambitious
targets to improve women's ownership of land and access to finance
in the countries we work in.
DFID is undertaking Inclusive Growth Diagnostics
so that we know what activities will have the biggest impact on
focus countries' inclusive economic growth. It will also identify
constraints to growth, and DFID's role in supporting countries
to change their inclusive growth approach. The diagnostic will
also help country offices identify the barriers to private sector
investment and set out how DFID can address these barriers.
DFID recognises that most work in the poorest countries
is in the informal sector. We will continue to engage with the
informal economy through support to establishing small and medium-sized
enterprises and by strengthening the general business environment.
We support policies that ensure marginalised groups can access
markets, services and opportunities so no one gets left behind.
Youth unemployment or underemployment reflects the
wider jobs problem - there are too few jobs and inadequate earning
opportunities in developing economies for people entering the
workforce. We are improving the chances of young people to access
these jobs, making sure they are better equipped to increase their
earning potential and empowering them to create their own economic
opportunities. The relevance and quality of education and skills
to economic opportunities available is central to this.
DFID is continuing work to improve reporting of achievements
to better reflect its economic development portfolio, and is looking
at how best to do this in the context of the overall DFID approach
to reporting results, and the evolving post-2015 agenda. Response
to conclusions and recommendations
1. We urge DFID to publish regularly a
list of achievements from the money spent on its economic development
programmes. A £1.8billion budget needs to demonstrate year
on year outcomes and results. (para
3). We agree with ICAI that DFID
should be clearer about the areas in which it has a comparative
advantage relative to other stakeholders and where it can actually
make a difference.
DFID's economic development programmes contribute
to a range of achievements that are regularly reported in DFID's
Annual Report and Operational Plans. This includes a number of
economic development related results (access to financial services,
land and property rights and access to clean energy). The inclusive
growth diagnostic undertaken at the country, regional and international
level will help identify where DFID can have the greatest potential
impact vis-à-vis other donors and actors.
Project level results are monitored regularly through
logical frameworks, annual reviews, and project completion reports.
These are published on the UK Development tracker (http://devtracker.dfid.gov.uk/).
DFID is continuing work to improve reporting of achievements to
better reflect its economic development portfolio, and is looking
at how best to do this in the context of the overall DFID approach
to reporting results, and the evolving post-2015 agenda.
2. Economic development work can and should
be done in fragile and conflict affected states. We recommend
that DFID continues the difficult challenge of creating jobs and
improving livelihoods in fragile and conflict affected states
as it is successfully doing in the DRC.
We agree that creating much-needed jobs and improving
livelihoods, as part of broader economic development work, are
important elements of creating stability and rebuilding fragile
and conflict-affected states. Where economic development leads
to inclusive growth it can play a central role in poverty reduction,
helping create jobs, markets and opportunities for people.
Creating space for the Private Sector to invest
should not do everything and investment in some areas such as
infrastructure is best undertaken by its partners which have a
comparative advantage in this area. However, as we saw in both
Dar es Salam and Kathmandu poor urban planning is a serious obstacle
to development and is relatively neglected by donors. We
recommend that DFID reassess the priority it gives to urban planning.
a) DFID has a significant portfolio of bilateral
infrastructure programming, achieving impressive results. For
example, DFID support to the Nigerian government on power infrastructure
through the Nigeria Infrastructure Advisory Facility has supported
a large scale power sector privatisation which has generated around
$2.5 billion for the government. DFID is on track to meet its
commitment of reaching 60 million people with our water, sanitation
and hygiene programmes by 2015, and has committed to reaching
another 60 million by 2020.
DFID's Infrastructure Policy Framework, approved
by the Secretary of State in January 2015, sets out our comparative
advantage in infrastructure including assisting governments reform
regulatory frameworks in ways that make a difference far beyond
one individual project.
Improving infrastructure service delivery in DFID
focus countries is central to achieving both our economic and
human development goals, and there is high demand from our partner
governments for the flexible, community-focused support we can
offer, and for UK expertise in mobilising private finance.
We agree that urbanisation is a key issue in DFID
partner countries and urban planning is one of many urban issues
that DFID is addressing. In particular we are developing urban
planning programmes in South Asia and Tanzania with a focus on
urban resilience and climate change - for example we are working
with the Government of Tanzania on flood risk management in urban
We have also recently developed a new programme,
which will enable DFID country offices to scale up their support
to urban economic development in partner countries to create growth
and jobs, and reduce poverty in urban areas. DFID will continue
to develop and build on this work.
4. It is important for DFID to use its
influence with recipient governments to encourage them to focus
on the investment climate especially to reduce corruption. We
recommend that DFID maintain its focus on improving the enabling
environment in the areas where it has its competitive advantage.
DFID is expanding work to improve the enabling environment
for private sector investment as part of our scaled-up focus on
economic development and in response to the findings of ongoing
inclusive growth diagnostics exercise. Corruption considerations
are closely integrated, including tackling the problem of poor
economic and political governance which can disproportionately
benefit elites and leave little room for the wider population
DFID is well positioned to support investment climate
reform. For example, we have our network of overseas country offices;
extensive engagement with developing country governments and other
partners; and close knowledge of local economic and political
contexts. We are also able to draw on technical expertise from
across HMG. In March 2015, we extended our support through the
Investment Facility for Utilising UK Specialist Expertise
(IFUSE) to fund short term deployments from over 20 other UK government
departments and agencies to respond to demand from our development
Engaging with business
has recognised that if it is to spend large sums on economic development
and engage with the private sector, it needs to recruit people
who have worked in that sector. We welcome the progress made,
but recommend that DFID recruit people who have set up businesses
themselves or have run businesses in developing countries to work
in the private sector department. (para. 9)
DFID now has over 80 Private Sector Development Advisers.
From the last (2013) skills audit of DFID's private sector development
advisory cadre, over 80% of the cadre had worked directly for
the private sector, bringing with them extensive business thinking
and ways of working. One third of the cadre are "Staff Appointed
in Country" to one of our Country Offices, who bring with
them detailed understanding and experience of the business environments
we operate in.
We have expanded the number of staff in our Private
Sector Department from 18 in January 2011 to over 40. DFID has
proportionately increased its staff intake of Private Sector Advisers
with risk, finance and investment backgrounds, both within the
Private Sector Department (PSD) and DFID more widely. A recent
capability audit by Ernst and Young confirmed that we possess,
or have access to, the appropriate and sufficient skills and capabilities.
In addition to direct recruitment from the private
sector, we use a range of approaches to supplement our internal
capability by drawing on external expertise. This includes contracting
in, pro bono advice, inward and outward secondments, and drawing
on our many business partnerships, including sector round tables,
a CEO-level External Advisory Group and a corporate relationship
management system with 23 key private sector partners.
must ensure it has put sufficient emphasis on economic growth
which creates jobs and improves livelihoods. It needs to be open
to working in a wide range of economic sectors which have the
potential to create large numbers of jobs. This should include
tourism and the creative industries. We recommend that DFID
and the FCO make tourism a greater focus of its work, both in
programmes which support the industry and in engaging with governments;
this might include in Tanzania encouraging the Government to increase
efforts to combat poaching. (para. 10)
DFID's economic development framework includes prioritising
growth in sectors that can generate quality jobs and transform
the economy. The sectors to be supported and DFID's interventions
will be informed by country-specific analysis.
In Tanzania, anti-poaching continues to be a DEFRA/FCO
lead, and proposals to engage in tourism programmes will be shared
with DEFRA/FCO to ensure alignment with their anti-poaching efforts.
At the request of the Tanzania Natural Resources and Tourism Minister,
the UK's CPS Criminal Justice Adviser is building capacity with
prosecutors and the judiciary to combat Illegal Wildlife Trade
7. The creation
of decent jobs is important; working conditions can be improved
without losing jobs, as the experience of the Bangladesh garment
industry shows. We recommend that DFID insist that any multinational
company receiving its funds respect international standards set
out in the OECD Guidelines for Multinational Enterprises and that
other companies fully respects local standards. (para.
The UK adheres to the OECD Guidelines. The Guidelines
align with DFID priorities in engaging with companies, including
combating bribery; being diligent about employment conditions
in their supply chains; respecting human rights; and protecting
DFID expects any multinational company we fund to
act in line with the guidelines, but there is no channel through
which we can insist on such behaviour. We do play a key role,
by funding the operation of the UK National Contact Point (NCP),
which promotes the Guidelines and provides access to remedy to
those who may be adversely affected. It is recognised as a world
8. We welcome the Secretary of State's
commitment to review DFID's relationship with the International
Labour Organisation as part of its reconsideration of the Multilateral
Aid Review. In light of the much greater involvement of DFID in
jobs we recommend that it should reinstate its core funding to
the International Labour Organisation.
DFID recognises the importance of the international
standards set out in the OECD Guidelines for Multinational Enterprises
and agrees that multinational companies should be held accountable
for compliance. The Secretary of State, Justine Greening, has
agreed to assess whether ILO should be included in the Multilateral
9. We recommend that as part of DFID's
growth diagnostic consideration should be given to the presence
or potential for forced labour, debt bondage and slavery in its
priority countries. An explicit part of DFID's economic development
programme in a country should be working to ensure labour contracts
are freely entered into and the end of forced or bonded labour,
on the understanding that this is a condition for economic development
in the same way as secure property rights or access to capital.
The inclusive growth diagnostic sets out the context
specific high level opportunities and constraints to inclusive
growth across our partner countries. This will include consideration
of forced labour, debt bondage and modern slavery issues where
relevant, but these issues will also be addressed through DFID's
broader country planning exercises (such as the country poverty
DFID's work covers a broad range of activities that
have a direct effect in making poor people less vulnerable to
modern slavery - whether promoting responsible business and working
with the private sector to improve labour standards, to promoting
economic growth, and lifting poor people out of extreme poverty
or making it possible for more children to go to school. Our 'Work
in Freedom' Asia Anti-Trafficking programme, run in partnership
with ILO, aims to prevent trafficking of women from South Asia
in the domestic service and garment-manufacturing sectors.
10. On our
visits we saw several examples of DFID's productive involvement
with private companies. However, our concerns from previous reports
persist. DFID has to be careful not to distort the market by favouring
one company over another. We welcome the Secretary of State's
support for new forms of finance along the lines we recommended
in our report on Development Finance. We look forward to seeing
greater use of returnable and recyclable capital alongside more
traditional grant aid develop further. (para. 13)
DFID's Economic Development Strategic Framework sets
out DFID's intention to increase the use of investment instruments
to stimulate private investment that benefits poor people. The
Government welcomes the Committee's continued interest in investment
DFID recognises within this the risk of distorting
the efficient functioning of markets. The Department has strengthened
its approach by setting out the conditions when it is appropriate
to provide public funding to the private sector to ensure public
funds achieve maximum value for money and reduce the risk of distorting
11. The majority of people working in developing
countries are not in formal waged employment but are eking out
a living in the informal economy. As one of our witnesses told
us 'informal is now normal'. We recommend that DFID make working
with those in the informal economy a priority. Social security
funding should be extended to those in the informal economy along
the lines of the National Social Security Fund in Tanzania.
The UK will continue to engage with the informal
economy for example through support to small and medium-sized
enterprises and the business environment and our work to improve
access to land, finance and skills.
DFID already supports non-contributory social safety
nets for the informal sector in a number of countries. We expect
the expansion of contributory social safety nets to be considered
by governments as they move from individual programmes to develop
comprehensive social safety net systems. This expansion will depend
on local resources and capacity and may require subsidisation
to reach a significant number of informal sector households.
12. We support
DFID's focus on agriculture as the most likely sector to help
raise people out of extreme poverty. It is a job intensive industry
and the sector that most poor people currently work in. Agricultural
processing and the food industry has the greatest potential for
many African countries as the raw materials and market are local.
We look forward to the publication of DFID's agricultural strategy
and recommend that our successor Committee inquire into this new
agricultural strategy in the next Parliament. (para. 15)
We are pleased to see the Committee endorse the focus
on agriculture, recognising its potential at lifting people out
of poverty, alongside other sectors. DFID intends to publish a
summary policy framework on agriculture by the beginning of next
year. We look forward to engaging with the Committee on it.
13. We recommend that DFID think more creatively
how it can support small organisations and charities doing exceptional
work especially with marginalised groups such as women and girls
in Lower Income Countries. (para.
UK Aid Direct was launched in September 2014,
recognising the important contribution that small organisations
make to reducing poverty. They are able to reach poor and vulnerable
people due to their unique ability to build relationships, trust
and legitimacy, through their grassroots knowledge of needs in
developing countries. £150m has been committed to UK Aid
Direct to be allocated in funding rounds over 5 years, with grants
continuing until at least 2022. UK Aid Direct has been designed
to be more flexible and responsive in order to extend its impact
and reach CSOs that have previously not received DFID funding.
needs specific interventions for marginalised groups if these
groups are to benefit from wider economic growth. We welcome DFID's
positive response to our report on disability. We recommend
that DFID should help raise awareness of disability issues and
the rights of people with disabilities within work as well as
broader society. It should also work with national partners to
share learning and expertise on creating inclusive work environments;
accessible training and working facilities. (para.
DFID supports a range of organisations that help
businesses perform better on social and environmental contributions,
such as ETI, Global Reporting Initiative (GRI) and Fairtrade.
These organisations work with businesses to build and implement
non-discrimination approaches, including disability. Last year
DFID published a Disability Strategy for the first time. We will
map and review these approaches, and survey the literature in
order to summarise successful examples of disability inclusion
in the workplace, which we will disseminate across DFID and with
15. Older people are increasingly the agricultural
workers and decision makers in smallholder farming. DFID must
ensure that its agricultural livelihoods programmes properly engage
with all age groups and does not exclude older farmers.
The Government is grateful to the Committee for their
insights and observations of how DFID can improve the inclusivity
of its agriculture programmes. DFID's focus is on helping meet
the needs of all smallholder farmers, including women, younger
and older farmers, and marginalised groups. Our agriculture policy
framework identifies the constraints faced by these groups, and
recommends that we address a range of discriminatory barriers
- both formal and informal - such as legislation including land
and property rights and social norms. This is in line with the
principles set out under DFID's SMART rules. DFID' safety nets
work also supports older people complementing livelihoods interventions.
16. Women and girls carry a greater burden
of unpaid domestic and care work than men, limiting their education
and employment opportunities. We recommend that DFID take further
steps to help lift this barrier. We recommend that DFID stress
the importance of supporting women in business and giving them
the same access to land and business rights as men.
Supporting women to own
and control economic assets and run businesses are core objectives
in DFID's work on economic empowerment of women and girls. Since
2010, our programmes in Rwanda, India and other countries have
helped more than 2.5 million women to achieve secure land tenure.
We have funded the
development of the Women, Business and Law database, which to
raise awareness about laws and regulations that discriminate against
women and prevent them from doing business.
Key interventions through
which we aim to tackle the issue of unpaid work include investment
in time and labour saving infrastructure and technology, and supporting
legislative reform to reduce and redistribute the burden of unpaid
care work that falls on girls and women. DFID
is also investing in research to better understand the 'care economy'
and the policy interventions that are likely to have the greatest
impact on more productive participation of women in wage employment
or profitable self-employment.
17. Women are very reliable with money
and returning money they have borrowed through micro-finance.
We believe the key to micro-credit is to provide it alongside
livelihood programmes as BRAC does.
Access to affordable and responsible financial services
is one of the ways to improve the employment opportunities and
economic empowerment of women and girls.
The evidence on the impact of microcredit in reducing
poverty is unclear. However, providing microcredit alongside livelihood
programmes can be effective. For instance, it can mitigate the
risk of partner violence that microcredit causes in some situations,
at least in the short-term. This is because livelihood programmes
are based on thorough assessments of social norms and support
systems and can better address women's vulnerability around microcredit
and income earnings.
18. Fertility rates remain high in many
parts of Africa, exacerbating the problem on un- and under-employment.
We are, therefore, surprised that DFID has reduced its spending
on reproductive health. We recommend that expenditure in this
area be significantly increased and that DFID assess whether the
main problem is access to or attitudes towards contraception (para.
We are on track to deliver on our commitments on
reproductive health by the end of 2015. DFID invested almost £1.5
billion on population and reproductive health between 2010 and
2013. Our general spending on health increased from around
£650 million in 2012 to nearly £1 billion in 2013, and
this funding also contributed to reproductive health services.
[Given the importance of DFID's International
Citizen Service programmes, we believe it is justified for them
to be the subject of an inquiry either by ICAI or our successor
Committee in the new Parliament so that their full effects can
The government is not expected to respond to this
unemployment is a great challenge and is a potential cause of
social and political unrest. We recommend that DFID more explicitly
target youth unemployment. We have seen examples of effective
interventions, but have also received evidence about the need
for improvement. Currently, donors, the private sector and developing
country governments are not working together on a scale to even
approach meeting the challenge. The work needs to be scaled up
and a sense of urgency injected into the thinking and planning.
Given the demographic profile of our countries, much
of what DFID does is for young people. This is especially the
case in fragile and conflict-affected states. In part, youth unemployment
or underemployment reflects the wider jobs problems that developing
countries face. But youth fare even worse against most employment
indicators. We agree it is important to address the specific obstacles
that youth face in transitioning from education to employment,
thereby increasing economic opportunities.
We are grateful for the Committee in recognising
the effective programmes that DFID has in this area. DFID's contribution
to the World Bank Jobs Multi Donor Trust Fund will contribute
to our understanding on youth employment and fragile and conflict-affected
20. The majority of young people entering
the labour market in developing countries will be self-employed
and in informal employment. They need to be supported in this
position as young entrepreneurs. DFID needs to ensure the education
in schools is focused on creating the skills young people will
need to enter the world of work especially self-employment.
In rural areas schools should focus especially on agricultural
skills for example animal husbandry. DFID should encourage recipient
developing country governments to introduce sandwich courses in
higher education institutions. (para. 23)
DFID is placing learning at the heart its education
programmes. We are working with Ministries of Education,
international partners and non-state players to ensure that children
who go to school learn basic foundation skills in literacy and
numeracy. These basic skills are the building blocks
for future learning. We are also promoting a stronger
focus on developing "soft skills" at school (including
team- working, communication and critical thinking). In
addition, we are expanding programmes on skills for work many
of which include a component of "catch up learning in foundation
skills, financial literacy and soft skills". .
We agree that the introduction of sandwich courses
in higher education institutions is an effective way to improve
their relevance and enhance graduate readiness for employment.
DFID is scaling up support to higher education as an enabler for
growth and development in low income countries. We are launching
a new Partnerships for Higher Education programme in 2015/16.
The programme will actively support the development of degrees
and curricula, including the introduction of sandwich courses
and better engagement from employers.
21. In our Beyond Aid inquiry we stressed
the importance of better policy coherence and in particular UK
government departments working together. We again highlight the
need for DFID to work with BIS on expanding its support to further
and higher education in its priority countries.
(para. 23). We also recommend a number of small, immediate,
practical actions. We recommend that DFID officials meet with
BIS officials to discuss which of the BIS youth programmes could
be transferred to developing countries. (para. 24)
We agree with the importance of cross-HMG working
and engage closely with BIS officials to deliver a joined up approach
to improving higher education. DFID takes an active role in the
Cross-Whitehall International Education group. We
also meet regularly with BIS officials from the International
Knowledge and Innovation Unit and officials from UKTI Education
to discuss areas of mutual interest and develop ideas for joint
working. We will explore the possibility of transferring certain
BIS youth programmes to developing countries and schedule meetings
with relevant officials.
22. To ensure it gives greater priority
to youth unemployment, we recommend DFID creates the position
of a senior adviser on youth employment. (para.
DFID has established a Youth Task Team within the
department to propose how DFID scales up its ambition on youth.
Over 15 years, 600 million jobs are needed for people transitioning
from education to working age. Youth employment is an important
part of this work. The Youth Task Team works closely with other
teams that lead on jobs and incomes including for young people,
skills and fragile and conflict affected states. DFID will continue
to check its staffing configuration on jobs including youth employment
is effective, but without committing to a specific youth employment
23. As the focus on this area becomes more
acute there is an urgent need for far more data to be collected
and examined to fully understand the problem and solutions so
that targeted programs can be developed. We encourage DFID to
work with organisations such as Peace Child International and
Youth Business International to create and pilot innovative ways
of collecting and measuring youth job creation data.
DFID appreciates that NGOs such as these have expertise
in reaching the poorest. Generating better evidence on the impact
of policies and interventions is also essential for understanding
'what works' in tackling youth employment.
DFID supports the Solutions for Youth Employment
via the World Bank Jobs Multi Donor Trust Fund; this coalition
of donors, NGOs and other partners develops evidence on innovative
approaches to tackling youth employment. This work includes efforts
to evaluate the impact of youth employment programmes such as
the Nepal Employment Fund that provides an innovative solution
to training with a special focus on young women.
[Jobs and livelihoods is such an important issue
we recommend that our successor Committee takes it up in the next
Parliament to assess what progress has been made.
The government is not expected to respond to this