DfID Aid Castigated
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This was the view placed before UK’s House of Lords, Economic Affairs Committee last week by retired Development Economist Gordon Bridger. “DfID is now not fit for purpose. What was once Barbara Castle’s proud achievement, a Ministry of Overseas Development is now largely an overseas welfare organization whose main beneficiaries are those who work for aid institutions” he said. Harsh words indeed from Gordon Bridger who together with Charles Cullimore and Michael Shaw systematically challenged DfID’s DNA particularly in respect of general budget support.
Gordon Bridger is a Development Economist and former senior Economic Adviser and Director of Country Programmes for the Ministry of Overseas Development. He is also author of ‘How I Failed to Save the World: Or Forty Years of Foreign Aid’. Charles Cullimore CMG was High Commissioner in Uganda from 1989-93 and is now honorary President of the Business Council for Africa. Michael Shaw was a District Officer in Tanganyika and acts as an adviser on Governance to DFID and other organisations. Whilst not against the principle of aid per se, all were concerned about the scale of aid and, general budget support as an accountable and efficient mechanism for its distribution a concern they suggested, was held by many DfID staff who were too frightened to speak out.
In his evidence to the Committee, Gordon Bridger quoted respected academics and journalists who had argued for a large reduction in aid, and cite examples where corruption in Kenya was deliberately ignored so as not to impede the achievement of DFID’s targets. He informed the Committee that DfID staff members were concerned that too much money is being given in aid which was distorting economic pointers, fuelling corruption and driving up exchange rates to uncompetitive levels. “Across Africa, the countries getting budget support do not have to bother too much about raising their own revenue. Meanwhile, DfID is dumping as much money as it can with international bodies as fast as it can. These are genuine comments by very concerned DfID staff members and is the reason why I am here” he said.
This is in sharp contradistinction to the message conveyed to the Committee earlier in the week by U.K’s Secretary of State for International development Andrew Mitchell who espoused the effectiveness of UK aid to the Committee. “I have seen it as part of my job to move DfID away from sometimes looking a bit like a rather well-upholstered NGO moored off the coast of HMG to being a department of state for development in the developing world” he said. Mitchell told the Committee that at the heart of DfID policy was the need to be accountable to the British taxpayers and deliver 100 pence of development for each £1 of their hard-earned cash to deliver result on the ground. “We have been very clear indeed that we need to be able to reassure the British public – it is also why we set up the Independent Commission for Aid Impact, the independent watchdog” he said.
Mitchell stated DfID now has an increased emphasis on accountability and scrutiny which added to the effectiveness and accountability of foreign aid. However, when asked by Committee member Baroness Kingsmill how much he thought had been lost by way of corruption Mitchell stated it was impossible to answer the question.
Mitchell informed the Committee that DfID was moving into the private sector as a means of delivering support, a sector he described as “the engine of development” in Africa and an effective mechanism for the distribution of aid.
Charles Cullimore told the Committee he felt this move was unlikely to be effective. “As far as I can see, there is really no way around the conflict between sovereignty on the one hand and the need for conditionality on the other, particularly in the context of budget support. The question refers to possible commitment by the recipient Government to improve “public financial management.” I can see that that could be negotiated as part of an arrangement. It might be the deal, as it were, that would be part of the conditionality for the budget support. However, it would be very difficult to monitor whether that was happening, still less to impose it. Therefore, I do not think that it can be effective. Perhaps it is not an exact parallel, but look what is happening in Greece” he said.
Michael Shaw concurred with this view making the point that for private sector aid to work, proper investor environments were required to have impact. “You need a secure environment, good governance, the rule of law and proper land registration—all those things around which a decent Administration revolves. If you do not have those, the whole aid programme is a waste of time – the one thing that DfID and the British Government should be doing is concentrating on those good governance factors that have to be in place before you can bring in private investment,” he said.
Gordon Bridger was more scathing. Accepting there will always be a certain amount of corruption to be absorbed, he maintained it was the way in which aid is now being given that facilitates widespread corruption which is impossible to audit. “The crude calculation indicates that probably around 60% of funds that are given in this form are diverted to other ends. I do not find that implausible at all when you think of the countries to which we are disbursing aid: Nigeria, Kenya, Tanzania, Ethiopia, Zambia and Malawi. The level of corruption in those countries is unacceptably high and as long as we continue to give this aid – we will facilitate corruption and continue to support very nasty regimes,” he said.
Bridger also made the point that academics, in Tanzania and Ethiopia particularly had complained to DfID about corruption and their concerns were being ignored. “We are undermining the very people whom we are supposed to be trying to assist by giving aid in this form” he said.
The Committee was clearly concerned by the difference in evidence between Andrew Mitchell and the panel. Committee member Lord Lipsey told the panel that in his evidence to the Committee last week, Andrew Mitchell did a very good job in convincing the Committee that this was a golden age for British aid, and that we were vastly more effective at promoting growth through our aid programme than we have been at any point in time and asked if the panel shared this view. Lord Forsyth shared the same concerns. “The Secretary of State’s message, broadly, is, DfID is focused on outputs and will have people monitoring these outputs and is absolutely focused on value for money. But you are telling us precisely the opposite; you are telling us that they are just focusing on targets relating to inputs and that they do not have the staff and expertise to measure what is happening to the inputs. Would that be an unfair summary?” he asked.
Gordon Bridger responded by stating this was his view and that there was a need to look much more skeptically at the effect of the aid programme. “Andrew Mitchel gave you a whole pile of figures about the number of children sent to school and so on. Where did those figures come from? They came from Governments. They were not counted. I am not out of date. I can assure you that there is a lot of concern within DfID about the way in which they are being forced to meet targets all the time,” he said.
The Committee was surprised by the suggestion from the Panel that DfID spending was target and bonus driven and that staff members had revealed they were shoveling tax payers money into multilaterals as fast as they could as there was no other way to spend the money – which meant unsuccessful aid programmes were played down. Gordon Bridger also informed the Committee, that senior DfID staff got bonuses for effective programmes i.e. for money spent. “I was asked by a DfID staff member to complain to the National Audit Office that this was distorting evaluations carried out by consultants because they did not want to upset senior managers” he said. He also referred the Committee to an e-mail from a DfID staff member who stated that staff cuts and the introduction of many new bureaucratic procedures, the pressure to ensure that rapidly rising budgets are spent and the effective loss of DfID’s reputation for technical and management competence in the field has made DfID staff morale very low.
The Committee called for an immediate review into the status of bonuses and DfID staff members.
Gordon Bridger maintains that the principal reason why DfID continues with its aid programme is because it provides jobs for staff and keeps the noisy international non-governmental agencies quiet. “Once an institution is established its main objective becomes the jobs and the careers of those who work for it- Andrew Mitchell and Alan Duncan claim that all this aid is reaching the poor. They have no idea if it is as they do not have the staff or expertise to check how it is used. When I asked a senior DFID staff member about their statistical claims of success he dismissed them as rubbish,” he said.
Added cause for concern are revelations reported in the Sunday Telegraph this week that India’s Finance Minister Pranab Mukherjee and other Indian ministers tried to terminate Britain’s aid to their booming country last year – but relented after the British begged them to keep taking the money. British aid was described by Mukherjee as “a peanut in our total development exercises [expenditure].” He said the Indian government wanted to “voluntarily” give it up reported Andrew Guilligan. The information seemingly came from a leaked memo where India’s foreign minister, Nirumpama Rao, proposed “not to avail [of] any further DFID [British] assistance with effect from 1st April 2011,” because of the “negative publicity of Indian poverty promoted by DFID”. Guilligan reported that according to sources in Delhi DFID officials had told the Indians that cancelling the programme would cause “grave political embarrassment” to Britain and that DFID has sent more than £1 billion of UK taxpayers’ money to India in the last five years and is planning to spend a further £600 million on Indian aid by 2015.
To what extent the above views presented to the Committee by the panel are representative of wider concerns held by government Ministers and development agencies is presently unclear. However, what is clear is that DfIDS DNA is being challenged by some seriously respected voices and the question of general budget support as an efficient and accountable mechanism for foreign aid is under attack. At a time of intensifying controversy over the UK aid budget highlighted by India’s Finance Ministers, it is suggested, they are voices DfID cannot afford to ignore.
London Evening Post
The Economic Affairs Committee is one of the five permanent investigative committees in the House of Lords and is charged with considering economic affairs. The Committee examines the operation of the Monetary Policy Committee of the Bank of England as well as other macroeconomic issues and more specific economic topics. The Committee is usually made up of thirteen members, appointed by the House for each Session of Parliament. Present members are, Lord Macgregor of Pulham Market (Chairman), Lord Currie of Marylebone, Lord Forsyth of Drumlean, Lord Hollick, Baroness Kingsmill, Lord Levene of Portsoken, Lord Lipsey, Lord Shipley, Lord Smith of Clifton, Lord Tugendhat
Click Here for the above evidence session.
By Sarah Hermitage
The author is a UK lawyer and anti-corruption activist researching corruption and access to law in Tanzania.