Throwing away soft power

“[Justine Greening] believes that the aid budget is not just about alleviating poverty, however important that may. It is also about easing the passage for great British commercial firms in emerging markets and ensuring the resources are more carefully marshalled.”

That from a sycophantic interview with the UK Minister of International Development in the Daily Mail. Alas it is all part of a pattern: Canada, Australia and Norway have all recently folded their international development departments back into their foreign ministries. (Without having ever been particularly close to bilateral aid action, I am not sure that such organisational restructuring, in and of itself, is such a bad thing, but the message in terms of how aid is treated is not good.)

This change in strategy may be not only nakedly self-serving, but also self-defeating. Despite all the hype, Chinese aid is not always as popular as is sometimes made out due to their habit to force their own commercial conditions on to things. (Roads get built by Chinese companies, employing Chinese labour etc.) While the choice was between Western moralizers and Chinese leeches I felt there was still a reasonable contest of ideas. But subjugating aid to self-interest in this way seems tantamount to hoisting the white flag.

Hat tips: Alex Evans and Peter B

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Fat cats make good accountants

Amidst all the kerfuffle arising from the  revelations last month about supposed ‘fat cats’ of Aid gobbling up too big a portion of DFID’s budget (and that led to the line by line review of DFID’s budget I blogged about yesterday), I have yet to read any analysis of why this has happened. Those stony hearts on the right want simply to reduce the aid budget, whilst those on the left lament that more money should go to the intended recipient countries.

I’ll give you the answer in one sentence: many would be contractors from developing countries do not generate reports to high enough standards nor keep good enough accounts to keep busy aid bureaucrats confident that money is being well spent. This, of course, is a sweeping generalization, and ignores elements of culture (sharing a common culture can greatly increase ones sense of confidence in a contractor). I have no doubt that many people and organisations in developing countries are capable of this, and the fact that at least one Indian company apparently got a big contract is testament to that. However, in the least developed countries (often the biggest aid recipients) this capacity is likely to be lowest.

The Daily Fail may well rage at these ‘fat cats’ of Aid, but imagine their scorn if they were to read reports written in mangled English by people for whom this is not their first language, and/or who just did not get good enough schooling in writing proper English. (A skill which is quite distinct from analytical thinking and empathy with poor people that are two of the most important abilities in doing practical development work.) And this whole storm in a teacup would quickly be recognised as such if it were instead discovered that significant corruption had occurred in DFID-funded programmes. If there is one person the Daily Fail hates more than a fat cat it is a corrupt foreign official!

If, as seems apparent, the proportion of DFID funds spent on UK-based consultants is going up, then I would suggest one simple reason: DFID’s own budget is rising quickly while staffing levels have been reduced. In such a situation DFID’s remaining staff will naturally look for good ways to get rid of big chunks of money at once. As I have previously noted, I think this is a false economy: at some point larger transaction overheads (as a proportion of funds disbursed) will have to be incurred if you are going to achieve high quality results in countries where government capacity is low.

For this reason, although I disagree with their reasoning (e.g. see Terence Wood’s demolition of Lord Ashcroft’s ill-informed ‘golden taps’ diatribe), I actually agree to some extent with the aid critics. DIFD should drop its misguided focus on the entirely artificial target of spending 0.7% of GDP on international aid and development, and instead simply seek to generate the best development outcomes that it can. If DFID can demonstrate that a budget increase will effectively deliver more good and the British Treasury can afford it, then it should spend more, but if not then it should not spend money just because it has it in the department budget (the standard donor failing). If development aid is a ‘race’ then it is not a sprint to 0.7% of GDP; it is a marathon, and the finish line is elimination of widespread poverty, which despite significant progress in recent years regrettably remains a distant target.

My conclusion from two years ago still stands:

“Few people would disagree that the aid system needs serious reform. Many say we need both more and better aid. I think that’s too much to deal with at one time. First make it better, much better, then add more if the absorptive capacity really is there.”

Line by Line

Justine Greening the new UK minister for International Development has apparently ordered a “line by line” review of DFID’s programmes. Setting aside snide remarks about that being what an accountant who knows next to nothing about international development would ask, here are some questions she should ask of each line, and a couple she shouldn’t ask.

What to ask

1. Is this programme compatible with your overall strategy? I.e. decide what it is you want to fund and, just as importantly, what you do not. But be careful of ordering a change in strategy just because you’re the new minister. Too much chopping and changing by bilateral donors can be a real problem.
2. Is it achieving good outcomes? Answering this question needs either hard evidence and/or independent evaluations. Note that not all programmes, e.g. those aimed at governance reform, can produce easily measurable outcomes, but it may be too early in their life to evaluate them properly. Do not confuse outcomes with outputs: shiny new classrooms are not evidence of rising educational standards even if the children in the picture are smiling.
3. Is it delivering value for money? An absolutely critical question. Obviously it is difficult to compare outcomes between different sectors: how many vaccines delivered equals one species saved from extinction? But you can ask yourself is the ‘good’ quantified in (2) worth the money spent on it.
4. Are improper people benefiting? This covers two eventualities. The first is whether the recipient government is using the aid programme to support its own naked political goals. The second case concerns ordinary corruption. This is detected by auditors. If you haven’t set up proper audit arrangements or agreed them with the grantee that is your fault.

What not to ask

5. Are the accounting procedures correct? If this programme is about improving accounting procedures or if a programme to improve accounting procedures was recently implemented with this grantee then this is a reasonable question to ask. In all other cases simply refer to question 3: if value for money is being delivered who cares about the accounting procedures?
6. Is anyone else funding it? Have the courage to believe in your convictions. Matching funding is for pussies!

And finally, if Justine Greening wants to make a difference, I suggest that she looks at all the new projects due to be funded and all the projects whose funding periods just came to an end and are now without. Better the devil you know, than the devil you don’t, as they say, and if you want to avoid charges of wasting tax-payers’ money then not cutting funding to proven projects just because they’ve reached the end of the originally planned grant period would be a really good place to start.