THE DEPARTMENT NEED TARGETS WHICH PROMOTE COST-EFFECTIVE AID AND GIVE A FAIR VIEW OF THEIR PERFORMANCE
- Like all main government departments, the Department set out their aims, objectives and performance targets in a Public Service Agreement; they have published two so far covering the periods 1999-02 and 2001-04. The Agreements are associated with the resources given to each department to achieve their targets. The central aim of the Department's Public Service Agreements is the elimination of poverty in the poorest countries.
- The Department believe their Public Service Agreements targets have provided a sharper focus to what they hope to achieve. But, in many respects, these targets are unsuited to measuring performance in the development field. The achievement of an input target such as the level of bilateral aid the Department provide to poor countries, is within the Department's direct control. But meeting other targets, such as improving education and health are not. Achievement of poverty reduction targets depends on the efforts of all donors, and the developing nation, as well as the Department. Poverty trends are also susceptible to the effects of economic, social and political factors. This variety of important influences on poverty reduction makes it virtually impossible to isolate how much of any progress achieved is due to the Department's own efforts. The Department accepted that they could not always establish how much poverty reduction in a given country was due to their aid, and that the proportion of targets over which they did not have direct control had increased with their current Agreement. But they considered that in some cases it was possible to establish a link to changes in the level of poverty on the ground, even if it was due to the collective efforts of all donors.
- The problems of identifying the Department's contribution to reducing poverty emphasise the importance of evaluation studies to determine what has worked and what has not. The Department spend about £2 million a year on formal evaluations of the effectiveness of projects and programmes. But their operational staff have taken little notice of the results because they have been produced too late. The lack of timely evaluation has forced country teams to turn to their own informal networks and contacts for information in order to help them operate in the field. The Department considered that there had been an unhappy separation between evaluation and country teams, who needed to work more closely together when monitoring the results of projects and programmes to generate lessons quickly enough to have an influence on future practice. Little evaluation takes place at the country level either, making it harder to identify the extent of the Department's contribution to changes in the level of poverty, even as part of a collective effort with other donors.
- The three year time scale of the Agreements also makes them unsuitable for managing the Department's progress in contributing to poverty reduction because it does not fit well with the longer time scales needed for the effect of aid to show. At the time of the Comptroller and Auditor General's report the Department were negotiating with the Treasury to include five-yearly targets in their next Public Service Agreement for the period 2003-06. This would allow decisions taken during the lifetime of a target to influence the performance achieved at the end of the target period. The Department's targets would also become clearer staging posts on the way to helping to achieving the longer term Millennium Development Goals.
- These weaknesses have meant that the Public Service Agreements have failed to capture the imagination of the Department's staff. Figure 2 illustrates some of their comments to the National Audit Office about the Agreements, which in practice have not been key factors in performance management in the Department. The Department did not, however, see these Agreements as irrelevant but recognised that a much clearer link was needed between them and the work of individual members of staff if they were to fulfil their purpose effectively. The Department are planning to explain their next Public Service Agreement to staff so that they understand its relevance and how it supports achievement of the Millennium Development Goals. The structure of the Agreement for 2003-06, with targets focused on different regions, is intended to increase the relevance of particular targets to country teams. The Department are also emphasising the need for their senior managers to review country plans against new guidance to ensure that they have clear links to the Public Service Agreement.
Figure 2: Comments made by Department for International Development staff on the importance of the Public Service Agreements
"The PSA is irrelevant - the PSA is meant to reflect [the International Development Targets], so people don't think about the PSA"
"The PSAs are a bit remote to people working on the ground, whereas [the International Development Targets] are less time bound and more realistic"
"I would say the PSA was the least known document in DfID"
Source: National Audit Office (2002), Department for International Development: Performance Management - Helping to Reduce World Poverty (HC 739, Session 2001-02); extracts from Figure 24.
- The biggest problem the Department face in trying to measure how far they have met their Public Service Agreement targets is the poor quality of data they have to use. The Department rely largely on data provided by international organisations such as the World Bank, who in turn depend on information provided by countries receiving aid. Data produced by many of these countries are often late, unreliable and patchy. These problems have been severe enough for the Department to drop targets relating to maternal mortality, economic growth and increasing the prosperity of the poorest from their 2001-04 Public Service Agreement.
- But it would weaken even further the Department's ability to focus their aid where it is most effective if they stopped trying to measure changes in poverty because of data problems. The Department are, therefore, supporting international initiatives such as the Partnership in Statistics for Development in the 21st Century. They are also funding projects aimed at improving the statistical capacity and capability in specific poor countries where they are one of the larger donors. The success of these initiatives will have implications for the types of targets the Department should include in future Public Service Agreements so that they make the most of improvements in the quality of underlying data.
THE DEPARTMENT NEED TO IMPROVE THEIR PLANNING FOR POVERTY REDUCTION IN INDIVIDUAL COUNTRIES
- Global targets for poverty reduction must be translated into specific aid programmes in individual countries. Figure 3 illustrates the links between key documents in preparing a country programme. But despite the importance of country planning, the country strategies the Department use do not contain quantified poverty reduction targets. As a result, the Department cannot assess the extent to which poverty will be reduced as a result of the aid they provide, nor can they establish a link between the resources they intend to commit and the reduction in poverty they can achieve.
Figure 3: The different levels of planning within the Department
- Performance objectives have been set more clearly for individual aid projects. But identifying the overall impact of a number of different projects is not straightforward. In the past the Department had found that individual projects had been very successful but their success had not translated into a noticeable reduction in poverty at the country level.
- The prospects of reducing poverty in a particular country are heavily dependent on the quality of governance. There is little point in providing aid to countries where corruption is so pervasive that the aid would be wasted. What represents 'good governance' however, is not straightforward. The Department have identified seven key capabilities they consider necessary for a system of governance in a recipient country to support poverty reduction. But there is no universal agreement as to how to measure 'good governance'. Attempts by the Organisation for Economic Co-operation and Development to identify a representative set of indicators, which would be able to measure change over time, failed because developing countries would not accept data collected by private organisations, and other data available from international organisations were not of sufficient quality. The World Bank is carrying out further work, partly funded by the Department, to identify governance indicators, which will meet these requirements.
- The Department need to know the state of governance in a country if they are to identify whether the situation is improving or deteriorating. The evidence about governance needs to be broadly based. External aid can be spent on development activities but release domestic funds for non-developmental purposes. In addition, the effectiveness of aid provided through multilateral channels can be as adversely affected by poor governance as bilateral aid. The Department told us that of the six billion euros the European Union spends annually on international development, about 15 million euros was possibly lost through fraud, of which the United Kingdom's share was two million euros. But governance assessments have not been a regular part of how the Department plan their future aid programmes in individual countries. The Department explained that their approach to assessing governance depended on the extent to which they consider a government is committed to reform and to improving governance. Countries which have established formal strategies for reducing poverty, including an assessment of governance, do not need a separate assessment by the Department. Other countries, which have not established such strategies, will need to have their governance reviewed. The Department have recently issued new guidance on country planning which emphasises the importance of governance in identifying the size, shape and form of aid programmes in individual countries.
- When the Department have come to a view on the quality of governance, there is a range of possible responses. If corruption is endemic with little commitment to tackling it, DfID take extreme care in how they provide aid. They may stop using government channels; restrict aid to regions where corruption is less of a problem or where there is a commitment to change; or provide aid only through non-governmental organisations. The Department actively support governments which tackle problems of corruption.
- The Department emphasised the importance they place on governance including evaluations of public financial management and audit systems, and of the government's commitment to improve them. They expect to have the necessary safeguards on the ground to make sure that aid will not be wasted because of poor governance, including evaluations of public financial management and audit systems, and of the government's commitment to improve them. Where risks remain, the Department assess whether the benefits for the poor of working with the government outweigh those risks; and aim to identify how they can manage the risks to minimise their impact. The Department could not provide an estimate of the scale of corruption in developing countries and they did not consider that estimates produced by other organisations were wholly reliable. The Department were confident, on the basis of checks carried out by their own Internal Audit, that all the aid they provided was well spent, and was not being wasted as a result of poor governance in countries receiving support. We believe that avoidable corruption and bad governance is the key promoter of poverty. We would like it to be addressed as a top priority in our aid programme.
- The quality of governance is just one aspect of assessing the risks faced by DfID's country programmes. The Department have routinely carried out risk assessments for individual projects but they have not done so for the risks that their entire aid programme in a particular country could be jeopardised by natural catastrophes, conflict or political upheaval. The Department are introducing new guidance on planning country aid programmes to address these issues. In addition, with the next Public Service Agreement, the risks of not achieving particular targets will also have to be identified.
- When planning and implementing their country aid programmes, the Department have to take account of the fact that they are not working in isolation. As many as a 100 different donor governments, international development organisations and aid charities can be operating in a single country; as well as the government of the country itself. This level of interest can be counter-productive, creating administrative burdens on the government of the country receiving aid, which may be unable to deal with a large number of donors. It can also lead to duplicated or wasted effort if donors do not co-ordinate their programmes. And projects and programmes which have been designed without regard to the needs of the government's own poverty reduction strategy will be less sustainable and less effective in contributing to that strategy.
- The Department are increasingly taking steps to reduce the burden on the countries where they are involved, and to increase the overall effect of the collective aid effort of all donors and development organisations. The Department are working to support governments' own strategies for reducing poverty, rather than imposing their own; and making increased use of budget support, which is less costly in administrative terms than individual projects. The Department are also seeking to establish common frameworks for expenditure controls which all donors in a particular country will rely on to try and reduce the administrative pressure on the government receiving aid.
16 C&AG's Report, paras 2.2-2.3; Q11 Back
17 Q41 Back
18 Qs 34, 42, 48-49, 95-96, 118-121 Back
19 Qs 12-13, 149-157 Back
20 Qs 48, 84, 111, 117 Back
21 C&AG's Report, paras 3.23-3.25; Qs 6, 81-87, 178 Back
22 C&AG's Report, paras 4.33-4.34; Qs 7, 9, 43-44, 46 Back
23 C&AG's Report, paras 4.35-4.36; Q16 Back
24 C&AG's Report, paras 3.2-3.13; Qs 10, 145 Back
25 Qs 22, 145, 158 Back
26 C&AG's Report, paras 3.28-3.35; Q14 Back
27 C&AG's Report, Figure 26; Ev 24; Qs 166-169 Back
28 Ev 24; Qs 14-15, 164 Back
29 Qs 143-144 Back
30 Qs 28, 56, 58-59 Back
31 Qs 134, 181 Back
32 Qs 68-70, 131, 182-183 Back
33 Q146 Back
34 Q108 Back
35 Qs 36, 108 Back