Examination of Witnesses (Questions 1-19)|
WEDNESDAY 24 APRIL 2002
1. Today we are examining the Department for
International Development, Performance ManagementHelping
to Reduce World Poverty, and welcome Mr Chakrabarti, the Permanent
Secretary of the Department. I think it is the first time you
have appeared before our Committee, so you are doubly welcome.
Perhaps you would like to introduce your colleague.
(Mr Chakrabarti) On my right is Mr Mark Lowcock who
is Director of Finance and Development Policy in the Department.
2. Thank you. This is a very important subject.
It is a difficult and complicated report on an important subject
and quite technical, so I know you will try to help us with that
as best you can. I am sure you will do it very well. Can I start
by asking you how you judge the value you get from the significant
funding you provide to multilateral agencies?
(Mr Chakrabarti) You are right, Mr Chairman.
We have put nearly half our budget into multilateral institutions,
ranging from the UN agencies through the EC and the World Bank,
so it is extremely important that we do get value out of it. The
way we look at this is, first, how do they allocate their funds?
Do they allocate them to where aid is likely to be most effective?
All the evidence suggests that that means allocating to the poorest
countries. On that basis we would say that the World Bank is a
pretty good institution. Most of its money goes go to the poorest
countries. The EC is not so good. Then we look at also, I guess,
their evaluation systems. Again, the World Bank has a very strong
evaluation system which has been built up over the years, independent
of the programme teams, and the evaluations there show that it
is getting better and better over the years. The third thing we
do and have done increasingly since 1997 is put together institutional
strategy papers, as we call them. Essentially these describe how
we as an institution, DFID, will work to try and influence these
international organisations. We try and set out what our targets
will be in terms of that influence, how we will go about it, will
we put individuals into the organisations, will we build up coalitions
of support in our dialogue with those institutions. Again there
we have fared much better with the World Bank and with bits of
the UN system than we have with the EC. At the World Bank we have
managed to put people in to help the World Bank re-design its
poverty reduction strategies. With the UN system we have had a
strategy for how we could reform the UNDP which is one of the
most important parts of the UN system, which is spread over too
many places in the world, too many sectors, and, with the helpful
efforts of some other donors, UNDP has radically reformed itself
over the years. It is a number of things that we do to try and
get good performance there.
3. Obviously performance targets are important.
Can you explain to me why only two of your 23 performance targets
relate directly to multilateral aid if it is so important? Indeed,
it is half of our aid effort.
(Mr Chakrabarti) Because at the end of the day we
are trying to get a balance between what we have direct control
over and where we do more in influencing strategies. In the bilateral
programme we have more direct control over how we spend our money
than we do in the multilateral system. That is not to say that
the multilateral is not important to us. It surely is.
4. It is difficult to know what is going on,
though, if only two of your performance targets relate to this
aid, is it not?
(Mr Chakrabarti) We have enough information, if you
look at the PSA, which supports that we are making an impact in
those two areas.
5. You mentioned the EU. Let us look at the
EU. If you could turn to pages 18 and 19 where this subject is
directly raised, you had a target for persuading the European
Community to increase the proportion of their aid going to poor
countries, which I am sure you would agree is a very important
issue, but you are not being very successful, are you?
(Mr Chakrabarti) I think that is absolutely right.
We cannot shy away from that. We are not making as much progress
as we would like. The reasons are essentially political. I can
give you technical reasons but they are just underlying the political
reasons. During the 1990s essentially the EC, obviously supported
by its Member States, moved away from a focus which had I think
about 70 per cent of its aid targeted on poor countries at the
end of the 1980s, now to around 50 per cent because many Member
States do not share our vision that development assistance should
be about poverty reduction. They see it partly as poverty reduction
but partly also about foreign policy interests and they have tended
to move it towards the middle income countries. We need to build
up a coalition of support there within the UK to impress on the
EC, together with other Member States who believe, like us, that
it can shift to low income countries and do much better.
6. I will leave that. If other members want
to come in they can do. I want now to look at a rather more technical
area, which is your performance targets. This relates to the spending
reviews and how they relate to them. Why are the targets resulting
from the two spending reviews so different in format from each
other and from longer term international poverty reduction targets?
(Mr Chakrabarti) I think there is more consistency
than might meet the eye. Both the PSAs, the first and second,
are very directly linked to the Millennium Development Goals which
I think the NAO report brings out very well, so there is quite
a bit of consistency in the subject matter, the substance underlying
those targets. What we are trying to do is change the structure
of the PSA, really following the NAO's recommendations, so that
our staff feel much better ownership than they have done up to
now of the PSA.
7. Would you say that there is a problem? For
instance, they target different things in different ways. There
is no focus on improvements in GDP in the second and there is
in the first, that sort of thing. Is that not causing confusion
to your staff? It will certainly cause, I imagine, confusion to
members of this Committee as they try to understand this report.
It is a very complex area, is it not?
(Mr Chakrabarti) It is a very complex area. Obviously,
when we change things like that we have to explain them to our
staff very clearly. There was good explanation of the change of
that target in particular. What we found was that the data was
essentially swamped by the performance of five or six very large
developing country economies within which our aid, although sizeable
in our terms, was actually very small against the size of their
economies, so it would have been hard in attribution terms, I
think, for us to say that we were really that influential on the
growth rates of those countries. We therefore made an honest choice
there and decided to move away from that target.
8. If you look at figure 7 on pages 16-17, I
think this is quite an important point. DFID is expecting to miss
three key targets for 1999-2002 relating to growth in GDP, reduction
in maternal mortality, increases in the poor's share of national
income. What action are you going to take in response to this
forecast shortfall? It is quite an important shortfall to try
and address, is it not?
(Mr Chakrabarti) Yes. I think the Committee has been
sent the latest figures which suggest that actually, firstly on
the GDP per capita growth target, we
9. I was warned you might come out with that
answer, I am afraid, but that still leaves the second two.
(Mr Chakrabarti) Okay; let us go to the next two then.
I can do that. On the second one, the share of the poorest target,
what we found with this was that frankly the data is totally unreliable
to make much headway with this, so it is true that performance
was below target but the aggregate data does not really tell us
very much. What we have done with both the GDP target and the
share of the GDP target is try to combine them and really focus
on what the institution really needs to do, which is the poverty
head count: how many people earning more than a dollar a day and
how many people earning less than a dollar a day. In the new PSA
which we are now in discussion with the Treasury about, we will
focus on that as the ultimate measure. On the third one, maternal
mortality, there are a number of reasons why we have not reached
that target. Three I will outline. One is high HIV prevalence
in the countries that we are focused on; secondly, very poor emergency
obstetric care in a number of those countries, and more generally
poor health systems. In all three areas we are trying to work
with others to strengthen and increase the capacity of health
systems to focus on those issues. We have now major programmes
to focus on maternal mortality in our bigger aid programmes such
as Malawi and Nepal, Ghana and Kenya. We are also working with
the World Health Organisation much more closely than we used to
and with the World Bank to try and focus on those three issues,
as I said. I am not shying away from that. I think we have definitely
slipped and we aim to do better. Again, there we have to work
with a number of other players to try and do better.
10. If you now turn to pages 32 and 33 and look
at paragraphs 3.6 to 3.8, this is about your planning and assistance
programmes for developing countries and the fact that it does
not translate corporate performance targets into appropriate targets
for the country programmes. Is this a problem for you and, if
so, how do you seek to overcome it?
(Mr Chakrabarti) It is a problem and we clearly need
to do better there as well. What we have found and what the NAO
brings out very well is that we can relate activities at country
level to the PSA targets but it is clearly not driving the way
staff think about performance management. What is driving them
much more is the Millennium Development Goals which of course
link to the PSA. We need to change quite radically our business
planning processes, and I hope that is not too much jargon.
11. I think we will avoid any kind of jargon
this afternoon. If you can do a short teach-in for the members
and explain how this works we would be very grateful.
(Mr Chakrabarti) Okay. The way we envisage it working,
and we are obviously in discussion with the Treasury about this
as well, is that at the very top level the world has Millennium
Development Goals ranging from health and education and what-have-you.
These then need to be translated into individuals' objectives
at the very bottom: how do we get from one to the other? The Public
Service Agreement will describe what the institution as a whole
will be doing in terms of the Millennium Development Goals. What
we will try and do is have the agreement much more focused on
the organisation's structure, which we have never done before,
so that there will now be directors in the organisation who are
responsible for the PSA objectives, say, for Africa or for Asia,
so that they are much more incentivised to deliver. Below them
we will have country plans which are again feeding through to
those regional plans and, finally, the individuals will have their
own individual objectives feeding through those country plans.
There will be a much clearer pass-through than there has been
in the past between the top level goals and individuals.
12. Okay. We can come back to that later if
we need to. Can I move on now? If you look now at evaluation studies,
this is quite important and it is mentioned on page 48. They are
important in helping to sort out the reasons behind changes in
the level of poverty, and I am sure we would agree there, and
they are vital to your work. Why is your programme of evaluation
studies not more directly aimed at helping to interpret your contribution
towards poverty reduction targets?
(Mr Chakrabarti) We need to change the evaluation
programmes within DFID quite significantly and we accept the NAO's
recommendations in that regard.
13. Just explain to us why you do not think
they are working.
(Mr Chakrabarti) What I think has been happening,
and there are some quotes from our staff which I think are very
apposite, is that our evaluation has tended to come too late in
the process to help staff change their actions as they find problems
with their projects, programmes, whatever. Increasingly therefore
what staff have done is resort to personal networks, retreats
to try and learn lessons from each other and feed that into their
work. That is fine but we do need a more formal system which also
brings in some independence, which the Evaluation Department will
do, to try and help change behaviour in real time. That is where
we need to move our evaluation. That is very much at the project
staff end of the system. At the top end of the system I think
we have made real use of the evaluation which is out there which
we share with the World Bank and others, as I said earlier, in
terms of aid effectiveness, focusing on the poorest countries,
focusing on those countries that are reforming their policies
as opposed to those who are not.
14. Every member will have his own interests
in this. I am interested in the arguments about bilateral as opposed
to multilateral aid, but I am also particularly interested in
good governance. I think this is a key aspect of international
development. There is no point in pouring money into countries
which are corrupt or badly governed. If you look at pages 40-41,
paragraphs 3.28 to 3.35, you will see that governance assessments
are not a routine part of DFID's planning for countries. I think
this is a surprising statement. I would have thought that good
governance is absolutely essentially to how well aid works. Can
you explain why that is the case and why tracking of governance
is not a routine element in DFID country planning?
(Mr Chakrabarti) Governance is crucial. We absolutely
agree with that. There are two types of countries here that we
are trying to describe. One is the country which does not have
a full scale strategy for how it might reduce poverty. In those
countries we do have to do governance assessments, economic assessments,
all sorts of assessments, which need to focus on these sectors.
There are other sorts of countries where increasingly they are
adopting what are called poverty reduction strategies put together
by those countries where governance will be a key part of that
strategy. Indeed, the best of these poverty reduction strategies
will be worked out in association with civil society and so on,
so the whole governance issue gets discussed in some detail because
of that. In those countries it does not seem sensible to do governance
assessments separately from those poverty reduction strategy processes.
We take them as part of those processes. It depends which country
we are talking about. We will look at governance in the first
set of countries separately, but in the second set we will look
at that as part of a joined-up process.
15. Would you accept that perhaps you have not
put enough emphasis on this aspect of your work in the past and
that good governance is moving up your agenda? Would that be a
(Mr Chakrabarti) I think good governance has been
moving up our agenda since the late eighties. One can argue about
whether we have put enough emphasis on it or not. I happen to
think we do, particularly in those countries that I have described
that are doing these poverty reduction strategies because increasingly
the debate around the economic reform agenda tends to touch on
a lot of governance issues, corruption issues and things like
that. It has permeated into the system much more than might seem
16. Can I end with the data that you use? If
you look at paragraphs 4.31 to 4.36 on pages 53-54 you will be
familiar with the poverty reduction policy and timeliness of much
of the data available. This is a fairly key point. If you have
not got the right data how can you make the right decisions? Do
you want to tell us something about how these shortcomings in
the data available to you are affecting your work?
(Mr Chakrabarti) In my view this is the biggest problem.
Attribution is an issue, linkage up and down and these business
planning chains are an issue, but data is the biggest issue for
us, much more so than perhaps the domestic departments, dealing
with their public service agreements. Coverage, timeliness, reliability
of that data, as we have already seen, are a real problem. This
could make us just give up, which I think would be ridiculous
because we really must try and measure not only our performance
but how these countries are doing, and so what we are doing increasingly
is supporting international efforts through the World Bank and
the UN system to try and improve the statistical work in these
countries, but also, in the countries where we are one of the
bigger players, we are also putting a lot of effort into the work
on data, in Kenya, Uganda, Tanzania, Nepal and Bangladesh. It
is generally a feature of poor countries that their data systems
are poor but it is not always so. Take India, for example. Over
the last 50 years India has developed a pretty good database actually,
spurred by the efforts of donors to help it, so it can be done
but it is something which I would say that donors over the last
20 years have probably not put much effort into and now we really
do need as individuals to measure our own performance as well.
Chairman: Thank you for trying to explain that
17. May I first say to the witnesses and to
the Committee that I have a non-pecuniary interest in the subject
as a member of the Council of VSO. Like all the other ex-VSO MPs
who are automatically put on the Council I have not attended it
once. That brings me on straight away to the question I want to
ask. We are talking today about the way in which we monitor that
our aid is being properly used, but it is also surely a question
of what the aid is to some extent. I wonder if you could just
tell us a little bit about the extent to which your aid effort
includes the sending of people rather than just money or goods
from this country to help those in poorer countries of the world.
(Mr Chakrabarti) Mr Lowcock might like to elaborate.
I think there has been a shift away from that way of providing
technical assistance, to seeing technical assistance, if we are
going to provide it, as much more part of a wider package of assistance.
For example, in countries where we are providing project support,
support direct through the budget rather than doing projects,
we will increasingly think through to what extent can a government
take this forward without having people in the right areas, like
audit, like financial management, and so on, so we may as part
of that package want to provide people to strengthen those areas.
It is much more trying to think of those people inputs as part
of an overall package rather than things in separate entities
which is how we have been doing it in the past.
18. I know that the Government still does support
the VSO programme but that is more for fully trained and older
people. Do you give any support to younger people, perhaps in
gap year terms and things of that sort?
(Mr Lowcock) The main continuing scheme we have there
is a scheme run by the Overseas Development Institute which is
for young social scientists, mostly economists. Twenty or 30 a
year get financed by us to go and work for governments in developing
19. This is on what sort of length of project?
(Mr Lowcock) Two years.