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UK development cooperation

Dutch development cooperation reform

No development model Eastern Europe

Multilateralism versus bilateralism in foreign aid

The Utstein Group

The Millennium Development Goals

Development Assistance Committee (DAC)



03/2003
  

In the van of the reformers

UK development cooperation

Ronald Meyer

Under the Labour government, the United Kingdom has re-emerged as one of the world's foremost and most reform-minded bilateral donors. After years of dwindling public development cooperation budgets – official development aid ebbed from 0.32% to 0.26% of gross national income (GNI) between 1991 and 1997 – funding climbed back to 0.32% in 2001 and is due to reach 0.4% in 2005/6. The DAC sees the United Kingdom as "among the most progressive [donors] in attempting to address poverty reduction issues systematically".

Since taking office in 1997, Labour has assigned a new importance to development policy. The Overseas Development Administration (ODA), which had been incorporated into the Foreign Office by the Conservative government in 1979, was de-merged and re-established as a ministry in its own right. Now the Department for International Development (DFID), it is led by a secretary of state with full cabinet rank and functions both as a ministry and as an implementing organisation. What paved the way for this development was the political will of Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown. As practical politicians with a social democratic sense of solidarity, the two men see a political and moral duty towards the developing countries, especially those of Subsaharan Africa.

Dynamic and charismatic Secretary of State Clare Short ('Ms. Dynamite') proved a vigorous champion of development issues, raising their profile in both politics and society. With growing funds and more human resources, new motivation and greater flexibility, DFID has increased its capacities in recent years and put them to more effective use. As long ago as 1997, the OECD-DAC certified: "there are few development co-operation agencies which could rival [its] professional capabilities".


Good framework conditions

The administrative reforms introduced by the Tories to gear government operations to targets and contractual relations provided the freedom needed to pursue development cooperation (DC) objectives on a systematic basis. Money is made available by the Treasury for pursuing agreed objectives, for which progress-monitoring indicators are in place (e.g. the increase in the percentage of funds set aside by DFID for bilateral assistance for low-income countries, which rose from 65% in 1996/97 to 75% in 2002, or the reduction of child mortality in the 30 most important partner countries). Although the large number of objectives defined warrant scepticism, the system gives the Treasury an incentive to keep out of micromanagement. What is not so surprising is therefore DFID's commitment at international level to improving and the policies pursued by partners and to finding better ways of measuring the impact of DC action.


Poverty reduction as over-arching objective

The government's sense of political and moral duty quickly found practical expression in full concentration on the implementation of the International Development Targets (from 2000 onwards, UN Millennium Development Goals) with poverty reduction as the overall objective. Retiring DFID Permanent Secretary Sir John Vereker summed up the importance of this objective in his valedictory address: "The power of the single uncluttered purpose. An organisation that knows what it is for, can develop effective policies and motivate its staff. An organisation that can’t articulate its purpose clearly, limit its activities accordingly, and show results convincingly, is never going to be effective." The "single uncluttered purpose" he spoke of has been enshrined in legislation (2002 International Development Act), two White Papers on international development (1997: Eliminating World Poverty: A Challenge for the 21st Century; 2000: Eliminating World Poverty: Making Globalisation Work for the World’s Poor) and a cascade of sectoral, cross-sectoral and regional strategy papers going right down to annual policy and resource plans and annual performance and development plansagreed for individual members of staff. The objective of reducing poverty is pursued within a framework of internationally accepted principles such as partnership, ownership, broad participation, effectiveness and responsibility for results.

Focusing on poverty reduction means that a larger proportion of funding is directed towards low-income countries, which are to account for 90% of bilateral funds by 2005/6. This is facilitated by a marked concentration on the anglophone countries of Africa with whom the United Kingdom has old colonial ties (in 2000, 54% of bilateral ODA went to Subsaharan Africa, where 10 of the 15 principal recipient countries are located) as well as on India and Bangladesh. Poor francophone countries in Africa receive hardly any support.

In future, the focus will be more on so-called good performers - countries which have a national poverty reduction strategy (PRS) formulated on a participatory basis and which meet the standards of good governance needed to promote development. At sectoral level, the concept leads to a moderate shift towards social sectors. Nevertheless, DFID's interpretation of poverty reduction goes well beyond just meeting basic needs; it also encompasses such matters as trade policy, private sector development and conflict prevention. The split between bilateral and multilateral funds no longer reflects a desire to show the flag. At around 40% of ODA, the percentage of multilateral funding is relatively high in comparison with other donors. More money is intended to go where the best poverty-reducing results can be achieved.


Influencing other donors

DFID sees attainment of the 2015 targets as a task for the international community. The first White Paper on development in 1997 states: "We should never overestimate what we can do by ourselves nor underestimate what we can do with others". So DFID invests considerable capacities in terms of personnel, funds and expertise in efforts to get other donors – especially the big bilateral and multilateral ones – to move in what DFID sees as the right direction (2015 objective, modernisation and harmonisation of development cooperation). The United Kingdom thus no longer plays the role of naysayer in the European Union (EU); it exerts influence, calling in the Commission for a more effective use of EU funds for reducing poverty. This "engaging with and influencing others" is also reflected in DFID's new perception of itself as a knowledge and lobby organisation which no longer sees its primary function in planning and implementing DC projects and programmes but in the provision of expertise and resources. However, DFID is not always successful in fully appreciating and integrating other donors' experience. As the DAC cautiously puts it: "There is … scope for DFID to deepen its collaborative approach" (DAC 2001). The almost messianic zeal that DFID representatives occasionally develop and the large numbers of initiatives, studies and surveys the system generates can sometimes be counterproductive for other donors and staff in the field. In the OECD-DAC peer review report 2001 complains of an "initiative overload" and "lack of guidance on priorities" and calls for more patience with different approaches are cited.

Because of their role in development and financial leverage, the World Bank and IMF are crucial players for DFID. DFID also has a natural affinity to the institutions’ anglophone culture. To establish an influential counterpole to those institutions, Clare Short works alongside her German, Dutch and Norwegian counterparts (also joined recently by Swedish colleagues) in the group of reformist DC "trendsetters" (Hofmann, 2001) known as the Utstein Group.


Decentralisation, representation overseas and partnership

Today crucial discussions on national poverty reduction strategies (PRSs) increasingly take place in the field. The primacy of gearing to targets and contracts within the British system of joined-up government allows DFID to model the external organisation it needs to achieve its objectives most effectively; structural considerations follow the need to meet development targets. This can mean concentrating DFID staff at embassies based on service-level contracts with the Foreign Office or it can mean setting up a separate DFID office and transferring whole units with decision-making powers from London to the partner country. DFID currently has more than 25 country and regional offices worldwide. Over 1200 of the 2695 people on the DFID payroll in December 2001 worked overseas (more than 700 of them recruited locally). However positive the results of this decentralisation may be for DFID, better cooperation between donors is urgently needed because if other donors adopted the same approach, the capacities of local partners would probably be overstretched (the DAC report points to the balancing act between "DFID’s high quality standards and partner’s ability to respond in terms of pace and priorities"). Another aspect is the need for rules regarding the "poaching" of qualified local personnel as local staff.


Renewal of development cooperation modalities

To meet the International Development Targets, DFID sees a need for not just poverty reduction strategies formulated by partners on a participatory basis but also close linkage of such strategies to budgets and capacities for implementing them. This calls for the use of partners' central planning, financial and accounting systems as well as efforts on the part of donors to adapt the way they operate to partners' priorities and systems. Hence DFID's considerable efforts to strengthen partners' systems, provide more dependable and longer-term funding itself, push forward the harmonisation of donor practices inside and outside the OECD and substantially reduce the proportion of funds earmarked for particular purposes. (cf. DFID 2002). DFID is reducing the number of its stand-alone projects, making greater use of local specialists, favours completely untying its development cooperation funds (open tendering) and supports cooperation with other donors in joint programmes. These objectives have not yet been achieved everywhere: DFID still faces major challenges in defining areas of sectoral focus, deploying an appropriate mix of DC tools and achieving sustained growth in partners' capacities (OECD-DAC 2001).

In countries which have both a poverty reduction strategy and certain basic financial management capacities, DFID sees support for sectoral strategies, sector-wide approaches (including pooled or "basket" financing) and/or budget support as the ideal way to help partners to take responsibility themselves. They also make it easier to manage DFID's growing budget. Whether the risks inherent in such action – e.g. misuse of funds (especially in Subsaharan Africa) – are acceptable, whether they can be reduced to an acceptable level by DFID or other experts in the country without the charge of neocolonialism being raised and whether they lead to too sharp a focus on central government structures (finance ministry) and mechanisms (financial control) rather than on institutions more relevant for the poor (e.g. local government) are matters of international controversy. In the case of budget support, DFID is seriously endeavouring to define reliable standards.


Coherence with other policies

The 2015 targets are not attainable if action is limited to the provision of DC funds. What is equally important is a coherent approach in other areas of policy. So in agriculture, for example, DFID stands shoulder to shoulder with the Chancellor of the Exchequer in seeking to get EU subsidies dismantled. For that task, DFID is building up its expertise and analytical prowess and making use of existing coordinating bodies. However, coherence so far often remains a rarely realised dream for DFID, especially where widely differing national interests are at stake. One example is the plan produced by Tony Blair and Spanish premier José María Aznar at the Barcelona EU Council, which proposed that lack of cooperation by developing countries on asylum issues should be answered by a reduction in development cooperation funds – a proposal which Clare Short described as "morally repugnant". Examples from past years also suggest that DFID in some cases risks becoming a moral fig-leaf for the rest of the government (the all-party International Development Committee spoke of "rent a conscience") if, for example, the UK continues to be a major exporter of arms to Africa (promoted, in part, by its own export credit agency) despite a 1998 government white paper on strategic export controls.


Conclusion

There is no doubt that DFID ranks among the most progressive and dominant bilateral donors engaging in the international debate today. It provides major stimuli for getting the donor community to move in particular directions: implementation of the 2015 poverty objective and the Millennium Development Goals, improvements in international framework conditions (debt relief, trade, agricultural subsidies) as well as more extensive and more effective DC provision. It has reformed its own organisation and policy, systematically re-gearing both for achieving objectives more effectively, and responds to partner requirements in a fast and flexible manner. But high aspirations have not always been translated into action. There is still significant scope for progress in terms of coherence, adoption of a cooperative, more open approach to other donors (diversity) and in answering the question of how much budget support causes an unsustainable dependence on donor funding for partners and how the risk of misuse of funds can be limited. And finally, DFID's internationally acclaimed competence and professionalism can also, of course, result in staff finding it difficult to give partners enough time and space to act on their own responsibility and initiative.


DFID: Departmental Report 2002, London April 2002
DFID: White Paper: Eliminating World Poverty – A Challenge For the 21st Century. 1997
DFID: White Paper: Eliminating World Poverty – Making Globalisation Work For the Poor. 2000
Hofmann, M.: Neue Wege der Entwicklungspolitik durch die Trendsetter der Geberzusammenarbeit (New directions in development policy signalled by the trendsetters of donor cooperation), in: Asien- Afrika-Lateinamerika, 2001, vol. 29, pp. 417-437
OECD-DAC: UK Development Co-operation Review, in: DAC Journal 2001, vol. 2, no. 4
Vereker, Sir John: Blazing the Trail: Eight Years of Change in Handling International Development. Address to the All Party Group on Overseas Development, Westminster, 23 January 2002

Ronald Meyer is a member of the staff of Division 210 (Supraregional coordination and planning; quality assurance) of the German Federal Ministry for Economic Cooperation and Development (BMZ). He worked at DIFD under a staff exchange programme from July 1999 to June 2000. meyer@bmz.bund.de
The views expressed in the article are the personal views of the author.

Net resources: www.dfid.gov.uk/
www.oecd.org/EN/documentation/0,,EN-documentation-67-2-no-no-no-67,00.html