30 March 2014

The World Needs DFID. But DFID Also Needs the World.

Folks, this is my last post as IDS Director. The blog will move to IFPRI and I don't think you will notice the difference, save for the different background and disclaimers.

For my last post I thought I would summarise some thoughts on UK development assistance, some thoughts that I shared at a panel last week for my wonderful farewell event.

How does UK development policy need to change for the post 2015 world?

Next year is a big one for global development and for the UK. In September 2015 the new development goals will be unveiled and in May 2015 we will have a new Government in place, no matter who wins. So it is timely to ask: is UK development policy fit for purpose? I am proud of the UK’s development efforts, but I do have my worries about the future. 

First, I believe that an increasing proportion of the world’s problems will be solved collectively, for example, climate, trade, financial flows, drugs, firearms and tax. DFID’s bilateral programme is focused on 28 countries. This makes is very difficult to contribute to collective solutions via this route. One obvious way forward is to work through the multilaterals. The Multilateral Aid Review should give UK politicians some confidence that their money is contributing to things that support development, but a smaller and smaller proportion of the multilateral spend is going into the UN, the EC and even the World Bank. Instead it is increasingly going through Global Funds, which often are not set up to solve collective action issues. If collective action problems require DFID to work better multilaterally, they also require the UK’s contribution to go beyond DFID. However when this is tried (for example, Ed Davey’s Energy and Climate Change Department and their £15m grant to Colombian climate mitigation by reducing cattle flatulence) it does not exactly fly terribly well with those who are aid sceptics. There is almost a sense among some that if UK development spending is not focused on the 28, it is wasted. The UK needs to get better at being a leader on collective action issues—this will benefit the 28, the rest, and the UK. 

Second, I am worried about the UK’s engagement with the international development assistance (IDA) “graduates”, those countries that have GDP per capita above the $1195. The economic growth of many of these countries disguises the fact that very large proportions of their populations remain extremely poor.  Seventy percent of the world’s poor live in middle or low middle income countries. How can the UK support them? The DFID focus seems to be almost exclusively on helping these countries focus on economic growth and jobs, with side benefits for the UK’s own trading interests. Nothing wrong with that. However the lack of nuance in this growth focus is somewhat alarming. The World Bank’s World Development Report on jobs tells us that some jobs are development promoting and some clearly are not. We also know that some economic growth delivers what we want--poverty reduction, health improvements, wellbeing--while some does not. Why does this matter? Well the UK is squarely behind the World Bank’s Zero Poverty goals (getting $1.25 a day poverty down to 5% or so). But the World Bank’s optimism on this is derived from analysis that assumes the average growth rates of the past 10 years will persist in the next 15—but in every country! This proviso is wildly unrealistic. As work by Richard Bluhm has shown the only chance we have of getting anywhere close to zero poverty, even if average growth rates are maintained, is by improving equity. We actually have a pretty good idea about what to do on equity, but we also have a pretty good idea about how difficult that is in a political sense. But this is an issue for UK leadership. The quantity of growth only matters if the quality is above a certain threshold. And reducing inequality is a big part of growth’s quality. The UK has been very silent on this issue. It needs to step up to the plate and be a leader if it has any hope of seeing extreme poverty rates continue to decline at current rates.

Finally, UK development assistance has to get a better balance of accountability and flexibility. I don’t know a single person who has said to me in the past couple of years “DFID is getting easier to work with”. The transactions costs are mind numbing and resource consuming. They have been put in place to demonstrate value for money. We all want value for money. I’m a UK taxpayer too. But when, by the very nature of the work, it is easier to track the money than the value, the focus will be too much on the former and not enough on the latter. This can lead to strange investments, where cost control is wonderful but value is not interrogated. The other side of this is that only really large partners can afford to engage with DFID. This is a problem because creative ideas often come from the smaller groups and organisations. These creative ideas are needed more than ever in the world of collective action, fragile contexts and persistent poverty in middle-income countries. The recent appointment of a Head of Procurement within DFID in response to the recent Independent Commission for Aid Impact review (pdf) is a step in the right direction, but much more needs to be done.

Wherever I travel it is easy to see that the UK Government’s development efforts are held in very high regard. That is a massive credit to David Cameron, Gordon Brown, Tony Blair and the rest. But if our leaders want the UK to stay at the top of the tree, DFID and other UK development agencies need to start showing more leadership on collective action problems, on worrying more about the quality of growth and inequality and on reducing the costs of engaging while still relentlessly focusing on accountability. Fit for purpose? Yes, but creaking. The world still needs DFID. But DFID also needs the world.

1 comment:

Anonymous said...

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