New directions in UK development policy

New directions in UK development policy – Tony German is director of DI

The Secretary of State for International Development in the UK’s new coalition government, Andrew Mitchell, made his first major policy speech on development policy on Thursday. The full text of the speech is here.

In addition, Prime Minister David Cameron wrote an article about UK development policy in the Guardian last week. The article said:

“There won’t be any less money – in fact, there’ll be more. But we are taking a new approach to the way that money is spent, and how spending is monitored. It’s time to bring greater transparency and accountability to overseas aid.

To start with, we are going to publish online details of every international development programme, letting people see where aid money should be going. Over time we also want that information to get to the very communities who depend on the funding, so they can blow the whistle if it doesn’t get through.”

Andrew Mitchell’s speech indicates some important new directions in UK aid policy:

• Transparency and accountability will be increased with the aim of making aid more effective.
• There will be an emphasis on the coalition government’s thinking about a post bureaucratic age and the Big Society.
• A new independent aid watchdog will be created, so that aid decisions are “based on evidence, not guesswork”.
• There is a strong signal about the priority that will be given to empowerment of women and girls.
• A new UK Aid Transparency Guarantee was announced.
• The speech emphasised the need to use the whole of government policy, not just aid, to support development.

In addition, the speech argued that aid is in the UK’s interest as well as a moral duty; and it restated the government’s commitment to increase aid to 0.7% of GNI from 2013, and to legislate for this.

There is a lot to digest in this speech. Here are some initial reactions:

First, the emphasis on transparency and accountability as a tool to improve the effectiveness of aid is right on the money. As my colleague Owen Barder has argued elsewhere, we won’t get better aid by having more committees of donors discussing their commitments under the Paris Declaration; we’ll get improvements (and progress towards the goals of the Paris Declaration) when donor agencies, NGOs and governments come under more direct pressure to do a better job. These announcements are a big step.

Second, the speech makes it clear that DFID will make aid transparent to citizens in recipient countries as well as to citizens in the UK. The focus on access to information for people in developing countries is hugely important. Their needs for information about aid has been ignored for decades. Literally none of the existing systems for publishing information about aid (notably, the OECD DAC) has a mandate to meet the information needs of citizens in developing countries. Indeed, until the aidinfo programme began working on this, nobody had ever systematically asked people in developing countries what information about aid they need and want.

Third, the speech recognizes that if we are going to put transparency to citizens of recipient countries at front of our minds, then we are going to have to change the way we make information transparent. Having each donor putting information on their own website, locked up in an internal database, in its own specific formats, with its own definitions and conventions, is no use at all to someone in a developing country. Parliamentarians, civil society organisations and citizens in developing countries want information from all donors – government, foundations, NGOs and private sector – in a form that they can access, compare, aggregate, consolidate, and mash up with their own information (especially information about their own budget). They are not going to get that from a plethora of different donor websites; nor is it possible at the moment for information intermediaries to aggregate the data from many sources. That’s why the data published by donors must be standardised, detailed, comparable and reusable, which is what the Secretary of State promised. The reference to “traceability” is also hugely important: if the UK can pull off an agreement to an international system of aid traceability, this will make a huge difference to closing down the opportunities for waste and corruption, improving performance, and hugely increasing public trust in aid.

Fourth, the section on empowering women stood out for me. We have all talked for decades about the importance of women for development. And there have been some (but too few) examples of really exciting progress. But we have not done anything like enough to put it front and centre in our thinking. It is remarkable that this is getting so much attention in the new Secretary of State’s first policy speech; this suggests that he plans to step up a gear on making sure women are put at the centre of development thinking.

Fifth, the Secretary of State is sending a strong signal that old-style, woolly, process evaluation is no substitute for rigorous impact evaluation. He specifically name-checks the Poverty Action Lab at MIT for showing that we can be more scientific about measuring what works. A lot of evaluation consultants are going to have a lot of new tricks if they want to stay in business. A few years ago an aid agency official pointed to the National Institute for Health and Clinical Effectiveness (NICE) as a model for what we need in development. Take a look at their mandate: this may be a good analogy for what the new Aid Effectiveness Watchdog might try to achieve.

Sixth, the speech gently warns NGOs and others who spend UK Aid that they too will be subject to the same disciplines of transparency and accountability. These groups have tended to argue, with some justice, that they should be subject to different kinds of accountability than governments. But a citizen in Malawi doesn’t care if the organisation that is supposed to deliver them fertilizer is a government agency, an NGO or a private contractor: they want information about all the services they are supposed to be receiving from all the donors, through whatever channel, all in one place. So one way or another, the aid system – including NGOs, foundations and private sector contractors – needs to make this information available in a common format that everybody can use and access.

Seventh, the Secretary of State appears to be thinking quite radically about the importance of empowering the poor, both as individuals and through their governments. This will bring to development policy the coalition government’s ideas about the Big Society and the post bureaucratic age, and it suggests that he is willing to challenge the vested interests and bureaucracies of the aid system. The speech talks about making more use of cash transfers directly to people in poverty (listen to more on this in a Development Drums podcast, out soon). It talks about Cash on Delivery Aid – as a way to give aid directly to developing country governments with few strings attached, provided results are achieved. These ideas are part of a growing movement challenging the waste of time and money involved in employing large numbers of consultants and the over-elaborate processes that aid agencies and NGOs put in place.

All in all this speech, sets some very important new strategic directions. It was an unfamiliar experience to listen to a policy speech on development that did not feel the need to announce £20 million for some new pet project, to provide a “deliverable” for the news, or a sop to a vocal interest group. Instead of a miscellany of new spending commitments, this speech signalled a new approach which aims to empower the poor and poor countries; and to improve the aid system by making it more transparent and accountable. Instead of a new development policy, this was a new way of doing development policy.

Below are a few thoughts from DI which we think chime in well with the thinking the new government has set out:

• DFID has played a key leadership role in working with other donors to make great progress on the International Aid Transparency Initiative (IATI). A lot is routinely asked of developing countries by donors – IATI shows donors themselves collectively changing their systems in order to achieve greater poverty impact – a practical example of development partnership in line with the Accra Agenda for Action.
• Aid agencies have to be more transparent about their future spending plans, and make aid more predictable. This is by some distance the request most often made by developing countries, and it is entirely reasonable. It is ridiculous that we force developing countries to make plans for the delivery of future public services in the absence of information which donors often hold but do not publish about their intentions for the aid they give to governments, and the services that they expect to provide complementing the government system.
• All aid should be “on budget” in developing countries, whether or not the money flows through government financial systems. Good resource allocation and accountability are only possible if governments, parliamentarians and citizens can see all available resources so that they can make informed decisions about the resources they control. Donors cannot complain about the lack of accountability of developing country governments, and the low productivity of public expenditure, when they themselves contribute to these problems. Whether or not developing countries choose to publish aid information in their budget, donors should publish information about aid in a way that enables it to be matched to the recipient country’s own budget classifications, and they should provide information at a time and in a format which enables governments to include it in the budget process and documentation if they wish.
• All aid agencies, and all organisations that spend aid money, should be required to publish their overhead costs, administration costs, and the unit costs of what they deliver, in a standardised, comparable format. The optimum size of administration costs is not zero, nor is it 100%: it is somewhere in between. When we have good measures of administration costs and unit costs, there will be pressures to drive organisations towards the level of administration costs that give us all the biggest bang for our buck.
• All new projects and programmes above a certain size should be opened for public scrutiny and comment (and open to suggestions of alternative approaches) before the decision is taken to implement them. Almost all aid decisions would be improved if they were not taken behind closed doors, and there is no good reason for these deliberations to be conducted in secrecy.
• Bringing together the commitment to women with the focus on transparency, DI would like to see donors agreeing to publish gender-disaggregated data on everything they do. This would include gender-disaggregated inputs (how money is spent) and outputs (what is produced) and outcomes (what difference this makes to people). And projects and programmes which are submitted to public scrutiny before they are approved should contain gender-disaggregated statements of their benefits.
• We should focus more on how to empower citizens in developing countries to set priorities and hold governments and service delivery organisations to account. People in developing countries know what they need, and whether they are getting it. This isn’t a new idea: the Poverty Reduction Strategy process was intended to give poor people more of a say in the direction of their government, but it has largely turned into a top-down, donor-driven bureaucratic Christmas tree. Getting the information published in an accessible and open format is a hugely important first step to social accountability of aid, because it will enable organisations to bring this data into the wider debate about resources and service delivery. This accountability to citizens is much more important than top down evaluations in determining whether aid is working. It is early days, but the evidence so far is that investments in transparency and social accountability may have a bigger payback than almost any other investment in aid.

Gunilla Carlsson, the Swedish development minister, said this the other day:

“The fight for the future of aid assistance will be between those who think it enough to speak beautifully about poverty reduction and those of us who are willing to do whatever is necessary to get the assistance to function properly.”

The new UK development strategy is a big step on the road to doing what is necessary to get assistance to function properly. It is an approach that requires political courage: transparency and accountability are not as sexy as new announcements of projects for AIDS or clean water. There will be vested interests within the development system who will not be happy to see the rocks being turned over, and who would rather have the government just dishing out more money. There may be difficult days ahead when transparency leads to the uncomfortable exposure of mistakes, and perhaps some waste or corruption. Organisations will face closer, more detailed questioning, and no doubt that will be a bore for them. But these steps to empower citizens and to make the system more accountable are the right steps towards improving the system so that aid works better and achieves more, and towards building trust among the people whose money is being spent.