The Department for International Development's (DFID) doubling of support to the African Development Bank (AfDB) is an affirmation of early successes in the Bank's reform programme. The Bank's President and his staff are overseeing critical changes - notably the decentralisation and 'results' agendas - that can help the AfDB fulfil its potential.
The Department for International Development's (DFID) recent doubling of support to the African Development Bank (AfDB) is an affirmation of early successes in the Bank's reform programme. The Bank's President Donald Kaberuka and his staff are overseeing critical changes-notably the decentralisation and 'results' agendas-that will help the AfDB fulfil its potential as the driver of development in Africa. Record donor support pledged under the eleventh replenishment of the African Development Fund (ADF 11) must be supported by maximising the effectiveness of AfDB strategies. Infrastructure investments must do more to build local industry and capacity. Compliance with global transparency benchmarks must be a pre-requisite for AfDB financing of extractive industry projects. DFID has influenced many of the most significant reforms to the Bank and deserves credit for this. It must now keep a watchful eye on the implementation of these reforms. DFID should argue for a reconfigured Board structure that enables the leverage of DFID and other major donors at the Bank to be commensurate with their increasing contributions to the institution. DFID must help ensure that both the Bank's key performance indicators and the extent to which its own objectives are being met are rigorously assessed. The Bank has the potential to become a regional leader. DFID must continue its worthwhile and highly creditable support to ensure the institution fulfils this promise.
In 1970 the UN General Assembly called on the economically advanced countries to provide 0.7% of their income as Official Development Assistance (ODA) by the middle of the decade. In 2004 the UK committed to meet the target by 2013. The Government proposes to enshrine in law its commitment to meet the target in 2010 and each subsequent year. Whilst the legislation is widely welcomed the Committee remains uncertain that it will have the wider impact claimed. The accountability measures contained in the draft Bill weaken the commitment and provide the Government with an easy excuse for not meeting the target. The 2002 International Development Act stipulates that DFID's expenditure on ODA should have poverty reduction as its primary objective. With increasing pressure to find additional finance for responding to climate change or to new types of security threats, there is a danger that increased amounts of UK ODA will be used for purposes only marginally related to poverty reduction. The Government must take appropriate steps to guard against this whether or not the Bill becomes law. Ultimately the Committee supports the 0.7% goal and feels the UK should maintain and build on its reputation as a donor.
This report is part of a general inquiry into development assistance in Iraq. Due to the dissolution of Parliament, the report is limited to oral and written evidence. The Committee has set the following objectives: to determine how successfully the Department of International Development has spent its' funds; also examining the roles of the multilateral organizations within Iraq; the effectiveness of the coordination of service provision; the situation as regards the security environment and provision for humanitarian relief; the transition from humanitarian relief to reconstruction and development in Iraq. A number of Committee members visited Iraq to assess the overall situation, and collect information, but there was limited availability of analyses and evaluations of the development assistance programme. The Committee hopes to continue the work in the next parliament.
The International Development Committee reports that DFID can be proud of much of the work it does to build infrastructure in developing countries - on which the Department spends £1 billion annually. But it calls on Ministers to improve monitoring of infrastructure spending through multilateral organisations, such as the EU, World Bank and African Development Bank. The UK should also insist on provisions in large multilateral infrastructure projects which require local capacity building in order to boost local employment and the private sector with developing countries. The MPs also raise concerns that infrastructure construction in developing countries is particularly prone to corruption. The report points to DFID's success in helping to establish the Construction Sector Transparency Initiative (CoST) to counter corruption, which has proved effective and is to be transferred to the World Bank. DFID should continue to provide the funding and staff time to ensure that CoST can build on the successes of its pilot phase. DFID should publish a departmental strategy on infrastructure. This would help DFID clearly to convey its rationale and priorities within the sector, emphasising that DFID funding is directed to the Department's key priorities within the sector, including the need to build local capacity, implement road safety measures and ensure the use of technologies appropriate to the needs of developing countries. Far more private money is needed to finance large infrastructure projects, and DFID has done well in helping leverage private funding through initiatives such as the Private Infrastructure Development Group.
The World Food Programme's (WFP) 'pipeline' of emergency food has never been more important. WFP does crucial work at the frontline of humanitarian emergencies and in building the resilience of communities to deal with long-term hunger.
Budget support is aid provided directly to a partner government's central exchequer, and aims to reduce poverty through helping to fund the poverty reduction strategy of the beneficiary country. DFID's use of budget support has risen to £461 million, representing nearly twenty per cent of bilateral expenditure. Budget support has been designed to improve aid effectiveness by reinforcing developing country policies and systems, and reducing transaction costs. Despite having provided budget support in some countries for many years, however, the Department has not established whether it is in practice cost-effective. DFID's main criterion for providing budget support is that benefits must outweigh the risks, a judgement which is assessed subjectively by country teams. DFID assesses weaknesses in financial systems but rarely estimates the associated risks of corruption or waste of UK funds. DFID's monitoring has basic weaknesses in specifying suitable indicators and tracking progress against objectives. Bodies such as Parliaments, State Audit Offices and civil society organisations can provide effective challenge to governments and ensure that the poor benefit from budget support funding. DFID has not historically paid sufficient attention to strengthening domestic accountability. DFID also has a responsibility to UK stakeholders to demonstrate that funds have been spent effectively.
This report highlights the importance of tax collection in developing countries, and recommends that the UK's aid programme should increase its focus on supporting tax authorities. This is equally valid for all forms of taxation, including VAT, personal income taxation and corporate taxation. It is also essential that taxes are paid on a fair and equal basis by all. New tax rules on developing countries, the Controlled Foreign Companies (CFC) rules are designed to discourage UK-owned corporations from using tax havens. Traditionally these rules have applied to all UK-owned corporations - both those operating in the UK and those operating overseas. Under the new rules, however, this will apply only to corporations operating in the UK, making it easier for those operating in developing countries to use tax havens. A number of NGOs have campaigned vigorously against the changes, with ActionAid estimating that developing countries may lose up to £4 billion in tax revenues as a result. The UK Government does not accept this estimate, but does not deny that there will be some cost to developing countries. The Committee recommends that - subject to the outcome of its own analysis - the Government should consider reversing the change as a matter of urgency. The Committee also received evidence which argued that the Government should require UK-owned companies to report their financial information on a country-by-country basis, rather than on an aggregate basis. The Government is reluctant to act unless other EU countries do likewise, but the Committee believes that it should act unilaterally
