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DFID’s Peanuts

February 24, 2011

UK political blog Left Foot Forward recently highlighted one of several developments made in the UK Department for International Development (DFID).  According to Left Foot Forward, DFID is the first aid agency in the world to adopt a new transparency standard, which will be  finalized in Paris this week.  The development stems from the Prime Ministers instructions for all government agencies to publish spending that exceeds £25,000, which has become a part of DFID’s ‘UKaid transparency guarantee’ centered on publishing comprehensive aid information.  This is a welcomed introduction for taxpayers and leads the way for other international aid agencies.

As with the introduction of changes to USAID through the QDDR, changes to DFID come amidst accusations of wasted funds.  A recent publication of US embassy cables by Wikileaks found that tens of millions of pounds had been subject to corruption in Sierra Leone, where ministers and officials used funds to purchase luxury items including 36 plasma TVs and hunting rifles.  Concerns were also raised last year about DFID’s Development Awareness Fund (DAF) which was used, for example, to fund Brazilian dance classes in east London, though the fund has since been closed.  In 2010, a portion of DFID’s finances were also used to fund Pope Benedict XVI’s visit to the UK, raising questions about the principal function of its budget.  DFID was one of two Whitehall departments to be spared in budget cuts by the coalition government, though earlier this week 140 employees were informed that they will loose their jobs.

Andrew Mitchell, Secretary of State for International Development under the coalition government since May 2010, has made several positive steps toward improving and streamlining UK aid abroad, transparency being one of several.  For example, Mitchell recently established a Private Sector Department aiming to “prompt and help catalyze change across DFID” in terms of private sector engagement with the issue of poverty.  DFID is also preparing to launch the ‘Match Funding Scheme’ next month which is currently open to consultation with the UK public.  This scheme’s roots can be found in David Cameron’s Green Paper released whilst in opposition, outlining his plans to establish a £40m fund for which the British public could “vote on where and how to spend aid money”.  The scheme, with a more modest budget of £30m, takes a slightly different approach by matching every £1 donated by the British public to a specific organization or project.  Though it has not yet received much publicity amongst mainstream press (the pilot scheme will run for 1 year from next month), some in the blogosphere support the idea whereas others are more skeptical.

DFID has worked closely with USAID and collaborated efforts over the years.  At a speech at Chatham House this week, Mitchell announced that moving forward DFID would be “adapting” its partnerships with the BRIC countries (Brazil, Russia, India and China) to reflect their growing power.  This statement attempts to address the changing role of the BRIC countries in the world of development.  As economist Andy Sumner highlighted in his book The New Bottom Billion, over a billion of the world’s poorest people live in countries classified as middle-income.  Hence, DFID faces a paradoxical problem with these countries.  Take India for example:

Source: Criticalapp.com

(Source: Criticalapp.com)

On one hand,

On the other hand,

DFID’s own research last year found that only 35% of the UK public supported government aid compared to 50% 18 months earlier.  Thus, the difficulty for DFID in this case lies in ensuring a careful balance of all the above-mentioned issues.  Since the new UK coalition came into power, this seems, so far, to have been addressed well.  Mitchell has frozen the $280m aid allocation to New Delhi and shifted it to private sector projects.  Mitchell’s speech at Chatham House outlining his intentions to “unlock the potential” of private enterprise seems to be a logical solution to the difficult paradox that he faces.

It will take time to see the results of DFID’s recent changes and new initiatives.  If it’s efforts to engage the taxpayer through the ‘Match Funding Scheme’ are successful, it may pave the way forward for other aid agencies such as USAID to implement similar systems of aid allocation.  This could change the way that governments approach development altogether.

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