Sunday, 4 July 2010

Spending unaided

"A study carried out by the Department for International Development (DFID) found that a quarter of its projects do not "achieve" or even "largely achieve" their aims – even by the assessment of staff involved in the schemes.

The result will pile further pressure on ministers to find savings from the ministry, which is one of just two in Whitehall to have its budget "ring fenced" – protected from swingeing cuts of up to 40 per cent to be introduced elsewhere across the Government. Currently £7.3 billion goes to fund DFID every year and the Coalition has pledged to increase spending on aid in order to meet a United Nations target of 0.7 per cent of national output by 2013.
Among the failed schemes, details of which have been disclosed in other government documents, were:

* two information technology programmes in Mozambique and Ghana, where DFID ceded too much control over the schemes to the countries' governments, which failed to supervise them adequately;

* fraud in the Kenyan education sector which saw money meant for text books and improved classrooms stolen by fraudsters who organised workshops which never happened and manufactured receipts. DFID has spent £55 million on the programme since 2005;

* "leakage" of 14 per cent of notebooks provided to Malawi because of lax management at warehouses, as well as "leakage" of teachers' salaries in the country of between five per cent and 28 per cent;

* an audit in Malawi also found 700 "ghost teachers" (about 3.5 per cent of the total) on the payroll that DFID helped to fund.

There is a common thread - inadequate supervision allows, at best, incompetence and at worst, theft to swallow up the monies allocated. The ring-fence may be justified but the fencing needs to be improved on the ground where the money is laying about waiting to be stolen or wasted.

The Coalition's commitment to maintaining the aid budget is bizarre. DFID is admittedly a very small department, responsible for less than 1 per cent of state spending. But it is hard to see why it should be thought sacrosanct when spending on so many other vital areas is not – particularly when there is plenty of evidence that a significant proportion of our overseas aid is completely wasted.

This protection of aid is in place when Ministers have been told to submit proposals in the face of a 40% cut in budgets. 25% cuts were described as certain to hurt - 40% must be a killer blow. Ministers will have to think the unthinkable. The task ahead is enormous, and they are proceeding in the right direction, and with commendable resolve. But for their plans to succeed, they will have to tear down the ring-fencing.

If it is verboten to cut the money back, then we have to find ways of reducing the sums demanded so as to remove the ability to siphon funds off and to improve the way in which budgets are controlled. Just how spending is approved is cloaked in mystery but I suspect country A says 'we want 20 more wells at £10,000 a go' and we remit £200K to their Treasury. Just what happens then is, I suppose, 'nothing to do with us'

Those who seek aid should be required to submit fully detailed proposals for everything they wish to do. Where, why, start date, stage completion dates and costs as each stage is undertaken. Cost accountants would look at what was suggested, Economists at the returns on the expenditure, health experts, environmentalists and any other applicable expertise should scrutinise the project. All disbursements controlled from London and the opportunity for fraud reduced. If something is provided for the benefit of all of the foreign populace, regard should be paid to recovery of the expenditure from tolls or other charges for use. One Indian village charged for the use of a shower and the income was sufficient to get a public lavatory.

These requirements would have two benefits. The locals would learn budgeting and project management which would move them towards greater independence. Some applications would not be made as they were deemed too much fuss and trouble.

I always have one query when I read of overseas aid. When we were in the country and devoted ourselves to governing it we were wicked colonial despots. Now, we are just wonderful where we hold the purse strings. This does open up another aid question - why not require the former masters to bear the lion's share of aid donations? Germany, Belgium and Italy all had colonies in Africa so why not have them pay for what they failed to put in place during their rule?

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