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The United Kingdom's development co-operation: new directions and a broader agenda 2001

Britain's current government, first elected in 1997, has placed development issues high on the political agenda, both at home and abroad. Poverty reduction has become central to the United Kingdom's development co-operation and official development assistance (ODA), which is increasing, is now seen in a larger context of efforts in support of international development. Achieving greater coherence in policies affecting developing countries has become a priority for the government as a whole, and is also being pursued internationally, especially within European Union (EU) institutions. Two government White Papers on international development, published in 1997 and 2000, outline the new directions and broader agenda for Britain's development co-operation. The 2000 White Paper addressed the opportunities and risks for development arising from increased globalisation, based on the recognition that the poorest countries could become more marginalised unless greater attention is paid to international economic linkages.

The United Kingdom has fully embraced the partnership approach to development and geared its aid programme around achieving the results-oriented international development targets and millennium development goals, set mostly for 2015. Recognising that no country can achieve unilaterally the objective of eliminating world poverty, the Department for International Development (DFID) has been charged by the British government with fostering international efforts in support of poverty reduction. DFID pursues this mandate by "engaging with and influencing" others in support of developing countries' own efforts to overcome poverty. Among Members of the OECD's Development Assistance Committee (DAC), the United Kingdom has taken a leading role in promoting the development partnership strategy - as articulated in the DAC's 1996 policy statement Shaping the 21st Century: The Contribution of Development Co-operation - and in mobilising the international development community to work towards achieving the international development targets.

The United Kingdom's development co-operation has gone through a period of substantial transformations since 1997. The recasting of DFID as an autonomous government department has strengthened its capacities to pursue its broader agenda as well as enabled it to play an active role in promoting policy coherence. These efforts have benefited from the strong political leadership provided by the Secretary of State for International Development, a Cabinet-level minister.

As a demonstration of its commitment to reducing world poverty and to reverse the decline in ODA, the British government will raise DFID's departmental expenditure limit to GBP 3.6 billion (approximately USD 5.2 billion) in the 2003/04 financial year, its highest level. The United Kingdom's total net ODA rose to USD 4.5 billion in 2000, the fourth largest programme among DAC Member countries. The United Kingdom's ratio of ODA to gross national income (GNI) was 0.32% in 2000, above the DAC (weighted) average of 0.22% but below the DAC average country effort (unweighted average) of 0.39%. The United Kingdom has pledged to increase its ODA/GNI ratio to 0.33% by 2003/04.

To improve aid effectiveness and maximise development impact, the United Kingdom is delivering an increasing share of its aid in collaboration with other donors through development frameworks in support of partner country-led poverty reduction strategies, most notably Poverty Reduction Strategy Papers (PRSPs). This explains a number of features of the British aid programme including a move away from stand-alone projects, the pooling of bilateral funds and the untying of aid. This means that public support for aid must rest more on its contribution towards achieving development goals rather than aid having a strong national identity. The adaptation of bilateral aid agencies to this evolving context is a topical issue of general concern. The United Kingdom's approach demonstrates that bilateral aid agencies can continue to add value by providing constructive and informed contributions to international policy debates, by providing an additional source of independently commissioned research and by monitoring the implementation of international undertakings. The extent to which the United Kingdom's approach is replicable and can serve as a model for a common approach by bilateral donors is an important question.

Recent changes in the United Kingdom's development co-operation

Since the last DAC Peer Review of the United Kingdom in 1997, a series of adjustments have been made which reinforce the United Kingdom's reputation as a leading donor within the international development community. Many of these changes constitute a significant departure from previous practices and bring the United Kingdom's programme into line with good practices internationally. The objective of the new approaches and ideas has been to make international development efforts more effective. These changes include:

• Poverty reduction and a commitment to working to achieve the international development targets have become central to the United Kingdom's development co-operation. The International Development Bill, recently introduced into Parliament, consolidates the poverty reduction objective for Britain's ODA (except in the case of assistance to United Kingdom overseas territories, which have a special position in the United Kingdom's aid programme).
• A government White Paper on international development, entitled Eliminating World Poverty: Making Globalisation Work for the Poor, was published in December 2000. This White Paper emphasises the need, if globalisation is to work for the poor, for effective governments and strong and reformed international institutions, in addition to strong and vibrant private sectors. It also stresses the importance of donors working collectively.
• A more comprehensive approach to promoting policy coherence has been adopted. This is being pursued through strong political leadership, a better use of existing co-ordination mechanisms within the British government and the mobilisation of DFID's experience and analytical capacities in support of this objective.
• The United Kingdom has played a key role in promoting and supporting multilateral efforts for the untying of aid, notably the recommendation on untying aid to least-developed countries adopted by the DAC in April 2001. Untying of the British aid programme was facilitated by the abolition of the Aid and Trade Provision, a mixed-credits scheme, in 1997. The government announced in December 2000 its intention to end the tying of all remaining development assistance to the procurement of British goods and services, and implementation of this decision proceeded on schedule with effect from 1 April 2001.
• Promoting public awareness of development issues has become a higher priority. DFID has become a more transparent organisation with most of its strategies prepared after consultations with stakeholders, civil society representatives and the public, and disseminated widely.
• To translate the United Kingdom's development objectives into policies, a wide range of strategy papers have been developed and published. These include Target Strategy Papers, which analyse the challenge of each international development target and what needs to be done to achieve it, and Institutional Strategy Papers, which cover DFID's partnership with multilateral institutions. The United Kingdom has prepared multi-year Country Strategy Papers for many years and started to publish these in 1998.
• DFID is now working more closely with international agencies at different levels and within their governing bodies, but also on co-ordination of policy and performance within selected developing countries. A stronger involvement with international organisations appears to be developing across DFID, based on a more systematic approach to influencing their agenda and assessing their performance.
• DFID has adopted a broader approach to working with civil society by targeting a wider range of stakeholders. The funding schemes for supporting activities by non-governmental organisations (NGOs) have been transformed. DFID is engaged more strategically with larger NGOs and is giving more emphasis to the advocacy role of smaller NGOs.
• DFID has expanded its representation in the field and established several new country offices with delegated financial authority. Responsibility for managing bilateral development assistance programmes is devolved to large country teams, most of whom are now located in the partner country.
• After being reduced for several years, staff levels in DFID have increased significantly. DFID has adopted a thoughtful and strategic approach to employing local staff. This is important for successfully implementing the current decentralisation process, and for achieving a more effective policy dialogue with partner countries and other donors in country.
• The role of DFID's Evaluation Department has changed from a primary focus on conducting ex post assessments of the impact of projects to a focus on sectoral and thematic studies of strong current relevance. The department is also contributing to efforts within DFID to improve the quality of performance assessment and knowledge management systems. The Evaluation Department has consequently taken on a broader role in sharing lessons learnt.
• The current government's objective of improving the delivery of the United Kingdom's public services has reinforced DFID's attention to the development impact of its activities. A set of time-bound and results-oriented performance targets is agreed with the Treasury and laid out in a triennial Public Service Agreement.

Challenges for the United Kingdom's development co-operation

Fostering enhanced development partnerships points to a need for donors to have strong representation in partner countries and well defined country strategies supporting host-country owned poverty reduction strategies. With the ambitious objectives assigned to its aid programme, the United Kingdom is also encountering a number of specific challenges. Addressing these will help maintain the United Kingdom's leading position within the international development community and contribute to help DFID be more effective in pursuing its engaging and influencing agenda.

The government recognises that a more substantial ODA/GNI performance is necessary to demonstrate the United Kingdom's commitment to tackling world poverty and has reiterated its commitment to the United Nations' ODA/GNI target of 0.7%. Although the United Kingdom is one of the few DAC Members committed to raising its ODA volume and lifting its ODA/GNI ratio, it remains far from reaching this target.

As for other DAC Members, achieving policy coherence is a difficult task and will continue to require constant scrutiny. DFID actively engages other policy communities across the United Kingdom government on policy coherence issues and decision making. The introduction of adequate legislation into Parliament in several areas such as corruption, arms exports and money laundering has not been given high priority but is now included in the legislative programme for 2001/02. Domestic interests remain strong in some areas, such as the process for granting export credits for sensitive projects due to their social and environmental impact. The results achieved in some other areas demonstrate the difficulties with implementing policies that are fully consistent with development objectives, for example in relation to the EU's "Everything but Arms" initiative.

The destination of the United Kingdom's bilateral aid indicates a strong focus on least-developed and other low-income countries, consistent with its stated policy framework. In the context of an expanding ODA budget, DFID needs to make decisions on country and regional allocations taking account of the relative weight given to the number of poor people, the likelihood of achieving the international development targets, the availability of other resource flows and the policy environment. DFID is active in a number of poor countries with weak policy environments and governance concerns, with the objective of supporting forces for positive change and protecting the poorest people. An additional issue is whether more emphasis should be given to drawing out and sharing lessons learnt from these experiences.

The strategies prepared by DFID form part of its engagement and influencing agenda within the international development community. DFID collaborates widely with other donors, for example in international fora and by making its research and experience available to others. There are, however, some perceptions that the United Kingdom, in its pursuit of its influencing agenda, needs to pay more attention to creating a broader sense of ownership among other donors in its alliances around common objectives and priorities. There is consequently scope for DFID to deepen its collaborative approach.

DFID has an ambitious and well-articulated policy framework, primarily focused on the achievement of the international development targets. Providing operational guidance to staff, especially those in the field, is a challenge for DFID. The application of these policies in developing countries with weak policy environments is a further issue. DFID is focussing attention on implementation and is working to develop operational guidance for field offices on the new approaches DFID is adopting to providing development assistance. Policies have to be tested and improved when confronted with operational realities. This underlines the importance of DFID's diversity in approaches in country and a greater sharing of knowledge and experience.

The increasingly sophisticated and ambitious nature with which aid can be provided in support of host country-owned poverty reduction strategies can also increase the challenges associated with raising public awareness of the aims, instruments and approaches associated with a high-impact aid programme. DFID is seeking to widen community involvement in the aid programme by diversifying its contacts beyond NGOs to wider civil society. In doing so, DFID needs to assist smaller organisations to engage on development issues and to meet DFID's criteria for funding.

DFID's monitoring and evaluation systems have evolved significantly in recent years. In many areas of activity, these systems are new and, so far, still not tried and tested. Where systems exist, compliance is an issue as there appears to be little ownership of these processes by DFID staff generally. Another matter for consideration is the institutional independence of ex post evaluations, the programme for which is presently determined by a committee comprising members of DFID's senior staff.

In the longer-term, achievement of the international development targets in each developing country will provide a basis for assessing DFID's performance. This is not an easy task due to the difficulties of capturing data on changes in developing countries and establishing the links between those changes and actions by individual donors. Despite systems being put in place to improve performance assessment, it remains a challenge how to reconcile the targets embedded in the three-year timeframe of the Public Service Agreement with DFID's longer-term development objectives.

Recommendations

Based on these findings, the DAC encourages the United Kingdom to:

• Increase the rate of growth in ODA, based on recent achievements, and consider setting an ambitious intermediate ODA/GNI target on the way to achieving the United Nations' target of 0.7% of GNI.
• line with recent trends, maintain a strong focus of bilateral ODA on the poorest countries, particularly those with good policy environments, while remaining engaged through appropriate instruments elsewhere.
• Continue to seek and develop effective ways of promoting policy coherence, in such areas as trade, environment and conflict reduction, across the United Kingdom government and at European and international levels.
• Continue to support partner countries in the development of their own poverty reduction strategies and use these as the basis for future Country Strategy Papers.
• Promote opportunities to deepen DFID's collaboration with other donors when preparing Country and Institutional Strategy Papers and in programme implementation.
• Maintain an active dialogue with parliamentarians, civil society, the media and the public on the aims and evolving instruments and risks associated with delivering a high-impact aid programme, particularly in view of the ambitious nature of Britain's development co-operation.
• Give further consideration to the need to develop operational guidance, particularly for field offices, on implementation of DFID's policies and partnership agenda, relevant to the range of policy environments found in developing countries.
• Focus the next generation of bilateral country programmes on addressing the challenges of greater sector focus, the appropriate mix of aid instruments and how best to pursue sustainable capacity building in partner countries. DFID's headquarters should update the guidance it provides to country programme managers to enable them to identify the appropriate mix of instruments, including how to assess and manage the fiduciary risk of direct budget support.
• Given the degree of financial authority delegated to offices in main partner countries, consider how DFID can further enhance information flows between field offices and headquarters and ensure that decisions on the appropriate number and mix of advisory resources take account of other donors' capacities already available in each country.
• Reinforce DFID's monitoring, evaluation and knowledge management systems by taking steps to promote staff's use of existing systems and by enhancing capacities to assess performance and provide useful action-oriented information; and consider reviewing the degree of institutional independence of ex post evaluations.

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