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The International Development Bill: a double-edged sword

10 March 2015 - Tim Midgley

0.7% is a welcome landmark but comes with risks, says Tim Midgley.

Today marks an important day for the UK’s commitment to poverty eradication and international development. The passing of the International Development (Official Development Assistance Target) Bill through the House of Lords enshrines into law the UK’s commitment to spend 0.7% of its Gross National Income (GNI) on overseas aid. This has been achieved, in no small part, by the committed and consistent campaigning of international development NGOs, as well as the commendable cross-party consensus that has emerged over the importance of the UK’s overseas development assistance, both for vulnerable communities as well as the UK’s ‘enlightened self-interest’.

The passing of this Bill sends an important message out to the international community about the critical role that aid can play in poverty eradication, and also in conflict prevention. In many ways, the passing of this Bill, coupled with DFID’s commitment to spend 30% of funds in fragile and conflict affected states, reaffirms the UK’s, and particularly DFID’s, leadership in the international development community. As Duncan Green put it, “maybe this is the moment DFID gets its mojo back”.

However, this commitment also brings with it real dangers that must be addressed. Two recent ICAI reports have clearly highlighted just how difficult it is to maximise the impact that aid can have in conflict-affected contexts. Indeed, there is a strong body of evidence that demonstrates that if poorly managed, aid can exacerbate conflict dynamics in fragile states, ultimately making conflict worse rather than better. Increasing the aid budget could therefore have the impact of undermining progress towards poverty reduction if it is not carefully managed.

We know from many years of experience that aid-funded projects need to be based on solid understanding of the local context, and tailored to that context in order to be effective. This is especially the case in places affected by conflict. Doing this requires a detailed and nuanced understanding of the local environment. Typically this is best achieved with relatively small-scale interventions, managed by local groups, rather than large projects administered by big international development consultancy firms or INGOs.

However, people familiar with the internal working of DFID have long complained about the administrative burden placed on staff by ever-more stringent accountability standards and processes. This is having the unintended consequence of pushing funding away from small-scale interventions toward a greater focus on large-scale programmes. Because the administrative burden of managing small grants is roughly equivalent to that for larger ones, DFID’s ability to directly fund small but strategic projects that genuinely respond to the context and needs of local people is directly undermined.

The pressure to rapidly scale up spending to reach 0.7% also carries inherent risks. There is a danger that increased budgets will only exacerbate the trend towards large scale spending, and result in more pressure on DFID staff to allocate funds on schedule, rather than focusing on the long term impacts. For example, it may precipitate pressure to increase direct funding through government systems in fragile states, since this is a relatively easy way to channel large amounts of money without major burden on staff resources. However, channelling resources through government systems before they are ready to manage those resources properly can increase corruption and undermine development in the long term. In the context of conflict, where governments can rarely be seen as neutral actors, it also risks the UK inadvertently backing players in an ongoing situation with potentially violent consequences.

Meanwhile, the extreme pressure on DFID to demonstrate value for money runs the risk of having exactly the reverse impact. Too often, value for money is narrowly interpreted, meaning that ever more impressive (but quite possibly unrealistic) results are demanded for less money. Commonly this results in pressure to reduce ‘overhead’ costs, both within DFID and in implementing partners. This often leads to cuts to staff responsible for areas like technical oversight, as well as logistics and office management. Inevitably this puts increased strain on remaining teams, who in addition to having to take on ever more responsibilities, are also required to complete more and more arduous value for money assessments rather than focusing on ensuring programme quality. There is a real danger that an increase in funding without a re-evaluation of what value for money genuinely means could exacerbate this problem.

There is a related risk that increasing the aid budget at a time when other departments (notably defence) are increasingly feeling the squeeze, could result in more pressure on DFID to align its aid towards the achievement of national security objectives, rather than poverty eradication efforts. Not only would this be in contravention of the International Development Act of 2002, but ultimately likely to reduce the effectiveness of conflict prevention efforts in the longer term. A recent report by colleagues here in Saferworld, for example, points to the detrimental impacts that securitised approaches to aid spend can have on poverty eradication and peacebuilding objectives.

Finally, there is also a risk that the focus on spending 0.7% of GNI on overseas assistance distracts attention from the remaining 99.3%; that is the impact of non-aid related policies on overseas conflict prevention and poverty reduction. Ultimately UK policies and activities (both domestic and foreign) relating to national security, trade, investment, crime and financial services are likely to have a more significant impact on conflict, and ultimately on poverty reduction, than the aid budget. Aligning the priorities and actions of all government departments affecting global development is a complex, but crucial role. So I would argue that what DFID really needs is much greater influence and political support to allow it to shape UK and global policy in other areas and better account for the impact of these policies on global peace and poverty reduction.

Tim Midgley is Senior Conflict and Security Advisor for Saferworld.

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Aligning the priorities and actions of all government departments affecting global development is a complex, but crucial role.

Tim Midgley