Aid Contractors: What should DFID do?

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Merry Christmas, Happy New Year, and goodwill to everyone! Unless, of course, you’re a fat cat poverty baron, in which case you’ve got a lot to answer for. DFID has launched two inquiries into malpractice at Adam Smith International following Daily Mail revelations; more attacks swiftly followed on cash transfers and the World Bank (paywalled). It’s caused no small amount of navel-gazing and handwringing among my friends working in the aid sector – many of whom work for the aforementioned poverty barons. Consequently, this blog examines how DFID should respond – if at all – to these attacks on aid contractors.

It would be true – if complacent – to point out that right wing media attacks on foreign aid are never going to stop. Whether because DFID is expanding in a time of austerity, exporting the British welfare state across the world, or simply helping foreigners, aid has always been a target. But the attacks are still cause for concern. Firstly because if foreign aid doesn’t maintain some level of popular support, it will disappear before long. And secondly because, as many aid insiders will admit, Daily Mail accusations often have more than a grain of truth. Aid contractors are often overpaid and incompetent. Millions of pounds are wasted. The aid system is simply not working as efficiently or well as it should. So what should DFID do about this? How can they control contractor costs, and minimize wasted budget? Here are some thoughts – please add yours in the comments below.

  • Cut DFID’s budget. Sorry Make Poverty History, sorry Oxfam, really sorry Bob Geldorf. I was actually a devotee of the 0.7% aid target until recently. But I’m increasingly thinking that DFID can’t manage the huge sums which have been allocated. Whether you believe that the 0.7% target is right or not, it makes no sense to give a target with no regard to the capacity of the agency to spend it. Perhaps the situation would be changed with a significant expansion of DFID’s staffing and capacity to manage funds, but that doesn’t seem likely any time soon.
  • Stop using private contractors to deliver aid. A tempting idea, but currently impossible; DFID is locked into the model of using private contractors. There is simply no other politically acceptable way to deliver sufficient volumes of aid. Direct budget support is (I think) the best way to deliver aid; but that’s been out of fashion for a good few years now, and there’s no prospect of a Conservative government bringing it back. NGOs are a possibility, but they don’t have the spending capacity of the big contractors; and the more they take multi-million pound grants, the more they begin to resemble contractors themselves. UN and World Bank are another possibility, but if anything they are less transparent and more expensive than contractors. In this environment, there’s not much that aid workers can do beyond making the case for government to government transfer – an argument that seemed to be won not that long ago – and continuing to defend cash transfers as the best way to get aid directly to the people who need it.
  • Demand full transparency. I find it shocking that DFID doesn’t automatically review the full budgets of all projects that it funds, including profit margins. I just don’t really understand how DFID could expect to keep costs down without this transparency. A more extreme version would be to publish all contracts online, as the Publish What You Buy group advocates. Transparency doesn’t necessarily push down costs, but it will certainly dramatically increase the incentives for DFID to try to do so.
  • Invest in local staff. We’ve written about this before, at length; see here and here. In the long run, this is the only way to push down the cost of staffing, which is the major input for a lot of development projects.
  • And the rest? This blog has posed fairly trivial changes so far; tinkering rather than rethinking. Given that the problem of outsourcing affects the whole public sector, not just aid (a fact often lost in the aid debate) it would be interesting to hear from other parts of the government on how they control contractor costs. One idea which I’d be interested in hearing more about is to set up a state owned contractor, independently run, which passes all profits back into DFID. This could bid against private aid contractors, ensuring competition and allowing government more scrutiny over what the actual costs are for this type of programme.

So that’s a quick run-through of my initial thoughts. Anything to add?

6 thoughts on “Aid Contractors: What should DFID do?

  1. I agree about capacity to spend the money. rather than cutting it though DFID could instead fund larger more impactful projects rather then the collection of uncoordinated piecemeal small stand alone project which only tackle a small part of the targeted problem .

    This would also allow the staff to be more focused on properly evaluating projects before/ during and after completion.

  2. I think you have not quite made up your mind whether to comment with snark (“exporting the British welfare state”, swipes at Oxfam) or whether you want to make substantial points on the issues (the second part of your blog post). Both of these approaches are viable, but not entirely at the same time – at least not if you want a discussion.

    Also, while I have seen a very badly managed DfID project very much up close, with many millions going to it, it may be useful to bear in mind that even the best firms in the private sector need to have some leeway to figure things out, and sometimes things go wrong. That, arguably, should also be part of the discussion.

  3. Re: Investing in local staff:
    I’m currently finishing my PhD thesis ‘Negotiating the Dilemmas of Development: a psycho-social study of ‘middle’ class identities and social action in Bangladesh’. My research has involved a series of in-depth biographical interviews (in English) with 37 professional-level NGO workers and social activists, mostly based in Dhaka, who are caught between the (still) top-down edicts of the INGO/DfID nexus and the bottom-up messy realities of managing and implementing development work. My participants ranged in age from 25 – 65 – covering the whole gamut of career-stages for local NGO staff. Those under about 45 years old in particular are affected by contractual out sourcing and so-called ‘projectisation’ which places them in precarious positions of job insecurity: part-time or fixed/short-term work, with little or no training available to them let alone any structure for career progression; and huge pressures to cut costs and meet often specious and unrealistic targets. A ‘public service’ social class background, higher education and exposure to social & ethnic diversity plays a huge part in the development of their progressive political outlook and their ethical orientations as well as their emotional resilience. To a large extent they draw on their substantial social and cultural capital just to keep the wheels of development turning and things going in the right direction. In addition, all the women, and especially the unmarried women, had suffered gender discrimination and sexual harassment both within and beyond the development sector. Some shameful stories, but I’m not naming names. All this passes under the radar of the expat managers and consultants. All the people I interviewed were deeply committed to the development of their country and the upliftment of the poor and ultra poor, equal to, if not more so, than the globe-trotting ex-pat development careerists. Local staff are largely undervalued and their contributions go un-recognised. I would certainly not argue for a simplistic ‘browning’ of the international development professions and with it the reproduction of existing hierarchies – tho why shouldn’t professionals from the global south have access to the same opportunities and lifestyles? But those with power & (white) privilege certainly need to radically re-think and re-structure their attitudes and operations and recognize the gold-dust beneath their feet and under their very noses.

  4. Two quick points. On transparency, DFID does do annual reviews of all the projects (which is where some of the most recent daily mail criticism has come from) but it doesn’t review profits of the contractors it selects. Not sure how easy that would be. On investing in local staff, yes. But also rely on them more to spread information about the potential to bid for projects. So many projects are now designed specifically for one UK-owned private sector contractor or another… Making sure tenders are really “open” would make a difference. Perhaps there could be some sort of diversity criteria included in competition assessments, that prioritises local private sector delivery contractors. Just an idea.

  5. Please allow us to grow. Aid is stifling development in the poor countries.

    It is interesting firms like this Chemonics DAI etc would not survive without aid money. They have no business in the aid giving countries. Does that not mean they provide an inferior service?

    And why should Adam Smith International grow only in the west? As someone who has built firm in poor countries, I know how aid handicaps us placing us in an inferior position to the ASIs etc.

    Policy capacity is what will make poor countries come out poverty. If policy capacity is consulting firms in the west that are not competitive at home, it is clear aid is the problem.

    Please keep the .7% and deal with your poverty.

    Let us end this orietnlism of aid now.

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