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?