This inquiry has concluded. A Report was published on 31 January. Click here to access the Report.
The Department for International Development (DFID) is channelling more funds through multilateral organisations, like the UN and World Bank, even though they have higher administrative costs, the International Development Committee has found.
The report warns that multilaterals have high costs and at times limited effectiveness. The Committee is calling on DFID to carefully examine its growing multilateral expenditure and ensure that it has thoroughly examined other options such as greater use of local NGOs and sector budget support. The report says DFID should ensure that its bureaucratic procedures do not prevent it from making use of effective, small NGOs to undertake projects.
DFID has switched expenditure from low income to middle income countries, in part because several countries with a large number of poor people have recently graduated to middle-income status. The Department’s policy towards middle income countries varies: it is ending grant aid to India in 2015, but programmes in Nigeria and Pakistan are due to grow rapidly. The report recommends that the Department establish and make public the criteria it will use to inform decisions of when and how it should cease to provide aid.
The MPs urge DFID to consider establishing a Development Bank - that could offer concessional loans alongside the Department’s traditional grant aid - as a solution to the concerns raised in the report. This would free DFID from the constraint of having to ensure that cash was spent by the end of the financial year.
DFID has addressed concerns that it did not have adequate numbers of staff to spend cost-effectively its budget and is rapidly increasing the number of professional advisers and the proportion of its staff working overseas. However, the MPs are still concerned that it does not have the staff to oversee the huge expenditure of UK taxpayers’ money undertaken by multilaterals.
The Committee remains concerned that DFID’s has ended its bilateral programme in one of the world’s poorest countries, Burundi, and is urging the new Secretary of State to re-instate it.