Blog: Updated: A more Global Britain, ‘better and fuller lives’, and cash transfers

Update from the horse’s mouth: DFID Minister backs cash programming

 James Wharton MP, the Parliamentary Under-Secretary of State for International Development (“DFID’ Africa Minister”) spoke to the packed house at All-Party Parliamentary Group on the Sudans session on girls’ education in South Sudan, last Wednesday (29.iii.17), a couple of hours after I wrote the blog below.

Talking about the UK Aid Girls’ Education South Sudan project, and specifically about what he had seen when he visited a school in Juba a few weeks ago, that had received school operational grants, and where girls had received cash transfers, he said that:

  • he wanted to highlight the “obvious but important narrative… direct support, relatively small sums of money, making a significant difference”
  • that he could see the impact: “the girls I met in a school [in Juba] were as articulate, informed, and ambitious as those I meet in schools in my constituency.”
  • That the simplicity of cash programming was an asset: “I wish I could take more of my constituents and more of those who take interest in aid…[whether with a positive or negative view] to see this programme: it is the sort of programme I can talk about and people get it.

It strikes me that what he said is really important, because sometimes people wonder if Conservative ministers will have the confidence to back cash as compared to “traditional” aid. Here’s the answer: they do, and, like the Prime Minister, they’re willing to stand up and be counted for it. Now the job of officials, contractors, NGOs and others in the international development sector, is to help them to back cash at scale.

A more Global Britain, ‘better and fuller lives’, and cash transfers

This blog, written on the way to tonight’s (29.iii.17) All Party Parliamentary Group on the Sudans meeting, where a film about Girls’ Education South Sudan, which features a national programme of cash transfers to support girls in education, will be launched, suggests that:

  • DFID could usefully define itself as the world’s leading institutional donor for cash transfers, and would have comparative advantage if it did
  • That this would not only make good sense, and be good value for money, but fits with the Prime Minister’s ideas about international development and a ‘more Global Britain’.

This week: what Theresa May, Benazir Bhutto, Owen Barder, and Stephen Twigg have in common

Two quite important things happened this week. [Also, a chap in an impressively retro beard hand-delivered a letter – also a retro look – to a Brussels postcode].

Theresa May, cash transfers outrider

On Monday, the Prime Minister spoke to an audience of DFID staff in their East Kilbride office. The project that she highlighted there was the Hunger Safety Net Programme, DFID and the Government of Kenya’s flagship collaboration that provides a social safety net i) in cash ii) that pays out before forecast climactic problems (drought), on a “no-regrets” basis.

This follows the Prime Minister’s last intervention on International Development, in January, where she went in to bat for the Benazir Income Support Programme, another cash transfers programme:

[PS: who knew that Benazir Bhutto set up the future Prime Minister and her husband?].

Is it totally excessive Kremlinology to see, in a 100% performance in a sample of, erm, two, a message being articulated?

International Development Committee: praise for UK aid, call for an articulated strategy

Yesterday, the International Development Committee of the House of Commons published its report: UK Aid: Allocation of Resources, which is here:

The headline was that UK aid does a good job, but a reaffirmation that “poverty reduction should always be the primary purpose of any UK aid spending”, and a call, both by sector and across the portfolio, that “we urge DFID to set a clear strategic direction”.

Evolving UK ‘licence to operate’ for overseas development assistance: show your workings

January and February saw quite a lot of discussion in the newspapers, and some beyond, about international development: the legal commitment to spend 0.7% of GNI is only part of the ‘licence to operate’ that UK aid, DFID, and all of us working in this field, need.  And in March, the ‘four famines’ were announced, and the UK public has responded with great generosity to the DEC East Africa Crisis Appeal:

To summarise that discussion grossly, there is:

  • general confidence in UK public sentiment towards humanitarian and basic services programming
  • a bit less confidence where the ‘theory of change’ is less well understood by the public (see the sad story of the excellent Yegna Behaviour Change Communication programme in Ethiopia being de-funded by DFID in January for no evident reason related to its own performance)
  • general desire to see value for money demonstrated, not just asserted

Buying overseas development assistance: a Principal/Agent problem

The newspapers and the sector, most recently through the Adaptive Development/Doing Development Differently discourse, are both scratching at the same Principal/Agent problem:

  • The buyers of overseas development assistance (donors) are not the same as the recipients (poor people) – whereas in most transactions in life, the buyer and the recipient are the same. This reduces the buyer’s insight into what she/he buys.
  • The unit of what is bought is not always clear, or easily comparable: logframes are difficult to understand, updated once a year or less on devtracker, and there isn’t the link there ought to be between what is in the logframes and what goes in the DFID Annual Report, which does do an annual add-up of core results
  • Lack of clarity feeds concern that logframes could be gamed by the agents, the principals, both, or, worse, both acting together (though I’ve not seen it happen)

From whom donors can buy overseas development assistance: no perfect options

Most donor countries are effectively buyers of overseas development assistance services. But the options are finite, and imperfect:

  • host governments: if they were Swiss-quality, would they be needing ODA? Many of the relatively good bets are already taken, and the less good bets are often beyond donor risk appetite, for the reasons set out above.
  • for-profit consultants: Principal/Agent applies, particularly if donors have less information, and/or can’t visit, or are even based in a different country
  • not-for-profit NGOs: in principle, can be expected to act according to the NGO’s stated objects, which are likely to be aligned with the donors’; but problems of scale (few NGOs are willing to act at national scale), of Principal/Agent and incentives problems at the level of staff, and relatively weak leverage (some BINGOs have significant cash reserves)
  • international organisations (UN agencies/WB): by their international nature, do not have to treat the Principal with the same consideration that a for-profit Agent would’
  • direct implementation: this is what DED used to do for the Germans, and JICA still do; no risk transfer, big governments not typically well equipped for agility

More use of cash programming, with a more ‘commoditised’ overhead: doing more, more efficiently, and showing your workings

The option not mentioned above is cash programming – putting funds directly in the hands of families and individuals, and, associated with it, our approach of putting money direct to lowest-level service delivery units.

To me, this squares much of the circle set out above:

  • Putting money direct in the hands of the poor cuts out a lot of the Principal Agent problems: the Principal is dealing directly with the Recipient, who can choose how to spend her/his/their own money
  • The ‘Theory of Change’ is simpler, more reliable and more resilient to events than that of many technical assistance programmes: give the poor money, they become at least that much less poor, and, in general, you get a multiplier; and on a quicker cycle time than Technical Assistance programmes
  • There is not a public hostility to the idea of giving support directly to the poor – and positive advocacy for it in some parts of the political right
  • The management of cash transfers ought to be more commoditised, at the stages of identification, verification, payment execution and reporting, and therefore the Principal and the Recipients be more confident of what they can expect from the Agent, for a more predictable and overtly defensible price. You can read elsewhere about work our company has done on providing systems that can do that in a sustainable, accountable, disaggregate, real-time fashion, that are robust to a range of external circumstances, and, for Girls’ Education South Sudan, on which we work as part of a consortium led by BMB Mott MacDonald
  • Targeting, and payment execution, have to be done well, and zero tolerance of fraud and corruption must not stop you looking hard for risks of both: but the value at risk in any single instance is typically small relative to the overall scale
  • The real-time, disaggregate, live-logframe approach that you need to run a decent cash transfers programme, is also a logical way to restore confidence to the ‘currency’ of results donors pay for: GiveDirectly is a concrete example of how the public will spend their own money if they have confidence in the currency of the results.

Cash programming as UK aid comparative advantage

In a world with less USAID, UK aid becomes even more important.

For the reasons set out in the previous section, it strikes me that cash programming is actually quite well-calibrated to the UK-side Licence to Operate: Ronseal Aid, does what it says on the tin, and you can immediately see what, where, when.

It fits, practically, with UK aid’s FCAS focus, where cash transfers have a distinct cost advantage over other forms of programming. It fits with DFID’s existing skills and leadership in this area – BISP, HSNP, Lebanon, Girls’ Education South Sudan, and many more – and with DFID’s wider strengths in working in social sectors, at scale.

And, if the Prime Minister and government are genuinely seeking to define a ‘more Global Britain’, then it builds a network of uniquely direct links and relationships, through systems, including financial services and telecommunications, in which the wider UK has some comparative advantage that is, relatively, Brexit-resistant.

Full disclosure: Charlie Goldsmith, MD Charlie Goldsmith Associates, is married to Dr Sarah Goldsmith, a DFID Health Adviser, currently based in Whitehall, previously in DR Congo and South Sudan