By Nick Mann | 19 September 2012
The UK Department for International Development’s review of the aid it spends via bodies such as the World Bank and United Nations was a ‘significant step’ towards it being able to improve value for money, auditors said today.
The DFID spent almost half of its total aid budget in 2011/12, £3.6bn, via 43 bodies it rated in its 2011 multilateral aid review. Reporting on the assessments, the UK National Audit Office welcomed the DFID’s ‘thorough and comprehensive’ approach.
The review was ‘valuable’, the NAO said, both for providing accountability to UK taxpayers, and for promoting reform in the organisations themselves. Since the review, other countries such as Australia and the Netherlands had used aspects of the department’s approach.
Of the bodies assessed, nine were rated as ‘very good’ value for money for UK aid, 16 as ‘good’, nine as ‘adequate’ and nine as ‘poor’. Four organisations are set to have their funding stopped after being rated ‘poor’ under the assessment. Funding for those rated ‘good’ or ‘very good’ will be increased from 74% of the total multilateral spend in 2010/11 to 77% in 2014/15.
However, the department has ‘limited scope’ to reduce funding to organisations that receive less good ratings, as its membership is often linked to broader objectives not directly linked to aid, such as the European Union.
‘These factors will inevitably constrain the potential impact of linking funding to performance,’ the report said. ‘Such constraints increase the importance of promoting reform in multilateral bodies to increase their effectiveness.’
The DFID should ensure that bodies rated as ‘very good’ in future reviews meet ‘clear absolute standards’, the NAO said. It said that those receiving the rating in the 2011 review were not assessed against a minimum set of standards.
Seven of the nine bodies rated ‘very good’ were assessed as ‘weak’ in at least one area of the review. In addition, the DFID tested the cost-effectiveness of its funding, compared with other ways of meeting the same aid objectives, in only four of the 43 bodies.
The department should strengthen its assessment framework, visit countries more to see the impact of the aid on the ground and encourage multilateral bodies to improve the evidence they provide on costs and cash, the NAO said. The DFID should also promote a ‘more rigorous’ shared approach to assessment with other countries,
NAO head Amyas Morse said: ‘By conducting a review of the money it spends through multilateral agencies, the department has taken a big step towards improving the value for money it gets from these funds.
‘To maintain this progress, the department needs to collaborate with other donor countries to encourage further consistently measurable performance improvements in multilateral organisations.’
A spokeswoman for the DFID said the report recognised the UK’s leadership in aid transparency and its focus on value for money.
‘We are determined to get even better value for money and more effective aid from multilateral agencies and we stand ready to take tough action – decreasing or stopping financial commitments –if poorer performers are not making the reforms they need to.’
