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The closure of DFID's bilateral aid programmes: the case of South Africa

London:  In 2010 the Department for International Development (DFID) undertook reviews of both its support for multilateral organisations in its Multilateral Aid Review (the MAR) and of its bilateral aid programmes in a Bilateral Aid Review (the BAR). As a result of the BAR, DFID decided to close a number of country programmes following criteria set out in the review. Ministers decided that by 2016 DFID should close its bilateral programmes in: Angola, Bosnia, Burundi, Cameroon, Cambodia, China, the Gambia, Indonesia, Iraq, Kosovo, Lesotho, Moldova, Niger, Russia, Serbia and Vietnam.  The Bilateral Aid Review results: country summaries, published in March 2011, set out the priorities and expected results for the countries where bilateral programmes were to continue.

While we have questioned the criteria chosen and have been critical of the decision to close the programme in Burundi, in general we approve of the method of undertaking decisions about bilateral programmes following a systematic review.

About 18 months after the publication of the country summaries, in November 2012, the new Secretary of State, the Rt Hon Justine Greening announced that DFID would not 'sign off any new programmes' for India, and financial aid programmes to the country would end completely in 2015.

Six months later, on 30 April 2013, the Secretary of State announced that Britain's bilateral development programme in South Africa would also come to an end in 2015. This was a contentious decision, which was criticised by the South African Government.

In 2013 DFID undertook an update of the MAR, but not of the BAR. In our recent report on the MAR update, published in July 2013, we recommended that there should be periodic BARs as well as MARs, in particular that DFID 'periodically review the scope of its bilateral aid, say every five years, and that decisions about whether to end bilateral aid to particular partner countries, or to open bilateral programmes with new partner countries, should generally be made as part of a bilateral aid review and not on an ad hoc basis between reviews'.

We had hoped to have an evidence session with the Secretary of State about the decision to close the programme in South Africa before the summer recess, but were unable to question her until her next appearance before the Committee in October.

There were criticisms of the decision to close the programme because of concerns about the impact of the decision on South African people, notably the loss of funding for civil society and for programmes to combat the high levels of sexual violence and HIV in the country. Although DFID is ending its bilateral programme in South Africa, it has decided to maintain a continuing development partnership with the country, for example in the provision of technical co-operation. DFID has also decided to keep its regional office for southern Africa, based in Pretoria.

There was as much if not more criticism of the timing of the decision and the manner in which it was announced as of the decision itself. Speaking at Chatham House on 2 May, the Hon. Pravin Gordhan, Minister of Finance, South Africa, said that no agreement had been reached with the South African Government about the announcement and, moreover, it seemed 'there was an intention to demonstrate some kind of fiscal probity using South African assistance as a political tool'.

In this report we do not comment on the details of the decision to close the UK's bilateral aid programme or the manner in which the decision was announced, but we do wish to draw attention to the Secretary of State's responses to our concerns about the ad hoc manner in which decisions to end bilateral programmes to Middle Income Countries are taken.

The Secretary of State explained the rationale for closing the programmes in India and South Africa as follows:

      The decisions that we take are not purely in relation to the fact that these are middle-income countries. The per capita income level is one of the considerations we might take into account. Broadly, we will look at growth prospects for that country; we will look at the current levels of extreme poverty, but also the trajectory of those levels and then understand, similarly, finally, what the country's own capability is, as you were saying, for itself being able to invest in tackling extreme poverty domestically. … Our assessment was that, ultimately, if we are going to continue to have the biggest impact from development spending that we are making on behalf of the taxpayer, which is about reducing extreme poverty, we should target it on countries that have higher incidences, less capability and generally bleaker prospects for the poor.

DFID's largest bilateral aid programme is to be another Middle Income Country, Pakistan. We questioned the Secretary of State about the consistency of policy towards Middle Income Countries. She replied:

      Pakistan, if you look at growth, it is far more challenging for that economy. There is not that track record of growth that you have seen in India. If you look at the current capacity of Pakistan to lift people out of extreme poverty, it is probably at a lower level than you would see in India, for example. I have been very clear with this budget: ultimately we want to use it to tackle extreme poverty. Alongside that, we should also not lose sight of the clear national interest that we need to have. Part of that is stability in making sure that we stop countries from sliding into more instability.

The Secretary of State's emphasis on the importance of security issues and stability reflects the criteria set out in the BAR, which stated that the UK would 'Focus our efforts on essential services and peace, security and stability in Afghanistan and Pakistan'.  However, it is important to ensure clarity about these objectives in future. We recommend that, in any future BAR, DFID spending reflect what it is able to achieve in increasing security. Large sums should not be spent just in the hope of increasing security and stability, but be based on what it is possible to deliver.

There is a rationale for funding bilateral programmes in some Middle Income Countries while ending them in others. However, we have concerns about the timing of the decisions and, in particular, that they are neither methodical nor transparent, but related to short term political pressures. In response to this line of questioning, the Secretary of State told us:

      The Bilateral Aid Review was a very robust approach, where we used a common approach for looking across the piece at what our bilateral aid programmes should be. We ended up reducing from 43 countries, when we came into Government in 2010, to originally 27 and then, when South Sudan broke from Sudan, to 28. People expect us, in a developing world, to continue to make sure we target the countries where we feel we can make the most difference. As I have said, the way that we approach that is to look at prospects for growth, levels of extreme poverty—it is worth pointing out that the incidence of extreme poverty in Vietnam is higher than that in South Africa— and their trajectory, and, critically, the capacity of the country itself to be able to lift its own people out of extreme poverty. Indeed, finally, it is whether we have the capability and the comparative advantage to be able to have a sensible relationship with that country. I think we do have a robust process. My sense is that, actually, the decisions we are taking that come out of that systematic look—whether on the Multilateral Aid Review or the Bilateral Aid Review—broadly are sensible ones….and reflect the progress that countries are making.

We do not dispute that the BAR was a robust process, but the Secretary of State has not convinced us that the announcements to end bilateral programmes in India and South Africa were in accordance with the principles and process established by the BAR. They were made just 18 months and two years respectively after the publication of the BAR country summaries and appear ad hoc. We reiterate our recent recommendation: decisions to end a bilateral programme or to start a new one should be made only following a Bilateral Aid Review, except in exceptional cases such as South Sudan where an existing recipient country became two states after a referendum on independence for South Sudan.

Table of contents

  • Terms of Reference
  • The Closure of DFID's Bilateral Aid Programmes: the case of South Africa
  • Conclusions and recommendations
  • Formal Minutes
  • Witnesses
  • List of printed written evidence
  • List of Reports from the Committee during the current Parliament
  • Written evidence submitted by the Department for International Development
  • The report, and evidence before the enquiry, can be accessed here.
13 January 2014
House of Commons
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Early Closure of TMSA Programme: The Secretary of State of the UK’s Department for International Development (DFID) has decided to terminate its financial contribution to TradeMark Southern Africa (TMSA), as announced on 4 December 2013. As DFID is the sole financier of the TMSA programme of support to the COMESA-EAC-SADC Tripartite, TMSA will officially be closed from 17 March 2014 instead of 31 October 2014. For more information about the TMSA closure, and for a summary of some of the more notable successes of the Tripartite achieved with TMSA support, please click here