Chief Commissioner speech at Crowe Clark Whitehill INGO conference

3 Feb 2012

Transparency, Impact and Value for Money – The work of the ICAI and how it impacts INGOs

Good morning and thank you for inviting me here today. I have the privilege of being the Chief Commissioner of the Independent Commission for Aid Impact (or ICAI). We are a relatively new organisation, launched in May last year, tasked with independently scrutinising UKaid. I am here talk to you today about transparency, impact and value for money in the context of international development.

The last couple of months have been a crucial period for ICAI as we published our first four reports in November and we are now preparing to publish our next reports in the coming weeks.

ICAI was established to evaluate aid independently. When the Government came into power in May 2010 it pledged that the increase in aid spending would be matched by a commitment to greater transparency and increased scrutiny. The Government believed, as do I, that public confidence in the credibility and impact of the aid programme necessitates robust, independent reviews ofUKaid.

We believe that ICAI is unique in the development world. Unique in independence, unique in structure and unique in remit and scope. Reporting to the International Development Committee of the House of Commons, rather than to Ministers, ensures that we are independent and enables us to produce reports that are objective, constructive and based firmly on strong evidence. This is crucial for giving taxpayers the confidence that they are getting maximum value for spending on aid and helps to ensure that intended beneficiaries get the maximum impact from theUKaid budget.

What also makes us unique is our remit and scope. We scrutinise all Official Development Assistance, which means that we review aid expenditure in a number of government departments, most materially in DFID. This ensures a more complete picture of the effectiveness of theUKaid budget as a whole.

ICAI was formally launched last year with the publication of the ICAI work plan at an event in Parliament. The work plan is structured so that there are core components that set a clear overall direction for our work. We have the option to add to those in order to respond to emerging topical issues and to requests from Parliament or other stakeholders. Our plan covers core development areas such as health, education and Africa as well as addressing a range of topical issues such asAfghanistanand other important areas such as budget support.

We compiled the work plan with the benefit of analysis and proposals from a range of sources. This work included recommendations from the International Development Select Committee; our public consultation; meetings with a wide range of stakeholders; discussions with DFID and other Government Departments which spend Official Development Assistance; and a synthesis study examining centrally commissioned evaluations, parliamentary inquiries and external audits of DFID from the last five years.

ICAI is structured so that there are four Commissioners, – myself, together with Mark Foster, who until recently was Group Chief Executive of Global Markets and Management Consulting at Accenture and the Executive responsible for Accenture Development Partnerships, Accenture’s model for strengthening global NGO’s; John Githongo, who is well know for his pioneering anti-corruption work in Kenya and across Africa and previously Executive Director of Transparency International Kenya; and Diana Good, a former senior partner of Linklaters and a former judge who has worked on governance and girls education projects in Africa. ICAI has a small Secretariat of four staff and we are supported by a consortium – led by KPMG, who are in turn supported by Agulhas Applied Knowledge, the Centre for Evaluation of Global Action (CEGA) and SIPU International.

Our remit is to advise government on how to improve the effectiveness of theUKaid budget, through targeted recommendations and follow-up. As part of our reporting process the Government is expected to respond to our recommendations 3 weeks after a report is published. The first management response to our reports was published in December and we are delighted to say that it accepted all of our recommendations. We hope that this shows the benefit of independent scrutiny and that we can bring beneficial change to DFID and toUKaid. In addition, International Development Committee hearings ensure that both ICAI and DFID are held to account.

As I mentioned, we recently published our first four reports: two covering general areas of the programme:

• ICAI’s Approach to Effectiveness and Value for Money; and
• The Department for International Development’s (DFID) Approach to Anti-Corruption;

and two covering specific programmes:

• DFID’s Climate Change Programme inBangladesh; and
• DFID’s Support to the Health Sector inZimbabwe.

In summary, the report ‘ICAI’s Approach to Effectiveness and Value for Money’ sets out our approach to defining these two concepts in the context of international aid. With a strong focus on the impact for intended beneficiaries and the robustness of delivery approaches, the report establishes a set of guiding criteria for whether aid is fit for purpose and being used to tackle the most important issues. The report argues that effectiveness requires a sustained, positive impact for intended beneficiaries; and that value for money demands the best use of resources to deliver that impact. In the report we stress that effectiveness and value for money are inextricably linked.

We recognise that this is an area where considerable work by academics and practitioners is ongoing to improve the effectiveness of aid and how it is measured. We intend to keep our criteria and approach under review as these discussions progress and as our findings develop. We hope, in addition, that we will be able to learn from your experiences particularly in terms of how to monitor and evaluate results.

What is particularly new and innovative about the ICAI approach is that our reports have a simple ‘traffic light’ scoring system. The four assessment ratings – Green, Green-Amber, Amber-Red and Red – will be applied to each review we carry out. This will enable policy-makers and the public alike to see clearly our assessment of each aid programme on which we report.

In our report on DFID’s Approach to Anti-Corruption, we conclude that the Government’s focus on fragile states, together with the planned increase of the aid budget, will exposeUK aid to higher levels of corruption risk. We gave DFID an overall rating of Amber–Red – whilst meeting some of our criteria for effectiveness and value for money, DFID’s approach to anti-corruption is not performing well.

We argue that significant improvements should be made and particularly recommend that DFID give more attention to the fight against corruption, including the development of an explicit anti-corruption strategy for any country assessed as having a high risk of corruption. The report recognises that at present there are some areas that are performing well, including lesson learning and awareness of threats from fraud and corruption. There is, however, a lack of coherent and strategic response and DFID need to shift from reactive to more proactive approaches to fighting corruption. DFID must give more attention to the fight against corruption. DFID needs to invest more in analysis of corruption risks and a more strategic approach to tackling corruption proactively.

Our review of DFID’s Climate Change Programme in Bangladesh shows that the £75 million programme is innovative and making an important and recognised contribution to climate change resilience. The programme gets an overall ICAI rating of Green-Amber which means that it meets most of the ICAI criteria for effectiveness and value for money and is performing well but that improvements should be made.

The programme is building resilience through improving early warning systems and increasing people’s knowledge. It is supporting people to stand up to the impacts of climate change by providing cyclone shelters, raising homes above flood level and trialling new ways of producing food to protect people’s livelihoods.

The report finds, however, that whilst channelling funds through the World Bank and the United Nations Development Programme adds technical value, DFID is not holding them sufficiently to account. Delays in the start-up phase and in coordination mean that only £13 million of the £75 million programme has been spent so far. The programme is progressing well and is establishing effective models with good local engagement. Parts of the programme, however, have been subject to delay in start-up and are, therefore, not yet having widespread impact.

Over £100m has been spent by DFID on the Zimbabwean health sector since 2004, mainly on the prevention and treatment of HIV/AIDS, support to maternal health and the supply of essential medicines. In our report on DFID’s Support to the Health Sector in Zimbabwe, we found thatUK funds provide critical support and have had a substantial and positive impact, most notably for those living with HIV/AIDS.

The overall ICAI assessment of the programme is Green-Amber. The report shows that DFID’s support has been influential and has contributed to the halving of the HIV/AIDS prevalence since the 1990s. The report recognises that the likelihood of achieving sustained improvement in health outcomes will remain poor until there is a more secure political context. It recommends, however, that DFID needs to pay explicit attention to the risk that increased levels of aid cannot be as quickly absorbed by a weak health system.

DFID has welcomed our first reports. In fact, the response from the Secretary of State for International Development, Andrew Mitchell, was that DFID will “implement in full the advice and recommendations, to complement the priorities the coalition government is pursuing.” To complement this, DFID’s management response confirmed that DFID will implement our recommendations as a priority. DFID’s commitment to reporting on progress regularly to us ensures accountability and effective delivery of our recommendations. We will be certain to monitor how our recommendations are being implemented and whether DFID are doing this within the timetable they set out.

Looking forward, we are now working hard to deliver reports for the rest of the year. Over the coming months we will publish reports on ‘DFID’s Programme Controls and Assurance in Afghanistan‘, ‘DFID/NIKE Girl Hub’, ‘DFID’s Engagement with the World Bank’ and ‘The Management of DFID’s Budget Support Operations’. The terms of reference for our reports, once they are agreed, are published on our website. We would very much welcome submissions from interested parties into forthcoming reports. These submissions will be used to inform the final report and recommendations.

There are two main ways in which our work will impact on INGOs. First, in our plan for Year 2 we intend to carry out a study on Programme Partnership Agreements with NGOs. We are in the very early stages of starting to think about our programme of work for Year 2 and have not yet agreed what the focus of this particular study will be. We envisage, however, that this study could examine how NGOS are monitoring and evaluating results and contributing to DFID’s policy priorities. We will very much welcome your input into this report once we have drafted the terms of reference, please keep an eye on our website.

Secondly, we expect that, where relevant, future ICAI reports will examine the effectiveness and value for money of NGOs in the DFID delivery chain. We also envisage that ICAI reports may examine the basis of DFID’s choice of who to partner with for any particular intervention.

As you know there is a great deal of public interest in the performance and effectiveness of the aid budget. We hope our recommendations will play a role in leading to beneficial change. This does not mean, however, that we expect all programmes to be perfect. We recognise that some aid is risky and some aid is innovative and we welcome that. We will not shy away from the hard to measure programmes and the long term impacts. We understand that long term programmes may change with changing priorities, circumstances or political situations, indeed they should do so. This is not about what is ‘easy to do’. It is about promoting trust, transparency and accountability inUKaid and ensuring maximum impact.

We are particularly aware that ICAI will continue to face many challenges, challenges that I am sure you will recognise. Including:

• How to report on allegations of corruption without interference in the appropriate legal processes;
• How to evaluate multilateral programmes, getting access to what is really going on, without duplication or seeking to override existing reporting mechanisms;
• How to attribute outcomes toUKinterventions where there is a complex delivery chain;
• How to examine the increasing amount of ODA spend that is going to fragile states;
• How to evaluate long term programmes which are only partially complete.

We do not under-estimate the challenges involved in delivering against our aspirations. We believe that our mixture of robust scrutiny and constructive recommendations will assist the UK Government to make decisions on how best to ensure effectiveness of the aid budget.

It is our intention to build on our body of work. We will continue to gather evidence on whether theUKaid programme is effective and learning lessons to ensure lasting and positive impact for intended beneficiaries and value for money for theUKtaxpayer. In order to do this we need to ensure that we learn from others’ experiences and expertise and we would be very grateful for your input into our work.

I believe thatUKaid is the right thing to do: morally, politically and economically. It is equally right that the money that is spent – taxpayers, money – must deliver meaningful outcomes for both theUKtaxpayer and the intended beneficiaries of that aid. We hope that our work will help DFID and other parts of Government to ensure that this happens and to ensure transparency, impact and accountability inUKaid.

Thank you very much for listening.