DFID’s Trade Development Work in Southern Africa

6 Dec 2013

The Independent Commission for Aid Impact (ICAI) has published a report today on the Department for International Development’s Trade Development Work in Southern Africa.

The overall aims of DFID’s trade programmes are potentially transformational in the long term but we found serious deficiencies in TradeMark Southern Africa (TMSA), which have impeded its progress to date and which were jeopardising its potential to generate a meaningful impact for the region’s poor. The shortcomings that we saw in the programme and its serious deficiencies in governance; financial management; procurement; value for money; transparency of spending; delivery and impact, as well as its failure to use DFID’s body of knowledge in trade and poverty, have led to a marking of Red for the programme. This is the first time that we have used the Red traffic light.

We were so concerned that we alerted DFID to these issues as soon as our initial fieldwork was completed in May 2013. As a result of our original alert, DFID carried out a Management Assurance Review led by the Internal Audit Department. This review verified a number of our concerns and also discovered a payment made to the Government of Zimbabwe in contravention of UK Government policy.

DFID Southern Africa and TMSA started to implement changes in response to our concerns and presented us with new evidence relating to TMSA. We decided, therefore, that it was necessary for us to carry out a follow-up review in order to give a complete assessment of this programme in our report. This included a return visit to DFID Southern Africa. We found, however, that the programme was still seriously deficient and have given our first Red marking.

On 4 December, the Secretary of State for International Development, having been presented with our report and the evidence that DFID Internal Audit Department, gathered as a result of our warnings, announced the closure of the TradeMark Southern Africa programme.

Graham Ward, ICAI Chief Commissioner, said: “We gave this report a Red because we had very serious concerns regarding the financial management and governance of TradeMark Southern Africa. We first made DFID aware of our concerns in May. DFID has now terminated the programme which is, in our judgement, a good decision. We welcome the Secretary of State’s announcement that programme controls will be strengthened and that improvements will be made to DFID’s Internal Audit.”

Commissioner Diana Good, who oversaw part of the ICAI investigation, in South Africa said, “We had a number of grave concerns, from the £67 million unused money and misreporting to excessive expenses, against the background of a programme which was regarded as a flagship but failed properly to take into account the impact on the poor. DFID just relied on the assumption that the poor would benefit and failed to take any mitigating action against the likely negative impacts for the poor in the short and medium term.”

Central to our recommendations is that, as a prerequisite of any future trade development programme, DFID should undertake comprehensive analysis of the impact on trade and the poor, both at the outset and throughout implementation; and build in mitigating actions to alleviate any negative effects.


Notes to editors:

1. For further information please contact Sam Harrison on 020 7270 6742 or S-Harrison@icai.independent.gov.uk. The Independent Commission for Aid Impact (ICAI) is the independent body responsible for scrutinising UK aid. We focus on maximising the effectiveness of the UK aid budget for intended beneficiaries and on delivering value for money for UK taxpayers. For further details on ICAI, the workplan and for links to each report please visit www.independent.gov.uk/icai.

2. ICAI’s Chief Commissioner is Graham Ward CBE. The three other Commissioners are: Mark Foster, John Githongo and Diana Good. Their biographies can be found on the ICAI website.

3. These reports were prepared by ICAI with the assistance of KPMG LLP, Agulhas Applied Knowledge, Center of Evaluation for Global Action (CEGA) and the Swedish Institute for Public Administration (SIPU International).

4. ICAI reports are written to be accessible to a general readership and we use a simple ‘traffic light’ system to report our judgement on each programme or topic we review, as follows:

I. Green: The programme performs well overall against ICAI’s criteria for effectiveness and value for money. Some improvements are needed.

II. Green-Amber: The programme performs relatively well overall against ICAI’s criteria for effectiveness and value for money. Improvements should be made.

III. Amber-Red: The programme performs relatively poorly overall against ICAI’s criteria for effectiveness and value for money. Significant improvements should be made.

IV. Red: The programme performs poorly overall against ICAI’s criteria for effectiveness and value for money. Immediate and major changes need to be made.

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