UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 96-iHouse of COMMONSMINUTES OF EVIDENCETAKEN BEFORETHE COMMITTEE OF PUBLIC ACCOUNTS
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This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
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Transcribed by the Official Shorthand Writers to the Houses of Parliament: W B Gurney & Sons LLP, Hope House, Telephone Number: 020 7233 1935
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Oral evidence
Taken before the Committee of Public Accounts
on
Members present:
Mr Edward Leigh, in the Chair
Mr Paul Burstow
Mr Douglas Carswell
Mr David Curry
Mr Ian Davidson
Nigel Griffiths
Keith Hill
Mr Austin Mitchell
Geraldine Smith
Mr Alan Williams
________________
Ms Gabrielle Cohen, Assistant Auditor General, National Audit Office, gave evidence.
Mr Marius Gallaher, Alternate Treasury Officer of Accounts, HM Treasury, gave evidence.
REPORT BY THE COMPTROLLER AND AUDITOR GENERAL
DEPARTMENT FOR INTERNATIONAL DEVELOPMENT:
AID TO
Examination of Witnesses
Witnesses: Dr Nemat Minouche Shafik, Permanent Secretary, Ms Gwen Hines, Head of Malawi Country Office, and Mr Sam Sharpe, Director, Finance and Corporate Performance Division, Department for International Development, gave evidence.
Q1 Chairman:
Good
afternoon. Welcome to the Committee of
Public Accounts. Today we are
considering the Comptroller and Auditor General's Report on Aid to Malawi. We welcome Dr Nemat Shafik, Permanent
Secretary of the Department for International Development, Sam Sharpe, Director
of DFID's Finance and Corporate Performance Division, and Gwen Hines, Head of
DFID Malawi. Ms Hines, perhaps I might
address my questions to you as you are on the spot. Would you like to look at figure 4, please? Why did you only hit 60% of your targets for
Ms Hines: Thank you very much. What we hit was 61% of the targets on time with another 14% within the following 12 months. Many of those targets, the further 14%, were achieved within one or two months of the original deadline. It is important to note that when it says they were achieved late, that does not mean there was no progress achieved. For example, one of the targets we hit late was drilling for boreholes where the drilling equipment came in a few months later but we did meet the target and, in fact, exceeded the target; it was just that it was achieved a few months late.
Q2 Chairman: Why did you only achieve 36% on governance? That is fairly crucial, is it not?
Ms Hines: Absolutely, governance is very important.
Q3 Chairman: Why so low?
Ms Hines: One of the issues that we did have with the results framework which we established for our Country Plan was that we had a whole range of targets within that, a mixture of process targets, outcome targets and output targets, as the NAO's Report acknowledges. Some of those targets, particularly on governance, were things that were not actually within our control. For the past five years Malawi had a minority government which meant that very few laws were passed, so it made it very difficult when we had targets within our own results framework which were about laws were being passed to actually achieve that progress. I am not trying to excuse that, but what we have done since is we have designed a new results framework which is much more closely focused on a small number of targets which are within our control, which are those most critical for the development programme, and we are now aiming to really focus on those targets to achieve a higher percentage next time.
Q4 Chairman: Education is also very low down at 33%, fairly vital, I thought. What action are you now taking to improve progress in governance and education?
Ms Hines: Absolutely. Maybe I will start and then ---
Q5 Chairman: You are on the spot, it is much better, just go on and answer it. You are actually working on the ground.
Ms Hines: I am happy to do so. Education is critically important in
Q6 Chairman: I will stop you there. We know that if you put enough money into any scheme you will achieve something, but we are a value for money committee, we are looking at efficiency. Would you please look at paragraph 10 of the Report where it says: "Specific evidence on value for money in implementation is harder to find. Most of DFID Malawi projects have either 'mostly' or 'partly', rather than 'fully', met their objectives. Very few project indicators relate outputs directly to inputs". How can you drive improvement in Malawian government programmes when you seem to know so little about their efficiency? How can we judge how efficient you have been in your disbursement of public money?
Dr Shafik: I think the NAO Report does
also say that the DFID programme in
Q7 Chairman: I am not arguing about that. That was precisely why I said what I said. If you spend enough money you are going to achieve something, but what I want to know is how can we as a value for money committee be assured that you are achieving value for money when clearly you are lacking in data about how effective your programmes have been in terms of value for money?
Dr Shafik: It is not saying we are
lacking any data. The NAO rightly is
raising the bar and saying we always need to get better data. I can give you several examples which prove
that. For example, the food security
programme: if you look back in 2005,
Q8 Chairman:
You
are not answering my question. We can
spend the whole session hearing about the wonderful work you are doing in
Ms Hines: Absolutely. We have, in fact, got unit cost analysis for
the cost of drugs. I can tell you, for
example, that for antiretroviral drugs, which are obviously a key issue in
Malawi with such a high HIV prevalence rate, the unit cost in Malawi is $85 per
person compared to $155 in most other countries in Africa. That shows that there are efficiencies within
Q9 Chairman: You are giving out more aid, but you have got fewer staff to manage that aid. Does that not mean that, in effect, you are relying on weak local systems to assess how well the money is spent?
Dr Shafik: The staffing we have in
Q10 Chairman: Look at paragraph 1.3 where you have increased the aid from £54 million to £70 million a year, and just at the time when you are increasing aid you are cutting your staff and, therefore, you have to rely on weak local systems of assessments, and that is what worries me.
Dr Shafik: No, I do not think we are
relying on weak local systems of assessment.
The NAO says that DFID performed well against international criteria
used to measure how effectively donors and partner governments are working
together, and that for most indicators DFID's performance has improved and is
performing better than other donors in
Q11 Chairman:
Can I
ask this to the Treasury: you have trebled the amount of aid that DFID has
given out in
Mr Gallaher: I think decisions about how administration costs are incurred is a matter for the Department themselves. We do not micromanage departments on how they spend their resources, so if they choose to operate and produce a better product for less money we welcome that.
Q12 Chairman: So cutting the running costs is down to them, not to you?
Mr Gallaher: Overall, we will ---
Q13 Chairman: There is no pressure you put on them to try to reduce staff?
Mr Gallaher: No.
Q14 Chairman: Never?
Mr Gallaher: We would actually say to them, "Run an efficient operation, run it well", and we would give them a global budget and they can make their own decisions.
Q15 Chairman: You never make any comment on staffing?
Mr Gallaher: We will, of course.
Q16 Chairman: Of course you do, that is what I am putting to you. You are constantly pressurising them to cut their staff while you are trebling the budget and, therefore, they have to rely more on weak local systems of assessment rather than their own staff who are far more able to assist this Committee.
Mr Gallaher: I think they have got to make
a judgment. They know better than we do;
we are not out in
Chairman: I agree with that.
Q17 Keith Hill: Let me put this first to the Permanent Secretary. I think I understand the principle of budget support. It is about empowerment and also about not overstretching the limited personnel resources that can be available in some of the administrations with which you deal so that individual officials in the Malawian government, for example, are not subject to endless bilateral negotiations with external parties, et cetera, but there is a downside of this arm's length relationship and that seems to be that often it is very difficult to know what is going on and what is being delivered. Is that a fair judgment?
Dr Shafik: I do not think that is the case. The biggest power of budget support is that it
enables us to use whatever resources we have to try and shape everything that
the government is doing. For example, in
the input subsidy programme, which we think has been incredibly successful at
delivering bumper harvests and food self-sufficiency for
Q18 Keith Hill: You are bound to be limited in the influence that you can exert when, for example, the data you are dealing with are so inadequate. The NAO Report has a series of findings about the inadequacy of data on, for example, the maize harvest, on poverty statistics, on the way in which different districts in the country are using DFID's money. This is bound to be tremendously limiting in both making a judgment about the effectiveness of programmes and also even knowing where you need to intervene to ensure an improved performance, is it not?
Dr Shafik: I think we respond to that in
two ways. One is investing in better
data. We are investing in a new
household survey next year and have invested a huge amount in improving the
tracking of drug procurement and spending on drugs, and so on. The second way we respond is by getting
information from other sources. For
example, when I was in
Q19 Keith
Hill: I have heard of that programme and I think it
is an extremely good idea. It is about
efficiency and governance as well, so first class, that seems to be a really
good achievement in
Ms Hines: I would be happy to answer
that. As Minouche has said, there are a
number of different ways that we can get at the data that we need. Some are things we need as DFID specifically
and some are things we help the government to get, so we are strengthening
their own national statistical office, and some are things we do jointly with
other donors.
Q20 Keith Hill: What has been your conclusion from that exercise?
Ms Hines: I am very positive, actually, and people in the villages are as well. The BBC were out there as well, so it was not just me who found this. What we did find and everybody in the village told us is that there is a lot of maize around. As the NAO Report says, there is a little bit of a dispute around the size of the harvest. The official statistic will tell you this year there is a 1.2 million surplus, and whether it is exactly 1.2 million is matter for debate, but what is not a matter for debate within Malawi is the fact that there is a surplus, that the country has gone from five million people on food aid in 2005 to now having a surplus and they are now in the process of exporting maize to Zimbabwe. The turnover is not something which is in debate.
Q21 Keith Hill: To what extent would you ascribe that serious turnaround to the role of DFID, for example?
Ms Hines: I like to think we played a part in it.
Q22 Keith Hill: I bet you would.
Ms Hines: Yes. As Minouche has said, this programme is something which the government itself very much owns. 90% of the funding for the programme comes from government. DFID's own money is about £5 million a year into this programme. One of the really key things we have done with our money is to help them to roll out improved variety seeds, hybrid seeds, which have a much higher yield. Of the £5 million we provided last year, £3.3 million went on improved seeds. It is both the seeds and the fertiliser.
Q23 Keith Hill: As a matter of interest, how did you ensure that those improved seeds became available to farmers at the district level, for example?
Ms Hines: In fact, it goes way below the district level.
Q24 Keith Hill: How did you do it?
Ms Hines: It goes down to the village level.
Q25 Keith
Hill: Who does that?
Is it the
Dr Shafik: It is private.
Ms Hines: It is a whole range of people who are involved in it. At the village level, there is a village level beneficiary identification committee, which is a very complicated way of saying the village get together and determine for themselves who within the village will benefit most from the programme.
Q26 Keith Hill: How do they get the money?
Ms Hines: As I say, 90% of the money is the government's own money. Development partners, including DFID, put their money with the government's money to fund the whole programme.
Q27 Keith Hill: Who administers that? There is obviously a large element of self-help in this, but who administers it at the local level?
Ms Hines: At the local level it is done through something called district agricultural development officers who are employees of the ministry of agriculture, who are at the district level, and then there are extension workers below that level who know every village, who work with every village, who go out with the vouchers for the individual families on that list.
Q28 Keith Hill: How do you know they are doing it?
Ms Hines: We fund two things. One is a logistics unit, which is a central mechanism which helps to co-ordinate the whole process and gives us a weekly report during the agricultural season, to both us and government.
Q29 Keith Hill: Gives DFID a weekly report?
Ms Hines: Yes.
Q30 Keith
Hill: The logistics unit gives DFID a weekly
report. I am not being hostile, I am
merely trying to get behind this issue of budget support. I almost get the impression now that we might
be slightly reverting to the old, rather more direct, hands-on style that aid
programmes and
Dr Shafik: That report of the logistics
unit also goes to the government of
Q31 Keith Hill: So we also fund civil society organisations to exert a kind of scrutiny and check on government?
Dr Shafik: Yes.
Q32 Keith Hill: They are really our go-betweens at the local level?
Dr Shafik: That is exactly right.
Q33 Keith Hill: So we are really a bit more hands-on than the principle of budget support would imply?
Dr Shafik: Good budget support has that kind of accountability mechanism in it whereby we ask the government to tell us.
Q34 Keith Hill: Is that something which has developed over time, or was that part of the original concept?
Dr Shafik: I think it was part of the original concept. Where we have got better over time, and I think the NAO has been helpful in pressing us on this, is in clarifying the targets, clarifying the commitments, measuring them on a regular basis.
Q35 Keith Hill: Mr Sharpe, I get the sense that you are teetering on the brink of an intervention!
Mr Sharpe: If I may, I wanted to comment on your point about the number of targets that we did not achieve on time. As a system we have always set stretching targets without the expectation that we would necessarily achieve all of them. Our agreement with the Treasury for this three-year period is that we will try and improve the portfolio quality scores from 73% to 75%, in other words we will achieve about three-quarters of our targets. The NAO are rightly asking us as we do project design to do it a bit differently, to state what would be the threshold level at which this intervention would deliver good value for money, what is the expected level and what would be over-achievement. We need to follow up with what the NAO are suggesting in that regard, and we will do that. We have never set these targets on the assumption that the project will have failed if we have not achieved all of them.
Q36 Mr Curry: Dr Shafik, helping peasants produce is back in fashion, is it not, in development programmes? It went out of fashion, did it not?
Dr Shafik: I think that is true. 2008 was a critical year because of the food crisis.
Q37 Mr Curry: The great price spike, plus climate change, plus the panic of population movements driven by both of them, has led us to be very anxious that very small farmers, subsistence farmers, can stay on the land and produce, has it not?
Dr Shafik: That is correct.
Q38 Mr
Curry:
Dr Shafik: I think it is a fair criticism that the international donor community neglected agriculture in recent years because there was a strong focus in the Millennium Development Goals on health and education. The food crisis in 2008 was a wake-up call to us and we are redressing that by putting more resources into agriculture.
Q39 Mr
Curry: I am interested in the agricultural side of
it. It is quite clear that your
programmes in
Dr Shafik: Yes.
Q40 Mr
Curry: How sustainable are programmes which are based
on subsidy? You subsidise the
fertiliser, and the Report comments that between 25% and 35% of the fertiliser
could have been bought at market prices, and also that any decline in food does
not seem to be sustainable after the first year or so, so perhaps the poorer
citizens are not benefiting directly.
How sustainable is it to base a programme on subsidy? Are we producing a mini-CAP for
Dr Shafik: It is quite different from the CAP since the CAP produces excess beyond need, but I understand your point.
Q41 Mr Curry: The point is this is a subsidy-based programme and I am suspicious at how sustainable those subsidy-based programmes are.
Dr Shafik: I completely agree with
you. I am an economist by training. Personally, I approved this programme several
years ago in my previous role and was greatly sceptical about the exact point
you are making. There are two compelling
arguments. One is, what is the
counterfactual? In this case, the
counterfactual was humanitarian assistance.
People would have starved and we would have had to ship in food
aid. We had to do that in 2005 and it
cost us £21 million. This programme cost
us a grand total of £6.8 million last year and has resulted in bumper harvests
and for the last four years
Q42 Mr
Curry: Let us leave aside for the moment the problem
of encouraging trade between developing countries which might get over the need
for food aid in some circumstances. What
about the alternative of market-based approaches? I am associated with an organisation called
International Development Enterprises, which is one of the Bill Gates funded
programmes, and we operate large in
Dr Shafik: I agree with you. I would prefer a world where Malawian farmers
had access to credit and could buy inputs on the market. That is much better and much more
sustainable. We are in a second best
world with this current input subsidy
programme. I would much prefer to move
towards the kind of programme that you identify. That is clearly where we would like to take
Ms Hines: As Minouche has said, the
long-term and the ideal would be something.
It is important to understand that at the moment that is very difficult
to do because, as the NAO's Report makes clear, 90% of the farmers are
subsistence farmers working a plot of an average size of an acre. Land is
Q43 Mr Curry: While the programme is heavily maize orientated, and I understand that is because it is a hunger alleviation programme, there are much better crops which would go to develop a market economy, for example, garlic and vegetables.
Dr Shafik: I quite agree with you.
Q44 Mr Curry: With the lack of a developed market farmers do not get a better price for their products. What are you trying to do to incentivise market production and help incentivise the markets themselves? Maize is a boring commodity, a crop which is essential to keep people fed, but the exciting things are these much more diversified products.
Dr Shafik: Gwen and I went to a village
and sat down with a group of women and asked precisely these types of
questions: why the obsession with maize, why not consider other crops which
would generate higher returns for farmers.
Given that
Ms Hines: There are things which DFID
is doing through the rest of its programme to encourage private sector
development in
Q45 Mr Curry: You can buy a lot of maize with that.
Ms Hines: You can buy a lot of maize with that.
Q46 Mr
Curry: You could buy it from
Ms Hines: Just last week, we published
with the government a new country economic memorandum and part of that was a
growth constraints analysis. Last year
Q47 Mr Curry: Can I just come back to a point I made earlier? The Report does state that somewhere between a quarter and a third of subsidised fertiliser could have been bought by people at market prices. It looks like the poorest Malawians have not been targeted directly on the assumption that they will benefit from a general reduction in the price of food, yet on page 35 it says that, while more food is available, beyond the first year food prices have not decreased and at the time of writing the Report were still high. Have you really helped the poorest people?
Dr Shafik: This programme was not intended to reach the poorest of the poor, for example, landless households; it was meant to reach the productive poor who could use the inputs effectively. The best evidence of the impact on the rural poor is that rural wages have risen faster than maize prices, so rural workers' incomes actually went up. I think that is quite a compelling story. The evidence we have is that about a million people have been lifted out of poverty in the last few years, in large part as a result of the gains that have been made in the agricultural sector.
Q48 Mr
Burstow: I just wanted to draw attention to figures 2
and 16 which address issues around poverty and then the ratio of nurses to
population varying by district. It is
quite striking that, if you look about halfway from the bottom of figure 16 to
the middle of the table, many of the districts referred to there are at the top
of the league table when it comes to being in ultra-poverty and poverty. I am particularly interested to explore what
is being done to address the issue of deficiencies of doctors and nurses in
rural locations. Why has
Dr Shafik: Again, it is important to
remember the baseline from which we are starting. Life expectancy in
Q49 Mr Burstow: Just on that point, if I may, briefly, in paragraph 2.16 it does say that by the end of 2007 in many districts a third of nurses and two-thirds of doctors remain behind the 2005 national average baseline, let alone the national targets for subsequent improvement. There are places where the lack of progress is masked by perhaps greater progress in maybe more urban areas.
Dr Shafik: The government has problems, like all countries, in getting people to be posted in poorer, rural isolated communities. They have built 500 houses which the ministry of health has recently constructed to try and make it more attractive for people to locate in rural areas. The minister of health, who I met, is looking at a package of additional incentives to make it attractive to people to move to rural areas.
Q50 Mr Burstow: The Report describes the salary top-up for doctors and nurses as a possible way of addressing this issue. Why has DFID not chosen to adapt that as a way of trying to help direct doctors and nurses into these areas both to make sure they are properly paid but also to incentivise those moves?
Dr Shafik: It is something we can look
at, which is increasing the financial incentives for rural postings. The top-up scheme has been remarkably
successful at retaining health workers in
Q51 Mr Burstow: How do you know that, given that it says in paragraph 2.19: "The health ministry does not compile annual data, and attrition will be measured in an evaluation of the programme between September 2009 and June 2010"? Do you actually have data that really allows you to say that with confidence?
Ms Hines: As the Report said, it is not
something which is measured on an annual basis.
What we have got is data from the beginning when we know that, for
example, in the first year of the health swap in 2005 there were 96 health
workers who left Malawi and in the following year there were 30, so that was a
huge fall even in the first year. There
are various ways which we use to triangulate the data that we do have. If you go to any hospital or any clinic in
Dr Shafik: Just to add to that, they are producing 500 nurses and 55 doctors every year who are entering the system and that will improve the numbers even further.
Q52 Mr Burstow: That is obviously very encouraging. You mentioned earlier on that now every area has at least one doctor, but the Report refers in 2.16 to the fact that in many cases where that one person is in place they are temporary appointments. What is being done to make sure that this workforce growth is sustained and sustained growth is put into the places where it is most needed?
Dr Shafik: Clearly, getting the numbers up is a key part of that and additional incentives to rural postings is another part.
Ms Hines: There are a number of ways
the government tries to do this from the salary top-up to additional
training. They are also looking at
bonding to a certain extent people who are trained through the government
system so they have to serve in rural areas, which is something they do with
teachers as well. It is also something
that we have been talking to the World Health Organisation about because they
are doing a study on this globally, how you can incentivise health workers to
go and stay in rural areas. They are
looking at
Q53 Mr Burstow: Can I briefly switch to another area, which is going back to the line of questioning Mr Curry was asking on about maize and particularly this issue of subsidy and the timeliness of subsidy? One of the points the Report in paragraph 3.7 refers to is that certainly in two seasons now the subsidies have arrived too late or there are barriers in the way, both in terms of the amount of distance to be travelled or amount of time that has to be waited before gaining access to fertiliser, which makes it a less than perfect scheme. What is being done to remove those sorts of obstacles and what is being done to make sure that the whole scheme is more timely?
Dr Shafik: Part of the reason for the delays in previous years was because we had this minority government situation and the government was unable to pass a budget until quite late in the fiscal year, hence the fertiliser was late in being delivered. That was a major factor. This is a large programme; it reaches 1.6 million households. There have been implementation delays, but we have been working very closely with the government through the logistics unit to make sure that the implementation delays are addressed.
Q54 Mr
Carswell: Since 2003 £312 million worth of aid has been
given to
Dr Shafik: Of the £312 million, in any particular year, for example in 2008, the budget support was about £27 million. It has been roughly about a third of the programme in each year.
Q55 Mr Carswell: About a third of the total aid budget. Can you personally account for how all of that is spent? I do not mean can you tell me which tick boxes and project scores have been met, but can you account for that in a way that would be credible in a western country to make sure it is not being siphoned off?
Dr Shafik: We undertake fiduciary discharge before we approve budget support and that involves a set of risk assessments that we do before approving a budget support programme. We have to assess whether a country has fiduciary standards that are acceptable. We have to ensure that things that are being spent on are things that we would consider eligible. There is a set of quite complicated things that is an internationally agreed standard.
Q56 Mr Carswell: So you can account for it?
Dr Shafik: I can account for it, yes.
Q57 Mr
Carswell: It is not being used to subsidise Mercedes
Benzes or the property market in
Dr Shafik: The government has a spending programme. When you do budget support you are supporting a broad spending programme. The decision we have to make is, are we comfortable with the broad areas that the government is spending on?
Q58 Mr Carswell: What I am trying to work out is if the British taxpayers' money is ending up being taken by kleptocracy for personal benefit.
Dr Shafik: The way we address that is we
fund the anti-corruption commission in
Q59 Mr Carswell: We give them half a million pounds.
Dr Shafik: We do, and they are incredibly active. In fact, if you look at their recent prosecutions in 2006 the minister of education was prosecuted and fired. They had 118 cases recommended for prosecution in 2009.
Q60 Mr Carswell: So they are identifying fraud?
Dr Shafik: They are identifying fraud and they are prosecuting it.
Q61 Mr Carswell: The general budget support is subject to fraud?
Dr Shafik: Fraud exists in all countries. The issue is, are you prosecuting and are you addressing it?
Q62 Mr Carswell: I believe I am right in saying that the Americans generally do not give general budget support and my understanding is the reason they do not is because of accountability. The United States Congress, a proper legislature that does its job properly, does not like to sign off on what they regard as a form of subsidy which cannot be accounted for. Are they wise not to sign off on it? Should we be more challenging in how our money is being spent?
Dr Shafik: I think if you asked the
general accounting officers, they have found widespread fraud in many parts of
the
Q63 Mr
Carswell: Do we spend money trying to develop an
enhanced democracy in
Dr Shafik: Yes, we do.
Q64 Mr
Carswell: Democracy is about competing tax and spend
options in a spectrum of public sector provision. Are we not actually preventing the
development of democracy if we are, in effect, providing a large subsidy that
prevents the government legitimately raising taxation through a local public
policy debate in
Dr Shafik: The government of
Q65 Mr
Carswell: I am sure he is, but it is not really enhancing
democracy if these are not decisions that are entirely dependent upon the
revenue raised. A lot of debate in
democracy is about how to broaden the tax base, whether you should broaden the
tax base. If we are bunging a third of
Dr Shafik: Two-thirds is their own money. Gwen, do you want to add something on that?
Ms Hines:
Q66 Mr
Carswell: So should we not cancel general budget
support, abolish it, and instead, rather than spend the money on hand-outs for
politicians, which is what it is, and hand-outs for grandiose planners, give
the budget support money instead to beefed-up programmes that would actually
ensure that rural farmers have things like to access to credit? It is a lack of credit that forces the
farmers to forward sell their harvests, which explains the low
productivity. Should we not be addressing
their lack of access to credit? Would we
not be better off sorting out land ownership issues, making sure that every
woman and man in
Dr Shafik: I do not recognise this picture of budget support that you paint, actually, and I think we are doing precisely that, helping a very, very poor government, which has £80 to spend per capita per year, target that money on an essential package of health services recommended by the WHO as the most effective for saving lives, an essential package of input subsidies which gives the poorest farmers in Malawi access to basic inputs.
Mr Sharpe: Perhaps I
could just say three things. Firstly,
obviously we want to be sure that the
Dr Shafik: Just to give
you one small example, if I may. We have
looked at our entire education portfolio in DFID, much of which is channelled
through budget support. We can get a
child into school for £60 a year. That
is 2% of the
Q67 Mr Carswell: In 2004 you had to suspend budget support because of the theft and the kleptocracy. What is it that has changed other than a more malleable set of politicians to make you resume budget support?
Mr Sharpe: One of the
things that has definitely changed is the improvement it the public financial
management system. In 2005 in the
international survey, on the 28 indicators
Ms Hines: I would also point out there was an election in the meantime and it was a fundamentally different government which has been bought in. The previous President is currently being investigated by the Anti-Corruption Bureau of Malawi for that period. If you look just at the economic indicators and how they changed between 2004 and 2008, something our budget support helped to achieve was macroeconomic stability. Inflation was 20% in 2004 and 8% in 2008.
Q68 Mr Carswell: In five years' time will we still have general budget support, do you think?
Dr Shafik: In
Q69 Mr Carswell: Yes.
Dr Shafik: Probably yes and I do not think that is a failure; I think that would be a sign that we had confidence in their systems and they had good policies and we were willing to support them.
Q70 Chairman: Dr Shafik, you believe that budget support or aid to government is no more liable to fraud than other types of aid, microaid for instance rather than macroaid? That is your belief, is it?
Dr Shafik: That is what my head of internal audit tells me.
Chairman: That is what you told Mr Carswell and I just wanted to double check. Geraldine Smith?
Q71 Geraldine Smith: It is a very difficult job obviously in a very, very poor country and £80 million is not that much money. Is there a danger sometimes you can try and spread it too thinly and try and do too much?
Dr Shafik: It is
something we always struggle with and I think Gwen will give you a feel for
this. In a country that has so many
needs we could be doing everything. In
fact, we have tried to focus on what Malawians say are their top
priorities. The first was food security,
for obvious reasons because that is what matters most to poor households, and
the second was health. Those have been
the two major sectors which the NAO has looked at. It does not give you a long-term development
strategy and the shortfalls and the shortcomings in education in
Ms Hines: It is very
difficult especially in a country like
Q72 Geraldine Smith: Can I ask something on health. One thing that jumps out is the figure of £1.2 million to treat 15 patients abroad. What happened there? What was that all about?
Dr Shafik: Those are
some very difficult cases. The majority
of those cases are cases of cancer and they are mainly children who have
cancer. We asked the Ministry of Health
to give us numbers on the wealth quintiles of where those families came from to
see if there was any bias in favour of wealthier families, and that was not the
case. The proposals for treatment abroad
come from public hospitals based on clinical criteria recommended by doctors
who chair those committees. The
Q73 Geraldine Smith: It is very hard. I know it is awful when you are talking about people's lives, but it is terrible when you look at the maternal mortality rates and things that they are so high and the fact that people do not have any transport to take them to hospitals, any ambulances or anything like that. Surely, there has got to be a certain amount of health rationing in effect to make the most use of funding? How do you do that? What systems do you have in place to make sure that the money is spent to save as many lives as possible?
Dr Shafik: In some ways,
thankfully, we do not have to make these choices; doctors in
Q74 Geraldine Smith: What about the basics such as clean water? There seems to be some dispute in the Report about just how many people do have access to clean water. That is surely the first essential thing that you need?
Dr Shafik: Absolutely.
Q75 Geraldine Smith: Has that figure not been disputed? Do WaterAid not dispute that figure of 65%?
Dr Shafik: That is correct. WaterAid's comment that 31% do not work relates to an earlier government number which I think most of us thought was an overestimate. We think these newer numbers are much more reliable. You are quite right; access to water is a basic. When I was there visiting we visited a village which had a water borehole put in place and it was the shiniest thing in the village. It was an incredible source of pride to the whole community and had transformed health indicators in that community, so it is a huge issue.
Q76 Geraldine Smith: Can I go back to the staffing numbers that was touched on earlier. It does seem that if you had over 100 staff in 2004 and it has gone down to below 40 at one point, that is a very big reduction. Are you saying you were overstaffed to begin with?
Dr Shafik: Malawi was
staffed somewhat unusually relative to other offices because there were many
things that in normal offices we would contract out like estates and taking
care of buildings and that kind of thing, which were done in-house in Malawi
and which because we wanted to reduce numbers we were able to contract out and
reduce our core numbers. I think the
current staffing numbers in
Ms Hines: I was just going to add as the person who has got that team to achieve the work that we are trying to achieve, that I am confident that we have the right staffing numbers now. It is not just about numbers; we have also changed the skills profile of the staff. A lot of those we have lost were very junior staff who did functions which are no longer required. We now have a computerised financial management system and record-keeping systems so we no longer need the people who in the past performed those kinds of functions manually. We also had a school construction unit which was previously part of DFID. As part of our aid effectiveness that unit is now part of government. It is also being merged as we speak with an African Development Bank unit so the government will control school construction in the future as part of a harmonised unit. That was also downsized as part of the transfer of aid into government but that explains for example why a certain number of posts were removed in DFID Malawi. We also have a lot more Malawian staff rather than international staff. Those staff have a huge amount to offer. They have quite different skills than I have or my other British staff have and that enables us also to balance our running costs. We all bring different things. I now have a very good team who can achieve what they need to achieve.
Geraldine Smith: Thank you.
Q77 Mr Mitchell: I see that 1.4 says that DFID aligns its work with the other donors,
but we are told elsewhere that more and more of the money DFID channels in is
going through the government in
Dr Shafik: We think it is efficient because the cost of the Malawian government delivering health and education services would be far less than if we brought in external parties and tried to ---
Q78 Mr Mitchell: Surely it is much more subject to corruption and political influence?
Dr Shafik: We think the way to mitigate that risk is to invest in the Anti-Corruption Bureau and try to make sure that public financial management is improving in its quality.
Q79 Mr Mitchell: Are you transferring more functions to their government rather than having it done through your staff because you have got to reduce staff levels?
Dr Shafik: No we are not doing it to reduce staffing. It is because we think it is more cost-effective and more sustainable in the long run if the Malawian government runs these programmes themselves rather than us doing it.
Q80 Mr Mitchell: But we get less credit for it?
Dr Shafik: I think if
you went to
Q81 Mr Mitchell: I am sure when you give tax
credits here people do not say thanks to the Labour Government. They think the Inland Revenue is giving it to
them from the generosity of its heart. I
cannot see that in
Dr Shafik: I think the
government of
Q82 Mr Mitchell: I am sure the
Dr Shafik: As Gwen said, the nature of the staff have changed. We now have more higher skilled staff and many of the previous staff we had before were doing things like maintaining the buildings and things which we no longer need on our staff, we can get those services contracted out, so I do not think we have compromised on staff quality.
Q83 Mr Mitchell: Mr Gallaher said with
typical Treasury ingenuity that they give the money and the staffing levels are
up to you. That is the usual Treasury
attitude. Do you feel under any general
compulsion from Treasury to reduce staff numbers in
Dr Shafik: The Treasury gives us an overall administration budget and it is up to us how we spend that, be it on staff or ---
Q84 Mr Mitchell: Yes but do you feel under any pressure to reduce staff numbers?
Dr Shafik: They do not specify anything on staff numbers ---
Q85 Mr Mitchell: You are doing it out of the keenness of your enthusiasm because you think doing it through the government rather than through our staff is beneficial?
Dr Shafik: I think that is correct. Sam, do you want to say something?
Q86 Mr Mitchell: Mr Sharpe, you were holding your pen up in class.
Mr Sharpe: Just on the agreement we have reached with the Treasury. We have said this to the Committee before. It is worth remembering that in the three-year settlement they agreed with us they agreed, along with all other government departments, reductions in our administration costs. They also ring-fenced some resources for our front-line administration costs overseas which they did not reduce at the same rate, so we have agreed with the Treasury that we need an adequate number of front-line staff overseas and that is part of our financial settlement for these three years.
Q87 Mr Mitchell: I see from 1.13 that current
DFID staff in
Ms Hines: Obviously this was a survey of the staff and it is for them to have their own opinions on this, but over 50% of the staff I currently have in the office have been with DFID through the transition. I am not denying the transition ---
Q88 Mr Mitchell: You mean they are thinking of the old times when you had more staff?
Ms Hines: I think so and it is something which the staff often raise with me.
Q89 Mr Mitchell: They are also surely assessing the difficulty of doing the job?
Ms Hines: Absolutely and I think it is also important to remember that the survey concerned which led to that figure by the NAO was done in December last year. December was a particularly difficult time within the office when I think staff were demoralised.
Q90 Mr Mitchell: So you are telling us that
staff in
Ms Hines: I think if you reran the survey today you would get a very different number because, as I was saying, I think December last year when the survey was done was a particularly stressful time for the staff. If you look at other internal staff surveys which we have done, such as the one in February this year called the Pulse Survey, that showed that 95% of staff actually know how their work contributes to our objectives and generally the levels of staff satisfaction in that were very high. We have just gone through another one which will report next February. I will be very interested to see what that says. I think that, yes, some people who were around a long time before do prefer the time when there were two people doing one job.
Q91 Mr Mitchell: I am sure their morale is
higher because they were under pressure then, but I think I would prefer to
trust the view of the staff on the ground about what staffing levels need to be
than somebody sitting in
Dr Shafik: I think the NAO also says that DFID has made well-informed choices on the design of the programme and part of what we do with other donors is to agree a division of labour. We cannot do everything. We focus on the sectors in which we are most effective.
Q92 Mr Mitchell: You cannot do everything but why did you take the most difficult part?
Dr Shafik: I do not think we took the most difficult part. We took the sectors where we think investments in education and health are investments in growth. The other receptors like infrastructure and energy were ones in which we thought the World Bank had a comparative advantage. It was not that we were neglecting them altogether but we were dividing up the work among us.
Ms Hines: It certainly
is not a question of all or nothing because, as we have already said to the
Committee, we do fund agriculture in
Q93 Mr Mitchell: Let me ask you just in
passing, what is the EU aid effort in
Ms Hines: They are very heavily involved in agriculture.
Q94 Mr Mitchell: Are there any barriers in the European Union against agriculture because it is a notoriously protectionist device? Does agricultural protectionism in the EU damage Malawian agriculture in any way?
Ms Hines:
Q95 Mr Mitchell: That was a yes? It was a vigorous nod. I would like it to be a yes.
Dr Shafik: All of
Q96 Mr Mitchell: So on the one hand the EU is
helping agriculture in
Dr Shafik: I think in the
specific case of
Q97 Mr Mitchell: But if it were it could not?
Dr Shafik: Yes, but it is sort of hypothetical.
Chairman: I warn you that the Treasury man is getting very worried now by your answers because you are attacking the EU so just watch it!
Mr Mitchell: They are very interesting answers, Chairman.
Q98 Chairman: They are very interesting answers.
Mr Sharpe: We do also
need to remember that the trade barriers into the EU are very heavily
differentiated between least developed countries like
Q99 Mr Mitchell: Yes, but we are contributing to EU aid and that is concentrating on agriculture which the EU --- Let me move on because I see that we gave more in direct food aid in 2006 than we have contributed to the maize subsidy over a four-year period.
Dr Shafik: That is correct.
Q100 Mr Mitchell: The maize subsidy cannot be
channelled. I do not know what these
districts are in figure 2 because I have not done any tours in
Dr Shafik: The maize subsidy is supposed to target the productive poor.
Q101 Mr Mitchell: It is a universal subsidy which is not directed at the poorest areas.
Dr Shafik: Within each community it is targeted within the village to those households which could benefit most.
Q102 Mr Mitchell: But the poorest areas according to 3.8 have most difficulty in collecting it and they have to hang around when they have gone to get it for two or three days or nights and have the furthest distances to travel and have the most expensive fertiliser. In other words, they are not benefiting substantially in the same way as the richer areas.
Ms Hines: This is very
much a nationwide programme. If you were
to go to
Q103 Mr Mitchell: You talk fast, Ms Hines, but not fast enough to avoid my last question, which is why is DFID concentrating on pushing the private sector into fertiliser distribution and the maize distribution system when clearly the Malawi government does not want it there?
Dr Shafik: We think it is part of building a sustainable market in agriculture.
Mr Mitchell: Is it a question of ideology?
Q104 Mr Curry: No, it is economics and commonsense.
Dr Shafik: I will let your colleague answer that.
Q105 Chairman: Why do we read in paragraph 3.9 that the
Dr Shafik: This was in
2008 which, as we know, was an exceptional year. Food and fuel prices skyrocketed and the
price of fertiliser more than doubled for
Q106 Chairman: It does not say all that in this Report. "It bought some of the extra fertiliser in 2008-09 in December 2008 at mid-2008 prices, not the lower prices available ..." It seems to me grotesque bad management. This is what you are supposed to be doing to protect our investment. Were you asleep on the job?
Ms Hines: No.
Q107 Chairman: This is a dirt poor country and we have wasted US$35 million on needless fertiliser.
Ms Hines: As Minouche has said, it was largely due to the very high price of fertiliser last year why this cost is so high. Yes, they did over-procure fertiliser ---
Q108 Chairman: So what were you doing at the time? What were you doing to help these people?
Ms Hines: I was one of
the first who went in to see the Minister of Finance as soon as this came to
our attention. It came to our attention
through the Logistics Unit which we fund as one of the safeguards. They made us aware of this over-procurement
and we immediately went to see the
Q109 Chairman: But none of the extra fertiliser was distributed.
Dr Shafik: Deliberately because they had excess so instead of wasting it they saved it for the next year.
Q110 Chairman: So all the money that we have spent is just stored, where presumably it will be filched by people, rot away, or whatever?
Ms Hines: No, not at all and in fact an audit was done as part of the agreement with the development partners to hold it over for this year's programme. It is now, as I say, being rolled out as part of this year's programme. For this year's programme they reduced it from 170,000 to 160,000, they used the 83,000 they had stored, they bought another 77,000 to make up the difference, and that is the fertiliser which is being used for this programme. Chairman: Thank you. Ian Davidson?
Q111 Mr Davidson: A lot of the improvement in Malawi - and it seems the country is improving far better than it has for a long, long time - has been due to the policies of the Malawi government - pro-poor policies, the agricultural subsidies and so on. To what extent do you think you are spending enough on capacity building to help Malawians do this for themselves as distinct from doing it for them?
Dr Shafik: A huge part of the reason we do budget support is because we build their capacity alongside them. I would like to think that some of these better policies have been a result of our own efforts to try and work with them to shape the agricultural input subsidy in a way that maximises the benefits to the poorest communities. Similarly on the health side, the essential health package which the Malawi government is rolling out is something that we worked on with them using international standards from the WHO as to which health investments had the highest rate of return, so I think we have contributed to that improvement ---
Q112 Mr Davidson: I know that you are well thought of by the
Dr Shafik: In
Q113 Mr Davidson: Right. Can I turn to the
question of civil society. Again, I have
been there and I have met representatives of civil society introduced to me by
yourselves and other people representing the
Ms Hines: Absolutely,
and, as you will know from your visit, civil society is a very broad term in
Q114 Mr Davidson: Rather than go into this in great detail maybe you could just let us
have a note of what in particular you are doing there to develop capacity
amongst the trade unions and amongst what could be seen as ordinary
people. Could I move on to ask about how
you work with other agencies and organisations in the country. There is a large number of people.
Dr Shafik: In
Ms Hines: At a process level there is a monthly meeting of the heads of mission of donor countries, and also heads of co-operation for those who are not diplomatic agencies, where we get together and we talk about issues. Also within the sectors the Malawi government is developing itself an aid effectiveness architecture in what they call the Development Assistance Strategy which includes sector working groups, because they themselves now see the advantages of having donors and also civil society over time coming together to talk about issues on a thematic basis, so there is a health sector working group and an agriculture one. Something else we are doing as DFID Malawi, I am in the process of setting up a joint agriculture and resilience unit with a Norwegian agency and the Irish Government, which will bring together both my own staff in those sectors and their own staff, which is another good way of using our staff so that we get more out of them. We also have joint programmes and it is actually very effective because it means that for example whereas in the past we might each have sent one person to the same meeting, we now send one person who reports jointly to all of us and we make sure that we are very co-ordinated in taking positions.
Q115 Mr Davidson: The question of co-ordination and assessment is measured in some way and assessed centrally? There is a mechanism for ensuring that is there?
Dr Shafik: Yes, in fact there is an international mechanism called the Paris Declaration whereby we measure how many times we send joint missions, are we doing our analysis together, how much of our funding is pooled.
Q116 Mr Davidson: Okay, that is fine. What
happens when there is a conflict? You
are not the governor general or the district commissioner of
Ms Hines: There are
obviously cases where we do disagree.
Q117 Mr Davidson: Give us another couple of examples where you have had a disagreement?
Dr Shafik: The examples you mentioned about international treatment on health would not be our choice. These are very difficult choices with children who have cancer and governments are entitled to make some decisions.
Q118 Mr Davidson: That is one. Give me another one.
Ms Hines: I can give
you another one on education. It is not
a disagreement per se but something where we have felt for a long time there
was a better way of approaching education in
Q119 Mr Davidson: The final point I want to pick up is the question of co-ordination between yourselves, other British influences in the field, as it were, the High Commissioner, the British Council, but also people like the Scottish Government who have programmes. Glasgow City Council are developing health links and there is a school in my constituency, Govan High, which has a link with Milonde Secondary. I get the impression that the Glasgow ones, the Govan one and the Scottish Parliament one are not really co-ordinated with anybody else and that there are no real links between themselves and yourself to make sure that they are slotting into a coherent programme. Is that fair?
Dr Shafik: Not quite I
think. We co-ordinate with the Scottish
aid programmes in two ways; centrally and also in the field. I will let Gwen say what it looks like in
Ms Hines: I met Lisa
Bird, who runs the Scottish development programme in
Q120 Chairman: It alarmed me, Dr Shafik, that when Mr Davidson asked you to list examples of waste you could only give one example which we have already read about in the Report. I would have thought when we are talking about what has been historically one of the worst-run countries in the world you could have listed a whole series of examples. Are you on top of this?
Dr Shafik: We have already talked about the agricultural inputs subsidy.
Q121 Chairman: We talked about fertiliser and we have given you that and I am going to ask about this cancer thing in a moment, but I would expect you to have been able to give a bit more of a list.
Dr Shafik: This is a country which does not have vast resources so it is not like one can give a huge long list of all the ways that money is wasted. We have looked at things like civil service reform and found some evidence of problems with payrolls in some government departments and we are working with them on that.
Q122 Chairman: You had better put your thinking cap on and write us a note. Let us look at this cancer thing that
Geraldine Smith asked about. In 2004, to
reiterate, the
Dr Shafik: As I said, we cannot identify them. We do not know the names of the individuals. We checked what income quintile they came from to see whether they tended to be from richer families or not and there was no evidence of bias.
Q123 Chairman: All right. Education - I
think this is always a theme that Mr Davidson is interested in. Just as a matter of interest, it is not in
the Report but I am curious to know, is this rather ridiculous school which
Hastings Banda set up in
Dr Shafik: Yes.
Q124 Chairman: So what are you saying about that?
Ms Hines: That is
Q125 Chairman: How much of Malawian government expenditure goes on that school; any?
Ms Hines: I do not have a figure to hand but I would be very happy to provide one.
Q126 Chairman: I would suggest to you that quite a lot goes on it. Tell me - you must know about this - you are working there. This is a big issue.
Dr Shafik: It is not something we fund so it is not something that we would devote lots of resources to finding out.
Q127 Chairman: But you do fund education and if you are funding a government which is wasting a significant proportion of its tiny educational resources on one public school for the elite, I would like to know about it. I would like you to tell me now rather than just promising me a note. You are living there, you must know what is going on; tell us.
Ms Hines: As I say, it is not information I have to hand. I will be happy to provide it. I can tell you that when we do regular budget scrutiny, which we do at least every six months as part of the budget support reviews, it is not a significant enough item to appear in the headline budget, but I would be very happy to look at it.
Q128 Mr Carswell: I have one follow-up question, Ms Hines. You talked about a government decision to over-procure fertiliser. Those are the words you used. It was a pretty large-scale over-procurement. Did anyone in government benefit? Was there an ulterior motive? Was anyone connected in any way to government benefiting from it in any way?
Ms Hines: What we did last year is the same as we are doing this year: we funded civil society to look into the monitoring of the programme and they went to a selection of villages across the country. They looked at the sum total of the fertiliser that went out through last year's programme. As I say, the bulk of it that was over-procured was held back for this year's programme. When they looked at last year's programme, despite it being election year, they found that it was no more politicised than in previous years.
Q129 Mr Carswell: So no-one in government was basically benefiting from this vast misallocation of resources?
Ms Hines: I fail to see how they would benefit from it because the fertiliser that was bought goes out to people in the villages through this slightly complicated process I have explained which is designed to ensure it gets to the right people.
Q130 Mr Carswell: Excuse my ignorance but who is the fertiliser bought off?
Dr Shafik: It is bought on the international market.
Q131 Mr Carswell: And it is supplied via middle men?
Ms Hines: It is done through an open tender process to private sector fertiliser companies.
Q132 Mr Carswell: And no-one in government had any connection with any of those companies?
Ms Hines:
Q133 Mr Carswell: So there could be scope for ulterior motives and corruption?
Dr Shafik: We have no evidence of that and we need evidence before we can make these sorts of accusations.
Mr Carswell: Thank you.
Q134 Mr Curry: Tobacco and maize are both hugely impoverishing crops for the ground
and they depend on fertiliser. The word
"
Dr Shafik: It is part of the conversation we have started to have with the Ministry of Agriculture to look at diversifying the crops that are grown in Malawi because, as you say, part of the reason that fertiliser is so essential is because the soils have been depleted. Gwen, do you want to say something about the issue of run-off?
Ms Hines: Just to add first of all in terms of the crops, whilst this subsidy is largely about maize it does also support other legumes, so various other kinds of crops, and people are being encouraged increasingly to grow them together.
Q135 Mr Curry: Legumes put nitrogen back into the soil?
Ms Hines: Absolutely so that helps from that perspective.
Q136 Mr Curry: Beans are very good!
Dr Shafik: Maybe for many reasons.
Ms Hines: The issue of
run-off is not something I have looked at specifically in terms of that, but we
are working with other donors increasingly on environmental issues, partly as
part of our scale-up on climate change.
We are looking generally for
Q137 Chairman: A last question from me. You mentioned that you fund the Malawian NAO. Do you have any assurance over the 20% of expenditure not subject to annual audit by the Malawian NAO?
Dr Shafik: No, but we have the wider measures of public expenditure.
Q138 Chairman: How wide are these wider measures?
Dr Shafik: They cover the entire system. Sam, do you want to explain how PFA works and what the 21 indicators are? You do not need to list all 21.
Mr Sharpe: I will not list all 28 PFA indicators but they cover the setting of the budget, the accounting for the budget and the external scrutiny and the auditing for the budget, so we do have that assurance about the overall improvement in the system.
Q139 Chairman: Improvement overall. This is incredible. 20% of expenditure is not subject to annual audit. This is a country to which we have provided £312 million of aid.
Dr Shafik: These overall measures cover 100% of the budget and the issue is the NAO's review of public expenditure covers 80% but there are these other measures - does the Malawi government budget properly, do actuals match budgeted amounts.
Q140 Chairman: Just imagine if our NAO only audited 80% of our government expenditure. It would be an international scandal.
Dr Shafik: But this is a
country whose total expenditure per capita is £90 per person and the
Q141 Chairman: What progress are you making to try and improve governance through the Malawian NAO? Is there a Committee of Public Accounts? Is it effective? What does it do?
Mr Sharpe: They have just audited parliamentary scrutiny of their accounts for the last three years which had lagged behind. I think the important thing that is going on at the moment is this work that we are doing to strengthen them in doing audits at district level, which is what we are particularly contributing to supporting at the moment.
Ms Hines: What we are
doing is because the National Audit Office, like a lot of other parts of
government, suffers from capacity constraints, as DFID we are enabling them to
use private sector auditors within
Q142 Chairman: Within the political process in
Ms Hines: There is and it is called the PAC and they are one of the people who participated most recently in the budget support review because we are trying to get them much more involved.
Q143 Chairman: How effective are they?
Dr Shafik: I can tell
you that the permanent secretaries in
Ms Hines: The audits done by the National Audit Office will now go straight to Parliament. They have recently changed the rules so they will go straight to Parliament rather than through government. Government in the past used to put their own response on top of the audit report before it went to Parliament. Now to avoid any concern about government interfering with the audits they are going to go straight to Parliament and the government will provide its own letter separately.
Chairman: Thank you. That concludes our hearing. Clearly this is one of the poorest countries in the world. An estimated 40% of the population remain below the national poverty line. That is the equivalent of 23 pence a day. Clearly, we congratulate DFID in the sense that some good things are happening in terms of health for citizens, reducing poverty, increasing harvests and reducing hunger. Unfortunately, it is not possible to say with any accuracy how much of this good progress is directly down to your help. I think this is an inherent difficulty in budget support measures or an inherent difficulty where funds are channelled through central and local government systems. I would like the Treasury to keep a particularly close eye on this in terms of value for money. What is also unsatisfactory is that the Department's own measures of whether their programmes are delivering value for money are weak. Despite the Department, you yourselves, setting your own targets for programmes with a deadline of June 2008, some two-fifths were still not achieved in time. Having said all that, we do commend you on the useful work that you are doing. Thank you, Dr Shafik.