Department For International Development

International development cooperation is undergoing a revolution. The authors question how far bilateral and multilateral aid agencies succeed in mainstreaming global issues in their operations and assess how emerging and traditional donors address competing objectives, often with diverging rationales. Cases include Brazil, China and South Africa.

This annual report details the work and expenditure of the Department for International Development (DFID) during the period April 2006 to March 2007, working as part of the wider international effort to tackle world poverty and promote the sustainable development of low-income countries. The report includes chapters on: reducing poverty in Africa and Asia and progress towards the Millennium Development Goals; making the multilateral system and bilateral aid more effective; fragile states, conflicts and crises; environment, climate change and natural resources; and working with others on policies beyond aid. The assessment of progress is structured around the DFID Public Service Agreement (PSA) targets.

This large-scale work concentrates on explanations of thematic concepts and debates associated with 'development'. It provides key information for universities, students and professional organizations involved in international development.

Rapid and profound changes are taking place in international development. The past two decades have promoted the ideals of participation and partnership, yet key decisions affecting people's lives continue to be made without sufficient attention to the socio-political realities of the countries in which they live. Embedded working traditions, vested interests and institutional inertia mean that old habits and cultures persist among the development community. Planning continues as though it were free of unpredictable interactions among stakeholders. This book is about the need to recognise the complex, non-linear nature of development assistance and how bureaucratic procedures and power relations hinder poverty reduction in the new aid environment. The book begins with a conceptual and historical analysis of aid, exposing the challenges and opportunities facing aid professionals today. It argues for greater attention to accountability and the adoption of rights based approaches. In section two, practitioners, policy makers and researchers discuss the realities of power and relationships from their experiences across sixteen countries. Their accounts, from government, donors and civil society, expose the highly politicised and dynamic aid environment in which they work. Section three explores ways forward for aid agencies, challenging existing political, institutional and personal ways of working. Authors describe procedural innovations as strategic ways to leverage change. Breaking the barriers to ensure more inclusive aid will require visionary leadership and a courageous commitment to change. Crucially, the authors show how translating rhetoric into practice relies on changing the attitudes and behaviours of individual actors. Only then is the ambitious agenda of the Millennium Development Goals likely to be met. The result is an indispensable contribution to the understanding of how development assistance and poverty reduction can be most effectively delivered by the professionals and agencies involved.

Budget support is aid provided directly to a partner government's central exchequer, and aims to reduce poverty through helping to fund the poverty reduction strategy of the beneficiary country. DFID's use of budget support has risen to £461 million, representing nearly twenty per cent of bilateral expenditure. This study examines the aims of budget support, what it is achieving, how DFID manages the risks of using it and how DFID takes individual funding decisions. The report finds that budget support has: often enabled partner governments to increase expenditure on priority areas; resulted in partner governments providing more services, particularly in health and education; helped increase the capacity of partner governments to plan and deliver services effectively and to develop better poverty-focused policies; helped partner governments to strengthen their financial management systems and encouraged other donors to support such reforms; facilitated donor alignment to, and support for, the developing nation's own strategies; and reinforced existing economic stability and good economic management. But evidence on whether budget support has yielded better value for money than other forms of aid is not conclusive. While budget support has some advantages compared to other forms of aid, it also carries significant risks which need to be better managed. Monitoring achievement is challenging, and DFID does not always set out what it expects to achieve or by when. Formal monitoring frameworks do not always track progress in remedying weaknesses in financial systems. And monitoring of human rights - one of the key criteria for giving budget support - is not yet systematic. Weaknesses in available statistics continue to limit the ability to monitor results. Developing country governments may not be capable of using UK funds efficiently and effectively or may misuse them for political reasons or through corruption.

Budget support is aid provided directly to a partner government's central exchequer, and aims to reduce poverty through helping to fund the poverty reduction strategy of the beneficiary country. DFID's use of budget support has risen to £461 million, representing nearly twenty per cent of bilateral expenditure. Budget support has been designed to improve aid effectiveness by reinforcing developing country policies and systems, and reducing transaction costs. Despite having provided budget support in some countries for many years, however, the Department has not established whether it is in practice cost-effective. DFID's main criterion for providing budget support is that benefits must outweigh the risks, a judgement which is assessed subjectively by country teams. DFID assesses weaknesses in financial systems but rarely estimates the associated risks of corruption or waste of UK funds. DFID's monitoring has basic weaknesses in specifying suitable indicators and tracking progress against objectives. Bodies such as Parliaments, State Audit Offices and civil society organisations can provide effective challenge to governments and ensure that the poor benefit from budget support funding. DFID has not historically paid sufficient attention to strengthening domestic accountability. DFID also has a responsibility to UK stakeholders to demonstrate that funds have been spent effectively.