Department for International Development: Maximising impact in the water sector (HC 351) Public Accounts Committee 12 Feb 2003

Examination of Witnesses

Mr. Steinberg: I have read the report and it is very good - there is no doubt about that - but when you get a report that is very good you look very closely to try and find what is not good about it! Clearly you pick up basically on what the Chairman has picked up on, and being a bit of an old cynic anyway you think to yourself, "Well, it cannot be as good as that; there must be problems", and I think there are but I am hoping this afternoon that on the problems I have, which are very similar to the Chairman's, you are going to convince me that we are not just pouring water down the drain, so to speak - please excuse the cliché. Turning again to paragraph 1.9, what struck me was that two thirds of the reports, and I quote, "highlighted problems or risks to achieving a sustained improvement", so I thought to myself: "Well, they deliver this water but how long does it last? Will it last for ever? Is it not money being wasted?" How do you convince us that this happens, and have you got proof that this happens?

Mr Chakrabarti: The basic proof is in progress made in the last ten years. We cannot say that about every millennium development goal but we can say about water and sanitation that there has been enormous progress with access over a ten year period, which is quite a long period, so I suggest that shows that many investments are working rather well. Figure 4 on page 11 also shows DFID's performance within that overall picture, and I think it shows that we have done pretty well in this area.

Mr. Steinberg: Also in this particular paragraph it says that lots of the reports do not have a completion report, so how do you know the situation in those particular projects? How do you make a judgement on those? Are you waiting for those reports to come and then you make a judgement, or are you confident that they will be sustained even without the completion reports?

Mr Chakrabarti: It is undoubtedly true that some project completion reports are overdue, but from this rather large sample that the National Audit Office have looked at - and they looked at 26 out of the 33 projects eligible for monitoring which is a pretty high percentage of those eligible - the results are pretty much in one direction, so I am reasonably confident. I have not looked at the ones we have not done obviously, but on the basis of the evidence here it is a pretty good sample from which to judge.

Mr. Steinberg: Turning to paragraph 1.14, here again we are told that to improve sustainability, "There has been a shift in the focus of DFID's water projects away from infrastructure projects towards an increasing emphasis on strengthening the institutional capacity of bodies responsible for water delivery", and I thought to myself, "Aha! Is money now being transferred away from real projects into more bureaucracy and administration?" Please tell me that is not happening.

Mr Chakrabarti: Not bureaucracy and administration; it is to make the departments or the organisations involved in the water sector much more efficient than they were. In many developing countries this is one of the weaker areas of public administration. Quite often this is devolved to local government where, again, some of the best people in central government are not working on this.

Mr. Steinberg: Does this mean you are taking more money away from actual projects and putting it into this, and therefore less projects are built?

Mr Chakrabarti: Yes. It is clear from the report that in terms of what DFID does we are moving much more towards work on policy institutional capacity. Other donors are coming in and doing more of the hardware, if you like. They have a comparative advantage in this. People like the Asia Development Bank, the EU, the Japanese, the Germans and the Americans are much more at that end, and we are recognised internationally as being much better at the policy institutional end than they are.

Mr Curtis: What is important to us is influencing policy through our projects, so in terms of looking at sustainability, unless that broader policy framework is structured and focuses on issues of sustainability then individual projects are not going to be sustainable, so part of our evaluation of the extent to which projects are successful is the extent to which they have influenced policy. This is something that, through our long term engagements in India, for example, we have seen coming through over the last 5-10 years - that projects we have been involved with and our development of policy documents here have influenced the way that the Indian government deals with policy.

Mr. Steinberg: So what proportion of the aid goes in administration? Is it possible to say?

Mr Chakrabarti: In the water sector?

Mr. Steinberg: Yes.

Mr Chakrabarti: It is still being set up, I think.

Mr. Steinberg: I am not sure that it matters but what worries me is that the more you put into administration and bureaucracy the more chance there is of somebody syphoning it off. Another water cliché - sorry! If I remember the last time you were in front of us one of the things you were worried about was actual corruption, and it seems to me the more money you put into bureaucracy, administration, policy, etc., the more chance there is of somebody putting their finger in the till, so to speak. Are you confident that does not happen?

Mr Chakrabarti: Very. If you look at our reputation for financial management it is second to none in Whitehall and is very good. We value it very highly. In fact, I have just got a letter from the Comptroller & Auditor General saying how pleased he is about the increased investment we have put in this area.

Mr. Steinberg: Do not get me wrong - I am not accusing anybody.

Mr Chakrabarti: In terms of managing those resources we are pretty good at it. As to whether there is insufficient emphasis on the hardware end as opposed to the public administration end, you have to look at this total picture. We do not work in this area alone. Other donors are going much more in dealing with the hardware than we are.

Mr. Steinberg: One of the things I picked up on in the report as well is that we were told that there are always risk appraisals included in project design but also that you are often unaware of, and that you do not understand, the local situations. Does that itself not increase the possibility of corruption?

Mr Chakrabarti: I do not think it necessarily increases the possibility of corruption --

Mr. Steinberg: Or failure? There was a project in Ghana, if I remember rightly, where there was a load of money wasted and a lot of problems and when they worked it out it was only because somebody had not bothered to open a valve to allow the water to come through.

Mr Chakrabarti: Actually on the Ghana project the money was not wasted. It is certainly true that this famous valve was only half turned, but when it was turned it was found the distribution system did not need any adjustment at all and the benefits flowed through very quickly, to use another water expression, so I do not think that is a problem. I really do think that increasingly we are much more aware of the need to analyse a local situation and to understand what these communities want in terms of their behaviour on hygiene, and how long they are willing to wait for water and so on.

Mr. Steinberg: Very quickly because I am running out of time, one of the things that also hit me in the face in the report was figure 16 on page 20, where you get the impression that some resources are being wasted. For example, "funding allocations to the water sector not increasing; geographic focus is not in the areas of great need - for example, funds have been earmarked for urban areas when the majority of the needy live in rural areas; insufficient attention to sanitary issues" and so on. How can we be assured that money is not being wasted if these problems are occurring?

Mr Chakrabarti: This figure refers to the strategies of developing countries and not finance as such. What it is saying essentially is that in their strategies these countries mentioned there are giving insufficient weight to the water sector compared with some other sectors, and it is a particularly interesting issue as to why they are doing that. I would say that most of these countries, with the possible exception of Uganda, are in a stage of development where they do not think water is as big a priority for them as health and education, and that is also reflected in our priorities. It is interesting that the three programmes in water which we are resustaining are in Uganda, India and Bangladesh, and I would argue certainly in the cases of India and Uganda that they are way ahead than some of the other countries, certainly in development. In some of the other countries, Rwanda and so on, it is not as important as dealing with conflict.

Mr. Steinberg: I understand that but perhaps some time in the afternoon you could explain to us on figure 22 as well why it appears that projects are going into areas that have less problems than other areas - for example, if you look at the money going into Kenya, Uganda, Tanzania and Nigeria and you look at the problems they have there, and then you also have Ethiopia, Rwanda and Eritrea who seem to have more problems and less money going in. Please do not answer that now because I will get into trouble with the Chairman --

Chairman: Weave it into your answers!

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Chairman: Gerry Steinberg wants a final question.

Mr. Steinberg: I think you answered it at one stage. The line of questioning I was taking was we were looking at Figure 16 on Page 20 and it seems that perhaps some projects were being built in the wrong place. It says: "Geographic focus is not in the areas of greatest need - for example, funds have been earmarked for urban areas when the majority of the needy live in rural areas." That indicates perhaps they are built in the wrong places. Apart from that, what I was going to go on to was the figure on Page 29. I read the report, I read that, then I looked at this figure, and I thought to myself they may have been built in the wrong areas, and perhaps even the wrong countries are getting the money. You seemed to answer the question as to why Kenya, Uganda and Tanzania, with considerably less problems, were getting more money than Sierra Leone, Rwanda and Eritrea and you explained these are areas of conflict.

Mr Chakrabarti: Afghanistan and Ethiopia were in conflict and Sierra Leone was in conflict so the priority there for us was to try and sort out the security situation. We put all our resources into making choices, so that if people working in the water sector, other donors come into that water sector quicker. It would be very interesting to have gone further and have what other donors are spending and other governments are spending. That would then show the collective effort in the country rather than just the DFID spend.

Mr. Steinberg: In terms of Nigeria, is Nigeria an economically sound country or not?

Mr Chakrabarti: No is the answer.

Mr. Steinberg: Which if any of these countries - presumably none of them are - are any of them economically sound?

Mr Chakrabarti: I think Uganda has made remarkable progress. I think there is a figure in the Report on Uganda's progress over the last ten years. Tanzania has shown real progress over the last five or six years as has Mozambique. There was a question whether that was unbalanced growth, with too much around capital, but it has shown progress.

Mr. Steinberg: So basically these are the poorest countries of the world?

Mr Chakrabarti: Some of the poorest countries. Years of conflict and bad policies and so on.