The UK government must do a better job of keeping track of the £412.9m channelled through multilateral development banks for infrastructure projects in the developing world, a parliamentary report said on Friday.
The Department for International Development is one the largest contributors to the EU, the World Bank and the African Development Bank for infrastructure spending, but the UK parliamentary international development committee expressed concern that DfID does not monitor spending as effectively as it could. Andrew Mitchell, the international development secretary, has pledged to get value for money for Britain’s aid budget, which was protected from cuts under last year’s spending review at a time of belt-tightening at home against a bleak economic backdrop.
The report is generally positive about DfID’s role. It praised the department’s innovative approach, particularly through its support of mechanisms such as the Public Private Infrastructure Advisory Facility that helps develop legal and regulatory frameworks to maximise the benefits to poorer groups. There is also praise for the Private Infrastructure Development Group, established by DfID to help stimulate investments from donors.
But the MPs were troubled by DfID’s approach to multilateral funding on infrastructure. In 2009-10, DfID spent £929.5m on infrastructure, channelling almost half of that through multilateral institutions. The committee said it found the government’s response to its questions about monitoring multilateral projects using UK taxpayer money unsatisfactory.
“We believe that assessing the comparative cost of infrastructure projects financed by the various multilaterals should be an ongoing process for DfID. We ask DfID to look at how it could undertake a more systematic approach to assessing the value for money provided by different multilaterals for the infrastructure projects they finance,” the report said.
MPs expressed particular concern at funding for the African Development Bank, pointing out that DfID’s multilateral aid review raised questions about the bank regarding delays, lack of poverty focus and the need to improve quality of staffing in fragile states. DfID, the report said, should explain the safeguards it uses for its infrastructure spending through the AfDB. DfID is the largest donor to the AfDB’s latest replenishment (2011-13), providing £567m – 65% of that will be spent on infrastructure.
Another concern for MPs was the failure to develop local jobs and training through infrastructure projects, partly due to rigid rules used by multilateral development banks (MDBs).
“Sometimes developing country government procurement processes may be inefficient and corrupt,” the report said, “but they will only improve by being offered the chance to reform. We recommend that DfID use its leverage at the World Bank and the other MDBs to ensure that they build capacity within developing country government procurement processes, for example by specifying in large infrastructure projects funded by MDBs a certain level of local procurement, or the use of, or training of, local professionals.”
On corruption, which plagues infrastructure construction, the report noted DfID’s success in helping to establish the construction sector transparency initiative (CoST), which has proved effective and is to be transferred to the World Bank. It recommended that DfID continue to provide the funding and staff time to ensure that CoST can build on the successes of its pilot phase.
MPs expressed surprised that DfID did not do more to trumpet its successes in infrastructure. “DfID can be proud of much of the work it does to provide infrastructure, but it is strangely silent about this in its key strategic documents such as its business plan,” said Malcolm Bruce, the committee chairman.
The report recommended that DfID publishes a departmental strategy on infrastructure. MPs said this would help it to clearly convey its rationale and priorities within the sector. It would also send a message to the multilateral institutions that DfID funding is directed to the department’s key priorities within the sector, including the need to build local capacity, implement road safety measures, and ensure the use of technologies appropriate to the needs of developing countries.
The Commission for Africa, set up by Tony Blair in 2004, recommended an investment of $20bn a year on infrastructure, $10bn of which should come from donors – but donor contribution is falling well short of that figure. Sub-Saharan Africa urgently needs improved cross-border and regional infrastructure. Shipping a 20ft container from Durban in South Africa to Lusaka in Zambia costs about $8,000 and takes 10 to 15 days. To ship the same container from Japan to Durban costs just $1,500. The Democratic Republic of the Congo has only 2,800km or paved roads, even though it is larger than western Europe. The UK has 394,401km by comparison.
A DfID official said: “The UK recently reviewed all the multilateral agencies we work with to focus our efforts on those who deliver the greatest impact on the ground. Making sure local people benefit from big projects is an important part of this. The coalition government has a zero-tolerance approach to corruption and has tough safeguards in place to protect all aid spending. Our work to build roads, water supplies and other vital infrastructure will benefit millions of poor people and boost their economy.”