Foreign aid risks making Third World countries dependent on handouts, official review finds

Foreign aid risks making Third World countries dependent on handouts by prioritising “short-term and immediate results” instead of “lasting change”, an official review warns.

The Independent Commission for Aid Impact warns: “The Department for International Development’s results system is not currently oriented towards measuring or reporting on long-term transformative change – that is, the contribution of UK aid to catalysing wider development processes, such as enhancing the ability of its partner countries to finance and lead their own development.

“DFID’s commitment to promoting structural economic change is an example of a complex objective that is not measured through the current results system. We also find that DFID’s commitments on development effectiveness – such as providing aid in ways that support local capacity, accountability and leadership – are not reflected in its value for money approach.”

It found targets were frequently revised and that there could be pressures for optimistic scoring of programmes. However, the commission did note the department had been diligent in efforts to cut waste, detect fraud, and improve efficiency and this work was improving the return on the UK investment in aid.

Tina Fahm, the ICAI commissioner who led the review, said: “The Department for International Development rightly places a high importance on ensuring it delivers value for money in everything it does.

“In recent years it has come a long way on embedding value for money, and this is undoubtedly making the UK’s aid spending go further and reach more people. However, there are still important areas for improvement to ensure the department delivers the maximum value for UK taxpayers and makes the biggest difference possible to the lives of those it helps.

“For example, by adding equity considerations into its value for money assessments, DFID acknowledges that reaching marginalised groups can be more costly. We are yet to see evidence, however, that DFID has considered how to weight the needs of different beneficiary groups in its decision-making on value for money.”

The review made five recommendations for DFID to improve its approach to value for money. They included introducing and reporting on value for money objectives at the country portfolio level and experimenting with different ways of delivering results more cost-effectively.

The commission also called for principles to be clearer and reflected in value for money frameworks if needed and to be more explicit about assumptions underlying the economic case.

The commission finally recommended that an assessment of whether programmes were likely to achieve their intended outcomes be produced in annual reviews.