Winners and losers in DfID's new Multilateral Aid Review

The Department for International Development has released its first Multilateral Development Review since 2011, outlining priorities for future multilateral spending and identifying strengths and weaknesses among its 37 multilateral partners. Multilateral organizations The United Nations Educational, Scientific and Cultural Organization, the Commonwealth Secretariat and the Caribbean Development Bank took a beating in the spending review, while health-focused organizations including the Global Fund to Fight Aids, Tuberculosis and Malaria and Gavi, the Vaccine Alliance drew praise from the agency, which currently spends 40 percent of its 14 billion pound aid budget through multilateral organizations. Going forward, DfID will expand the use of performance-based payment schemes across its multilateral delivery partners. According to the report, paying for results is meant to incentivize better collaboration among U.N. agencies, which it said suffer from in-fighting and overlap. “From now on, up to 30 percent of DFID’s core funding to U.N. humanitarian and development agencies will be set aside and allocated according to performance. Funds will only be disbursed to agencies that meet pre-agreed performance targets,” the review sets out. To facilitate better collaboration between agencies and prevent overlapping activities, some performance agreements will be joint and will bind organizations together on cross-cutting issues such as nutrition. “This will be challenging,” Peter Young, director of Adam Smith International, told Devex, “as many U.N. agencies report activities rather than results.” More broadly, the review chastises all DfID multilateral partners for “too much inefficiency, especially in back-office functions.” “We are clear that organisations tasked with assisting some of the world’s most vulnerable people must bear down on their own costs. This includes stricter control of daily allowances and travel expenses but also the pay levels of senior staff and boards,” the review says. Despite these critiques, a DfID spokesperson told Devex that no multilateral organizations were being cut off from U.K. aid, as happened with the 2011 MAR in which four organizations lost their funding. For this reason, the spokesperson said, the agency believes “the review is very forward-looking.” The exception is the Global Facility for Disaster Reduction and Recovery. DfID “did not renew” its funding in the most recent replenishment period due to poor performance, the spokesperson told Devex. In the red DfID singled out three multilaterals for poor performance: UNESCO, the Commonwealth Secretariat and the Caribbean Development Bank. All three organizations received similar warnings in the 2011 review, citing consistent shortcomings in transparency and organizational capacity to implement quickly and efficiently. All three organizations have been issued performance agreements with benchmarks based on observed weaknesses. A spokesperson for the Commonwealth Secretariat, which appointed its new Secretary-General Patricia Scotland in April 2016, told Devex in an email that the review “was undertaken before Secretary-General Patricia Scotland took office. She was unanimously elected to the post and given an unequivocal mandate to reform the Commonwealth Secretariat,” he said. “The Secretary-General acknowledges the challenges facing an organization which is not your typical development agency and is determined to ensure it continues to serve all 52 countries, many of which are small states and vulnerable, and its more than two billion citizens,” he said. Across its multilateral delivery partners, DfID called on development finance institutions such as the World Bank to develop better indicators to regularly report on the amount of private finance they catalyze, on their support to improve “economic productivity (particularly in the nonagricultural economy), and on their impact on jobs.” DfID said it would press the World Bank in particular to develop a “monitorable and quantified plan to significantly shift the share of lending that goes from its non-concessional lending arm from high income and upper middle income countries down to lower middle income countries.” The agency also took a stronger stand on the Sustainable Development Goals, also called the Global Goals, than in its recently published Civil Society Partnership Review. It pointed to a need for reduced overlap, particularly in the global health sector. “Globally, progress on nutrition has lagged because of insufficient coordination across the health, education and agricultural sectors. This urgently needs to be addressed in order to achieve the Global Goals,” it reads. Are all DfID partners equal? While the development sector was relieved to see yesterday’s tranche of reviews, as well as the Civil Society Partnership Review last month — all were delayed for over a year — some practitioners told Devex that the publication of these documents highlights how not all DfID tools and partners are subject to the same scrutiny, at least publicly. “The focus on transparency and value for money is not at all surprising and we support that,” Kathleen Spencer Chapman, head of policy and public affairs at Bond, told Devex. “But I think it’s really important that DfID is making sure it’s applying those principles to all the instruments and partners it works through.” Chapman pointed specifically to the investments DfID makes through its private sector instruments, such as the CDC Group plc, DfID’s private investment arm, which came under fire last week for poor transparency and accountability. Still, the new measures applied to DfID’s multilateral partners represent a step in the right direction, said Young of ASI, even if it’s yet to be seen how they’ll be carried out. “New standards on financial transparency will also be problematic for the UN agencies, as they are not used to being audited,” he told Devex. “It will be interesting to see the actual progress that DFID makes in holding these organisations more firmly to account.” For more U.K. news, views and analysis visit the Future of DfID series page, follow @devex on Twitter and tweet using the hashtag #FutureofDfID.