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9 November 2011 | Angeline Albert
The Department for International Development's (DfID) procurement function must help the organisation get a grip on its direct spending of cash and other assets on the poor, according to the National Audit Office (NAO).
The NAO’s report Transferring cash and assets to the poor, published today, describes DfID’s inefficient use of direct transfers of international aid. These usually come in the form of cash payments, food or livestock and are used to reach people more quickly than other methods of aid.
The NAO said such transfers require the procurement function to ensure the quality of management information systems, including performance metrics, to help DfID analyse its costs efficiently. It said: “DfID does not have sufficient analysis of costs of transfer programmes to know whether what it is spending represents the best possible value for money and is under-informed about efficiency.”
It recommended the purchase of IT systems to facilitate the use of more electronic payments to reduce hidden transaction costs, improve financial control and reduce risks of fraud.
A total of £634 million, the lifetime-spend on eight programmes for 2004-20 in Bangladesh, Ethiopia, Kenya and Zambia, were examined by the NAO. It said DfID should conduct comparative cost-benefit analysis between transfers and other programme options to support stronger business cases. It also recommended a more consistent approach to management information systems, especially metrics used to assess payment.
NAO head Amyas Morse said today: “The transfers show clear immediate benefits including reduced hunger and raised incomes. DfID must now get a firmer grip on the efficiency of its chosen transfer approaches.”
In October, DfID produced guidelines for country teams on measuring and maximising value for money in cash transfer programmes.
Andrew Mitchell, secretary of state for international development, said Britain has pioneered the use of direct transfers. “It is good to see that the NAO confirms that our programmes are helping the poorest people in some of the hardest places to reach,” he added. He would not comment on the NAO’s recommendations to improve the transfer system.
DfID is expected to answer questions about the report at a Committee of Public Accounts hearing next month.