By Nick Mann | 9 November 2011
The Department for International Development’s use of direct transfers of aid to people rather than to governments has had ‘clear immediate benefits’ but could be more efficient, the National Audit Office said today.
In their report, Transferring cash and assets to the poor, the auditors outlined the department’s increasing use of the direct transfer approach – which involves supplying cash, food and livestock directly to impoverished communities. They also noted its plans to use transfers in 16 countries by 2014, compared to nine currently.
In countries where transfer programmes were being used, the NAO found the aid had delivered ‘clear immediate benefits’, including a reduction in hunger and an increase in incomes. In some cases, it added, people had also stayed out of extreme poverty once their transfer aid had ended.
But the department was criticised for failing to consistently compare the use of transfer programmes to alternative ways of administering aid. Traditionally, funds have been aimed at strengthening public services such as education and health in the developing world.
The NAO also said that the department had ‘too weak a grip’ on how it could increase the effectiveness of its transfer programmes. In particular, it should consider spending more on administration to improve the targeting of aid.
‘A greater focus here could lead to further benefit for given expenditure and more efficient delivery,’ it said.
To address these issues, the department needed to develop a ‘clearer strategy’ on transfer programmes, the auditors said, as there was ‘considerable scope’ to use a standard approach. It should review existing examples to identify the transfer methods that work best. Then, it should challenge its teams in other countries to use these methods, the report added.
Commenting on the report’s conclusions, NAO head Amyas Morse said: ‘Direct transfers have been targeting aid at some of the most impoverished and vulnerable people in developing countries.
‘The transfers show clear immediate benefits including reduced hunger and raised incomes. The department must now get a firmer grip on the efficiency of its chosen transfer approaches.’
International Development Secretary Andrew Mitchell welcomed the NAO’s comments on the benefits of direct transfers and highlighted the UK’s ‘pioneering’ use of the approach.
‘I am pleased that the NAO recognises the clear and immediate benefits in the coalition government's successful use of direct transfers, getting financial and other resources directly into the hands of the poor people so they can make the investments needed to lift themselves out of poverty,’ he said.
‘The report's findings are clear that DFID-funded direct transfer programmes have led to significant increases in household assets in Bangladesh; reduced food insecurity in Ethiopia, and secured a 13% increase in food consumption among children in the programme in Kenya.
‘Britain has pioneered the use of direct transfers and 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.’
