1. Aid is a broad term and SID reports on two different aggregations of development assistance:
2. There are three main differences between UK GPEX/ DFID Programme and UK ODA data:
3. It is possible to reconcile GPEX and ODA and also to present ODA in financial years. The following table shows a presentation of ODA in financial years.
4. If readers are interested in making international comparisons, UK ODA figures which follow international reporting practices should be used.
5. An important United Nations target was established in 1970 which states that each donor should aim to spend 0.7 per cent of its gross national income (GNI) as ODA. The UK government is committed to delivering this target by 2013. Progress against this target and more detail on UK ODA can be found in Tables 7 and 8.
6. Readers interested in wider aid spend (not just ODA) should look at the DFID or GPEX figures (or figures reported to the DAC on ODA, OOF and Private Flows).
7. Those interested in DFID in particular will want to focus on the DFID programme data.
8. The classification of aid as bilateral or multilateral is based on definitions laid down by the DAC. On the whole bilateral assistance is provided to partner countries while multilateral assistance is provided as core contributions to international organisations. While much of DFID’s expenditure is clearly identifiable as bilateral or multilateral in nature, there are some anomalies.
9. Funds can only be classified as multilateral if they are channelled through an organisation classed as multilateral on Annex 2 of the DAC Statistical Reporting Directives which identifies all multilateral organisations. This Annex is updated annually based on members’ nominations; organisations must be engaged in development work to be included on the list.
10. Aid may be classed as bilateral while a case is being made for the recipient institution to be recognised by the DAC as a multilateral organisation. Once the DAC has recognised the multilateral organisation the aid may be retrospectively re-classified as multilateral.
11. While core funding to multilateral organisations is always classified as multilateral expenditure, additional funding channelled through multilaterals where the recipient country/region, sector, theme or individual project is known is classified as bilateral expenditure
12. DFID’s Bilateral Programme can be further disaggregated between Country Programme and International/ Policy Programme. DFID’s total programme is allocated to budget lines for spending divisions. Country Programmes are divisions within DFID that work in specific countries or regions e.g. East & Central Africa Division. Whereas, International/ Policy Divisions are DFID divisions which work on policy areas or with international organisations; which benefit many different countries.
13. The chart below shows that the majority of DFID bilateral assistance in 2009/10 was delivered by Country Programmes (£2,674m or 68%). However, about a quarter of DFID bilateral assistance was funded through the budgets of International/ Policy Programmes. It is not possible to allocate the majority of the International/ Policy Programmes expenditure to a single benefiting country or region. There are a few reasons for this:
14. DFID’s classifications of bilateral aid types are consistent with DAC reporting standards and are detailed below.
15. Financial Aid – Poverty Reduction Budget Support (PRBS) – Funds provided to developing countries for them to spend in support of a government policy and their expenditure programmes whose long-term objective is to reduce poverty; funds are spent using the overseas governments’ own financial management, procurement and accountability systems to increase ownership and long term sustainability. PRBS can take the form of a general contribution to the overall budget - general budget support - or support with a more restricted focus which is earmarked for a specific sector - sector budget support.
16. Other Financial Aid – Funding of projects and programmes such as Sector Wide Programmes not classified as PRBS. Financial aid in its broader sense covers all bilateral aid expenditure other than technical cooperation and administrative costs but in SID we separately categorise this further.
17. Technical Cooperation - Activities designed to enhance the knowledge, intellectual skills, technical expertise or the productive capability of people in recipient countries. It also covers funding of services which contribute to the design or implementation of development projects and programmes. This assistance is mainly delivered through research and development, the use of consultants, training (generally overseas partners visiting the UK or elsewhere for a training programme) and employment of ‘other Personnel’ (non-DFID experts on fixed term contracts). This latter category is becoming less significant over time as existing contracted staff reach the end of their assignments.
18. Humanitarian Assistance - Provides food aid and other humanitarian assistance including shelter, medical care and advice in emergency situations and their aftermath. Most of the work of the Conflict Prevention Pool is also included here.
19. DFID Debt Relief - This includes sums for debt relief on old DFID aid loans and cancellation of debt under the Commonwealth Debt Initiative (CDI). The non-CDI DFID debt relief is reported on the basis of the ‘benefit to the recipient country’. This means that figures shown represent the money available to the country in the year in question that would otherwise have been spent on debt servicing. The CDI debt cancellation is reported on a ‘lump sum’ basis where all outstanding amounts on a loan are shown at the time the agreement to cancel is made.
20. Bilateral Aid Delivered Through a Multilateral Organisation – This category covers funding that is channelled through a multilateral organisation and DFID has control over the country, sector or theme that the funds will be spent on. For example, where a DFID country office transfers money to a multilateral organisation for a particular piece of work in that country. This also includes aid delivered through multi donor funds such as the CERF.
21. Bilateral Aid Delivered Through a Non-Governmental Organisation (NGO) – This category covers support to the international development work of UK and international not for profit organisations such as NGOs or Civil Society Organisations. This covers Partnership Programme Arrangements (PPAs), the Civil Society Challenge Fund and other grants.
22. Other Bilateral Aid – This category includes any aid not elsewhere classified such as funding to other donors for shared development purposes. More information on all of the above aid types is provided in the Glossary.
23. When DFID or other UK government departments provide core contributions in support of multilateral organisations, it is not possible to directly track the funding to the country or sector level. However, to provide a further indication of the destination and sector of UK aid, DFID uses the overall proportions of ODA reported by the relevant agencies to impute a UK contribution. 24. DFID uses the breakdown of ODA reported by each multilateral organisation to the DAC to estimate what proportion of UK core contributions are spent in each country and sector. Where a multilateral organisation does not report its development assistance to the DAC but the multilateral is only mandated to work in a particular country, region or sector, DFID allocates 100% of its core contributions to the relevant country, region or sector. If a multilateral organisation does not report to the DAC but works in multiple sectors and/or countries then 100% of DFID’s core contributions are allocated to the category ‘non-sector allocable’.
25. Tables 13, 14 and 20 in this publication show estimates for the imputed multilateral share of financial year GPEX broken down by region, country or sector. These are based on the calendar year figures reported to the DAC by each multilateral organisation.
26. Every bilateral DFID project is marked with up to eight ‘input sector codes’ that identify where funding will be spent. DFID’s input sector codes are based on the OECD DAC Purpose Codes which as used for reporting ODA. There are around 200 DFID input sector codes to choose from, each of which comes under one of ten broad sectors:
27. For each sector code selected, budget holders indicate what proportion of the total budget is expected to be spent in or on behalf of that sector. Prior to October 2002 just one dominant sector was identified which limits comparison between the data in this report and older data.
28. Tables 20 and 21 present breakdowns of bilateral GPEX by broad sector and type of aid or by region. More detailed breakdowns by country and sector are available as excel tables on the DFID website.
29. A large amount of DFID funding is delivered in the form of Poverty Reduction Budget Support (PRBS) both General Budget Support (GBS) and Sector Budget Support (SBS). In PRBS, funds are provided directly to recipient governments and pooled with their own funds. Partner governments then use their own allocation, execution, accounting and reporting systems in spending the aid to support their development programmes. Understanding how the UK's money is used therefore means understanding the way in which the recipient government allocates and uses all its funds. In managing PRBS, DFID country offices monitor this process closely.
30. PRBS cannot be separately identified from partner government funds and while Sector Budget Support, by its very nature, is easily allocable to sectors, General Budget Support cannot be easily broken down. For statistical purposes, DFID has developed a standardised methodology to notionally allocate General Budget Support to sectors in the same proportions as the recipient government allocates total resources to ODA eligible activity. This means, for example, if a government intends to spend 25 per cent of its budget on education, 25 per cent of GBS provided would be attributed to education. This method allows GBS to be allocated to eight broad sectors.
31. It is important to note that this methodology does not attempt to say where DFID funding actually goes, but where it would go if partner governments allocated it in proportion to their own budget. The methodology also does not attempt to measure, or claim to measure, marginal changes in governments’ expenditure resulting from aid flows.
32. DFID contributes to some bilateral multi-donor pooled funds which have a clear sectoral purpose and are managed by a multilateral agency that disburses pooled funds to recipient countries (e.g. the Education for All Fast Track Initiative or the CERF). This means that when DFID contributes to these funds we do not specify a recipient country and it is not possible to directly track which countries receives DFID’s contribution.
33. However, it is possible to notionally allocate DFID’s contribution based on the known disbursement of the fund. In this edition of SID the CERF has been notionally allocated for the first time, this has been done by allocating a proportion of DFID’s contribution to a recipient country based on the proportion of the fund that has actually been disbursed to that country. This was based on disbursements from CERF during 2009/10. DFID contributed £59 million to the CERF in 2009/10, of which £39 million (66%) has been allocated to Africa using this method. DFID also notionally allocates the Education Fast Track Initiative in the same way.
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