Sections:
Statistics on International Development 2006
Section 4
What is the purpose of UK expenditure on International Development?
1. This section considers the issue of what aid is being spent on. It is important to be aware that demonstrating the exact areas on which aid is being spent is not a simple and exact exercise and a certain amount of judgement is involved. Increasingly more projects are multi-dimensional and address interrelated policy areas, as well as more innovative types of aid being introduced. This makes attributing expenditure to specific topics more difficult.
2. DFID is increasingly moving towards larger and longer term programmes including a greater use 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 which 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. For future statistical reporting purposes, DFID is developing a standardised methodology for attributing General Budget Support (GBS) to sectors in the same proportions as the recipient government spends total resources. For example, if a government spent 25 per cent of it's budget on education, 25 per cent of GBS provided would be attributed to education.
3. Two systems in operation in DFID attempt to gather information on the purpose of bilateral aid: Sector codes (which also apply to GPEX), and the Policy Information Marker System (PIMS). Depending on the nature of particular questions, it might be more appropriate to use data from one or other system.1 The types of question best addressed by each approach are considered at the end of this section.
Broad Sector Codes
4. Every bilateral project or programme that comes within the umbrella of GPEX, is marked with ‘input sector codes’ that identify where funding will be spent. There are eight broad sectors:
- Economic (including transport, communications, construction and manufacturing)
- Education (including teacher training and development awareness)
- Health (including communicable disease control and nutrition)
- Governance (including international influencing, statistics and local government reform)
- Social (including human rights, shelter and housing and water supply)
- Humanitarian Assistance (including emergency food aid and de-mining)
- Rural Livelihoods (including agriculture and aquaculture)
- Environment (including biodiversity and climate change)
5. Within the broad sectors there are a range of more detailed codes. Since October 2002, up to 6 sector codes can be specified for each project or programme (including PRBS and debt relief). For each code selected, budget holders indicate what proportion of the total commitment is expected to be spent in or on behalf of that sector.2 Prior to October 2002 just one dominant sector was identified which limits comparison between the latest three years and older data.
6. Figure 11 shows the split of DFID’s bilateral programme between sectors for 2005/06. It can be seen that over a quarter of spend was classified under the economic sector code and that health, humanitarian assistance and governance received the next largest amounts. As the DFID bilateral programme has grown over the last two years, so spend in most sectors has increased (see Figure 12).
 |
 |
7. Table 18
(25 kb) shows sector breakdowns of DFID and GPEX
bilateral aid by aid type. It can be seen that for GBS, the economic sector is
reported to be a key focus. This may in part be due to the difficulties of
coding this type of expenditure and reflect the fact that GBS is intended to
facilitate the establishment and maintenance of fiscal discipline. In contrast
SBS is mainly focused on health and education sectors. Technical
cooperation is particularly likely to be focused on the health, economic and
governance sectors. A sector breakdown of DFID’s bilateral aid by region is
given in Table 19(44 kb).
Policy Information Marker System (PIMS)
8. The policy information marker system (PIMS) is used within DFID to show the extent to which development activities target specific policy areas – in particular those focused on different MDGs. The PIMS system has been revised over the years to reflect changes in development focus and reporting needs. It currently includes 13 markers, which map onto the MDGs.
9. All bilateral spending commitments over £100,000 are required to be marked
under the PIMS system3 . By value, this means that over 90 per cent of DFID’s expenditure
is coded, although by number only around half of all projects are included.4
Debt relief is excluded, and while PRBS is PIMS marked, it has been excluded
from Table 20(47 kb) due to the new approach under investigation to allocate PRBS according
to recipient country budgets.
10. While it is a requirement to have at least one PIMS marker, there is no upper limit on the number allowed and because DFID policy areas are mutually supportive and overlapping, most bilateral activities contribute to, and are marked against two or more PIMS markers.
11. The PIMS system is designed to show whether a particular policy area is a principal target for the project/ programme, in which case a ‘principal’ marker should be applied or whether it is an important objective, but not a primary reason for undertaking the activity – in which case a ‘significant’ marker should be used. Projects can have more than one principal marker.
12. Scoring against PIMS does not involve attributing spend proportionately
to different markers where there are more than one. As a result, in analysis the
total value of expenditure on any project or programme in the year in question
is counted against each of the markers allocated to it. This means that there
would be double counting if data for different PIMS markers were added together.
SID does not aggregate spending against PIMS markers (except under MDG headings
where we avoid double counting) and Table 20(47 kb) includes a footnote warning against
adding markers together.
13. Figure 13 shows that the PIMS marker with greatest DFID bilateral expenditure marked against it in 2005/06 was ‘good governance’, followed by ‘the elimination of extreme poverty and hunger’ and ‘human rights and empowerment'. The markers ‘reducing child mortality’ and ‘promote gender equality and empower women’ were next in line. It is interesting to note that some markers like the ones for poverty/hunger and education are more likely to have a principal marker, while others such as the gender equality and human rights markers are more likely to be awarded as significant. This is what would be expected given the mainstreaming agendas which apply to gender, HIV/AIDS and the environment.
 |
14. Table 20(47 kb) is the table on which Figure 12 is based and shows how DFID’s
eligible expenditure is marked against the full range of PIMS marks and gives a
regional breakdown of estimated allocations under PIMS.
When to use Sector Codes or PIMS data
15. Sector codes should be used to address questions such as what proportion
of DFID’s bilateral programme is spent on health? (the percentage should be
calculated on the basis of aid that can be allocated to sectors which is shown
in Tables 18(25 kb) and
19(44 kb). Sector data are also most appropriate if a UK perspective
is required since data are available for total GPEX.
16. PIMS markers should be used for questions such as to what extent is DFID targeting work on a particular policy area. In answering the question, the principal markers which show direct targeting should be reported separately from the significant markers which show a wider reach of work in the area concerned. PIMS eligible spend should be used as the baseline for any calculations.