Teach a man to fish …

I am full of admiration for Justin at Chicken Yoghurt – he writes brilliantly, and is full of passion about all the right things.  But I do want to challenge his criticism of the use of consultants by DFID before it enters into the blogosphere as an accepted meme.

I know what you are thinking – in the immortal words of Mandy Rice Davies – "well he would say that, wouldn’t he?".  Yes and no: I do have some criticisms of DFID’s use of consultants, but the issue is more nuanced than Justin suggests.

Supporting international development is about more than merely transferring resources. One of the things we can do is "transfer knowledge" – for example, by providing specialist expertise which is not available in the developing country.  In the words of the famous cliche: "Give a man a fish, you feed him for a day. Teach him how to fish, you feed him for a lifetime."  Many people who are sceptical about the value of aid in general are more ready to support the use of development assistance for skills transfer, and to support building institutions and help implement reform programmes that will benefit the recipient country in the long run.

And that is, for the most part, what consultants employed by DFID do.  They go to developing countries and advise on everything from the best type of tarmac to use on a road to the IT system needed for the administration of courts. They develop training materials for teachers, or design supply chain logistics to get vaccines to remote rural areas.  They advise Governments on how to create an environment for small businesses, priorities for trade liberalistion, improvements in tax administration, how to set up independent electoral systems, or how to train farmers to use fertilizers and new seeds.

Now DFID could employ an army of civil servants to do all this.  But it makes more sense to use consultants.  Many of these are specialists in their field.  Many have themselves been successful in business or other walks of life, and now choose to spend some or all of their time transferring their expertise to developing countries.   Demand for these skills fluctuates, according to priorities in developing countries, and depending on the latest trend in development thinking.   As I pointed out in my recent paper, in the 1960s there were about 16,000 British staff working on contract to developing countries, receiving a salary supplement from the Overseas Development Ministry. By 1990, this had been reduced to almost none.  Those roles were instead being filled by consultants.

I expect there are some people who take the view that employing staff in the public sector is always better than using private sector contractors.  Civil servants do not look quite so cheap when you take into account the expectation of job security, a public sector pension, and all the costs of recruitment, training, sickness, holidays, maternity and paternity leave, and administrative overheads – all of which are bundled together in the price we pay for consultants. Some would prefer to use public employees for ideological reasons.  I would prefer to maintain the flexibility to use scarce aid resources as efficiently as possible – buying in just the right mix of skills that are needed in a particular place at a specific time.

Justin says:

We have know way of knowing if £270m of our money has been spent in any way efficiently.

That just isn’t true.  DFID has an extensive system for tracking how money has been spent, and for appraising the individual impact of each aid project and programme.  It has an independent evaluation unit, which analyses the effectiveness of DFID’s approach and makes recommendations for improvements in the future.  And it has both internal audit and external audit and value for money analysis by the NAO and the Public Accounts Committee.   But it makes sense to analyse the cost effectiveness of each project and programme, including all the resources used, not to try to measure the impact of the use of computers, or secretaries, or consultants across the whole of the organisation. 

Chris is right when he remarks in the comments at Chicken Yoghurt that the public sector rules do often lead to perverse incentives.  For example, the current limit on headcount in civil service departments recreates an incentive to contract out activities that could be done more cheaply internally – whereas a limit on "running costs" would prevent the bureaucracy from growing but would be neutral about whether it was more cost effective to use civil servants to perform those tasks or buy in the services needed.

I do not mean to imply that there is no room for improvement in the way that we provide technical assistance.  The UK still spends a relatively large share of total aid on technical assistance.  We should be better at considering whether we can use those resources to help developing countries develop and retain their own skills (for example, by providing incentives to offset the brain drain); and facilitate south-south learning.  We do not have good systems for appraising the skills of technical experts (by definition, they know more about their subject than we do).  We are not particularly good at training technical experts in the more general skills of communication and skills transfer, and we do not have good metrics to measure their performance.  This agenda was identified by the Berg Report back in 1981, and it still remains to implemented.

But while there is clearly room for improvement in the provision of technical assistance, that is quite different from the suggestion that all the money spent by DFID on consultants is wasted, or used to peddle privatisation.  Knowledge transfer is an important component of the support we can provide to developing countries, and it is entirely rational for DFID to make extensive use of consultants to deliver that goal.

9 thoughts on “Teach a man to fish …”

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  2. Tim

    I agree. I think we have a long way to go on improving the way we give technical assistance, and better evaluation is an essential component of any strategy.

    Owen

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  4. I’m not even sure that what Justin was responding to is the same thing as you’re talking about here. You seem to be talking about DFID sening private sector technical experts to developing countries, as a form of aid. The question that got Justin going was:

    … ask the Secretary of State for International Development what estimate he has made of the total expenditure saved in each of the last three years as a result of implementing recommendations by management consultancies within his Department.

    I suppose there might be expenditure saved from employing private sector technical experts as opposed to internal staff (which is what you’re talking about isn’t it Owen) but those savings can hardly be described as “a result of implementing recommendations by managment consultants” – or have I misread things?

    Owen replies: There were two questions, the first of which was “which five management consultancies received the highest value of contracts awarded by his Department in each of the last three years; and what the total value was of the contracts awarded to each.” That was where the £270m comes from. DFID does not spend £270m on management consultants providing advice on DFID.

  5. Yes, I saw that, but haven’t the two been conflated?. I meant that when Justin is complaining that DFID cannot even say whether it has got value for money, he is talking about managment consultants not technical experts. Hence my suggestion that he’s not responding to the same thing as you are talking about. In fact, he’s just put up a response on his blog to your rebuttal that illustrates this confusion.

  6. Justin, Paddy

    I think you are right, Paddy: there are two separate issues here that have been conflated and which can usefully be separated. The vast bulk of DFID spending on consultants (which Justin quotes as £270m) is “teach a man to fish” technical assistance. I don’t know how much of it is on DFID’s own management and systems (DFID does have that information) but I would wager the figure is very small.

    Justin has followed up with two questions:

    a. How can we know we are getting value for money from spending on consultants?

    b. Should we be using consultants to advise on privatisation at all – should services be delivered by the private sector?

    On the question of value for money: DFID does measure we are getting value for money for each activity, whether it is an aid program (eg supporting legal reform in Nigeria) or an internal reform (eg computerising expenses claims). But as I read Hilary Benn’s answer, it is not possible to separate out the specific contribution made by management consultants.

    Consider an example from the small minority of the spending which is on DFID’s own systems. DFID recently introduced a computerised human resource system that allows staff to update their own records (eg address, bank account details, etc) through the intranet – greatly reducing the need for central data entry. This will bring very substantial savings for the taxpayer – it pays for itself in less than a year. Consultants were hired to help design and implement the system, and they worked alongside DFID’s HR and IT staff. DFID does know how much the project as a whole cost, and how much it will save. But we do not know exactly how big the savings are as a result of the consultants. They were an essential component of a project that makes considerable savings in total, but it would be a total waste of time and money to try to separate out the savings attributable to consultants. That is why Hilary Benn says in the answer you quote: “DFID do not maintain central records of expenditure saved as a result of implementing recommendations from management consultants.”

    The second question, about the value of privatisation, is rather bigger than can be addressed here. A new book, edited by Birdsall and Nellis at the Center for Global Development, finds that privatisation has been good for the poor, but perhaps not as tranformational as its proponents might have expected. But for this discussion, I just want to point out that privatisation programs are complex and hard to get right (including ensuring that the interests of the poor and marginalized are properly reflected in the design) and that it is good that if a country embarks on a privatisation program, that they should have advice from experienced and expert advisers. Consultants do not, however, impose privatisation programs on countries that do not want to implement them.

    Owen

  7. There’s not a lot to argue with there, Owen. One point though, possibly getting slightly off the track, is where you say: “Consultants do not, however, impose privatisation programs on countries that do not want to implement them.”

    True enough, but the consultants act as agents for Western governments who, through the tools of aid programmes, are imposing privatisation.

    Owen replies: Justin – some donors are. I am pleased to say that the UK Government is moving away from this sort of conditionality. In the March 2005 policy document, the Government says:

    In this new approach, agreed benchmarks for measuring progress on the reduction of poverty, rather than policy conditions set by donors, will be the basis for both partners to be accountable to their citizens.

    The lesson of experience is that, even if you believe in a particular policy reform, conditionality is not an effective way to get it implemented.

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