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.
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.