WIREDGOV

Directly providing international aid to the most poor and vulnerable people is showing clear and immediate benefits, according to the National Audit Office.

The Department for International Development is successfully using such transfers to reach particularly impoverished populations in challenging places. The transfers – usually in the form of cash payments, food transfers or agricultural assets, such as livestock – typically reach their recipients more quickly and transparently than more widely prevalent ways of delivering aid. Today’s report points out that transfer programmes are demonstrating important characteristics of good value for money but the Department remains under-informed on some key elements of cost-effectiveness. Therefore, the Department has not optimised value for money.

The transfer of aid to poor households has resulted in clear short-term benefits, for example in relation to improved diet or investment. Of the programmes we examined five out of seven stated objectives showed positive change, the other two were mixed. There is also some evidence for longer-term effects in the form of improved livelihoods, health and education, where measured and where programmes have been running for some time. Where evidence is available, the NAO found that the Department successfully targets transfers on those most in need. 

The Department does not have sufficient analysis of costs of transfer programmes to know whether what it is spending represents the best possible value for money and is under-informed about efficiency. Electronic transfers can be a generally more efficient and reliable way of reaching more isolated people. They are not yet widely used by the Department, although there are plans to extend their use. Nor does the Department consistently compare the cost-effectiveness of transfers with that of other design options. It also does not know whether the amount it transfers is set at the optimal level because its programmes are generally not analysed for different payment levels to assess which might lead to the best results relative to the costs.

Amyas Morse, head of the National Audit Office, said today:

"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."

Notes for Editors

1. Direct transfers can include cash, food and livestock, and use shorter and more transparent delivery chains than other aid approaches. Transfers place cash, or the means to generate income, directly in the hands of the most poor, whereas other more prevalent development mechanisms are aimed at strengthening public services such as health and education.

2. The Department’s principal objectives for the programmes we examined related to increased access to food, water and sanitation, and assets (livestock), as well as the number of households receiving benefits and levels of household spending. Mixed results related to enrolment of children in school and the social practices of households.

3. In 2010-11, the Department spent some £192 million on social protection, which includes transfer programmes. This was around 4.5 per cent of its country-to-country aid spend. The Department currently has major transfer programmes in nine countries.

4. Press notices and reports are available from the date of publication on the NAO website, which is at http://www.nao.org.uk/. Hard copies can be obtained from The Stationery Office on 0845 702 3474.

5. The Comptroller and Auditor General, Amyas Morse, is the head of the National Audit Office which employs some 880 staff. He and the NAO are totally independent of Government.  He certifies the accounts of all Government departments and a wide range of other public sector bodies; and he has statutory authority to report to Parliament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources.

Press Notice 62/11

All enquiries to Sarah Farndale, NAO Press Office: Tel: 020 7798 5350

Mobile: 07985 274421

• Full report - DFID: Transferring cash and assets to the poor