Department for International Development Statistical Consultation
Detail of outcome
Background
DFID reports statistics on how much money has been spent on Official Development Assistance (ODA) by the UK government. ODA is the internationally agreed measure of aid spend. The ODA statistics include equity investments (shares in businesses) purchased by the UK’s Development Finance Institution, CDC.
A previous internal quality review recommended that DFID statisticians consider whether the UK’s approach is in line with the international rules and best practice in this area. There are many different interpretations of the DAC guidance on how equity investments from a Development Finance Institution (DFI) or other similar bilateral agencies should be recorded as ODA. This is in contrast to most other areas of ODA statistical reporting where the guidelines are clear and international practice is consistent.
DFID launched a public consultation on the arrangements for reporting this type of ODA on the 19th December 2014. The consultation closed on the 5 February 2015. The full consultation document is available from here. The consultation set out the findings from a review of the UK’s approach. It also asked users to provide feedback on 3 options for reporting this type of ODA in the future:
- continue to report the value of equity investments made by CDC as ODA
- from 2015 flows onwards, report the value of equity investments as Other Official Flows (OOF) rather than ODA
- from 2015 flows onwards, report only the capital flow from the UK government to CDC as ODA but continue to track outflows from CDC
The consultation paper assessed these options against 2 key criteria:
- the promotion of international comparability
- ability to reflect the true contribution of the UK’s development activity
It recommended that option 3 should be adopted. This option has the benefit of more effectively capturing the true contribution of DFID’s activity. However this approach also results in DFID moving away from the reporting approach of the majority of OECD DAC members with DFI’s. As set out in the consultation paper reporting practices differ amongst members, therefore international comparability is already reduced.
Summary of responses
DFID received 3 responses to the consultation. Responses were received from the CDC Group, the UK’s Development Finance Institution (DFI), from the Green Investment Bank plc (GIB), a UK Government owned bank which invests in green projects across the UK and from the Swiss State Secretariat for Economic Affairs. All three consultation responses were supportive of DFID adopting option 3 for future reporting.
CDC Group highlighted some additional concerns around the current approach to reporting. It stated that the current approach is ‘out of date’ with current practice by DFIs and other similar bilateral agencies to stimulate private sector investment, and that it ‘rewards failing investments over those that generate profits, equity investments over debt and structured deals with stable revenue streams over more risky, potentially high-growth ventures’.
The Swiss State Secretariat for Economic Affairs highlighted the importance of continued transparent reporting of the activity of DFI’s and the need for an agreed international definition of a DFI.
Next Steps
The analysis presented in the consultation paper favored option 3 over the other 2 options. The responses to the consultation also indicate a preference for option 3, and do not present any new evidence in favour of the other 2 options. In the light of these findings, DFID will report only the capital flow from the UK government to CDC as Official Development Assistance (ODA) from 2015 flows onwards (2016 reporting). We will continue to track outflows from CDC.
DFID will continue to work with members of the OECD DAC to clarify the ODA Directives which cover this area of reporting, as part of the ongoing work on ODA modernisation.
Prior to the release of the provisional ODA statistics for 2016 DFID will publish a short paper which sets out the impact of this change on the historic data series.
If you have any questions about this consultation then please get in touch with Sian Rasdale, Senior Statistics Adviser, email: statistics@dfid.gov.uk.
Original consultation
Consultation description
DFID reports statistics on how much money has been spent on Official Development Assistance (ODA) by the UK government. ODA is the internationally agreed measure of aid spend. The ODA statistics include equity investments (shares in businesses) purchased by the UK’s Development Finance Institution, CDC. CDC is an important part of DFID’s portfolio of interventions to promote private sector development. CDC invests in businesses in Africa and South Asia which would struggle to attract investment otherwise.
A previous internal quality review recommended that DFID statisticians consider whether the UK’s approach is in line with the international rules and best practice in this area. There are many different interpretations of how equity investments from a Development Finance Institution are recorded as ODA. This is in contrast to most other areas of ODA statistical reporting where the guidelines are clear and international practice is consistent.
This consultation sets out the results of the internal review. It also requests feedback on 3 options for reporting this type of ODA in the future