Press Release

From the Department for International Development

11 December 2000

Untie all development assistance to make it more effective, says Short

In today’s White Paper Clare Short, the Secretary of State for International Development, announced that from 1 April 2001 UK development assistance will be fully untied.

"There is clear evidence that untied aid is more efficient and can be used to support what countries need rather than a donor driven agenda," said Clare Short, "our goal is that all development assistance should be untied.

"After years of painfully slow progress towards agreeing untying on a multilateral basis, we have concluded that unilateral action by the UK is the best way to keep up the pressure on others."

Ms Short explained that the change, which brings development assistance into line with all other government procurement, will increase the effectiveness of aid because:

untying aid means better value for money - tied aid is around 25 per cent less effective than untied aid.

untying aid increases impact - tied aid can lead to inefficiency with the proliferation of incompatible technology and administrative systems in developing countries, which is especially damaging in areas such as health care.

untying aid ends mixed motives and protectionism - untying makes it absolutely clear that poverty elimination is the sole objective of aid.

Approximately two thirds of DFID’s development assistance is already untied and the UK has been leading international efforts for all donors to untie their assistance. The decision to move unilaterally to untie the remaining third was taken in the light of continuing failure to reach agreement across all donors. But the White Paper also makes clear that the UK will press vigorously for multilateral untying both in the OECD and the European.

"British industry has nothing to fear from aid untying," said Clare Short. "DFID will continue to award consultancy contracts on the basis of quality and cost rather than price alone. UK consultants are consistently successful at winning contracts from the fully untied funds of international organisations such as the World Bank and Asian Development Bank.

"The White Paper emphasises the key role of the private sector in development. We will continue to work with business to maximise its contribution to eliminating poverty."

In a series of other measures designed to strengthen development assistance, the White Paper also commits the UK to:

increasing development assistance as a proportion of GNP to 0.33 per cent in 2003/04, up from 0.26 per cent in 1997;

introducing a new International Development Bill to replace to the outdated 1980 Overseas Development and Co-operation Act;

providing support for at least 12 countries by 2004 to develop and implement poverty reduction strategies

harmonising and simplifying procedures for reducing the burden imposed on developing countries

strengthening procurement capacities in developing countries

driving forward reform of European Commission assistance

Notes to Editors

Untying aid has been a stated common goal of donor countries for many years. G8 leaders have called for rapid change at their last three summits. But progress has been slow. The UK is committed to working for the successful completion of the OECD agreement to untie financial assistance to the least developed countries from 1 January 2002, and to the EU wide untying of member states bilateral aid.

This initiative builds on Government progress on untying. The tied proportion of UK commitments of bilateral aid (excluding Technical Co-operation) was 8½% in 1999; down from 28% in 1997. A higher proportion of technical co-operation (which accounted for about 18% of public expenditure on aid in 1999-2000) is tied.

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