ADAM SMITH INTERNATIONAL
SUBMISSION FROM THE CEO, JALPA PATEL
1.1 Adam Smith International (ASI) is a global advisory company that works locally to transform lives by making economies stronger, societies more stable, and governments more effective. ASI has worked with multiple UK Government departments over the past three decades to deliver on their international development and foreign policy objectives around the world, and for the past decade we have been key a delivery partner to the UK Government in Pakistan on bilateral development and rule of law projects. It is for this reason that we are contributing to this review.
1.2 Since 2015, ASI has been an Employee Owned Trust, owned by its employees and established under model rules created by the UK Government to advance employee-ownership of British businesses.
1.3 In 2019 ASI was certified as a B Corporation, proving its credentials as a company that demonstrates a balance of profit and purpose by meeting the highest standards of social and environmental performance, transparency, and legal accountability.
2.1 The UK delivers important and impactful aid in Pakistan that delivers measurable development benefits. Our experience is that careful thinking goes into designing and delivering aid projects with clear, appropriate and ambitious aims.
2.2 The aims of projects and programmes within the overall aid programme are very clear but it is often less clear how they fit into an overarching Pakistan country aid strategy. As we work on behalf of the UK government – and especially as a British company – we see our capabilities as an extension of the UK’s reach in Pakistan. We would value any opportunities to better understand the UK’s strategic aims so that we can ensure that our resources and activities are always entirely focused on achieving them.
2.3 At a global level, the Secretary of State’s letter to the International Development Committee of November 2020 provides useful clarity and certainty over the UK’s policy priorities for aid. Additional understanding of the strategic aims that these priorities are intended to achieve would be helpful in making sure that we can dedicate ourselves to delivering them, as would more understanding of the UK’s specific regional and bilateral priorities.
2.4 Both of the above would benefit from regular departmental evaluation, and communication to internal and external stakeholders and delivery partners.
3.1 The government aims to align aid expenditure to the UK’s security and economic interests. Pakistan presents both opportunities and risks for the UK. There is a large Pakistani-origin diaspora population in the UK that facilitates strong commercial and cultural ties. There is a large domestic market that offers the potential for investment opportunity.
3.2 While much reduced from its peak, more extreme ideologies in some geographical and societal spaces still pose a threat. Khyber Pakhtunkhwa and Baluchistan border Afghanistan, in whose stability the UK has invested considerable resources. China has significant and significant economic and political influence in Pakistan. Russia has growing influence in the region. The Kashmir situation poses an ongoing threat to regional stability that would involve India, another close UK ally.
3.3 While we understand some of the UK’s interests in Pakistan, that understanding is largely derived from our own analysis of the context. More systematic communication of UK interests from the UK government might better enable us and other delivery partners to ensure that our resources can contribute to delivering them.
4.1 There is joined-up delivery, especially between projects and initiatives with overlapping technical focus. The FCDO mission is proactive in bringing together different delivery partners to exchange knowledge and coordinate activities. For example, the British High Commission’s rule of law team organised quarterly meetings between ASI and the UN agency that was contracted to work in the sector; established a WhatsApp group for partners to share information and ask questions; and ensured coordination between our work on domestic violence and that of NGOs working in the same space.
4.2 As highlighted in our responses to the previous two questions, greater understanding of the UK’s strategic aims might enable us to make a greater contribution to joining up delivery with strategy.
5.1 In those areas in which we work, UK aid spending is responsive to the priorities and commitments of the Government of Pakistan:
5.2 The Khyber Pakhtunkhwa Education Support Programme (KESP) contributes to Pakistan 2025 pillar I, “Developing Human and Social Capital”.
5.3 The Sustainable Energy and Economic Development (SEED) programme contributes to Pakistan 2025 pillar II, “Achieving Sustained, Inclusive and Indigenous and Inclusive Growth” and pillar V, “Private Sector and Entrepreneurship-led Growth”.
5.4 The Justice Sector Support Programme (JSSP) contributes to the 2014 National Action Plan objective of “Revamping and reforming the criminal justice system”.
5.5 All the programmes we deliver contribute to Pakistan 2025 vision pillar III, “Democratic Governance, Institutional Reform and Modernization of the Public Sector”. With their focus on measurable results, the programmes we deliver also contribute to the vision’s focus on “Implementation, implementation and implementation!”.
6.1 The programmes we deliver for the FCDO are explicitly designed and delivered to have measurable impact on the lives of Pakistani citizens, especially vulnerable groups. For example:
6.2 The outcome indicators for the Khyber Pakhtunkhwa Education Support Programme (KESP) are the percentage of out of school children, student attendance and improvement in grades.
6.3 The impact indicators for the Sustainable Energy and Economic Development (SEED) programme are increase in household income and the unemployment rate.
6.4 The output indicators for the Justice Sector Support Programme (JSSP) include improved investigation and prosecution of homicide and sexual violence crimes, police responsiveness to victims of domestic violence and released of eligible prisoners.
6.5 While all the programmes we deliver have ambitious and measurable aims, there are instances in which contract modalities focusing on payment by results risk a perverse incentive of reducing ambition for citizen-focused impact. We expand upon this in our responses to questions under the Delivery section of this inquiry’s terms of reference.
7.1 At a country level, the UK makes considerable efforts to coordinate its programmes with those of multilateral and other bilateral programmes.
7.2 Coordination between donors is challenging because programme design and procurement often takes years, the design processes of different donors are not aligned, and donors tend to hold their designs close to them. By the time donor programmes are ready for delivery it is often too late to do more than tinker with them.
7.3 For a truly coordinated approach between donors, efforts should start early in the design phase and be grounded in strategic alignment. The merger between DFID and the FCO and the intended delegation of authority to embassies offer opportunities in that regard.
9.1 NGOs are important for delivery of some elements of UK aid in Pakistan. They often have strong grassroots connections, community access and legitimacy. We are proactive in engaging with NGOs to form valuable partnerships, whether formal or informal. NGOs do, however, have limitations, including:
9.2 Low funding absorption rate. Local NGOs in Pakistan tend to be small organisations with a relatively low capacity to design, deliver and financially manage interventions. This means they are often able to deliver only small projects. It is often possible to mitigate this risk and achieve scale by asking larger and more experienced delivery partners, such as ASI, to undertake financial management and technical oversight of local NGOs.
9.3 Limited range of capabilities. Local and international NGOs often do not have the capabilities that are required to deliver in the technical areas that the UK wants to address. This is evident in their absence from procurement processes, especially outside emergency humanitarian work. NGOs are sometimes reluctant to work closely with host country governments, including that of Pakistan, so that they can maintain their important role as a check on the power and actions of the state.
9.4 Limited freedom to operate. In Pakistan it can be difficult for NGOs to operate because of security concerns of, and monitoring by, state agencies.
10.1 Private sector delivery partners fulfil an important role in the delivery of UK aid, around the work and in Pakistan. While we cannot offer a detailed account of the capabilities of all private delivery partners right across the sector, we believe the following advantages that ASI offers are likely to be somewhat representative:
10.2 Aid spent through private sector delivery partners is bilateral, which means it is more tightly linked to UK interests than that spend via multilaterals. In addition, the UK does not receive credit for aid spent through multilaterals – it is not recognised by beneficiaries or host governments as coming from the UK. On the other hand, bilateral UKAid branding (e.g. on schools and hospitals, training and vocational education institutions) is a soft power lever, helping to dispel anti-West propaganda by fundamentalist groups, especially among under-exposed communities.
10.3 Experience across time, sectors and geographies that has allowed us to develop individual and institutional knowledge to drive impact. That range of experience can be more difficult for diplomats, given the limitations on their postings and activities.
10.4 We have worked in Pakistan for over a decade, which has given us the opportunity to build relationships and nuanced understanding of the processes and the political economy of reform. We are able to support and track reform activities over time, from helping leaders to establish visions that satisfy their political priorities and HMG’s objectives in Pakistan, through to design and delivery of programmes, measurement of their success and transfer of successes across sectors and geographies.
10.5 We have worked across multiple sectors, in education, the environment, economic development and criminal justice and human rights. We have been able to draw on common threads of what works and understand where there is divergence. For example, we implemented a superficially similar ‘roadmap’ approach to criminal justice reform in Punjab as we previously had in education, but the way we went about it diverged significantly in response to structural and political economy differences in the sector.
10.6 We offer experience across all four of Pakistan’s main provinces, and at federal level. We have gained practical experience of the politics and culture (including the culture of the powerful bureaucracy) of different provinces. We have, for example, supported the Khyber Pakhtunkhwa government to introduce merit-based teacher recruitment despite major opposition from local politicians and the powerful teachers’ union, or eliminating the use of invasive tests for rape victims, and introducing an e-procurement programme in a province where procurement reform has been constantly delayed because of vested interests around procurements.
10.7 We are especially accustomed to ensuring the stability of interventions through the frequent turnover of senior bureaucrats that is a feature of the Pakistan civil service. For example, when the Secretary Prosecution for Punjab was transferred to the post of Secretary Education Khyber Pakhtunkhwa, we were able to transfer the relationship from one project to another.
10.8 We can attract some of the best people working in international development and bring in external experts. This allows us to deliver and adapt interventions that fold-in international best practice. For example, the criminal justice project that we deliver for FCDO has a UK ex-Chief Constable and an ex-Chief Prosecutor in the team. When Coronavirus hit Pakistan, we were able to combine that with barristers from one of the UK’s top criminal chambers to provide advice to the Punjab Prosecution Department on mitigate the risks of service disruption.
10.9 Our flexibility does not end with human resources. When COVID-19 hit Pakistan, all three of ASI’s current programmes were quick to pivot to support their counterparts with COVID-19 response, one redesigning itself within 48 hours of the FCDO’s request.
10.10 Our projects are subject to a high degree of FCDO control, oversight and accountability. Systems of monitoring and evaluation are laid out in our response to the Performance section of the terms of reference to this enquiry, but formal mechanisms present only a partial picture. We are subject, and responsive to any request for information or action, at any time, that the UK government makes of us. We demonstrated this when the FCDO requested that we procure urgently needed equipment for the Punjab Forensic Science Agency at the start of the COVID-19 pandemic in Pakistan – we agreed to the request within two hours and had completed the procurement within two days. Those COVID-19-related requests are not exceptional but, rather, are representative of the responsiveness we offer across projects in Pakistan and globally.
10.11 We have greater freedom to travel and operate in Pakistan, where there are severe restrictions on movement by diplomats. It takes 16 working days for a UK government official to gain approval to travel to Peshawar – it takes ASI around 12 hours to arrange a trip. This freedom of movement, along with dedication to projects, allows us to build relationships that span ministers to field staff, federal to district level. We work with government counterparts day-in-day-out. As an extension of the UK government’s reach, we are able to offer it access, insight and relationships that its constraints inhibit.
10.12 We are apolitical, focused only on delivering what HMG wants. The UK government’s priorities become our priorities. Where the UK wants to use aid to address wider UK interests by, for example, mitigating the risk of violent extremism, supporting human rights, combatting organised crime or countering the influence of UK rivals in the region, we will do so.
11.1 Multilaterals play an important part in the aid mix. In Pakistan they are sometimes allowed access to sensitive geographical areas that bilateral projects may not be. They do, however, present limitations, which can limit UK aid effectiveness:
11.2 Loss of UK government control, oversight and accountability: Aid spent through multilaterals is directed to the priorities set by those multilaterals, which are only indirectly influenced by the UK. Multilaterals are not subject to the detailed reporting and tight accountability requirements that NGOs and private sector delivery partners are. These limitations are evident even where the UK contracts multilaterals to deliver specific, focused projects. Civil servants complain about their limited ability to truly hold them to account. Similarly spending by Multilaterals is not subject to Parliamentary scrutiny or oversight in the same way UK directed aid expenditure is.
11.3 Divergent interests: The multilateral system was designed to promote global stability and positive global norms. That is a deeply valuable role but it is important to recognize that multilaterals are not designed to address UK security concerns or promote UK economic growth.
11.4 Lack of design flexibility: Multilaterals tend to be equipped with a limited range of delivery tools: procurement, training, or channeling funds to host country governments. The size of multilateral programmes in Pakistan are often larger than those delivered by NGOs or private sector delivery partners, which means the UK effectively limits its ability to deliver focused and sophisticated initiatives that serve UK interests.
11.5 Lack of flexibility to respond to changing circumstances: Multilateral bureaucracies have cumbersome rules and procedures, and conservative cultures. Multilaterals follow a results-based aid disbursement model, with disbursement linked indicators approved by a central board comprising of members from donor countries. This structure gives these programmes more rigidity, with a lengthy process needed to change indicators. They cannot quickly flex in response to crises or evolving context.
11.6 To illustrate, while ASI’s programmes pivoted to a COVID-19 response the World Bank was less agile. KESP2, FCDO’s education programme in KP, adapted programming to support the Government of Khyber Pakthunkwa’s distance learning, school staggering and re-baselining efforts. PESP3, the World Bank’s education programme in Punjab, was unable to support the Government of Punjab in its COVID-10 response efforts.
11.6 Bias towards ‘on-budget’ expenditure. The vast majority, if not all, of the World Bank’s programmes in Pakistan channel aid money to the Government of Pakistan for it to spend. This removes any meaningful oversight by both Parliament and the UK government to ensure that it is spend either on its development priorities or in UK interests. It can also reduce aid effectiveness and increase fiduciary risk.
12.1 Risk: overpriced services. Mitigation: the UK government competitively procures services and takes steps to encourage applications from multiple partners. This is straightforward in Pakistan, where there is a competitive market.
12.3 Risk: under-delivery of results
12.6 Monitoring and evaluation – the UK government requires comprehensive monitoring frameworks for all its projects, usually combining quantitative and qualitative results.
12.6 Oversight – UK government clients maintain close oversight, through maintains close oversight of projects, with requirements for meaningful reports to monitor both the quantitative results, qualitative results and risk.
12.7 Payment by results (PbR) – this is seen as a useful tool for driving results. Adam Smith International has enthusiastically embraced PbR projects and will continue to do so. There are, however, questions around the effectiveness of PbR and the perverse incentives it can create.
12.8 A 2018 study by the Paul Clist of the University of East Anglia’s School of International Development found “no evidence that PbR leads to fundamentally more innovation or autonomy, with the overall range of success and failure broadly similar to other aid projects”. Mr Clist highlights that “PbR does not deal with the fundamental constraints that donors face”.
12.9 Adam Smith International has observed the perverse incentives that development partners face in PbR arrangements. Implementers face a high degree of price competition in FCDO procurement, very narrow margins on projects and limited control over project outcomes in challenging environments. Such a high risk of making a loss on a project, as a result of PbR, can encourage a downgrading of ambition that inhibits project results. ASI always strives to deliver the most ambitious and effective projects possible but we are alert to this risk to the effectiveness of UK aid.
12.10 Risk: lack of host government approval or support for interventions
12.11 Mitigation: UK government senior civil servant engagement to ensure and maintain political and senior bureaucratic support for interventions. With projects very often having a lifetime of over three years, and host country governments grappling with multiple priorities, that can mean that support can fade. Where support fades, so too can effectiveness. This can especially be the case where programmes traverse governments, as was the case over 2018 in Pakistan. We would urge the UK to ensure that senior-level engagement is maintained throughout the lifetime of UK aid interventions.
13.1 ASI maintains range of policies that support safeguarding across our organisation and projects. These include:
13.2 A safeguarding policy that lays out our safeguarding commitments; sets out responsibilities of the company, employees and third parties; provides information and guidance on how to recognise and deal with instances of sexual exploitation, abuse and harassment; and instils a culture in which safeguarding is promoted.
13.3 A child protection policy to ensure that none of our staff or partners engage in any behaviour that could allow abuse to occur.
13.4 An equality, diversity and dignity at work policy that promotes equality and diversity and defines and prohibits discrimination of different kinds, harassment, victimisation and bullying.
13.5 A ‘speak-up’ policy that encourages those working for or with us to report actual or suspected wrongdoing; reassures those who raise concerns that they can do so without fear of reprisal; and provides guidance on how to raise concerns.
13.6 A grievance policy that lays out the organisation’s responsibilities, confidentiality requirements, and procedures for informal and formal investigation and resolution of grievances.
13.7 All staff and subcontractors are required to adhere to our policies and all staff receive training on safeguarding.
13.8 Day-to-day staff safety
13.9 ASI has extensive experience operating in high risk environments. We bring that experience to bear on our stance in Pakistan, despite it displaying a lower level of risk than was the case a decade ago. We consider there to be three primary risks to staff safety in Pakistan.
13.10 First, there is risk of violence against vulnerable groups, especially women. Public attention was drawn to this issue following a high profile rape near Lahore in September 2020, but we recognise that that incident was reflective of a widespread risk. ASI addresses this risk in the same way as above and by supporting transport arrangements to/from work, and taking a flexible approach to working hours, as needed.
13.11 Second, there remains a continued risk of attacks by individuals or armed opposition groups. Attacks against the government buildings in which we often work, and other high profile or public locations. In October 2020, for example, a suicide bomber killed several people and injured over 100 in an attack against a religious school in Peshawar. ASI addresses this risk by maintaining tailored standard operating procedures on safety and security and constant monitoring and sharing information on threats. This is managed by a full-time Security Adviser, dedicated to Pakistan, and overseen by our Global Risk Manager.
13.12 Third, there is a risk of attacks by armed opposition groups in field locations against people who are, or are perceived to be, working on foreign-funded initiatives. For example, in February of this year four people providing training to women to run small-scale businesses were killed in Khyber Pakhtunkhwa. ASI addresses this risk in the same way as above.
13.14 COVID-19 presents an additional safeguarding risk to our people, and to stakeholders with whom we work on a regular basis. We address this risk by ensuring our workplace complies with federal and provincial rules and guidance, supplemented by additional implementation of WHO-recommended protocols and information and guidance to our staff.
13.15 The only long-term mitigation to COVID-19 risk for our people is vaccinations. The FCDO’s vaccination programme for civil servants in Pakistan is well underway. Our people who work for on FCDO projects for delivery partners are not eligible for vaccines from the mission, cannot travel to the UK to receive a vaccine within the notice period the NHS offers, and cannot spend a prolonged period in the UK waiting for their vaccine without it being detrimental to FCDO projects. This leaves British citizens working for the UK government overseas unvaccinated, which is a risk to them.
13.16 Project staff vulnerability to host country state agencies
13.17 Some host country state agencies are suspicious of foreign-funded programmes and routinely approach project personnel. Those agencies’ operatives can intimidate project staff and put their safety at risk.
13.18 As non-state actors, delivery partners have limited ability to address this safeguarding risk. Greater political and senior civil servant engagement at the political and senior bureaucratic level would likely mitigate the risk. As would the UK government ensuring approval by the federal Economic Affairs Directorate (EAD) for all the projects it funds. EAD approval is mandatory, must be government-to-government, is routinely requested by state agencies, and is lacking across much of the UK’s portfolio. This safeguarding risk also threatens project continuity.
13.19 Vulnerable beneficiaries
13.20 Our projects work in sectors where the ultimate beneficiaries are vulnerable groups, including children and victims of sexual violence, who present a safeguarding risk.
13.21 We manage this by:
13.22 Completing third party screening and background checks for all staff.
13.23 Ensuring that all long-term staff also complete training on safeguarding, bullying and harassment.
13.24 Providing a whistleblowing hotline and Safecall contact details to report any safeguarding risks or other concerns.
13.25 Maintaining a position in which our people do not engage directly with the abovementioned vulnerable groups but instead provide support to the government staff who do. Similarly, our people do not become involved in individual cases of sexual violence but provide support to criminal justice institutions to do so.
13.26 Delegation of safeguarding responsibilities
13.27 The FCDO’s approach to safeguarding, as with risk in general, is to pass responsibility to delivery partners. The approach has the advantage of ensuring that actors working in closest proximity to vulnerable people are responsible for safeguarding actions. On wider issues of security and safety, it often allows delivery partners to work in higher risk geographies that diplomats would not be able to.
13.28 The disadvantage is the risk that it distances FCDO from safeguarding outcomes. We believe the balance is roughly right, but also recognise that this reduction in risk to the UK government may not be matched by a reduction in risk to vulnerable groups. The example of British citizens working on FCDO programmes facing a vaccine gap is one example of this risk becoming reality.
14.1 There are a range of self-evaluation and independent evaluation processes that are applied to the projects we deliver:
14.2 Logical frameworks: All FCDO projects that we deliver are designed around an evaluation tool called a logical framework (or ‘logframe’). Logframes define project outputs, outcomes and impact, each with indicators to measure progress. This means that evaluation is built-in to the heart of projects.
14.4 Progress against logframe targets is tracked continuously by the delivery partner, formally reporting to FCDO anywhere from monthly to quarterly, and used as a basis for external evaluation.
14.5 Adaptive programming: It is common for aid projects, especially projects as complex as those we implement in Pakistan, to take an adaptive programming approach. An adaptive design tends to involve agreement on the target outcomes of the project, while allowing flexibility to adjust activities and outputs to meet those target outcomes, with the agreement of FCDO. This approach necessarily requires that self-evaluation be built-in to project delivery. All of the projects we implement in Pakistan have adaptive elements to their design.
14.6 Project-level monitoring and evaluation: All FCDO projects that we deliver have internal functions that provide monitoring and evaluation at arms-length from the technical functions. This allows us to reduce internal conflicts of interest and unconscious bias in our own assessment of our performance.
14.7 Annual reviews: All FCDO projects that we deliver are subject to annual reviews, which are sometimes conducted by full-time FCDO personnel and sometimes by external consultants, but review projects from an independent perspective.
14.8 Annual reviews check progress against the logframe, review other documents such as risk registers, include interviews of key people (project staff, FCDO personnel, beneficiaries, other stakeholders), and draw in the experience of the reviewer on best practice and common sectoral challenges.
14.9 Third party reviews: The FCDO often commissions third party reviews to further explore the adequacy of both the design and the implementation of projects. One such review was conducted by Ecorys UK Ltd, of the Khyber Pakhtunkhwa Education Support Programme, in 2018.
14.10 Internal audits: Adam Smith International has an independent audit function in place, which regularly reviews projects implemented by ASI to ensure that they are implementing good practice. Implementation of internal audit recommendations is a key responsibility of project managers and is followed-up regularly. The three projects we currently deliver for FCDO were last subject to internal audits in 2018 and 2020.
14.11 External audits: The FCDO often commissions external audits of projects to ensure compliance with its requirements. ASI provides all information required by the auditor.
14.12 Culture and relationships: Perhaps the single most important factor in ensuring the effectiveness of the above tools and processes, is the culture of the delivery partner and FCDO client, and the relationship between them. A culture of openness and honesty about successes and failures allows those people to continuously improve aid-funded interventions.
14.13 Our experience is that the FCDO in Pakistan does engage on this basis, and that is a key factor behind the success of many of its aid initiatives. Additional openness and seamless working could be achieved by enabling more individuals who work for delivery partners, on behalf of the UK government, to have security clearances.
14.14 Evidence of lessons learned being turned into action: At a project level, there is extensive evidence of lessons being turned into action in the lessons learned sections of many regular reports, and in the tracking of actions required from annual reviews and audits.
14.15 From technical perspective, our experience in Pakistan is that the FCDO encourages and enables actions to address lessons learned.
14.16 From the programme and financial management perspective, FCDO’s country mission is often subject by procedures and requirements that emanate from headquarters. These constrain them from the agile approach needed to make worthwhile changes.
 Clist, Paul, ‘Payment by results in international development: Evidence from the first decade’ (September 2019), p.2.