Written evidence submitted by the Department for International Development

Introduction

1.               In this memorandum, DFID describes the changing development context in Burma, the opportunities for change and the rapid scaling up and repositioning of our programme in response to the new environment.  We focus on the areas that the IDC will examine.

Context

2.               Decades of military rule have left most Burmese people poor and vulnerable, but Burma now has an unprecedented opportunity to achieve peace, prosperity and democracy.  The remarkable political and economic reforms since 2011 have generated huge goodwill and hope within Burma and internationally.  The dynamism in politics and society creates an opportunity for reformers to achieve transformational change.  This opportunity will not last for ever; without progress goodwill will tend to dissipate and the reformers risk losing traction.
3.               Despite the significant challenges, DFID is exceptionally well-placed to help Burma capitalise on this window of opportunity, and set Burma on a path to graduate out of UK aid as several countries in the neighbourhood have done.
4.               Burma is one of the poorest countries in Asia with GDP per capita of about $800 compared to $4,800 in Thailand.  A third of the population (16.5m people) do not have enough money to meet their basic food and living needs.   Where reliable data exists (which it rarely is), it shows the country is off track to reach many of the Millennium Development Goals.
5.               Burmese people are poor and vulnerable for inter-linked reasons.   Long running conflicts in ethnic regions, human rights abuses, and displacement have led to severe poverty.   Five decades of military dictatorship have stifled initiative, institutional development and entrepreneurship, and created a culture of opacity, cronyism and impunity. 
6.               The banking and financial sector is extremely limited, with an outdated legal framework and weak regulation.  Private enterprises – especially medium sized and small ones, have been starved of capital[1], hamstrung by unreliable infrastructure and red-tape, and show very low productivity[2].  Several larger businesses including mining and transportation companies are owned by the Burmese military and/or closely-connected cronies.  The agricultural sector, once the rice basket of the region, is still the main source of income for some 70% of Burmese people, but much of it is low yielding, uncompetitive and low-value.  The right to own and to use land – in rural and urban areas – is uncertain and highly contested – a pervasive cause of social discontent and deterrent to investment.
7.               Weak infrastructure is a major impediment for economic development and the provision of basic services. About 75% of the population has no electricity. Road density is less than 20% of the ASEAN average. Telecommunications and internet access are very limited, with mobile phone and internet penetration amongst the lowest in the world.
8.               Burma has some of the worst health indicators in Asia, and suffers amongst the highest rates of malaria and tuberculosis anywhere.  Malnutrition is high and 35% of children under five are stunted.  Education is weak and few Burmese have higher level education.  Only 54% of children who enrol complete primary schooling.
9.               Burma is highly vulnerable to economic shocks and humanitarian disasters.  Cyclone Nargis in 2008 killed 130,000 people, destroyed 75% of health facilities in the Delta region as well as 4,000 schools and 600,000 hectares of rice land.  The cost to Burma from lost and damaged assets was estimated at $4 billion, some 20% of GDP.
10.           Burma is home to some of the longest running conflicts in the world with ethnic insurgencies breaking out soon after independence.  The ethnic borderlands have never been fully under the control of the central state, and they are still not.
11.           Before reforms began in 2011, the military dictatorship brutally repressed political opposition; imprisoning opponents, censoring the media and suspending parliament.  The change since the military handed power to a civilian government has been remarkable.  Political prisoners have been freed, the parliament is meeting regularly (with Daw Aung San Suu Kyi as an elected MP), laws allowing unions and peaceful protest have been passed, pre-publication censorship of the media has been abolished, and ceasefires have been signed with 11 out of 12 main ethnic groups.
12.           Though it has made significant progress, government is still far from transparent, representative or accountable.  The President’s attitude to reform is positive, but this is not uniform across government.  The government has limited capacity to implement reforms and to respond the changing context.
13.           The ceasefires are fragile, and the challenge will be to move to political dialogue that will address the grievances and aspirations of ethnic people who have faced significant discrimination (for example, there has been a clear ‘glass ceiling’ for non-Burmans and non-Buddhists in state institutions and the military).
14.           The ethnic areas have been left with a legacy of militarization and underdevelopment that will not be easily overcome. The writ of the central government remains weak, and decades of conflict have created war economies in these areas, involving unchecked exploitation of natural resources, and the rise of powerful well-armed criminal networks that profit from illegal activities including narcotics production, racketeering, counterfeiting, wildlife smuggling and trafficking in persons. An end to the fighting will not in itself be enough to dislodge them.
15.           The conflicts led to major human rights abuses of the civilian population, including forced labour and sexual violence, and to large numbers of displaced people – an estimated half a million people are internally displaced in Eastern Burma alone, and 140,000 people are in refugee camps in Thailand. The recent fighting in Kachin has displaced a further 75,000 people.
16.           Inter-communal violence in Rakhine State and elsewhere in Burma has led to a number of deaths and the displacement of tens of thousands of people. Many Rohingya people in Rakhine still lack basic civil and political rights. Inter communal violence, mainly between Buddhists and Muslims, is starting to spread causing destruction of property, loss of life and a growing threat to the wider reform process.
17.           Burma’s fragility means it is a source of serious threats to other countries and the international community: drug resistant malaria, radicalisation, refugees, drugs, money laundering and peoples smuggling.
18.           Since the lifting and suspension of sanctions in 2012, many donors have initiated or increased aid, but official development assistance (ODA) remains low and no sector is well covered.   Burma only received $7 ODA per capita in 2011.  The median among DFID’s focus countries is $54.
19.           DFID’s ability to have a transformative impact derives from several areas of comparative advantage.   Many aspects of Burma’s parliamentary, government and legal systems reflect UK systems.  This combined with DFID’s long experience of working with civil society, ethnic leaders and key political players positions us well to work on peace, government, democracy and resilience.  The UK and DFID have recognised expertise in financial sector reform and in strengthening laws and institutions that foster private investment and enterprise, and so are well placed to work on growth, livelihoods and jobs.  Burma looks to the UK as a centre of excellence on education.  DFID has led donor health sector work in Burma for several years and has strong and established health expertise. 

Overview of DFID Burma’s Programme

20.           Burma has rich natural resources - land, water, minerals and gas, huge potential for trade by virtue of its location between China and India, and a large working age population.  In the medium term, it should not need international aid.  DFID’s aim is to help the Burmese people and government harness the country’s great potential and become a better governed, more stable, peaceful and prosperous country that respects the rights of its people, provides them with good basic services and jobs, and is a respected member of the international community.  Central to this will be helping Burma achieve a peaceful democratic transition at the elections in late 2015 and resolution of the inter-communal violence that is threatening stability.
21.           The development context within which we are working to achieve this is high cost, high risk, but also high return.  The many conflict-affected and difficult-to-reach areas, the weak infrastructure and the scale of the development challenges bring high costs.  The paucity of capable implementing partners, the often low capacity of government, the fragile peace, and inter communal violence create high risks.  Yet Burma’s resources, location, its dramatic reform trajectory, and the youth, goodwill and commitment of its people bring the possibility of high development returns – and a real prospect of graduating from international aid within a generation.
22.           DFID has responded rapidly to the changing development context in Burma.  Since 2012, we have doubled the size of our programme (from £32m to £62m) and our staff in Burma (from 12 to 26 people).  Our overall budget for 11/12 – 14/15 is summarised below, and is disaggregated by sector in the table on page 5.  The table in the annex (pages 13 to 15) provides a brief description of our principal programmes.

Note:              Many of our programmes cover several sectors – so the sector disaggregation is indicative.

23.           DFID’s programme portfolio is evolving rapidly.  We are adjusting existing programmes in response to the new environment and introducing new initiatives.  Our most substantial existing programmes are in healthcare, education, humanitarian, rural livelihoods (food security as well as income generation) and civil society strengthening.  As well as modifying these, we have developed new programmes and are developing further new ones, in five ‘Golden Thread’ areas:-

        Good governance and Public Financial Management

        Strengthening the work of parliament

        Transparency and the rule of law

        Helping the process of ethnic reconciliation

        Promoting responsible investment.

24.           More than 50% of DFID Burma’s programme is delivered through multi-donor funds.  DFID has been instrumental in creating these funds – and seeks to be influential within them.  They concentrate donor resources on core development issues and reduce transaction costs for partners, for example by using a single implementing agency.  The main multi-donor funds cover health, education and rural livelihoods:-

        The 3 MDG Fund[i], which is targeted at improving basic maternal and child healthcare in communities, tackling HIV- AIDS, tuberculosis and malaria, and strengthening the systems that deliver health services.  DFID chairs the 3 MDG Fund Board and has committed up to £80 million from 2012 – 16 representing approximately 40% of the total fund.  DFID’s work in the health sector in Burma aw recently evaluated by the UK Independent Commission for Aid Impact (ICAI)[ii].

        The Multi Donor Education Fund (MDEF)[iii], managed by UNICEF, which works to improve policy, access, equity, quality and management in schooling.  DFID is on the MDEF Steering Committee and has committed £6 million to 2014.

        The Livelihoods and Food Security Trust Fund[iv], which works to increase food availability and income generation opportunities for 2 million rural people.  DFID chairs the LIFT Donor Consortium and is the second largest donor (£36m since 2009).

25.           The remaining 40% of our programme in Burma is largely implemented through smaller projects, though also usually in collaboration with other donors.  Our policy has been that no UK aid is given as budget support nor through central budget accounts. We provide nearly all of our aid to Burma through UN organisations and trusted international and local NGOs.  Given the changing context in Burma and the more reform-minded government, where circumstances allow and fiduciary controls are appropriate, some of these will seek to work through or alongside certain line ministries and at the township level.
26.           The financial resources committed to the different sectors are outlined in the chart and table below:-

27.           As headline results; over the four years of our Operational Plan in Burma, we aim to ensure that:

        500,000 women and men receive appropriate treatment to contain the spread of drug-resistant malaria

        153,000 unintended pregnancies are helped to be averted

        Political rights and civil liberties improve, as measured by Freedom House

        200,000 children are helped to complete primary school by 2015

        110,000 more women have access to financial services to help them buy food, send their children to school and meet their medical needs

        2 development finance organisations commit capital or attract private investment

        155,000 people affected by conflict receive humanitarian aid.

28.           Further details on the themes of the IDC inquiry are outlined below.

Democratic transition, parliament and civil society

29.           The reforms over the last two years have provided real prospects to promote improvements in governance; particularly transparency and accountability.  Liberalisation of the media has encouraged broader and freer comment.  The new parliament has made a good start in asserting its role of scrutiny of the executive, including public expenditure plans and civil service pay.  By-elections in 2012 saw Daw Aung San Suu Kyi’s National League for Democracy win 43 out of 45 seats.
30.           The emergence of parliament and the burgeoning of independent media provide opportunities to strengthen these channels of representation of ordinary Burmese people’s views.  We are looking to do more with parliament, and have made a start with:

        Funding the UK visit of Burmese parliament’s Bills Committee to learn from their counterparts in Westminster

        Funding a legislative drafting expert attached to the Burmese parliament to train MPs

        Together with the Embassy facilitating Westminster Foundation for Democracy training of the Burmese parliament’s Public Accounts Committee including a UK visit, and a visit of WFD and National Audit Office trainers to the parliament.

31.           DFID funds BBC Media Action Trust’s[v] work in Burma to strengthen the capability of both state and independent media.  This includes training on investigative journalism and the development of programmes produced by Burmese people including on FM radio that address governance issues in ways that young people find appealing (audience of about 7m listeners).
32.           DFID has a strong track record in empowerment and strengthening accountability in Burma through our innovative funding and advice to civil society organisations, and in our sectoral work on health and reform in Public Financial Management.  Examples of current work in this area include:

        The 3 MDG Fund’s Equity, Empowerment and Accountability framework which fosters community engagement in decision-making on healthcare.

        ‘Pyoe Pin’; which brings together marginalised communities and groups helping them to make common cause to lobby for better services and policies; for example on HIV-AIDS, legal aid and the use of local languages in schools in ethnic regions.

Women and Girls

33.           Men and women have theoretical equal rights under the law, but cultural beliefs and practice often prevent this in reality.  Women are disproportionately affected by displacement following conflict and inter-communal violence but have little voice in peace processes.  Women comprise only 4% of members of parliament.  Maternal mortality rate is estimated at 200 per 100,000 live births.  Women find it harder than men to get jobs.
34.           The reforms have created space to address these issues; and DFID seeks to do so throughout its projects.  Examples of direct action for women and girls include:

                      135,000 women and girls getting financial services, cash for work and cash transfers through the Livelihoods & Food Security Trust Fund

                      84,000 unintended pregnancies averted through access to family planning, 47,000 women receiving antenatal care visits and 25,000 women giving birth with the help of nurses, midwives or a doctor

                      80,700 girls completing primary school - by lowering the cost of education through the Multi Donor Education Fund

                      57,000 women empowered to have a greater say in issues that affect them in their community through the Civil Society Strengthening Programme.

Governance and Public Financial Management (PFM) in sector programmes

35.           The 3 MDG Fund has successfully advocated for better and more inclusive measures to coordinate health systems strengthening efforts, and funded the World Bank mapping and first steps in strengthening of public financial management in the health sector.
36.           DFID together with the World Bank and UNESCO are addressing central government planning and financial management in public education.  The Multi Donor Education Fund builds capacity at local level to ensure effective absorption of increasing investment.
37.           DFID has committed £10m to co-funding the 2014 census, the first in 30 years.  This will help correct the poor data coverage and quality that undermines the capacity of government and donors to assess priorities and target funding and service delivery.

Economic Governance

38.           Burma has implemented a series of economic reforms to remove economic distortions, improve macroeconomic management, including the unification of multiple exchange rates, the floating of its currency and the development of a more meaningful budget process.  A second wave of economic reforms has begun including a review of the financial sector. 
39.           Burma’s GDP grew 5.3% in 2010/11 and 6.2% in 2012/13.  However, growth has come largely from exploitation of oil, gas, mining and timber, which are controlled by a small elite.  Whilst extractive industries can generate finance for public spending (if tax systems, PFM and transparency can be improved), they create few jobs and bring considerable risks in relation to corruption, to the environment and in exposure to commodity price shocks. 
40.           There is an opportunity to help change the pattern of growth by doing more to help Burma develop good and inclusive growth policies, reform its business climate and rebuild its banking and financial sector – enabling and making capital available for a diversification of enterprise including into job rich manufacturing.
41.           The DFID-funded International Growth Centre[vi] is advising the Myanmar Development Resource Institute (a body close to the President) on inclusive growth policy including natural resource management. We are funding the World Bank Investment Climate Assessment to identify priority constraints to increased investment.  This World Bank assessment plus a parallel Financial Sector Review will provide good foundations for work to improve the business enabling environment and to implement banking and financial sector reforms.
42.           DFID is also working on improving budget transparency and public financial management to ensure that more of Burma’s resources go to delivering high quality public services for its people.  We financed the first ever assessment of Burma’s PFM systems, which provided the basis for the government to develop its own PFM Reform Strategy.  We have a strong focus on transparency in the extractives sector as the largest funder of Burma’s application to the Extractive Industries Transparency Initiative[vii] (EITI).  We are funding Revenue Watch Institute to strengthen civil society engagement on EITI.
43.           The Livelihoods and Food Security Trust Fund works to improve rural livelihoods including by empowering women through access to microfinance.  LIFT is exploring options for how best to work in the ceasefire areas.
44.           We are working on ensuring that business in Burma observes decent standards through the Centre for Responsible Business[viii].  We have just launched the Business Innovation Facility[ix] in Burma, which will work with companies to create more jobs and economic opportunities for poor people.

Peace, Stability, and Resilience

45.           This is obviously a critical time for achieving a lasting peace.  With ceasefires now in place across almost all of the country, and the government aiming for a formal nationwide ceasefire ceremony by the end of 2013, parties are now preparing for political dialogue.  This will be an extraordinarily complicated process.  Working closely with our FCO colleagues, DFID staff engage regularly with representatives of government and the ethnic groups to assess how UK assistance can best help.
46.           DFID work on peace building includes funding the specialist mediation organisation Inter Mediate[x] to advise all sides on improving negotiations and how to structure a peace process - drawing on UK experience in Northern Ireland and elsewhere.  DFID funded a recent visit by senior Burmese government Ministers accompanied by representatives of the Myanmar Peace Centre (the government’s peace secretariat, from where negotiations are led) to the UK, and a separate visit by some leaders of the ethnic minority armed groups. DFID will also support the study visit of Daw Aung San Suu Kyi to Northern Ireland in October.   Inter Mediate has run a number of technical workshops for ethnic parties over recent months, focused on ceasefire technicalities (codes of conduct, monitoring mechanisms) and political frameworks.
47.           In addition, the UK is the leading bilateral supporter of humanitarian assistance in Kachin; providing £13.5m over 2½ years for some 64,500 Internally Displaced People (IDPs), both in government-controlled and non-government-controlled areas.  DFID is giving £4.4m of humanitarian funding in Rakhine, which will help 50,000 IDPs, and £20m over 3 years to 140,000 refugees and 17,000 IDPs on the Thai Burma border. With FCO colleagues, DFID has played a leading role in lobbying the Burmese government on humanitarian access and lifting of other constraints on service delivery, and DFID staff visit all affected areas regularly. DFID funds non-governmental organisations to work on harmonising the health services of the government with those of ethnic health authorities, such as the Karen Department for Health and Welfare.  As a leading member of the Peace Donor Support Group, an informal grouping of key donors, DFID is also exploring early support to confidence-building projects in new ceasefire areas, in close consultation with local communities.
48.           Women and girls are most affected by displacement and violence as a result of on-going conflict and inter-communal violence.  DFID has committed to fund two positions in UNFPA, based in Kachin and Rakhine, to improve coordination of activities to reduce violence against women and girls in Kachin and Rakhine.  The FCO will also shortly begin funding of two projects in Burma focused on Preventing Sexual Violence in Conflict[xi] [xii]; DFID advisors have played a central role in shaping these projects.
49.           As well as the risk of recurring conflict in the ethnic minority regions, Burma is amongst the most vulnerable countries in the world to natural disaster, notably cyclones and earthquakes. Burma has little capacity to prepare for, or to respond to disasters, whether conflict related or humanitarian.  It is largely reliant on assistance from the international community after the fact.
50.           DFID Burma is currently recruiting a new Humanitarian Adviser to strengthen its ability to help Burma build preparedness and resilience prior to disasters as well as respond well when these occur.  Over the last decade, disaster risk management programmes worldwide have shown convincingly how lives can be saved and critical infrastructure spared using new technologies, emergency and city planning, building codes, climate change adaptation and risk financing mechanisms. Preventive investments in risk reduction and emergency preparedness are cost-effective and can greatly reduce the impact of natural hazards. Standard cost-benefit analyses suggest that for every $1 spent on mitigation, countries saved US$3-US$4.

Lesson Learning and Application

51.           DFID looks to draw widely on its work elsewhere for lessons and innovative approaches for application in Burma.  We have recruited several new staff with substantial experience in fragile states.  Our work with civil society on coalition building around specific issues, for example, draws on similar approaches in Nigeria.  DFID helped develop the Joint Peacebuilding Needs Assessment framework for conflict-affected areas of Burma, the scoping work for which drew on experience from Africa and East Timor.  DFID’s work on the peace process is informed by experience from international interventions in, among others, Northern Ireland, Somalia, Colombia and the Philippines.

Working with HMG

52.           DFID Burma works closely with the Foreign Office, UKTI, MOD and British Council.  Recent examples include:

• Joint DFID/FCO/UKTI work to helping establish the EITI and the Centre for Responsible Business in Burma
• Work with FCO on Preventing Sexual Violence including in DFID’s humanitarian programmes
• DFID and the FCO continue to work closely together to promote the peace process in Burma. 

53.           A Defence Attaché from the UK Ministry of Defence will be posted in the British Embassy Rangoon from October 2013 will and will enhance HMG’s ability to engage with, and promote the reform of, the Burmese military.

Working with other donors (development partners)

54.           Recent reforms have led to a substantial influx of donors and increased donor budgets for Burma.  To improve donor coordination and aid effectiveness in Burma, DFID co-chairs the Development Partners Working Committee and is influential in several of the Sectoral Working Groups, including those on health and public financial management. We are finalising new funding for Peace Donor Support Group – the body that coordinates donor assistance to the peace process. Where possible, we look to deliver our programmes through multi-donor programmes.

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