Yesterday the UK’s Foreign, Commonwealth and Development Office (FCDO) released their eagerly awaited International Development Strategy.
It has been an agonizing wait; the international development community have been expecting this strategy since the publication of the Integrated Review back in March 2021 and many have been particularly keen to understand what expert comments had been incorporated from the ‘Call for Submission’ organized by the International Development Committee back in September last year.
At the African-owned Consultancy where I work – Development Reimagined – we provided a number of expert contributions to the preparation of the strategy, focusing in particular around African development needs, local ownership – especially in light of the Black Lives Matter and decolonizing development movement -, and the importance of financing and trade in development. We were pleased to see some of these ideas reflected in the language of the new strategy.
However, the strategy has already come under fire from, in particular, British non-governmental organizations (NGOs) who are concerned about the lack of direct focus on poverty reduction within the strategy. Why? And what is our view?
Our view is that on balance, this new strategy could be positive for poverty reduction globally – but the devil is in the detail. Here is why.
First, the importance of infrastructure and concessional financing options has FINALLY been acknowledged as a critical area of sustainable development (something many other development professionals do not always promote). Let’s take Africa as an example – the African Development Bank estimates the continent’s financing gap to stand at a staggering US$68 billion to US$108 billion per year. In order to fulfil this gap, new and innovative programs are needed to provide developing countries with the financing they need to develop green infrastructure which is the bedrock for catalyzing sustainable development.
The new strategy outlines the UK’s willingness to support countries to obtain the investments they need to grow. Notably, the new British Support for Infrastructure Projects (BSIP) will “facilitate concessional loans to help partner governments access high quality and affordable infrastructure finance.” This alongside other mechanisms such as the British Investment Partnership (BIP) and British International Investment (BII) and the target to “mobilize up to £8 billion (US$9.97 billion) of UK-backed financing a year by 2025 including from the private sector” are a step in the right direction. That said, where the devil is relevant is that the strategy does not actually make a commitment towards providing more concessional loans from the UK, but help countries get more. Ultimately the UK is not offering to fork up more lending. The question remains, where will these loans come from. That’s where – for this area – more detail is needed.
Second, the role of trade for supporting poverty reduction and development is highlighted through the new “Developing Countries Trading Scheme” (DCTS). This scheme will aim to “give better access to the UK market for goods from low- and middle-income countries, through a set of simpler, more generous trading arrangements than those in the UK’s current arrangements.”
From our perspective, this is good news. For years we have been encouraging countries from China to the UK to open up their markets to Made in Africa products, and go beyond simple “aid for trade” projects that put all the onus on African exporters to adjust. But again, the new UK commitment comes with caveats. Back in November last year, myself and a colleague published an oped looking at the limitations of the DCTS including the need to focus on value added exports from developing countries and not just increase the volume of raw materials. Take Nigeria for example. In 2019, the UK imported US$1.45 billion worth of goods but 87 percent of this was crude oil. This focus on raw materials does not support increased job creation (through supply chain growth) and poverty reduction. For the DCTS to truly work we need a clear understanding of how value-added products will be able to enter the UK. We need more detail.
Third, one paragraph that many others might miss is an essential move by the FCDO. The document states, “those who benefit from our work must have a voice in what we do, and how we do it. The difficult reforms and good policies that drive progress must be locally owned. Our country partnerships will be anchored in our respect for the rights of our partners to self-determination. Our support will strengthen their sovereignty.” As an African organization, we believe the evidence that increased local ownership and power over development decisions leads to more effective development impact is clear. However, what is not clear in the strategy is exactly how this local ownership will be nurtured. Through what mechanisms and/or targets? The strategy highlights more power to Ambassadors and High Commissioners but what incentives will staff in HQ or embassies in countries actually have to channel finance through local partners? Indeed, the push for more British expertise goes against the grain of decolonizing development, challenging in a context in which the vast majority of UK aid contracts already go to UK firms. So once again, nice words, but the devil is in the detail.
Finally, overall, the strategy notes that “our approach to international development will be as a patient partner that champions openness, predictability and the rule of law – There are no quick fixes” yet the strategy isn’t clear on how the UK will role model this itself in order to support development abroad. There is little on improving migration rules, improving UK’s own tax rules to avoid illicit financial flows, or even tackling racism in the development sector (while tackling sexism is mentioned). The role of the UK in reforming multilateral organizations such as the IMF and World Bank – from their governance structures to use of Special Drawing Rights and their analytical tools, and the UK’s domestic role in influencing multilateral cooperation including on climate change action, is also left out. Except for trade, the onus seems to all be on other countries to shift… Begging the question – is this really a truly equal partnership?
So, what does this all mean?
The UK is certainly changing its traditional approach with this new strategy and it needs to. Other countries such as China are filling the gaps or “asks” by developing countries that many traditional donors have been leaving behind. For example, China is currently the largest bilateral trading partner for the African continent and the volume of Chinese loans increased significantly from US$129 million in 2000 to US$7.0 billion in 2019. Furthermore, from 2013 to 2018, China spent approximately US$3 billion annually in aid to African countries. The UK in comparison has cut foreign aid since 2020 – spending just under US$14 billion worldwide in 2021, and the new strategy doesn’t give a clear timeline for any significant increase. While quality of spending really matters, there is no doubt the UK can do more and better.
At Development Reimagined, while we welcome the UK governments’ more oblique focus on trade, investment and infrastructure to deliver development, rather than direct poverty reduction schemes, we still believe more can be done, and wonder if the UK can really ‘walk the walk’. For that, much more detail will be needed to avoid devils emerging.
This article was originally published on The Habari Network by Leah Lynch, Deputy Director of Development Reimagined