In a recent speech aptly delivered at the London Stock Exchange, Justine Greening, the Secretary of State for International Development announced a shift in “DfID’s work to include a much stronger focus on economic development”. The argument is, and it is one that I support, that the shift in policy and emphasis will be more beneficial for the targeted recipients than currently, and importantly that the UK will also reap greater rewards, primarily of the economic nature.
The effectiveness of simple aid through the provision of money and basic services has long been debated. The case it not so much about whether direct aid is beneficial, but whether it is the best way of alleviating poverty in the long run and for allowing people to become sustainably self-sufficient. For Justine Greening and me, the answer is that it isn’t. Instead, by focusing on increasing trade this will help development new and augment existing markets which ultimately drives economic growth, both on a micro and macro level, and creates jobs. This is more sustainable than simply providing aid through monetary hand-outs as it helps deliver structural change that puts the power to prosper in the hands of those who could previously only wish for such a platform. Giving someone in poverty a generous but small monetary donation is unlikely to pull them out of poverty in the long run, but give them a long term incentive and opportunity for sustained growth you then start providing a genuine springboard out of poverty. As Greening noted in her speech and as President Ellen Johnson Sirleaf of Liberia says: “Aid is not an alternative to self-sufficiency.”
Of equal importance to Greening’s change in DfID’s strategy is the desire for the department’s work to better benefit the UK commercially. What Greening is rightly seeking to implement is a strategy whereby DfiD’s work is not a one way channel of money into poverty zones with none coming the other way, into a mutually beneficial relationship where both sides prosper economically through greater trade and business interaction.
As a continent, Africa is one of the key targets for DfID’s work, but to continue ploughing one-way aid into the region without thinking more strategically about how we can make this work more for the UK too, would be a ludicrous oversight. Whilst a strict policy of non-interference in others’ affairs has played a part, China’s meteoric rise in Africa which now sees the communist state as Africa’s biggest business partner, there are critical lessons and warnings that the UK must heed. In an increasingly globalised world where economic power is shifting, the competition for new markets is only going to intensify further. As the Chinese have shown in Africa, the UK cannot expect that new markets will open up and instinctively look to trade with the traditional markets of old. Instead, the UK needs to be more pro-active in finding these new markets and building relationships and putting UK businesses in place to start working with those on the ground as soon as feasible. The new DfID strategy seeks to address this. As Greening rightly states, in the context of this global environment where economic competition has intensified, getting ahead “means being in emerging market countries – not just those of today, but those of tomorrow too.”
The change in strategy which seeks to bring more direct benefits to the UK is also partly in response to criticism from some quarters at the fact the UK’s aid budgets have been ring-fenced at a time when many domestic budgets have been cut. Some critics, including a number of Conservative Party members, would rather see aid money being spent elsewhere, particularly in areas where the benefits to the UK are perceived to be more obvious, such as defence. However, aside from the simple humanitarian case which I think is compelling, the benefits to the UK of spending 0.7% of Gross National Income (the Coalition’s and G8’s target) on international aid are numerous. For instance, greater international prosperity reduces volatility, which would benefit financial markets, as well as the chances of conflict and even war which in the long run could prove costly should the UK have to intervene. Reducing poverty and fostering prosperity in other countries also offers the UK greater influence, with the UK’s support not being forgotten by the countries that we help which could pave the way for beneficial trade agreements in the future. This could be hugely valuable when trying to unlock and tap into the next global growth markets.
The net benefit of the UK’s aid policies is hard to quantify, but the change in DfID’s strategy should make this clearer as it will hopefully generate increased trade and opportunities for UK businesses. Aside from the economic rationale for maintaining the UK’s aid programme, we should be proud of the fact we are the first G8 country to spend 0.7% of GNI on aid and that by doing so the UK is an international leader in eradicating global poverty.