DFID to partner with UK finance sector to support development

Devex
By Russell Hargrave

U.K. Secretary of State Penny Mordaunt. Photo by: Vicki Couchman / Bond

LONDON — The United Kingdom’s development secretary has announced plans to partner with the City of London to help countries transition out of poverty as part of the government’s global aid strategy.

The plans, under which the Department for International Development will work with major financial firms to encourage investment in emerging economies, were announced in a wide-ranging speech by Secretary of State Penny Mordaunt in London on Thursday morning.

Mordaunt also promised that her department would reflect “the priorities of the people,” in a speech that tried to move beyond recent negative media coverage of the aid sector and linked development work back to British national interests.

Signaling an enhanced role for the private sector in growing economies that still require development support, Mordaunt pledged “a new trade offer, which includes a new partnership with the City of London to bring down the barriers to trade and unlock investment for emerging markets in Africa and Asia.”

She continued: “As we leave the European Union, we will scope new instruments and institutions to sit alongside CDC, our private sector investment arm, to provide loans or guarantees to ensure a better offer to developing countries as they transition out of extreme poverty but before they’re fully reliant on international capital markets.”

This would also mean “new opportunities for British pension funds to invest in new markets in developing countries and deliver higher returns for British pensioners,” Mordaunt said.

The announcement continues the approach pursued by her predecessor, Priti Patel, of using Britain’s finance industry to leverage more funds to support work in the poorest parts of the world. The plan comprised one of five focus areas for the government’s aid work laid out in Mordaunt’s speech.

Mordaunt also promised ongoing humanitarian assistance where it was needed; a stronger role in leading the fight against disease and ill-health; protections for citizens overseas who are vulnerable to crime and extremism; and efforts to foster new partnerships “to share ideas and creativity” across donor and recipient countries.

New initiatives include expanding the Power of Nutrition program to reach 5 million more people worldwide, and establishing a DFID presence in financial centers overseas as part of an international fight against corruption and money laundering, which strips developing countries of much-needed capital, she said.

Words of caution
Mordaunt also used the speech to directly address public concerns over a succession of media scandals involving the aid sector and its impact on DFID’s work.

“The recent Oxfam scandal shook the public,” Mordaunt said, acknowledging there remains “a lack of trust [from the public] that we are spending their money well.”

To address this “our development offer must be something we can be really proud of. It must be something that can be clearly understood and supported — in spirit and in practice — by those who wish to contribute further to it through extra resources, or their expertise, or their time.”

Mordaunt, who backed the campaign for Britain to leave the European Union, described the vote as a chance to protect British values “of freedom, equality, independence, and democracy.” International aid is one way to “project those values on to the world stage,” she said.

“Evidence clearly shows that if aid and development are used to serve the U.K.’s national interests, it will be less effective and poorer value for money. U.K. values are better reflected by keeping those we seek to help at the heart of what we do.”

— Tamsyn Barton, chief executive of Bond

Speaking with Devex after the speech, Alex Thier, executive director of the Overseas Development Institute, welcomed DFID’s plans for supporting emerging economies — but warned that some of the toughest work may lie ahead.

“The trick now is for DFID and its partners like the CDC to actually be able to move to the next level,” Thier said. “They really need to figure out how to lower the perception of risk for these pension funds, so that they can actually get higher returns in developing countries. DFID and its partners need to strengthen their tools to make that real.”

He added that Mordaunt is not the first secretary of state to promise that Whitehall departments would work together more effectively on ODA, and that there was still “more desire than effective implementation at the moment.”

“What you don’t want is a balkanized aid budget,” Thier said, adding, “it has to come from a conceptual framework that these are a group of mutually supportive things, rather than just a bunch of different departments happily getting their hands on some aid money. Mordaunt signaled that she wants that, but it’s not easy.”

There was also a note of caution from Tamsyn Barton, chief executive of Bond, the umbrella body representing NGOs in the U.K. aid sector. Barton said “it would be concerning if today’s proposal distorts the primary objective of aid and development policy, and instead promotes the U.K.’s own commercial and security goals.”

“Evidence clearly shows that if aid and development are used to serve the U.K.’s national interests, it will be less effective and poorer value for money,” she continued. “U.K. values are better reflected by keeping those we seek to help at the heart of what we do.”