For over a decade, a consensus has existed at Westminster on overseas aid. All main parties are committed to the internationally agreed target of spending 0.7% of gross national income on it.
But this important achievement obscures how this money is often spent. Consecutive governments have shown a preference for privatisation, big business, and ‘free market’ models of development. The Department for International Development’s (DFID) focus on the private sector includes supporting the expansion of private healthcare and education in poorer countries. For example, DFID spent £10 m on a chain of private schools which has faced international condemnation, including from Uganda’s High Court, which ordered their closure across the country for using unqualified teachers. The department also promotes large public-private partnerships in energy; for example, DFID's spent £1.4 bn on helping Nigeria privatise its energy sector. It has helped deregulate agriculture to encourage multinational business ‘investments’. Worse, development funds have been spent on luxury apartments and shopping malls.
Increasingly, transnational corporations are presented as ‘partners’ in development.
Countries are told to reduce regulations to help large businesses, “as development has almost become synonymous with financial investment, private sector growth and even capitalism itself. Britain is a global leader for this approach.” Secretary of State Priti Patel has stated her intention to use UK aid to “tear down the barriers to free trade” and help UK companies win investment.
Private contractors are increasingly used to deliver aid programmes. Most UK aid is now spent via international organisations, charities and for-profit private contractors. Adam Smith International (ASI) is one: it became a multi-million pound company thanks to DFID, its primary customer. But in 2017, ASI was the subject of a scandal when it was found to have attempted to falsify evidence submitted to a parliamentary inquiry scrutinising contractors. As a consequence, DFID said ASI will not receive any new UK aid-funded business but in the past it awarded ASI at least £450 million in contracts since 2011.
Another outfit, CDC Group, is owned by DFID. Its mandate is to fight poverty but its portfolio of projects includes an upmarket shopping mall and luxury apartments in Kenya, private healthcare in India and controversial palm oil plantations in Democratic Republic of Congo which have been linked to land and labour violations. These lucrative projects do little to reduce poverty, but DFID has recently increased the amount of aid money to the company to £12 billion.
Aid is increasingly being spent in the national interest rather than on poverty reduction. DFID is clear that aid should be spent in ways that support the UK’s security, foreign and trade policy objectives. The Tory government is also rewriting the rules on aid so that it can include some military and security spending. Helen Clark, former head of the UN Development Programme, said these changes could undermine countries’ stability..
Consequently, an increasing share of the aid budget has been handed to other government departments such as Business, the Foreign Office, and even the National Security Council. A recent study found that by 2016 more than a quarter of the aid budget was being spent outside DFID,
The public debate on aid is simplistically binary – you’re either for it or against it. This report seeks to encourage a conversation on how aid money is spent. The authors believe aid spending must focus on long-term structural change to build democracy from the bottom up and give people power over their lives.
Aid should be re-imagined as a form of global wealth redistribution that seeks to encourage universal welfare. Aid money should be spent on strengthening public services, such as health and education. Goals should include food sovereignty and gender equality: only 8% of gender-focused international aid currently goes directly to women’s organisations.
Creating sustainable economies and promoting tax justice should be another aim. Africa alone is estimated to lose $35 billion every year to tax avoidance – more than the roughly $30 billion annual aid budget for the continent. Yet there is scant evidence that low corporate taxation plays a significant role in attracting investments that wouldn’t have occurred otherwise - compared to factors such as education, a skilled workforce, decent infrastructure and political stability.
The key to international aid being effective is that it is led and managed by local people. “The ‘benevolent donor’ swooping in, saving lives and lifting people out of poverty is an outdated and harmful narrative,” argues the report.
Aid can also be considered a form of compensation. The developed world has grown rich, over many centuries, by pillaging poorer countries’ resources. Whether through extracting irreplaceable natural resources, tax avoidance by western corporations, ignoring the impacts of climate change, neoliberal economic reforms or wars fought for strategic interest, the impact of the rich world on developing countries can never be entirely redressed.