Nicholas Daniels is an Government relations strategy adviser. He is based in Nairobi and is currently working on a more comprehensive study of fresh ideas for UK aid, to be published soon.
Brexit rightly dominates our national political discourse at this crucial time, but we shouldn’t suspend policy discussion in other areas.
I sense a yearning for radical ideas on the centre and right of British politics, if only they could cut through the noise created by our departure from the European Union.
At the risk of raising a topic which probably ranks at the lower end of current government priorities, the UK’s commitment to lifting some of the poorest people in the world out of poverty still matters. When done properly, international development represents that important British and Conservative value: promoting prosperity.
The UK spends billions each year on aid to countries where people continue to endure significant hardship. Yet after decades of pumping money into least-developed and low-income countries, many of the underlying challenges persist or are getting worse.
As the respected Kenyan commentator Ken Opalo tweeted last week:
‘Dear African elites, “National Pride” through state-owned airlines is dumb. Have you seen the margins in the industry? Focus instead on boring stuff – like schools, roads, hospitals, power, running water and sanitation, and housing… Then you’ll have demand for airlines.’
Two recent reports by the International Development Select Committee highlight the crossroads the UK’s aid strategy is at when it comes to getting international development right.
The first report looked at the definition of overseas aid and what should be allowed under our commitment to spend 0.7 per cent Gross National Income (GNI). It concluded that aid ‘must be directed primarily at reducing poverty, helping the very poorest and most vulnerable rather than being used as a slush fund to pay for developing the UK’s diplomatic, trade or national security interests.’
I disagree with this because the primary goal of ‘reducing poverty’ is so vaguely defined it looks like something from a New Labour manifesto. I also don’t see the same level of commitment to poverty reduction among governments in many developing countries.
Fortunately, the second report gave me more hope. In reviewing the Department for International Development’s (DFID) Economic Development Strategy, the select committee welcomed the ideal that: “The more economic growth there is, the fewer people there will be in poverty. This has been the story of the past 20 years.”
In ten years of implementing aid projects in Africa, I’ve seen first-hand the importance of promoting free enterprise to reduce poverty, and British expertise – whether diplomatic or commercial – should play a vital role alongside British money. Innovations in micro-banking, solar energy, and affordable education will be the future drivers of prosperity in the developing world.
As a Conservative, I understand the power of reducing poverty through the private sector. In the poorest countries, this can only be achieved by fundamentally overhauling how aid is spent. That’s why I’m proposing a new strategic direction for UK aid, with disruption at its core.
Under a new doctrine of ‘disruptive aid’, I contend that DFID should shift its approach towards more heavily prioritising development finance through an impact investing framework, supported by diplomatic soft power.
The Commonwealth Development Corporation (CDC) is the UK’s development finance institution. With £4bn of equity investments currently in private sector enterprises in developing countries, CDC provides much-needed patient capital to support the building of businesses throughout Africa and South East Asia.
The government has the power to raise CDC’s investment ceiling to £12bn, and this should be effected as part of a disruptive shift away from traditional development, and towards enterprise.
Impact investing offers DFID an essential framework for what should be our ultimate goal of supporting and sustaining economic growth. UK aid can achieve social and financial returns on the money we spend, but we should maximise our impact by backing enterprises which can be aggressively scaled. This would allow UK commercial practices – like equal employment opportunities and high product standards – to nudge behaviour changes in developing economies.
Most importantly, we should move away from traditional development approaches like capacity-building and technical assistance, and focus on economic growth through for-profit sectors like energy, agriculture, and infrastructure, alongside British expertise. All this should be backed by a laser-focused diplomatic effort that protects our investments and opens up new opportunities for more UK money.
Disruption of the aid sector itself is also overdue. In recent months leading aid organisations have been hamstrung by allegations of sexual exploitation. The broader question for me is: what tangible economic results have these organisations delivered over several decades? In my view, they’ve become fixated on outputs – like the amount of cash dispersed, workshops held, or advocacy – rather than outcomes such as creating jobs and increasing revenues.
Disruption is becoming an important lens to tackle big public issues in the UK, and Liz Truss has consistently argued the case for disruptors who challenge the status quo.
People in developing countries deserve disruption too – political disruption that shakes up the cartels and kleptocratic regimes very often found at the heart of developing nations. Social disruption that puts women on an equal footing with men and tackles discrimination against LGBT people. Economic disruption that makes markets more efficient, drives down prices, and introduces new consumer innovations like Uber and AirBnB.
The Chief Secretary to the Treasury might also be attracted to an idea that would sustain our 0.7 per cent GNI commitment by delivering financial returns back to the UK. When it comes to new Tory thinking and innovative paths to economic growth – both at home and abroad – in Liz we Truss!