Hundreds of staff members across the world could be affected if Crown Agents goes bust. Devex has the exclusive on the causes of the potentially imminent closure.
Also in this edition: Drops in Southeast Asia’s development finance, defrosting Russia’s frozen assets for Ukraine, and opinions on everything from localization to Big Pharma.
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Crown Agents, one of the United Kingdom’s most established development contractors, seems to be steps away from shuttering — a closure that would affect nearly 350 staff in 20 countries across the world.
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On Friday, Crown Agents told Devex that the organization was experiencing “severe financial difficulties.” And according to my colleague David Ainsworth, the development contractors' staff have received only half the pay they were due for July.
Crown Agents’ financial difficulties go back to when it was spun out of the U.K. government in 1997 that saw it inherit a historic pensions deficit that currently stands at around £50 million — almost a year’s revenue, David tells me.
It’s not just pensions that seem to be doing the not-for-profit company in. Crown Agents has placed blame on significant cuts to foreign assistance by the British government, a shortfall that amounted to millions of pounds a year. At the same time, several big development firms have opened London offices in recent years, bringing the competition from across the pond directly to Crown Agents’ doorstep.
“The directors have been working as hard as they can over the last few months to attract new investment and funding for the business but unfortunately, whilst there was much support for the work we do, it recently became clear that actual commitments to provide the cash required going forward were not forthcoming,” the company said in a statement.
Exclusive: Crown Agents faces collapse (Pro)
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Speaking of financial decline, Southeast Asia is seeing a similar trend when it comes to development finance and renewable energy.
That’s according to a recent analysis by Australia’s Lowy Institute, which found that official development assistance to the region was $26 billion in 2022 — down from the previous average of $32 billion in recent years. Money is now tighter than it has been since at least 2015, when the institute’s measurement of these financial flows began.
Alexandre Dayant, deputy director at the Institute’s Indo-Pacific Development Center, pointed my colleague Vince Chadwick toward promises from China, whose development finance to the region was at its lowest level in 2022.
Still, the country continues to invest in infrastructure. China is currently involved in 24 out of 34 infrastructure “megaprojects,” according to the report, though it is the leading provider of financing where climate change is the principal objective.
It comes at a time where climate-related finance as a whole has been lacking: though the Asian Development Bank noted the region requires $210 billion in climate finance per year to 2030, the institute’s report found that between 2015 to 2022, just $8.1 billion had been disbursed annually.
Read more: What’s behind Southeast Asia’s dwindling development finance (Pro)
Turning westward, the European Union has dispatched the first proceeds from frozen Russian bank assets to war-ravaged Ukraine. It came after a year of wrangling — but the €1.5 billion sent is just a smidgen of around €200 billion it has locked away. And while 10% will be directed to reconstruction and economic recovery, the remaining 90% is to buy weapons through the confusingly named European Peace Facility for the fightback against Moscow’s aggression.
Why so little? My colleague Rob Merrick tells me that unlike the United States, which passed a law — not yet enacted — to allow all of Russia’s immobilized assets to be seized for Ukraine’s benefit, Brussels fears such a draconian move would enmesh it in a lengthy legal battle and prompt other countries to sell their euro investments, destabilizing the currency.
Instead, a compromise means it is snatching only the interest earned from the assets, which are held mostly by a Brussels clearing house called Euroclear. Disagreements over its management fees and Belgian taxes on corporate profits also held up a deal.
“There is no better symbol or use for the Kremlin's money than to make Ukraine and all of Europe a safer place to live,” said Ursula von der Leyen, the reelected European Commission president, announcing the transfer.
Reconstruction is getting 10% because EU members including Austria, Hungary, and Ireland refused to fund weapons. The cash will be channeled through the existing Ukraine Facility, which hopes to allocate up to €50 billion over three years.
The next seizure looks a long way off because the EU is currently only able to send profits from Euroclear — and plans no further knock on Euroclear’s door until March 2025.
The Devex newsroom will be taking some time off next week, but we wanted to leave you with a reading list ahead of our summer break. Here are five of our top-read recent opinion articles by some of the most prominent names in global development:
On road safety, time for more governments to race ahead by Michael Bloomberg and Dr. Tedros Adhanom Ghebreyesus
In the time it takes to read this article, as many as 10 people will die somewhere on the world’s roads — and every year, the number of fatalities on the world’s roads exceeds 1 million. Michael Bloomberg and Dr. Tedros Adhanom Ghebreyesus are urging for comprehensive interventions to curb those deaths, from mandating vehicle safety standards to redesigning streets to protect pedestrians. Learn more.
How USAID is working to hit its localization targets by Samantha Power
In 2021, the U.S. Agency for International Development set an ambitious target: In just four years, a quarter of the agency’s eligible funding would be shifted toward local organizations. The same day the agency released its progress toward that goal, USAID Administrator Samantha Power published an opinion article detailing the opportunities and challenges of localization. Read more.
Pharma profiteering isn’t going away, and so we can’t either by Winnie Byanyima and Max Lawson
At the height of the COVID-19 pandemic, nine new pharmaceutical billionaires were created in a matter of months. At the same time, the world’s poorest died without vaccines. That’s one of the reasons why Winnie Byanyima and Max Lawson, co-chairs of the People’s Medicines Alliance, wrote an op-ed pushing for medicine as a public good, and why their organization is pushing for a new way of developing medicines “based on human need, not big pharma greed.” Keep reading.
Here’s what today’s African vaccine accelerator launch means by Jean Kaseya, Sania Nishtar, and Chrysoula Zacharopoulou
The African Vaccine Manufacturing Accelerator aims to invest at least $1 billion over 10 years to meet the global need for vaccine supply against key diseases. Jean Kaseya, the director-general of the Africa Centers for Disease Control; Sania Nishtar, the CEO of Gavi, the Vaccine Alliance; and Chrysoula Zacharopoulou, the French minister of state for development, break down why the accelerator matters. Read on.
Farmers are getting old. Time to unlock our youth’s potential by Ibrahim Thiaw
The backbone of our food supply — the farmer — is aging. And though young people are increasingly turning away from the world’s farms and toward the world’s cities, their potential can be tapped to revive rural economies. Ibrahim Thiaw, the under-secretary-general and executive secretary of the United Nations Convention to Combat Desertification, explains how. Read more.
Paris Olympic officials are working to halve their carbon footprint compared to the 2012 London and 2016 Rio Games. [France 24]
The World Health Organization is urgently dispatching over one million polio vaccine doses to Gaza to prevent a potential outbreak of the highly contagious disease in the region. [UN News]
In Belém, Brazil, U.S. Treasury Secretary Janet Yellen urged climate action as an economic catalyst, calling carbon reduction “the greatest economic opportunity of the 21st century.” [Bloomberg]
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