A man passes a sign to Whitehall in London. Photo by: REUTERS / Luke MacGregor

LONDON — The United Kingdom’s controversial cross-government Prosperity Fund — which is set to double its spending next year — is still failing to demonstrate strong development impact and that it is focused on the world’s poorest, experts have warned.

It comes after the fund’s latest annual report, released last week, showed its spending doubled last year to £126 million ($156 million), of which £116 million was official development assistance.

Launched in 2017 as part of the U.K. government’s cross-government aid strategy — which aims to spend 30% of ODA through departments other than the Department for International Development by 2020 — the Prosperity Fund claims to reduce poverty by promoting inclusive economic growth while at the same time creating business opportunities for U.K. companies. It focuses exclusively on middle-income countries, including China and India, and emerging markets.

The fund has been criticized by the aid community, with fears that its dual mission of alleviating poverty and promoting British business interests marks a “step towards the return of tied aid,” according to the International Development Committee, the parliamentary group responsible for U.K. aid spending, in its 2017 inquiry.

It was also subject to a scathing review by the Independent Commission for Aid Impact in 2017, which convinced the Treasury to extend the fund’s timeline from five to seven years so that it had time to build up its spending capacity.

While the fund’s third annual report shows improvements in transparency, gender, and inclusion among its projects, experts continue to express major doubts about the fund’s poverty impact, especially as the report includes no results data.

“If we don’t have results data then we won’t know how successful projects have been at targeting poverty until it’s well into the lifecycle of the fund … and there’s a question about how you course correct for that,” Rachael Calleja, senior research officer at the London-based think tank the Overseas Development Institute told Devex.

According to the Prosperity Fund report, it is “too early in the programmes’ cycles to show major progress towards poverty reduction and the SDGs at this stage.” It offers a handful of case studies to “give confidence the portfolio is on track.”

However, with the fund’s budget set to double again next year to £305 million, of which £290 million will be ODA, experts fear that by the time the impact data does become available it may be too late.

“The fact that they don’t have any data … really speaks to whether the primary purpose of the fund is to achieve poverty reduction outcomes, or whether it is to achieve the national interest,” Calleja added.

To improve transparency, the Prosperity Fund has published more business cases and information. It is also taking part in a review of U.K. aid transparency carried out by the NGO Publish What You Fund and due out in November.

While Stephanie Draper, CEO of Bond, the network of U.K. development NGOs, said she welcomed the “concerted effort over the last year to increase transparency,” the latest annual report “suggests the Fund still fails to demonstrate that it is sufficiently focused on helping the world’s poorest and most vulnerable people.”

“This is exemplified by the fact that the Fund’s Theory of Change makes no reference to poverty reduction as a targeted outcome. It is also worrying that the Fund is yet to start reporting against its own identified impact indicators,” Draper added.

Romilly Greenhill, U.K. director of the ONE Campaign, agreed. “We still need to know more about what the fund is achieving — or at least is expected to achieve — for the poorest men and women in the countries in which it works,” she told Devex in an email.

The Prosperity Fund’s focus on middle-income countries is a source of tension in the sector. While the fund points out that MICs are home to nearly 60% of the world’s poor, development experts have argued that scarce aid resources would be better spent in lower-income countries — which only received around 20% of net ODA from wealthy donors in 2017.

About the author

  • Sophie Edwards

    Sophie Edwards is a Reporter for Devex based in London covering global development news including global education, water and sanitation, innovative financing, the environment along with other topics. She has previously worked for NGOs, the World Bank and spent a number of years as a journalist for a regional newspaper in the U.K. She has an MA from the Institute of Development Studies and a BA from Cambridge University.