LONDON — During a week-long trip to several African countries last week, United Kingdom Prime Minister Theresa May pledged to deliver “a radical expansion of the U.K.’s presence in Africa,” the heart of which is a £4 billion ($5.13 billion) investment strategy, largely channeled through the U.K. government’s development finance institution, CDC.
But aid experts have questioned whether May will be able to get her government to deliver on the ambitious plan, and also expressed concerns that using the aid budget to boost trade and investment on the continent could compromise pro-poor development.
Speaking in Cape Town, South Africa, on the first day of a trip in which she also visited Nigeria and Kenya, May spoke of a "fundamental strategic shift" in U.K. aid spending, which would put development “at the heart of our international agenda — not only protecting and supporting the most vulnerable people but bolstering states under threat, shaping a global economy that works for everyone, and building cooperation across the world in support of the rules-based system.”
She pledged to maintain the 0.7 percent aid target but also said she was “unashamed about the need to ensure that our aid program works for the U.K.” Development spending will “not only combat extreme poverty, but at the same time tackle global challenges and support our own national interest,” she said.
The comments come as the prime minister tries to appease a divided government and negotiate the country’s exit from the European Union. Government departments are also preparing for a spending review designed to outlined the government's spending plans for the next four-five years, due to start in the coming months. The last review was in 2015 and included a number of reforms for the Department for International Development.
Insiders told Devex the review is likely to lead to a tug of war over the aid budget as non-DFID government departments try to secure greater portions of the ring-fenced official development assistance pot. In this context, the speech could be seen as DFID vying to maintain the lion’s share of the budget by aligning itself with the national interest agenda, according to one aid insider who did not wish to be named for professional reasons.
Devex spoke to aid experts about May’s visit, to get their reaction on the key development issues.
A focus on Africa
The rationale for going after Africa is obvious: It is home to five of the world’s fastest-growing economies, and by 2050 it is estimated a quarter of the world’s population will be living in the region. Yet in recent years, the U.K.’s presence in Africa — in terms of investment, diplomacy, and security personnel — has been diminishing. May is the first prime minister to visit the continent since 2013. Now, she wants to turn that on its head and make the U.K. the G-7’s number one investor in Africa — it is currently second, behind the United States, but its investment level has remained largely stagnant since 2011 and trade levels are low compared to the other G-7 members, according to the Center for Global Development.
Furthermore, this is not the first time a British government has vowed to “take Africa more seriously,” according to Owen Barder, CGD’s vice president, who said the government under Tony Blair was unable to deliver on similar claims.
“It’s very difficult to get the whole of government to take seriously the interests of sub-Saharan Africa,” Barder said, adding that “good ideas get floated and jettisoned pretty quickly when they turn out to be politically difficult to implement.”
Others suggested the U.K.'s pro-Africa pivot could be linked to its plans to leave the European Union, which May alludes to in her speech, and thus part of a short-term bid for post-Brexit trade deals.
"Yes, it is in the U.K. interest to see progress in Africa. But will the actual investment decisions be driven by concerns over long-term progress or short-term economic benefits for the U.K.? One wonders whether Ms. May would have gone to Africa at all were it not for economic concerns related to the new Brexit situation, and that will obviously influence the U.K.’s approach,” Jonathan Glennie, an expert on aid to Africa, told Devex.
Aid in the national interest
The U.K.'s development chief Penny Mordaunt repeatedly returned to the theme of spending "in the national interest" during a wide-ranging speech on the future of U.K. aid earlier this year.
The national interest language that permeated the speech is not new. Secretary of State for International Development Penny Mordaunt has also spoken about tying aid to the national interest, a pivot that was clear in the 2015 U.K. aid strategy under David Cameron. However, Romilly Greenhill, U.K. director of the One Campaign, said comments from the prime minister on the issue add weight.
Nilima Gulrajani, senior research fellow at the Overseas Development Institute, added that May’s speech appeared to show the U.K. embracing a “more enlightened” definition of national interest, one which “suggests that the U.K. interest [can be] satisfied as a positive externality of long-term development of the continent,” and not by short-term measures such as tying U.K. aid to contracts with British companies, for example.
The national interest rhetoric does with risks however, especially that development assistance will become be spent less effectively — in terms of its impact on the most marginalized and poorest — in pursuance of U.K. interests, Gulrajani said, and so NGOs are right to pay close attention to how May’s rhetoric plays out in terms of U.K. aid policy.
“My sense is the speech maintains a commitment to development cooperation to Africa. The question is whether it will disrupt the focus on extreme poverty … That’s where time will tell,” she said.
Greenhill agreed. “The concern is that the more you focus on the national interest, the less focus there is on poverty reduction … I don’t believe all aid can be win-win for U.K. interests and poverty reduction,” she said.
Writing in the Sunday Times newspaper, Paul Collier accused NGOs criticizing May’s plans — especially the potential to benefits to British businesses — of being “ideological and self-serving” in their hostility to modern business, arguing that “enlightened self-interest is legitimate and valuable.”
The biggest ticket item in May’s speech was the announcement of a £4 billion investment in the private sector to spur job creation across the continent.
“At the very heart of [our] partnership should be job creation. Every African leader I speak to identifies jobs as the number one demand of their people and their greatest political priority,” the prime minister said.
The bulk of this investment will be channeled through CDC, which is tasked with investing £3.5 billion in African countries over the next four years. To help make this happen, the U.K. will also invest up to £300 million of aid in the Private Infrastructure Development Group, a development finance organization focused on infrastructure and funded by the U.K. and other mainly European donors. PIDG investments will “lay the foundations for new trading and business opportunities across Africa in places businesses previously would not have been able to operate,” according to a press release.
U.K. aid chief Penny Mordaunt laid out five key focus areas for the U.K. government's aid work in a speech with a national interest thrust earlier this year, including a plan to partner with the City of London to help countries transition out of poverty.
The hope is that these investments will generate up to £8 billion in additional investment for African countries between 2018-2021, thanks in large part to the City of London which will provide technical assistance and help to improve business environments, strengthen institutions, and remove barriers to investment across the continent. African companies will be encouraged to list on the London Stock Exchange.
The City of London currently manages over £8 trillion of assets, of which only around 1 percent is invested in Africa. Next year, London will play host to an Africa Investment Summit, to help strike investment deals, the prime minister said.
While aid experts agreed that job creation and increased investment are good for the continent, some sought assurances it will be delivered in a way that does not exacerbate inequalities.
“Job creation of course is very important, but which jobs for which people and under what conditions? Are you creating jobs for marginalized women or urban men in richer areas?” Greenhill said.
Claire Godfrey, head of policy and campaigns at Bond, the network of U.K. aid NGOs, said “we should all support the type of economic development that tackles inequality, helps people out of poverty, and is environmentally sustainable.”
Others pointed out the massive increase in work for CDC that the plan entails. The development finance institution only invested £500 million in Africa last year and will need to ramp up its spending by 75 percent to reach the £3.5 billion commitment across four years, according to a CGD blog.
May’s speech also offered insights on the U.K.’s thinking around trade with Africa, confirming plans to continue existing EU trade agreements with South Africa and other southern African countries post-Brexit.
“I’m delighted that we will today confirm plans to carry over the European Union’s Economic Partnership Agreement with the Southern African Customs Union and Mozambique once the EU’s deal no longer applies to the U.K.,” she said.
However, CGD’s Barder said he would like to see May offering better terms than the current EPAs, including simpler rules and fewer restrictions, although this would likely be opposed by the U.K.’s Department for International Trade.
All 29 developing countries that currently hold Economic Partnership Agreements with the EU have agreed to replicate them with the U.K. after Brexit, according to a government source — but some members of the development community say they should be renegotiated.
“Is May now going to tell DIT to back off and agree something more positive for African countries to make good on her speech? If she does, it would be a remarkable change in policy and strategy,” Barder said. Others in the aid sector have also criticized the terms of the EU’s EPAs and suggested Brexit could be an opportunity to renegotiate them.
Human capital, corruption, dirty money, and security
May said, “we must also support governments as they work to ensure development is not stalled by other threats,” including addressing issues around climate change, gender inequality, and human capital. The speech was followed by a number of DFID announcements on support for education, skills, and health care, including a new £36 million, five-year grant for family planning work in Kenya starting in 2019. Other commitments included work on jobs, skills training, and education.
Pointing to further threats, May also committed to use aid funding to fight “corruption and dirty money.” Measures will include lending U.K. expertise to support African institutions to tackle financial crime and recover illegal financial flows. That will start with Kenya, where the U.K. has signed a new agreement to return more than £3.5 million of criminal proceeds which had been hidden in U.K. bank accounts. The money will be used exclusively for development projects, according to a DFID press release. Africa has lost an estimated $1 trillion over the last 50 years in illicit financial flows.
On security, the prime minister said “African and British security are inextricably linked and mutually dependent.” As a result, she will continue to support calls for a permanent African presence on the U.N. Security Council and promised more “support” for fragile countries fighting terrorism, increasing the U.K.’s presence in Chad, Niger, and Mali. May also said the government will work more in countries such as Jordan to counter the Islamic State group. Finally, she said more resources would be invested into tackling “illegal migration,” an issue that has been controversial in aid circles.
Greenhill said it was important the U.K. maintains its reputation as a “neutral player and an honest broker,” and said she would prefer to see the U.K. using its aid budget “to create the long-term conditions for security rather than short term [of] fighting particular terrorist groups.”
Update, Sept. 5: This story was amended to clarify that, among the G-7 countries, the UK is currently the second biggest investor in Africa. It is third from the bottom in trade.