UK firms heed DfID's call for development through business

Want to reduce aid dependency? Develop the business sector. That’s what the U.K. Department for International Development wants to do with all its 29 partner countries starting 2015, British Secretary for International Development Justine Greening announced in a speech on Monday as she unveiled details of a strategy the department already adopted over a year ago but until now had lacked specifics on implementation. Under its renewed push for economic development, DfID will spend 1.8 billion pounds of its budget on “growing emerging frontier economies to end their dependency on aid” in 2015-2016, almost triple the 620 million pounds it allocated for this in 2012-2013. Greening hinted less than a year ago that she would encourage businesses to join the government’s development efforts under the three pillars of reducing trade barriers, developing the private sector and boosting investment to develop the economies of its partner countries, where the development secretary said both the department and U.K. firms had “barely scratched the surface” of partnerships. Now she is even more convinced that economic development “is, without question, the only way countries can leave behind enduring and chronic poverty for good.” Promoting business DfID’s 2015-2016 strategy includes several partnerships with top firms in the British private sector — Sainsbury’s, Marks & Spencer, Debenhams, Primark, Asda, River Island, John Lewis Partnership, C&A, M&Co, Next and Morrisons — to improve business conditions and create job opportunities for smallholder farmers in Kenya, South Africa and Bangladesh. “Working with world-class businesses ensures frontier developing economies get the best support, advice and expertise they need to grow, and Britain is well placed to benefit from this growth,” Greening said. DfID will also spend at least 20 million pounds on efforts to reduce risk of doing business by supporting investor insurance in the still fragile but emerging economies of the Democratic Republic of Congo, Liberia, Sierra Leone, Somalia, South Sudan, Sudan, Zimbabwe, Afghanistan, Myanmar, Nepal, Yemen and Palestine, with a maximum total coverage of 270 million pounds. The funds for the insurance scheme will be provided by donors contributing to the Conflict-Affected and Fragile Economies Facility run by the Multilateral Investment Guarantee Agency, the World Bank arm in charge of promoting foreign direct investment in developing countries. Support for social entrepreneurs In addition, DfID said on Monday that East African venture capital fund Novastar will become the first beneficiary of a fund managed by the Commonwealth Development Corporation to support small and medium social enterprises across the region. Novastar will receive up to 9 million pounds to help entrepreneurs provide low-cost schooling, health care, energy, housing and safe water. Could this last point confirm former development secretary Andrew Mitchell’s prediction that the CDC will take on a bigger development role than DfID in the future? Too soon to tell, but the British aid strategy seems to be moving in that direction, which some NGOs argue undermines their poverty eradication efforts. The department will also have to be careful on implementation, especially after Greening was forced to shut down an ambitious program to support trade and regional integration in Southern Africa following a probe by U.K. aid watchdog ICAI that revealed irregularities and weaknesses over impact, oversight and financial monitoring. Read more development aid news online, and subscribe to The Development Newswire to receive top international development headlines from the world’s leading donors, news sources and opinion leaders — emailed to you FREE every business day.