‘Damning indictment’ of UK’s international development strategy
By GlobalJusticeNow – Global Justice Now today said the UK government’s international development strategy was “hell-bent on pushing aid money into financial markets regardless of the consequences”, following the release of a damning report by independent aid watchdog ICAI – the Independent Commission for Aid Impact. (*)
The report gives CDC, a wholly-owned company of the Department for International Development (DFID), a ‘red-amber’ score for its new strategy, which means its achievements are ‘unsatisfactory in most areas’.
CDC is used by DFID to finance private companies and markets with the aim of stimulating jobs and growth in developing countries. The government has handed vast sums of aid money to CDC, seeing private sector development as one of the cornerstones of international development.
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DfID invested £1.8 billion in CDC from 2015 to 2018, with more investment planned. CDC projects that its net assets may increase from £2.8 billion in 2012 to over £8 billion by 2021, despite its history of funding upmarket shopping malls and private schools and hospitals.
Nick Dearden, director of Global Justice Now, said:
“We have repeatedly warned about the dangers of pushing money into the private sector, and this report suggests we were right to be worried. Despite the government throwing vast sums of new money into CDC, the watchdog has clearly said that CDC’s new strategy is unsatisfactory. This is a damning indictment of the government, and shows that successive international development secretaries have been hell bent on pushing aid money into financial markets regardless of the consequences.
“In fact the conclusion of the ICAI report is far more positive than the facts warrant. Among other things the report notes that average returns of 10.6% suggests CDC is still putting high financial returns ahead of real development impacts. The report is also damning about CDC’s failure to measure its development impact or to prove that it mobilised additional private finance for the projects it engages in.
“This should be a wake-up call that the strategy of using public resources in order to leverage private finance for ‘development’ is very dangerous. What’s good for big business and rich investors is not necessarily good for the globally impoverished, and you can’t reduce inequality by adding more to the overflowing plates of those at the top of society. We need an urgent, radical shake-up of Britain’s aid strategy if the public are not to lose all confidence in international development.”
* CDC’s investments in low-income and fragile states – new review, 26 March 2019, https://icai.independent.gov.uk/new-review-cdc/