The real "poverty barons" are multinational companies

Foreign aid should be investigated, but in the right way

 

On Monday, the new International Development Secretary Justine Greening launched an investigation into the millions of pounds of UK aid money diverted into the pockets of private sector consultants such as the staunchly pro-market Adam Smith International (ASI), following an investigation by the Sunday Telegraph.

This is certainly welcome news. The World Development Movement has for years argued that money made by highly paid consultants like ASI, forcing privatisation, is a dubious use of public funds at best. As early as 2001, ASI was paid to facilitate a water privatisation project in Tanzania, including earning a handsome £250,000 to promote a pop song.

But the worrying thing is that the use of the aid budget in this way is only the tip of the iceberg.  Increasing consultancy spend is part and parcel of a wider undying faith that DfID has in the private sector to deliver poverty reduction.

In one stark example, UK aid money is currently paying for consultants to advise the Bangladeshi government on the establishment of new special economic zones aimed at attracting private-sector investment. Existing zones give multinational companies tax holidays and subsidised land while placing severe restrictions on trade union activity to an extent where the average wage inside these Bangladeshi "export processing zones" is around £30 a month. Here, the scandal goes well beyond the approximately £14m that we are paying the consultants. The heart of the issue is the fact that we are using aid to support a project that will do everything to benefit multinationals like Adidas, which made 671 million Euros in profit last year, and next to nothing for the supposed beneficiaries.

But the government’s pursuit of development policy that focuses on the private sector doesn’t stop at promoting pro-market solutions through consultants. Increasingly, we are seeing multinational corporations replace aid agencies, governments and NGOs as the implementing partners in aid projects.

For example, DfID’s Girl Hub project aimed at getting policymakers to prioritise the needs of girls is being implemented by the Nike Foundation. At the hunger summit hosted by David Cameron during the Olympics, it was Unilever and Glaxo Smith Kline, not NGOs or governments who were named as the major partners.

The problem with all this is that the core assumption – that private sector solutions will be somehow better and more efficient than public sector oriented ones – is based on ideology, not evidence. Nike’s Girl Hub project was slammed as having “serious deficiencies in governance” by the independent aid watchdog ICIA.

There have been myriad inquiries into aid policy over the past decade, but none have broached the key question that needs to be answered: do pro-market, private sector models of development work better for the poorest people than approaches that focus on using and strengthening the capacity of the public sector? The World Development Movement’s 2007 research on water provision showed precisely the opposite.

Justine Greening should look towards supporting an independent Parliamentary inquiry into this broader and more vital question, and put ideology aside and in the interests of genuine poverty reduction. Until this happens, there will remain doubts about whether the government is serious about an aid programme focused on the poor rather than promoting market ideology alone.

Deborah Doane is director of the World Development Movement

Food aid is collected in a Kenyan refugee camp. Credit: Getty Images
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Cabinet audit: what does the appointment of Boris Johnson as Foreign Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Foreign and Commonwealth Affairs.

The world shared a stunned silence when news broke that Boris Johnson would be the new Foreign Secretary. Johnson, who once referred to black people as “piccaninnies” and more recently accused the half-Kenyan President of the United States of only commenting on the EU referendum because of bitterness about colonialism, will now be Britain’s representative on the world stage.

His colourful career immediately came back to haunt him when US journalists accused him of “outright lies” and reminded him of the time he likened Presidential candidate Hillary Clinton to a “sadistic nurse”. Johnson’s previous appearances on the international stage include a speech in Beijing where he maintained that ping pong was actually the Victorian game of “whiff whaff”.

But Johnson has always been more than a blond buffoon, and this appointment is a shrewd one by May. His popularity in the country at large, apparently helped by getting stuck on a zip line and having numerous affairs, made him an obvious threat to David Cameron’s premiership. His decision to defect to the Leave campaign was widely credited with bringing it success. He canned his leadership campaign after Michael Gove launched his own bid, but the question of whether his chutzpah would beat May’s experience and gravity is still unknown.

In giving BoJo the Foreign Office, then, May hands him the photo opportunities he craves. Meanwhile, the man with real power in international affairs will be David Davis, who as Brexit minister has the far more daunting task of renegotiating Britain’s trade deals.