How many UK aid-funded consultants does it take to dismantle a state?

By: Claire Provost
Date: 1 April 2016
Campaigns: Aid

The UK should redirect aid towards “helping along and speeding up the process of privatisation in the third world”. That was the conclusion of a short paper published by a young researcher named Peter Young in 1986.

After working at the neoliberal Adam Smith Institute think tank – a key force behind privatisation in the UK under Margaret Thatcher – it was time, he argued, to take the privatisation campaign worldwide.

Few now have heard of Young or his ideas, but for years he has been a key player in determining how UK aid is spent. In 1992, Young and two of his colleagues from the Institute founded what was then a small international consultancy. Today, that company is called Adam Smith International (ASI) – one of the Department for International Development’s (DfID) largest and most controversial private contractors, and the subject of a critical report released today.

And business, for ASI, is booming. As DfID’s budget has grown, more and more of it has been outsourced to for-profit companies. Since the Conservatives took office in 2010, the department has developed an all-consuming obsession with “helping the private sector” as a way to end poverty.

“Today, there is much greater consideration for the role of the private sector,” said Jonathan Pell, one of ASI’s senior managers, providing evidence to a House of Lords inquiry on aid in 2011. “We see much greater focus on the role of the private sector, not just in agriculture, mining and those more traditional areas but in new exciting areas such as water… Five years ago, if you had mentioned the role of the private sector in water, you would have been accused of being a right-wing loony.”

Despite DfID’s repeated pledges to be more transparent with how it spends UK aid, following the money remains difficult. But new research from Global Justice Now, released today show’s the scale of ASI’s UK aid-funded business success. According to analysis of data published by the department, the company has won hundreds of millions of pounds in DfID contracts over the last five years alone, including contracts for controversial projects in Nigeria, Afghanistan and Papua New Guinea.

Parliamentary committees and the UK government’s independent aid watchdog, the Independent Commission on Aid Impact, have warned before that relying on private contractors is a risky way to spend aid money. ASI has a particularly controversial track record – including its involvement in a failed water privatisation scheme in Tanzania, when, with UK aid money, it even helped write a pop song to promote the sell-off of public water services to private businesses.

In 2015, Global Justice Now published research revealing how, despite the UK’s own long and controversial experience with energy privatisation, DfID has put millions of pounds into supporting a privatisation programme in Nigeria, via ASI consultants, that has already left poor communities struggling higher tariffs, mandatory fixed payments, poor service and job losses at the hands of private energy companies.

Globally, hundreds of cities and municipalities have moved to take back privatised water and energy services and bring them back into public hands. A review of DfID’s ASI-implemented project in Nigeria, published by the department in March 2015, acknowledged that it is “well aligned to the objective of contributing to non-oil growth but less well aligned to direct poverty reduction”. It cautioned: “Without clear targeting of interventions, benefits may not necessarily reach the poorest or contribute to wider and longer-term poverty reduction.”

This is the world of UK aid that taxpayers rarely see – how for-profit private contractors are increasingly part of how our money is spent. ASI has grown to become a multi-million pound company thanks to British aid, reaping profits for its shareholders while delivering questionable benefits for poor communities in a number of its projects. With DfID’s current private sector obsession, and the UK’s long-standing commitment to spend 0.7 percent of gross national income as aid now enshrined in law, it’s a business model that is concerning for global justice.

Photo: April Fools protest by Global Justice Now of aid consultants protesting for more money.