Maybe giving aid money to big business doesn’t solve poverty. Who knew?

Maybe giving aid money to big business doesn’t solve poverty. Who knew?

Date: 21 May 2015

In 2009 the Conservative party unveiled their new international aid agenda and stated that, “capitalism and development was Britain’s gift to the world. Today we have an opportunity to renew that gift by helping poor countries kick-start growth and development.” Six years and hundreds of millions of pounds of taxpayers’ money later, we have the first formal and independent assessment of the Department for International Development’s (DfID) strategy of increasingly working with, and through the private sector to address poverty and inequality. It turns out that working with Coca Coca Cola and paying Diageo to make Guinness in Cameroon don’t seem to be effective ways of delivering development benefits. Who knew?

The Independent Commission for Aid Impact (ICAI) has today released an audit of DfiD’s business partnership programme. It was given an overall ‘amber-red’ rating – meaning that it was performing “relatively poorly against ICAI’s criteria for effectiveness and value for money.” The same ‘amber-red’ rating was also given to the objectives, delivery, impact and learning assessments of the programme.

The commission wrote that it was “concerned about the level of strategic oversight DFID has over business engagement activities and the lack of clear targets for this portfolio. Our findings show that DFID needs to do more to translate its high level ambition into detailed operational plans with a clear focus on poverty reduction.”  The commission also identified cases where it was “not confident that DFID’s support is additional to what businesses would have done anyway, especially in the case of challenge funds.” In other words, aid money has simply being used to subsidise what those corporations were doing anyway, while giving them free PR as to what socially engaged, good corporate citizens they are.  The report remarked that one such initiative, the much criticised New Alliance for Food Security was “little more than a means of promotion for the companies involved and a chance to increase their influence in policy debates”.

At Global Justice Now we’ve been constantly raising concerns about DfID’s disturbing direction in aid spending.  It’s not just a question of aid being ineffective, in many cases money is being spent on making things worse. Last month we  published a critical report on DfID of working with multinational corporations including Pearson and Coca Cola to promote private education and healthcare in the global south, despite the fact that the UN special rapporteur on the right to education has called for an end to this sort of approach because of it entrenching inequality.  In January we documented how a Nigerian farming community were being forced off their land by an agribusiness corporation that was part of the DfiD-backed New Alliance for Food Security.

DfiD’s  approach seems to be driven by an outdated ideological commitment to free-market mania. You’re left with the impression that aid money has been spent on aiding the efforts of corporations to expand their markets in the global south rather than to support economically marginalised communities to access to basic amenities. The irony is that the multinationals that get subsidised are often the ones who help maintain the inequality that aid should be addressing.  Multinationals are costing developing countries over $100 billion in tax revenues every year through their use of tax havens.

The dogma of neoliberalism and ‘trickle down’ economics has become increasingly discredited – it takes a real commitment to the ideology to still believe in this day and age that helping the rich get richer is beneficial to anyone but the rich. Bizarrely it’s in the field of development where this thinking seems to be becoming more entrenched rather than ridiculed. We are expected to seriously believe that using aid money to build gated communities and luxury shopping malls in the global south will somehow bring benefits to the poorest sections of society.

In truth, even if every single penny of UK aid money was spent in a way that progressively supported the needs of, for instance, small-scale farmers, indigenous communities, trade unions – it would still only ever be a limited part of what’s needed to address the structural inequality of north/south relations. On a more fundamental level we need to address issues such a tax havens, the imposition of unfair trade regimes and resource-based colonialism in order to break the systemic under-development of the global south that has brought to much benefit to the north.  The UK’s legal commitment to spend 0.7% still has an important role to play as a tool towards redistributing global resources, but   it’s essential that we ensure that it goes towards transformational projects and communities that are promoting the public, democratic control of services and amenities. We shouldn’t be spending a penny towards subsidising the profits and PR campaigns of multinational corporations, let alone the £494 million that DfID has spent on these ludicrous business partnerships in the last two years.