The UK government has been accused by NGOs and unions of ‘chasing post-Brexit colonial fantasies’ to the detriment of the world’s poorest as they urge Liz Truss to focus aid on poverty reduction rather than geopolitical maneuvers.
In a joint letter to the Foreign Secretary, the group criticizes the rebranding of the UK development investment arm, which will see the Commonwealth Development Corporation (CDC) become British International Investment (BII) next year.
“This new strategy and name change appears to reconvert BII into an institution that focuses solely on private sector investments and profits, rather than development goals and poverty reduction,” write the 12 organizations, including Global Justice Now, the Trade Union Congress. (TUC), the Catholic Overseas Development Agency (Cafod) and Unison.
“Rather than investing in job creation in general and in projects that have only the weakest relation to poverty reduction, in the hope that the economic benefits will trickle down to the most marginalized communities around the world, British aid must retain a strong mandate to reduce povertyâ¦ and support job creation to maintain its international credibility, âthey said.
When Truss announced the overhaul of the CDC last month, she presented it as part of the Foreign, Commonwealth and Development Office’s (FCDO) ‘freedom network’ strategy, outlining BII’s plans to mobilize private capital to invest in countries in Asia, Africa and the Caribbean.
Observers said the implicit message was that the government views the BII as an alternative to loans from China, which has reportedly loaned around $ 1.5 billion (Â£ 1.1 billion) in direct loans and trade credits. to more than 150 countries around the world.
The change, said Truss, would help “to develop the economies of Asia, Africa and the Caribbean while bringing them closer to free market democracies and building a network of freedom across the world.”
But NGOs, already furious at the government’s reduction of the aid budget from 0.7% to 0.5% of gross national income, condemned not only the rhetoric but also the practical changes in the way British aid is spent.
In the letter, also sent this week to Diana Layfield, the new CDC chairperson, NGOs and unions warn that increased funding for BII “will almost certainly lead to catastrophic cuts in other areas of aid spending based. on subsidies “.
‘Ultimately this means that more UK aid will be directed to projects, countries and sectors which provide an economic advantage to the UK, rather than to the world’s most marginalized communities,’ they add. .
“Particularly in this time of global health crisis and climate crisis, what remains of Britain’s squeezed aid budget should be a priority for agencies with a proven track record of achieving development goals.”
It is “very worrying,” the letter said, that the changes appear to have been made without consulting civil society or unions.
Frances O’Grady, General Secretary of the TUC, said: âAfter being left in the dark about UK international investment plans, it is time for ministers to consult with unions and other civil society groups so that we can secure decent jobs and reduce poverty. are at the heart of the institution’s work.
Daniel Willis, development finance activist at Global Justice Now, said: âUK aid has a clear role to play in supporting the ‘Global South’ during the pandemic and against climate change, but instead , the government is pursuing post-Brexit colonial fantasies. .
“Having already cut the aid budget by Â£ 4bn this year, the expansion and rebranding of the role of BII by the government will see grants cut further and more funds will go to projects at profit and inefficient private sector. “
The CDC said it invest Â£ 3 billion specifically to help emerging economies in Africa and Asia achieve the goals of the Paris Agreement.
But Graham Gordon, public policy manager at Cafod, said that at the Cop26 summit in Glasgow last month, developing countries had “bugged out” for more climate finance in the form of grants rather than grants. loans, and that the new proposals of the BII could cause these countries to become even more indebted.
“As Secretary of State with direct oversight of BII, Liz Truss should commit all future UK climate finance in the form of grants, not loans, and stop all future disbursements to BII unless she can show how it will provide funding based on grants, âhe said.
Unison International Officer Mark Beacon said: âMinisters should not channel the shrinking aid budget to the private sector. Rather, they must finance quality public services to reduce global challenges such as poverty and inequality. “
A spokesperson for FCDO said: âNo country in the world has escaped poverty without a reliable and long-term investment. Reliable and honest sources of finance are needed in low- and middle-income countries to prevent them from incurring unsustainable debt and make them freer, richer and more secure.
âBritish International Investment will act as a key delivery vehicle to generate investment and economic opportunities in Asia, Africa and the Caribbean, including some of the world’s poorest countries. “