Tackling poverty is not a priority in British aid spending

The Tory party’s idea of ‘development’ involves investing in overseas private sectors that are beyond the reach of helping the world’s most vulnerable. Rather than tackling poverty, they are complicit in its existence, and Global Justice Now wants us to do something about it.

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CDC group, the UK’s development bank, has received increasing amounts of funding from the UK government over the past few years. While the government claims that their goal is to fight poverty, tackle climate change and improve global health, large proportions have been spent on private hospitals, private schools and private equity funds, as well as the fossil fuel industry. According to a 2020 report released by Global Justice Now, $800 million has been invested in oil and gas-burning power plants in Africa and Asia in the last decade. $200 million has been invested in private hospitals, including Nairobi Women’s Hospital, which has been accused of overcharging patients, and which Oxfam has deemed unaffordable for most Kenyans. A substantial amount has also been spent investing in corporate hospitality, for example $53.55 million in Onomo Hotels, whose target clients are wealthy African business travellers.

Clearly, the UK government predicates their understanding of ‘development’ in relation to levels of economic growth. Whilst many in the West see economic growth as the solution to global poverty, the last 50 years of growing inequality suggests that it actually perpetuates poverty. Whilst economic growth has its advantages, the assumption that this will ‘trickle down’ to the poorest is proven to be irrational.

Privatisation of the aid budget comes with the objective of forging positive relationships with foreign governments, in the hopes of establishing trade deals. When the government announced last summer that the Department for International Development (DfID) would merge with the Foreign and Commonwealth Office (FCO), they pledged that decisions on aid spending would fall “in line with the UK’s priorities overseas”. The priority has proven to be protecting the interests of British businesses rather than tackling the global poverty crisis. The government claims this will give British taxpayers their value for money – why not? After all, aid is all about getting something in return.

Adding to the problem, CDC appoints private equity funds to make decisions on where the aid budget goes. Two British managers were appointed to run Spencon in Kenya, which was “once the largest infrastructure development company in East Africa”. The two were accused of fraud, bribery and other dubious business practices, and the firm is now bankrupt. Global Justice Now also claims that “CDC funds continue to make extensive use of tax havens”. Given the corruption, the underdeveloped taxation system and the lack of regulations in some of the countries receiving British aid, it is made even easier for corporate cronies to take advantage of investment arrangements. Western businesses tend to be responsible for the active ‘underdevelopment’ of these nations, drawing resources and encouraging rent-seeking in governments, thus impeding accountable and democratic practice in host countries.

The Abraaj Growth Markets Health Fund has a legal base in the Cayman Islands, and is one of the dozens of private equity companies recruited by CDC. With the help of other investors, including the Bill and Melinda Gates Foundation, the fund accrued $1 billion of investment after its launch in 2015. While funds like these are supposed to develop new infrastructure that will benefit the public healthcare system, this fund’s largest investment was reportedly $145 million to buy a 72 per cent stake in an Indian private healthcare company. So our aid budget is aiding people, just people who can already afford it.

This regular practice of CDC is endorsed by the British government. The existing reality is that very little impact is being made on sections of the population that are most disadvantaged. Daniel Willis, the aid campaign manager at Global Justice Now, says that the government’s decisions on aid spending have only served to “accelerate the UK’s increasingly extractive relationship with the global south”. Instead of investing in underfunded sectors that are in need, the government has focused on turning profit, which in fact serves to exacerbate the problems of inequality further; they line the pockets of their overseas counterparts while ignoring the poverty stricken and denying them aid. Under the Conservatives, the aid budget has been centred around the prospect that we would get something in return from recipient governments, whether it be trade or other political perks. It seems that the questionable funding of foreign private sectors has increased since the Brexit referendum, suggesting that the government has used aid as a ruse to forge ties with overseas elites, in the hope of establishing favourable post-Brexit trade deals.

Despite the Conservative’s legally binding commitment to spend 0.7 per cent GNI on aid in 2021, Rishi Sunak announced in November that this would decrease to 0.5 per cent and increase again “when the fiscal situation allows”. Given that billions of pounds worth of Covid contracts have been handed to Boris’ incompetent inner circle, this seems just a little wrong. The pandemic has pushed millions more people around the world below the poverty line, and while we are expecting a potential return to normality by the end of this year, many countries may not have access to the vaccine for a couple of years to come.

Global Justice Now has set up a petition, asking Boris Johnson to stop hijacking the aid budget for the sake of furthering the interests of the private sector abroad. They also urge constituents to write to their MP, specifying the Global Justice Now report, and articulate that we do not want the aid budget, nor our taxpayers’ money, to be spent on corporate contracts abroad. Boris has displayed an explicit unwillingness to even tackle child poverty within the UK during the Covid crisis, choosing rather to give £800 million in Covid contracts to Tory party donors. It is hardly surprising that his attitude towards overseas poverty is the same. The Conservatives boast the fact that we are the world leading aid donor, yet their focus is anything but helping the world’s most vulnerable.

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