Kevin Watkins challenges last week’s post arguing for the importance of sustaining bilateral aid spending: on the contrary, he says, the UK should in fact give priority to multilateral over bilateral aid. And, he adds, we can’t have a debate about the future of aid without acknowledging that ministers have lost the plot by cutting spending on education and gender equity – and that using aid to stimulate economic growth has a poor track record. [Update: this debate is still going strong – read the blog below first, then Guy and Will’s latest response to it here]
Guy Lodge and Will Paxton provide some sensible and thoughtful reflections on the UK’s anguished “future of aid” debate. As we navigate the freefall transition from aid superpower to aid minnow, we need ideas that offer what the government has spectacularly failed to provide – namely, some semblance of strategic direction. So why do I disagree pretty strongly with the conclusions that Will and Guy reach, and the recommendations that follow? Four reasons.
First, the preference for bilateral over multilateral aid is based on flawed financial logic. Every $1 in bilateral aid delivers $1 to programmes nicely draped in national flags of the respective donors. Every dollar delivered through IDA, the World Bank’s soft-loan arm and the biggest source of development finance for the poorest countries, especially those affected by conflict and fragility, delivers $3-4. That figure could be increased through the innovative use of risk guarantee mechanisms, not to mention less conservative lending policies.
If you’re shooting yourself in one foot by making indefensible cuts in the aid program, why would you take aim at the other foot and prioritise bilateral aid over multilateral delivery?
Partly to counter Chinese influence through UK soft power, according to Will and Guy. Really? Last September, at a summit in Beijing, Xi Jinping pledged to provide $51bn in aid, loans, and investment to Africa over three years, dwarfing any feasible UK effort. I somehow doubt that Chinese diplomats and strategic planners will be fretting over UK influence in the region.
Second, pooling resources through multilateral organisations offers gains in efficiency, economies of scale, and a platform for strategic coordination behind shared priorities.
By contrast, far too many bilateral aid projects are high cost, far too small to move the dial on impact (the average aid grant today is under $1 million) and marked by high transaction costs for recipient governments. Last year, in a report prepared by ODI Global for Brazil’s Presidency of the G20, we estimated that Ethiopia was administering over 400 separate poverty-related projects for donors, most of them operating off-budget.
I’m totally in favour of aid to support civil society organisations working to defend rights, hold governments to account, counter corporate mineral grabs, and tackle gender disparities. There should be more of it. But tilting the balance in favour of bilateral aid will inevitably reinforce fragmentation and diminish impact.
Third, I apparently struggle more than Will and Guy with some of the language being used to rationalise the aid cuts. How did we arrive at a situation where a Labour Secretary of State, Jenny Chapman, declares before the UK parliament’s International Development Select Committee that “the days of viewing the UK government as a global charity are over?” – a turn of phrase recalling Boris Johnson’s condescending pledge to stop the UK being treated by poor countries as “a giant cashpoint in the sky“. Apparently, the new model for development cooperation will see the UK emerge as an investor and partner, rather than a charity.
The idea that we are about to become an investment powerhouse for the Global South strikes me as far-fetched, to the point of being delusional (I’m being diplomatic here). Yes, the UK could – and should – do more to promote blended finance for infrastructure investment and the green transition. But let’s not underplay the critical importance of public finance and grant aid in combating hunger, extending access to health are, or getting girls into school. On the latter, I found it extraordinary that a Labour Secretary of State for Development would, in her same speech to the Select Committee, identify cuts to spending on education and gender equity, two of the most powerful drivers of human development, as her first order priorities. Where does this stuff come from?
‘Those of us working on international development have to ask ourselves one overwhelming question: how did we go almost overnight from a 0.7% consensus to a 0.3% consensus spanning the leaders of Labour, the Conservative Party, and Reform?’
Fourth, I question Will and Guy’s focus on driving economic growth. There are plenty of areas in which the UK could play a role in supporting reformers trying to build more efficient and equitable public finance systems, whether by cutting tax exemptions, transferring public subsidies that benefit the rich into investments targeting the poor, or shifting resources to more deprived areas. But aid for economic growth has a poor track record on delivery.
None of the above detracts from the case for deep reform of the international system for development finance. Governance of the Multilateral Development Banks (MDBs) and international aid concentrates power in the Global North. The MDBs themselves are maddeningly conservative in their approaches to risk. Ken Opalo has cautioned against governments in Africa using aid and accepting aid dependency as a substitute for domestic resource mobilisation. Aid is one small part in an international development finance system that is failing to deliver affordable finance, tackle the debt crisis, and combat global inequality.
We are living through extraordinary times. Duncan Green is right to characterise what is happening on aid as a tsunami – and tsunamis inevitably leave a trail of destruction. IS Global, the Barcelona-based health research institute, estimates that US aid cuts will result in an additional 14 million deaths, 4.5 million of them among children under 5. The UK’s decision to cut aid will inevitably add to the human toll.
Sadly, aid donors have already ‘priced-in’ public concern over the suffering that will come with cuts to development assistance. Therein lies a deeper concern that should be prompting some tough conversations. In her comments to the Select Committee Jenny Chapman delivered some uncomfortable home truths. Public support for aid is at best wafer-thin. That’s not because public sentiment is lacking in empathy, generosity, or concern over hunger and poverty in the Global South. But if the aid cuts had been put to a referendum, it would have produced a landslide in favour of the decision to reduce the aid budget from 0.5% to 0.3% of GNI. We urgently need to win the case for aid in the public square.
Those of us working on international development, whether in aid agencies, academia, or the FCDO, have to ask ourselves one overwhelming question: how did we go almost overnight from a 0.7% consensus to a 0.3% consensus spanning the leaders of Labour, the Conservative Party, and Reform?
Make that two questions: how do we reassert the case for an aid program grounded in values, solidarity, and multilateralism in an age marked by anxiety, nationalism, and extreme right-wing populism?
There are no easy answers. Pessimism is an easy option (especially when, like me, you are a lifelong supporter of Tottenham Hotspur*). But we can’t afford pessimism. We need to do whatever we can to minimise the harm that the UK will inflict on some of the poorest people in the world. But this is also a time for standing up for what is right. The UK is retreating from the fight for poverty eradication and climate justice. We need to stop the retreat, reassemble our forces, and fight for something better.
Kevin is currently a visiting Professor of Practice at the London School of Economics. He was CEO of Save the Children UK from 2016 to 2021, having previously led the Overseas Development Institute (ODI). Kevin worked for seven years in the United Nations, first as lead head of UNDP’s Human Development Report Office, where he was lead author of flagship reports on climate change, water and sanitation, and inequality, and then as Director of UNESCO’s Global Education Monitoring Report. Prior to working at the UN Kevin worked at Oxfam GB, where he was head of research.
Guy and Will have now responded to the blog above over at LSE’s activism influence and change blog: The big choices facing UK aid: what Kevin Watkins gets right and wrong (and in fact Kevin has replied again in the comments)
*This blog was written before Tottenham’s recent Europa Cup final victory. It is reposted from LSE’s new Activism, Influence and Change blog, run by our FP2P Blogger Emeritus, Professor Duncan Green.
Thank you Kevin – as ever bringing sanity to the, at present, very partial but really important ‘debate’ about the future of aid. Sadly far too many new pundits have never read (some never heard of) the Paris Declaration which former UK chair of the OECD DAC which the UK’s Richard Manning took such a pivotal road in steering through the DAC, Roger Riddell
Very good contribution to an important and interesting debate. Kevin argues that economic growth-oriented aid has a poor track record. But, I’m curious how Kevin would respond to Lant Pritchett’s argument that growth is all-important – and that governing competence and cohesion should be the primary focus. See: https://voxdev.org/topic/macroeconomics-growth/rethinking-evidence-and-refocusing-growth-development-economics. I’m not sure this directly contradicts his argument here – but does seem a different focus. {NOTE: posted this comment elsewhere as well. Hope for a response anywhere. This debate is a move-able feast.}