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| UK aid watchdog criticises DfID over partnerships with private sector | UK aid watchdog criticises DfID over partnerships with private sector |
| (about 14 hours later) | |
| Britain’s Department for International Development (DfID) is failing to capitalise on partnerships with the private sector because of a lack of concrete targets and detailed operational plans with a clear focus on reducing poverty, the UK’s aid watchdog has said. | Britain’s Department for International Development (DfID) is failing to capitalise on partnerships with the private sector because of a lack of concrete targets and detailed operational plans with a clear focus on reducing poverty, the UK’s aid watchdog has said. |
| While recognising the potential for development agencies and private businesses to work together to boost livelihoods in the developing world, the Independent Commission for Aid Impact (Icai) said these collaborations must identify more clearly how they will benefit the poor. | While recognising the potential for development agencies and private businesses to work together to boost livelihoods in the developing world, the Independent Commission for Aid Impact (Icai) said these collaborations must identify more clearly how they will benefit the poor. |
| Related: Privatising public services is no way to fund sustainable development | Mark Dearn and Meera Karunananthan | |
| DfID has described its partnerships with the private sector as an “engine of growth”. But the study, which was released on Thursday, said the department must “work with businesses which want to invest in developing countries in such a way as to maximise benefits for the poor”. | DfID has described its partnerships with the private sector as an “engine of growth”. But the study, which was released on Thursday, said the department must “work with businesses which want to invest in developing countries in such a way as to maximise benefits for the poor”. |
| The watchdog gave DfID an amber-red rating – its second worst – for its work with businesses. Icai’s report assessed the impact of DfID’s work with private sector firms on economic and human development, environmental sustainability and humanitarian assistance. | The watchdog gave DfID an amber-red rating – its second worst – for its work with businesses. Icai’s report assessed the impact of DfID’s work with private sector firms on economic and human development, environmental sustainability and humanitarian assistance. |
| Graham Ward, Icai’s chief commissioner, said: “[DfID has] clearly stated their intention to work more with business and there are great potential benefits for the poor from this collaboration. We are concerned, however, about how DfID will translate these goals into practical actions without more strategic oversight of business engagement activities and without concrete targets.” | Graham Ward, Icai’s chief commissioner, said: “[DfID has] clearly stated their intention to work more with business and there are great potential benefits for the poor from this collaboration. We are concerned, however, about how DfID will translate these goals into practical actions without more strategic oversight of business engagement activities and without concrete targets.” |
| This year, DfID is projected to ramp up its financing to private sector firms – in the form of loans, equity investments and guarantees – to an estimated £580m, up from £68m in 2012, the report said. | This year, DfID is projected to ramp up its financing to private sector firms – in the form of loans, equity investments and guarantees – to an estimated £580m, up from £68m in 2012, the report said. |
| Between 2012 and 2015, DfID spent about £494m of its budget on alliances, financing and partnerships with UK and foreign businesses, the study said. Examples of these relationships include the Business Action for Africa network; the Safety, Health and Education and Employment for Girls and Women alliance; a partnership with Water and Sanitation for the Urban Poor; and the Food Retail Industry Challenge Fund. | Between 2012 and 2015, DfID spent about £494m of its budget on alliances, financing and partnerships with UK and foreign businesses, the study said. Examples of these relationships include the Business Action for Africa network; the Safety, Health and Education and Employment for Girls and Women alliance; a partnership with Water and Sanitation for the Urban Poor; and the Food Retail Industry Challenge Fund. |
| Poor leadership has made the development objectives behind DfID’s private sector partnerships unclear, according to Icai. “We didn’t get the sense that this new and really important agenda is being steered by senior management,” said a spokesman for the watchdog. | Poor leadership has made the development objectives behind DfID’s private sector partnerships unclear, according to Icai. “We didn’t get the sense that this new and really important agenda is being steered by senior management,” said a spokesman for the watchdog. |
| Part of the problem is that DfID’s poverty reduction targets are out of sync with the profit-making imperative fundamental to private business. The financial incentives for businesses to work with DfID mean that the agency must agree with private sector partners on reachable targets, the study said. | Part of the problem is that DfID’s poverty reduction targets are out of sync with the profit-making imperative fundamental to private business. The financial incentives for businesses to work with DfID mean that the agency must agree with private sector partners on reachable targets, the study said. |
| Related: DfID accused of heightening inequality through support for private sector | |
| This is further complicated by DfID’s remit to reduce poverty in the world’s most fragile countries, which often have challenging business environments, the study warned. | This is further complicated by DfID’s remit to reduce poverty in the world’s most fragile countries, which often have challenging business environments, the study warned. |
| An Icai spokesman said: “The markets that most business are going to be interested in are going to be in the more developed countries. The very poorest countries, by definition, are going to offer slim pickings for businesses, and therefore there’s going to be less opportunity for DfID to do this direct engagement with [businesses].” | An Icai spokesman said: “The markets that most business are going to be interested in are going to be in the more developed countries. The very poorest countries, by definition, are going to offer slim pickings for businesses, and therefore there’s going to be less opportunity for DfID to do this direct engagement with [businesses].” |
| According to the report, DfID’s spending on challenge funds – competitions for funding – is particularly problematic. “In some cases … we are not confident that DfID’s support is additional to what businesses would have done anyway, especially in the case of challenge funds,” the report said. | According to the report, DfID’s spending on challenge funds – competitions for funding – is particularly problematic. “In some cases … we are not confident that DfID’s support is additional to what businesses would have done anyway, especially in the case of challenge funds,” the report said. |
| The report echoes criticism by some NGOs, who say DfID’s private sector partnerships don’t translate into development gains. | The report echoes criticism by some NGOs, who say DfID’s private sector partnerships don’t translate into development gains. |
| “This report raises serious questions about DfID’s ideological drive to work more and more with the private sector when there’s so little evidence of the development benefits,” said Polly Jones, head of policy and campaigns at Global Justice Now. | “This report raises serious questions about DfID’s ideological drive to work more and more with the private sector when there’s so little evidence of the development benefits,” said Polly Jones, head of policy and campaigns at Global Justice Now. |
| Beck Wallace, a private sector policy analyst at the Catholic aid agency Cafod, said: “DfID needs a clear oversight mechanism in place when working with private firms that goes beyond just cash flow and considers who bears which of the economic, social and environmental costs, risks and benefits of projects. By identifying specifically what value it adds to partnerships with private firms, DfID can help drive forward thinking about how best to deliver poverty reduction through profit-making enterprises.” | Beck Wallace, a private sector policy analyst at the Catholic aid agency Cafod, said: “DfID needs a clear oversight mechanism in place when working with private firms that goes beyond just cash flow and considers who bears which of the economic, social and environmental costs, risks and benefits of projects. By identifying specifically what value it adds to partnerships with private firms, DfID can help drive forward thinking about how best to deliver poverty reduction through profit-making enterprises.” |
| This report raises serious questions about DfID’s ideological drive to work more and more with the private sector | |
| The report did not take into account spending by the UK’s CDC Group, formerly the Commonwealth Development Corporation, or the Private Infrastructure Development Group, in which DfID invests. Icai said this is because the UK’s National Audit Office (NAO) has recently reviewed PIDG’s spending. The NAO had been scheduled to review CDC’s spending, but this review has since been cancelled, Icai said. | The report did not take into account spending by the UK’s CDC Group, formerly the Commonwealth Development Corporation, or the Private Infrastructure Development Group, in which DfID invests. Icai said this is because the UK’s National Audit Office (NAO) has recently reviewed PIDG’s spending. The NAO had been scheduled to review CDC’s spending, but this review has since been cancelled, Icai said. |
| A DfID spokesman said: “Our relationship with business has never been closer and this is delivering real results, whether working with the London Stock Exchange to boost markets in Africa, partnering with Unilever to set up social enterprises that improve the lives of millions of people, or getting new vaccines to market quickly and safely.” | A DfID spokesman said: “Our relationship with business has never been closer and this is delivering real results, whether working with the London Stock Exchange to boost markets in Africa, partnering with Unilever to set up social enterprises that improve the lives of millions of people, or getting new vaccines to market quickly and safely.” |
| He added: “This report comes a year into our groundbreaking new strategy and only reviews a small cross-section of our work. It would be wrong to rush to conclusions on projects that are intended to deliver over a five- to 10-year timeframe.” | He added: “This report comes a year into our groundbreaking new strategy and only reviews a small cross-section of our work. It would be wrong to rush to conclusions on projects that are intended to deliver over a five- to 10-year timeframe.” |
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