DFID doubled its expenditure on economic development in recent years to £1.8 billion a year, with the objective of promoting economic transformation and job creation.
ICAI’s review of inclusive growth in Africa finds that DFID is showing a welcome increase in ambition as it aims to improve economic development and create jobs.
The department has pursued a well-considered approach to building up its knowledge and expertise in the area of inclusive growth, doubling its global investment in economic development – from £934 million in 2011-12 to £1.8 billion in 2015-16.
With some 10 to 12 million young Africans entering the jobs market each year, ICAI’s review found this was a positive commitment.
DFID’s analysis of the opportunities for transformative growth is clearest in Ethiopia where DFID is supporting access to finance for poor households and businesses, particularly female-led firms, and is investing in specific areas – textiles, leather, and horticulture – which have the potential to transform parts of the country’s economy in ways which benefit the poorest.
However aspects of the department’s work to bring about inclusive growth are of variable quality.
For example, the review found that DFID needs to achieve a greater focus on its investments in the areas with the greatest potential, and avoid spreading its resources too thinly.
The review also found that DFID needs to improve the quality of its political economy analysis, and to focus learning on how to make progress on economic transformation in the face of unfavourable political economy conditions.
Based on this review, ICAI made the following recommendations:
- DFID’s diagnostic and planning tools should more clearly support and encourage country offices to prioritise and concentrate their investments into areas with the greatest potential for DFID to contribute to transformative growth.
- DFID should provide more guidance on how to build a portfolio that balances investments in long-term structural change and job creation with programming to increase incomes for the poor in existing livelihood areas, taking into consideration the time required for economic transformation in each country context.
- Recognising the centrality of the state to economic transformation alongside the private sector, DFID should prioritise learning on how to combine politically smart and technically sound approaches to economic development.
- To meet the commitments in its Economic Development Strategy and drawing on broader learning on inclusion, DFID should ensure that, in each of its partner countries, opportunities for addressing the exclusion of women, young people and marginalised groups are identified and built into programme designs and results frameworks wherever feasible, and that distributional impacts (whether intended or unintended) of its programming are routinely monitored and assessed.
The government publishes a response to all ICAI reviews. You can read the government’s response to ICAI’s inclusive growth review online.
International Development Committee
There will be an International Development Committee hearing into this review in due course.
ICAI’s follow up
This review will be included in ICAI’s next follow up report, due to be published in summer 2018.