UK aid for trade

Review

This review finds that the UK needs to do more to ensure its aid for trade in developing countries benefits the poor. We awarded an amber-red score and made five recommendations.

Findings

• UK programmes broadly align with UK and partner country priorities, as well as available evidence on ‘what works’ and are assisting economic growth
• However, the UK is not doing enough to ensure that its aid for trade interventions benefit the poor – helping smallholder farmers, small businesses and employees in developing countries
• While the portfolio shows a particular focus on women, there is less focus on other marginalised groups.
• The creation of the FCDO and improved cross-government coordination are opening up possibilities for a more integrated approach to aid for trade.
• The recent increase in the priority given to secondary benefits to the UK poses risks to the quality of programming that are not sufficiently managed.
• UK aid budget reductions have left the portfolio spread thinly across priorities and countries, and reduced UK support for the international trading system.
• The speed of the reductions and the way they were managed have had a detrimental impact on the UK’s relationships and reputation.
• UK aid for trade has contributed to positive results in assisting developing countries in both trade negotiations and trade policy and regulatory reform.
• UK programmes have helped facilitate and increase cross-border trade.
• Direct support for small enterprises and farmers has led to positive results for poor and marginalised groups, including women, although often at a limited scale.
• In our case study countries, programmes delivered benefits, but negative consequences were not sufficiently anticipated or mitigated.
• Aid for trade programmes have made limited effort to track their wider impacts.
• Learning across the UK government on aid for trade is largely informal and ad hoc.
• While there is learning within programmes, the UK government needs to do more to systematically share learning and put it into practice.

Recommendations

1. UK government should develop and publish a set of detailed guiding principles for aid programmes to ensure that the pursuit of secondary benefits to the UK does not detract from its primary poverty reduction objective.
2. FCDO should increase its focus on the international institutions underpinning the rules-based trading system to improve the alignment of the portfolio with the UK’s commitment to the rules-based international system.
3. The UK should ensure that future programmes are based on clear theories of change linking them to poverty reduction and impacts on the poor and test the assumptions through research, monitoring and evaluation.
4. UK government should improve coordination and collaboration between programmes that have the potential to complement each other to achieve greater impact and value for money.
5. UK government should inform its partners in a timely and transparent manner when its budgets increase or reduce significantly, and the pace of change should allow partners sufficient time to adjust.