Information note on the use of UK aid in enhancing mutual prosperity

Since the publication of the 2015 UK aid strategy there has been renewed emphasis on using aid to “tackle global challenges in the UK national interest”. The idea of wider benefits was included in the strategy which refers to “security, stability and opportunity that will benefit all of us”. It also states that “recognising that economic development, good governance, job creation, peace and security, and the fight against climate change are vital to sustainable development. Addressing all of these issues will also benefit the UK’s security and prosperity.”

This ICAI review focuses on the specific wider benefit of using aid to promote economic development in low and middle-income countries whilst simultaneously strengthening UK trade and investment opportunities. Following the 2016 EU referendum, the government has committed to using the UK aid programme to “enhanc[e] mutual prosperity by building the foundations for UK trade and commercial opportunities in horizon markets” as well as eradicating poverty and meeting the Sustainable Development Goals (see National Security Capability Review, 2018).

Background

The pursuit of mutual prosperity through providing development assistance is not a new phenomenon, although approaches vary amongst donors. There are many forms of economic development programming – such as strengthening the business environment – that could benefit both recipient countries and international business. The renewed focus on UK economic interests has led some to raise concerns that this could influence the allocation of aid towards countries and sectors that offer opportunities for UK business, rather than those with the greatest development needs, and might detract from the pro-poor primary purpose required by the International Development Act. It has also raised questions about the UK’s continued commitment to untying all development aid.

Purpose and Scope

This information note will look at the use of the aid budget to enhance mutual prosperity, covering the period since the publication of the UK aid strategy in November 2015. ICAI aims to:

  • provide factual information on key trends and highlight risks that warrant future scrutiny
  • survey the different ways in which UK aid is being used to promote secondary economic benefits for the UK, and explore the resulting changes to country and sector allocation, delivery channels and aid instruments
  • review the rules, systems and processes used by the responsible departments to ensure compliance with the international ODA definition, the International Development Act and the UK’s commitment to untying aid.

The note will review evidence as to whether the pursuit of mutual prosperity through secondary benefits is detracting from the primary purpose of promoting the economic development and welfare of developing countries. The information note will cover aid spent by any UK department. The intention is to focus on the portfolios of DFID, DIT, and the FCO. Secondary benefits related to national security and public health threats are not within scope.

The information note will provide information and analysis but will not reach evaluative judgments on any specific aid programmes nor will it score the work of any government departments or provide recommendations.

Methodology

The information note will use a combination of research methods, providing a sufficient level of triangulation to ensure robust findings. They will consist of:

  • A rapid survey of the literature, in the form of an annotated bibliography covering the current debate as well as a comparison with other donors.
  • A documentary review of HMG policy documents and guidance, as well as findings from previous ICAI reviews.
  •  Interviews and focus group discussions with key HMG stakeholders, civil society, businesses and academia.

Timeline

Research for this information note begins in June with publication expected in October 2019.