DFID aid review puts spotlight on trade

2 Dec 16

The UK’s aid agency has announced it is to “turbo charge” its focus on trade as part of a long-delayed review into its work overseas.


The emphasis on trade had been anticipated by those awaiting the report, which will define the Department for International Development’s approach under its new chief Priti Patel. 

Patel, the secretary of state for international development, had already hinted that she wanted DFID to up its focus on trade deals in a post-Brexit world, as well as increasingly prioritise economic development and the British national interest – all ideas critics have said will dilute the department’s work for the world’s poorest people. 

Announcing the reviews today, Patel said the approach to development “needs to adapt and reform to keep pace with our rapidly changing world”. 

“As a world-leader, the UK will be at the forefront of these efforts: promoting pioneering investments in the most challenging and fragile countries; making greater use of cutting edge technology; and sharing skills from the best of British institutions.”

Stephen Twigg, chair of the UK’s International Development Select Committee, DFID’s parliamentary watchdog, welcomed some of the developments announced in the aid review, including commitments to maintain or scale up work in fragile states or regions like Syria and Africa’s Sahel. 

However he noted “a more overt link between the UK’s aid and trade policies, with an implication that more [official aid] could be directed towards middle-income countries”. 

The bilateral aid review, one of two published today that focuses on DFID’s own initiatives in developing countries, said scaling up the emphasis on trade “offers an opportunity [for Britain] to forge a new role for ourselves in the world, embedding development within UK trade policy”. 

Critics fear this kind of approach could distract from UK aid’s focus on the world’s poorest people. 

Twigg noted that the new focus on trade and economic development will be delivered through the cross-government Prosperity Fund – £1.3bn worth of official aid that can be accessed by a number of aid-spending departments in the UK government to promote economic development overseas. 

The Prosperity Fund currently focuses on countries where “development potential” and interest for the UK are highest. So far, that has meant projects in countries like India, China, Mexico, Malaysia, Vietnam and Nigeria – a list including the two fastest growing major economies in the world, Africa’s biggest economy and some of southeast Asia’s more well developed.

The review also discusses catalysing private investment using “innovative” approaches such as via the DFID’s wholly owned private sector arm, the CDC Group. 

Patel has submitted a Bill to scale up the government’s funding limit to the CDC by at least four times – a move that has caused an outcry among campaigners who point to the CDC’s chequered history. 

Almost half of the firm’s portfolio is also invested in comparatively high income nations like Nigeria and India – despite the fact that UK aid to India has ostensibly stopped. It has also been found to invest in projects that have little benefit for the poor, such as luxury shopping malls. 

DFID argues CDC’s investments create jobs and the UK’s National Audit Office recently found that the company did indeed create 24,673 jobs directly last year. 

Claims the group has created over one million are based on a methodology created specifically for the CDC and it is notoriously difficult to attribute this kind of indirect impact. Overall the NAO concluded demonstrating that the firm helps the world’s poorest is a “significant challenge”. 

Saira O’Mallie, interim UK director of the ONE Campaign, welcomed the focus on the private sector, she stressed that DFID must “maintain UK aid’s poverty fighting purpose”. 

The CDC in particular must “meet the utmost levels of transparency and focus on development impact”, she added. 

Also published today was DFID’s multilateral aid review, which evaluates the department’s work with international development agencies. 

It found that overall, DFID’s partners align closely with the UK’s objectives, but that all “have scope to do better and some need urgent and radical reforms”. 

The United Nations Educational, Scientific and Cultural Organisation (UNESCO), the Caribbean Development Bank and the Commonwealth Secretariat were singled out as poor performers for issues around transparency or underperformance. Future DFID funding allocations to these organisations will now be dependent on reforms. 

In response to the review, UNESCO director general, Irina Bokova, hit out at DFID for using a “flawed methodology” that “misunderstands, if not ignores,” UNESCO’s particular role. 


Did you enjoy this article?

Related articles

Have your say


CIPFA latest

Most popular

Most commented

Events & webinars