Foreign Aid to Africa – Capitalizing on Poverty

re posted from                            Global Justice Now

UK government told ‘stop the scandal of privatised aid’ as new report exposes millions going to free market consultants

Friday, 1 April, 2016

  • Shadow secretary of state for international development, Diane Abbott, calls for critical assessment of the free market reforms that ASI are pushing in the developing world
  • UK aid used to re-write laws in Afghanistan and privatise energy sector in Nigeria
  • Adam Smith International (ASI) given more funds than DfID spent on human rights and women’s equality organisations

A report published today by campaign group Global Justice Now has raised a series of concerns about the hundreds of millions of pounds that the Department for International Development (DfID) has paid to development consultants Adam Smith International (ASI) for a variety of projects being carried out in the developing world.

The report, The Privatisation of UK aid – How Adam Smith International is profiting from the aid budget examines:

  • how much money ASI is getting from DfID. ASI has won at least £450m in aid-funded contracts since 2011. In 2014 alone, DfID spent nearly £90m of its money through the company, more than the entire amount spent on human rights and women’s equality organisations, or almost twice that spent on programmes to tackle diseases like HIV and Aids.
  • how much of the company’s work for DfID has been on projects to support the private sector and ‘market-based development’ in poor countries. Its recent projects include support for a ‘business advocacy capacity development programme’ in Zimbabwe and work to expand private schools in Kenya.
  • different case studies of ASI projects, including their involvement with the privatisation of energy in Nigeria, how they helped to make Afghanistan ‘investor friendly’ by helping to rewrite a new minerals act for the country that was later passed into law – an act that a local NGO said was “missing the basic protections” over local people’s rights and transparency. ASI also assisted in developing a new mining law and related regulations in Papua New Guinea. Mining has a history of violent conflict in PNG and this new law that ASI were involved in developing has been condemned as being been condemned as “authoritarian and regressive.”

Shadow secretary of state for international development, Diane Abbott responded to the publication of the report saying:

UK aid is being used to pay for consultants instead of alleviating poverty in the global south. We must look beyond simply spending 0.7% of UK GNI on aid, but look at how it is spent. UK aid should be first and foremost about tackling poverty and inequality and not benefitting UK business.
If consultant expertise are really needed as companies like Adam Smith International claim, then it’s insulting in this day and age for DfID to continue to spend millions on UK-based consultants when there is such a wealth of skills and experience to be found amongst civil society and public services of those countries that aid money is supposed to be going to.  We need to critically assess if the sort of free market reforms that Adam Smith International are enabling in the developing world, using UK taxpayers’ money, are actually helping to alleviate poverty or if they are making it worse.”

Aisha Dodwell, the campaigns and policy officer at Global Justice Now said:

Many UK taxpayers would be genuinely shocked if they knew that hundreds of millions of pounds of aid money was going to ‘free market’ consultants in the UK rather than to alleviate the conditions of poverty of vulnerable communities in the developing world. UK aid could be used to strengthen public services, support civil society, and build democratic and accountable institutions. Instead of padding the pockets of big UK contractors like Adam Smith International.
It’s not just the amount of money that Adam Smith International is getting that is wrong. The free market reforms that that they are pushing in some countries are based on an outdated and discredited development ideology that has been in no small part responsible for entrenching poverty and exacerbating inequality across the developing world. The reforms around mining that ASI have been pushing in countries like Afghanistan and Papua New Guinea seem to be more concerned about the needs of foreign mining companies while actively undermining the rights of local communities.

The report is being released on the 15th anniversary of UK aid money being formally untied from promoting UK business interests.  But the report argues that “DfID is too often entering into partnerships with businesses and funding private sector development projects with questionable benefits for poor communities. And despite UK aid being formally ‘untied,’ ASI and a small group of other large UK contractors have long won the lion’s share of DfID contracts.”

The current government is increasingly explicit in linking aid spending to UK security interests. The new aid strategy, unveiled in November 2015, presents aid spending on “economic development and prosperity” in developing countries as a tool to create “new trade and investment opportunities for UK companies.” This new aid strategy was recently criticised by the International Development Committee, who said that, “the new strategy risks creating an impression that poverty reduction is no longer the top priority. The most important principle of allocating UK aid should always be that it is allocated to areas where it can most effectively be used to reduce poverty, which is clearly in the UK’s national interest.”

Adam Smith International were given the opportunity to comment on the report before its publication – their response can be found at the end of report.