DfiD and the national interest debate: Can contractors ride to the rescue?
The UK has a new Prime Minister, Boris Johnson, and will have a new Secretary of State for International Development, after Rory Stewart publicly foresworn serving under Boris Johnson.
The new office holders inherit an international development policy agenda which has stalled since the UK’s vote to leave the EU in 2016, a victim of a reduced prioritisation to development issues and a sapping of DfID staff for handling ‘no deal’ preparations. Such despondency has fed through to the widely reported issues facing key DfID contractors who are suffering from years of delays in procurement plus an over the top reaction to grotesquely exaggerated allegations by the UK media.
The sector faces a bleak immediate future. The new Secretary of State (the fourth since July 2016) will likely face a serious threat to DfID’s status as an independent department, since the new PM, Boris Johnson, has called for DfID to be closed and been critical of DfiD expenditure:
if ‘Global Britain’ is going to achieve its full and massive potential then we must bring back DFID to the FCO. We can’t keep spending huge sums of British taxpayers’ money as though we were some independent Scandinavian NGO
Such lazy comparisons will alarm many working in the UK development sector, either in DfID or in contractors. However, there is a major constraint to undertaking such radical reform in the form of the 2011 law which fixes DfID’s budget at 0.7% of GDP. A lack of parliamentary space for non-Brexit issues and a lack of parliamentary support for such a radical step would prevent any abolition or reform of this law in this parliament.
This means the only change in the short-term will concern the distribution of expenditure. Here, Johnson has argued that the aid budget could be spent to promote the UK’s interests abroad: “We could make sure that 0.7 % is spent more in line with Britain’s political commercial and diplomatic interests,” he told BBC’s Radio 4’s Today programme. Such a move would be more achievable than reducing DfID’s budget and less controversial than absorbing it into the FCO but raises question of how expenditure could be redistributed.
Alas, a potential solution awaits………………
The contractor opportunity
The desire to ensure that the development budget also supports UK interests provides a potential opportunity for the struggling contractor industry. The opportunity lies in linking the uncertainty over DfID and development policy with similar uncertainties facing UK trade policy.
Brexit-related uncertainties over trade policy threaten export opportunities for UK services, the high-paying consultancies, law firms and accounting and insurance providers which form a major part of UK GDP. This leads to further downward pressure on sterling, plus direct impact on employment and tax revenues. Such concerns should be top of the priority list for the new Department of International Trade (DIT). The DIT should naturally be enthusiastic about supporting UK successful service exports, and the UK has become a leader in technical assistance for governments.
Through my own consulting experience, I’m aware of projects implemented by UK consulting firms which have been directly paid for by the governments of Papua New Guinea, Albania, Angola and Saudi Arabia. Such consulting firms generally developed their expertise and reputations on the back of DfID funding their services for technical assistance projects. Thus, development expenditure which has benefitted the beneficiary country has had spin-off benefits for the UK in terms of developing a government consulting industry.
Despite their recent poor PR, UK contractors have a very good story to tell in terms of successfully penetrating difficult markets, generating export earnings and tax revenues for the UK. Typically, politicians would be falling over themselves to praise small and medium sized UK firms with such achievements, as opposed to Priti Patel stabbing them in the back on the basis of lurid headlines.
The synergy in interests between DfID’s mandate to support reduce global poverty and DIT’s mandate to help UK exports leads to a viable solution to the UK governments dilemma on how the 0.7% can support UK interests.
A viable way forward
Realising this requires a large shift in the UK’s current development expenditure with the complete abolition of budget and sectoral support plus dramatic reductions in contributions to international organisations. DfID will primarily convert into a procurement agency utilizing UK-based technical assistance to support developing countries to reform.
There should also be a review of national preferences in procurement protectionism. The UK is exceptionally open in allowing foreign firms access to DfID contractors (far more so than their US, Canadian, Australian or EU equivalents) and such one-sided openness could be queried as naïve. A better approach would be to follow a tit-for-tat strategy by enabling foreign firms access in return for UK firms access to their markets.
This is a very direct approach to ensuring UK interest, as well as arguably being more effective for beneficiaries than budget support and contributions to international organisations. Such synergies between the interests of the UK and aid beneficiaries should spark a new epoch in UK development policy, based on the concept of partnerships rather than paternalistic aid.
