12. It’s not all about aid – the role of policy and the private sector

Key points

• No serious development expert ever claimed that aid alone would end world poverty. You can’t conclude that aid doesn’t work just because there’s still poverty in the world. But it can’t work on its own.
• It’s not a matter of aid or trade.?We need both. There has not been enough progress on making global trade freer or fairer since the 1994 ‘Uruguay’ Trade Round. ?The main exceptions are the very new Africa Continental Free Trade Area, the 2001 EU Everything But Arms trade rules for least developed countries and the year 2000 USA African Growth & Opportunity Act.
• The private sector and charities can and should work together to ensure that economic activity and growth is more sustainable, inclusive and equitable.?There are many great examples.?But not yet enough.

I have focused a lot in other articles on how official (ie government) development assistance, when managed properly, can help countries make huge progress in reducing poverty, improving education and saving lives.?But aid alone is not enough. It can only ever help.?If other conditions are not in place, poverty will persist. Where other conditions are right, assistance can help to eliminate poverty faster and with more equity than leaving it to markets alone. ?DFID’s 1997 White Paper made this clear.?

Trade

When I worked in Brussels, 2000-2002, representing the UK in European Union meetings on international development, we negotiated a new trade deal called Everything But Arms.?It removed all duties and quotas from all exports to the EU from the 49 Least Developed Countries – except for arms. ?(The name was more about rhetoric than reality.?Arms mostly flow in the other direction!) ??This is the kind of policy decision by rich countries which can help create jobs and prosperity in low-income countries.?And it reduces prices in Europe too.?

But most of the time, world trade rules are still skewed towards protecting rich country interests, for example by protecting the patents of life saving vaccines which should be universally accessible.? In another article on new diseases , I talk about the importance of engaging pharmaceutical companies to help reduce the price of life saving treatments and vaccines.

There has been very little progress in removing trade barriers in the last 25 years.?The last successful world trade round was the Uruguay Round in 1994.?Seattle was a famous riot in 1999. The Doha round was launched in 2001 and finally died in 2018.?Make Trade Fair was one of the four demands of the Make Poverty History campaign in 2005 and the one where the Summit achieved the least. Partly because the WTO “does trade,” not the G8, but also because rich countries care even more about beneficial trade rules than they do about increasing aid budgets. This is because aid is a very small % of government spending or trade volumes. ODA when it was at 0.7% of GNI was still under 2% of UK government spending. ?Whereas Trade is almost half of the UK economy.

So after the Gleneagles Summit I returned to DFID to be Head of International Trade to try to make some progress on this outstanding problem.?It was hard going.?The EU was working on new Economic Partnership Agreements with African, Caribbean and Pacific countries but they have been beset by problems.?We probably made more progress with ODA programmes to support countries to make the most of the trade access they did have, under Everything But Arms or other agreements.?So, when I hear people say that international development should be about “trade-not-aid”, I disagree.?And a smaller number of people argue it should be aid not trade. I also disagree.?It’s trade and aid and they support each other.

Everything But Arms and the US African Growth & Opportunity Act have improved trade rules for some low-income countries. ?Hopefully the first African and first female leader of the World Trade Organisation, Ngozi Okonjo-Iweala, can make more progress on a global improvement of trade rules for poorer countries.?

Dignified jobs and sustainable products

Trade is important because jobs are crucial to prosperity and reducing poverty.?And that means the private sector is just as important to reducing poverty as governments are. Again, it’s not one or the other, it’s both.?I have worked in closed partnerships with the private sector throughout my career.?The private sector was ahead of the South African government in 1999 in providing AIDS treatment to people who worked for them, and in DFID we worked with them companies like Anglo American, and the Global Business Coalition on HIV/AIDS.?The role of the private sector was central to the UK G8 Presidency in 2005?(more next week on World AIDS Day). Business Fights Poverty is a coalition of companies that started working together and with the UK G8 Presidency in 2005 on international development. It has grown ever since.?At the Gates Foundation, we worked very closely with pharmaceutical companies to reduce child deaths. We also worked closely with food and agriculture companies to improve nutrition.?

I have worked most closely with the private sector during the last eight years, as Chief Executive of CARE International UK. ?CARE recognises that the private sector does and must play a positive role in improving lives and reducing poverty, but must do more. We will not achieve the UN Global Goals without companies. So CARE collaborates with business.?CARE is proud to work with large and small companies in the UK and around the world, to improve the lives and opportunities of workers, customers and communities. CARE works with brands that are well known for their ethical leadership and also works with companies who have further to go because this is probably where the biggest opportunity for change is.?The Board and staff at CARE have robust and healthy debates about some of these more challenging partnerships.?We didn’t take those decisions lightly.?But if you want to change the world, you have to take calculated risks. ?At CARE I worked with ten of the UK’s largest FTSE100 companies. I have many great examples I would love to share but let me just give two contrasting ones.

Story One. In 2016, I visited a social enterprise in Zambia which had been formed by CARE with UK Government funding 20 years earlier.?In 1996, the British government began funding CARE to bring safe water to urban settlements in Zambia. At the time, it was a substantial ￡10 million investment, spread over six years. Local ‘Water Trusts’ were established, which charged customers a few pence for 140 litres a day. The price per litre is similar to the UK, but people living on only a few pounds a week were prepared to pay this, for safe, clean water.?Either because they were already paying more for untreated water from informal sellers, or women and girls were walking hours a day to find their own water. The income ensures the Water Trust can keep the network in good working order, and expand to cover new customers. It was great to go back and visit a CARE project ten years after the aid funding stopped. I saw that it was still a thriving business bringing an essential service to people living in poverty, at an affordable price, in addition to providing high quality employment opportunities to local people. The Chipata Compound Water Trust alone employs over 100 people - mainly women - on good wages by local standards.?Child mortality has halved, from 1 in 7 deaths (2002) to 1 in 13 (2013).?That ￡10 million investment has provided safe drinking water to 600,000 people for 20 years, for less than ￡1 per person per year.?

For years, the same compound was full of rubbish with only a small % of households paying for rubbish collections. Fast forward to 2016 - CARE tested bundling the water service with waste collection, with seed funding from Comic Relief.?Households pay 25% more for their water, and this will guarantee them a regular weekly waste collection as well.?In just two months, waste collection was up eight-fold and the neighbourhood was looking better and healthier already.

Story Two. I love the fact that many of the products that appeared in the original CARE Packages sent from the USA to Britain, Europe and beyond in the 1940s after the war, still appear in the work CARE does today. Cadbury’s chocolate was in the original packages and CARE still works with Cadbury’s today , helping coco farming communities in over 500 villages in Ghana and Cote D’Ivoire to thrive.?

In 2015, we celebrated CARE’s platinum anniversary and we had this picture on the wall of an exhibition in London.?A gentleman walked in and looked at the picture for a long time and then said to one of my colleagues, “That’s me,” pointing to the bottom right corner.?You can see that in this CARE Package tailored for British tastes, there is a box of tea, rather than the coffee which families in France and Germany received.?And still today, CARE is working on tea farms in Sri Lanka and Malawi, to improve conditions for workers. ?CARE has worked with Twinings since 2017 on their Sourced with Care programme to improve the lives of tea estate workers. Community Development Forums facilitate dialogue between workers, management and the wider community. An independent evaluation by the New Economics Foundation showed that for every ￡1 invested in the Forums there is benefit of ￡11.21 to the workers, ￡26.65 to the tea industry (through higher productivity), and ￡4.70 to the wider community. The programme has also helped more woman to move into management positions on the estates and improve the gender equality of decision-making affecting women and men workers.?

Next article - Another new start – looking ahead

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