Mordaunt’s vision for aid: more spending on private investment
9 October 2018
This morning, secretary of state for international development Penny Mordaunt outlined her vision for UK aid at the Commonwealth Development Corporation (CDC), the UK government’s development finance institution. In her speech, Mordaunt announced increased spending of official development assistance (ODA) towards private sector investment into developing countries.
This speech follows Theresa May’s recent announcements that UK aid spending must align with the UK's national interest and further private sector investment in Africa.
Mordaunt reaffirmed her commitment to underwrite existing NGO contracts in the event of a Brexit no deal, but stated that she would be looking at how the government uses the £1.5 billion currently channelled through the EU for joint humanitarian and development projects. Penny Mordaunt also stated that she will use Brexit and ODA to “harness the huge opportunities in Asia and Africa”.
Mordaunt emphasised the need for collaboration between the charity sector and private sector. She said that the Sustainable Development Goals (SDGs) will only be realised if these sectors play to each other’s strengths, drawing on innovation, entrepreneurs, scientists and academia.
Mordaunt intends to use ODA spending for the private investment to fill financing gaps to deliver the SDGs. She cited OECD-DAC rules as a barrier preventing more investment flowing into developing countries and will look to change the rules on what counts as aid so that profits from the CDC Group will count as ODA.
The secretary of state intends to mobilise private investment by working with banks, pension funds and other investors to secure returns on investment to the British taxpayer’s savings and pensions.
Mordaunt restated her commitment to spending 0.7% of the UK’s GDP on aid and to ensuring that aid money is “not just spent well but could not be spent better”. However, she stated the government would work for the British public to get a triple return on investment and to allow the city of London to become a “financing hub for the developing world”.
Judith Brodie, interim CEO of Bond, said: “The priority needs to be poverty reduction over profit and this must be demonstrated if we are to meet the SDGs. It is also important to note that we are yet to see how the CDC, the UK’s development finance institution owned by DFID, will live up to its 2017 5-year strategy and improve transparency, effectiveness and impact. We would like to know how they will meet the secretary of state’s requirement to ensure that 0.7% is not just ‘spent well, but could not be better spent’.”