Economic growth at the heart of new UK aid plans

On Tuesday night UK Secretary of State for International Development Andrew Mitchell announced a major rethink in the way his department approaches economic growth and engagement with the private sector.

He is creating a new Private Sector Department within DfID and proposed radical reforms to the Commonwealth Development Corporation (CDC) – a that which invests public money in developing countries. In recent years the CDC has been criticised for being too profit focused and not paying enough attention to development goals. Mitchell is seeking to redress that balance, and suggested CDC should work with investment partners to ensure the poorest parts of the world benefit from greater investment.

Andrew Mitchell on Tuesday:

“CDC will become a distinctive, innovative and differentiated development finance institution – with clearly measurable development impact and additionality, and a new commitment targeted throughout Sub-Saharan Africa and the poorer parts of Asia. I want CDC to be more focused on the poorest countries than any other Development Finance Institution, doing the hardest things in the hardest places.”

Responding to the speech Paul Collier – author of the Bottom Billion and Plundered Planet – welcomed the reforms and pushed Mitchell to go even further in certain areas. Collier made a clear ask of the Secretary of State for the UK to implement legislation ensuring that oil, gas and mining companies registered in London have to become more transparent in their operations. A similar law has been passed in the US and by bringing it to the UK a loophole would be closed. Collier made clear that this would cut down on corruption in resource-rich developing countries by giving local civil society the information they need to hold their governments to account.

The UK Government’s commitment to put economic growth at the heart of development policy is welcome. The challenge is to ensure that growth helps the poorest people and that action is taken to address the systemic unfairness that prevents developing countries boost their international trade.