On Tuesday the House of Commons International Development Committee continued their hearings into the future of UK international development cooperation.
In the first session, the witnesses were Andrew Rogerson (ODI), Peter Young (Adam Smith International) and me. Here is the recording of the session. They forgot to switch on the camera for the first 27 minutes so it is audio-only until then.
Our session covered a lot of ground, including: is multilateral aid generally better than bilateral aid (see my blog post here), should we be giving aid to middle income countries like India (see my blog post here), and is there a case for the UK to set up a new development lending organisation (like KfW or AFD)?
We were followed by Tamsyn Barton, Director General, European Investment Bank, Marc Engelhardt, Director of Development and Climate, KfW Development Bank, Dr Chris West, Director, Shell Foundation, and Dorothee Fiedler, Deputy Director General, German Federal Ministry for Economic Co-operation and Development.
I’ll post a transcript of the evidence when it comes out. UPDATE: the uncorrected transcript is here (pdf). You’ll gather from my evidence that I do believe that DFID should make greater use of a wider range of financial instruments, including debt, equity and guarantees. The Committee was surprised to hear that DFID already has these powers (see section 6 of the 2002 Act) so the question is why they do not make more use of them. But I am not at all persuaded of the case for setting up a new development bank. The world needs fewer, not more, international development organisations. One of DFID’s greatest strengths is that it combines nearly all British development policy under one roof: bilateral aid, multilateral institutions, global funds, and non-aid development policies. Creating institutional rivalry between a grant-giving organisation and a loan-giving organisation would not help. But it follows that DFID would have to build considerable new capacity and culture if it were to expand its range of financial instruments (which is presumably why it hardly uses its existing powers).
The arguments for the UK having its own development bank, rather than expanding DFID’s use of instruments and contributing more to existing multilateral organisations, is everything to do with British national prestige and nothing to do with the interests of developing countries.
2 responses to “Should the UK set up a development bank?”
Thanks own. Right up my interest alley.
Owen, Glad you are there making the case against establishing yet another development institution. The absolute last thing the world needs. You are so right to emphasize the tools already at the UK’s disposal. Having lived through the process of creating, or trying to create, new international organization to fill a political, rather than an economic, need, I hope we have all learned the lesson of how wasteful such efforts can be.