Baroness Stroud is Chief Executive Officer of the Legatum Institute.
The Ministry of Overseas Development. The Overseas Development Administration. The Foreign Office. The Department for International Development…the administration of the UK’s overseas aid budget has been varied and discussions around its future are often fractious. But as the new Foreign, Commonwealth and Development Office (FCDO) takes responsibility, there is a huge opportunity for a re-think on the way the UK’s aid is administered to improve its effectiveness.
It is only right to question whether the current approach is helping or hindering the ability of individuals, communities, and nations to fulfil their unique potential. Even the most committed advocates of aid would acknowledge that the billions of pounds worth of aid the UK has delivered to African nations in the last few decades has failed to create the level of prosperity hoped for.
While it’s clear that aid has a vital role in providing disaster relief and humanitarian assistance to those who are suffering, this should only be a small part of our ambition. The FCDO now has a chance to transform the way the UK’s aid is used to increase prosperity around the world, but this will require a different approach.
Our new report How Nations Succeed studies the journeys of 10 developing countries across a period of six decades and explores the patterns behind their contrasting development trajectories. It illuminates a clear and compelling trend: aid has proven most effective when targeted in support of nations’ own development priorities, notably through supporting efforts to build capacity not only in critical sectors such as healthcare and education but also improving the quality of governance, whether the administration or the judiciary. When used appropriately, aid can help reinforce the development process, enabling nations to build their own pathways from poverty to prosperity.
But the research demonstrates that the form this aid is provided in matters a great deal. While the primary obstacle to national development is often political will, perhaps the second greatest obstacle is lack of government capacity to implement policy reform once it has been decided upon. Therefore, the provision of aid as external assistance, offering much-needed expertise, skills, and training opportunities, rather than just cash, can make all the difference.
The partnership between Norway and Botswana could provide inspiration to the FCDO in this regard, as it is a model for what this sort of cooperative, capacity-building aid can achieve.
Healthcare was a key feature of successive Botswanan five-year national development plans following independence, and the country made concerted use of Norwegian development assistance. Norway sent technical experts in the form of civil servants to provide essential capacity, while also accounting for some 90% of funding for public healthcare in Botswana in the 1970s. This support allowed the Botswanan government to invest in the creation of the Basic Health Services programme, focused on preventative healthcare by prioritising the provision of clean water, sanitation, and clinics. This approach enabled the steady creation of a healthcare system that was financially sustainable, with the Botswanan government increasing spending on healthcare per capita from only $10 in 1975 to almost $100 by the mid-1990s.
The FCDO can learn valuable lessons from the experiences of countries that have, and have not, succeeded in using aid to support national development. Success is most common where donors have focused in terms of the countries with whom they work on a long-term basis; where donors have given financial support in block grants or loans, rather than fragmenting aid through multiple charitable organisations; and where donors have provided technical assistance as well as cash, facilitating capability transfers wherever possible.
The process of national development remains the best available mechanism for rapidly lifting large numbers of people out of poverty. But progress takes time and is incremental, often unspectacular, and rarely linear. The FCDO must take a long-term perspective and work in partnership with countries that have a clear vision for national transformation and internally-agreed plans for where resources should be focused. In this way it can help nations build institutional, economic, and social wellbeing as they create their own pathways from poverty to prosperity, and demonstrate that the UK remains a force for good in the world.