Philippa Stroud: A new department, a new approach? How the revised Foreign Office should recast our aid policy.

25 Feb

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.

Philippa Stroud: The Legatum Prosperity Index. The UK is in a strong position, but there are the first signs of deterioration.

16 Nov

Baroness Philippa Stroud is CEO of the Legatum Institute.

The UK is facing two major challenges. The ongoing pandemic, and national efforts to contain it, are impacting not just our health but also our jobs, our children’s education, and our relationships with each other and with the state. At the same time, we are approaching the end of the Brexit transition period and will soon be re-defining our place in the world and re-establishing our relationships with other countries outside of the European Union.

There are clear challenges for the UK to overcome, but also opportunities to grasp. The choices we make now will create the foundations and form the character of the nation we will be in the future; we need to decide carefully.

The good news is that the 2020 Legatum Prosperity Index shows the UK is in a strong position to emerge more prosperous from this time. Prior to the pandemic, the UK was the 13th most prosperous country in the world. On average, the British public enjoyed among the best living conditions globally, with access to quality healthcare and world-leading higher education institutions, and our economy was one of the most dynamic and enterprising in the world.

However, the last few years have seen the first signs of the deterioration of our prosperity, showing we must not take it for granted. This is not an irreversible trend, but it is a warning signal.

We must beware the trap of falling into a mindset of an overdeveloped society, vulnerable to entitlement and complacency. If we lose sight of our values and heritage, if we sacrifice innovation, purpose, and meaning out of a desire to avoid change and risk, we will create a window through which the hard-won prosperity of our forebears will evaporate.

The Prosperity Index reminds us of the multi-dimensional nature of true prosperity. Implicit in the Index is the danger of prioritising only one aspect above others, and at a time of crisis shows us what we need to protect.

Prosperous nations build healthy institutions, strong economies, and strong social wellbeing simultaneously. They do not trade freedom or the economy off against health or education.

The pandemic is testing the UK’s institutional, economic, and social resilience. One of the most deeply felt effects has been the change in how we interact with others – family, friends, neighbours, colleagues, and strangers. Over the last 10 years, the strength of personal and family relationships in the UK has deteriorated, and the strength of wider social networks has increased less than in other nations.

In addition, public confidence in national government is among the lowest levels seen across the world. This is not a reflection on any individual administration – levels of public confidence have fluctuated significantly over the last 15 years – but is perhaps a result of the testing times we have been through over the last few years, including the Brexit referendum and a number of general elections and leadership changes.

While our governance systems are still relatively strong, the UK has also experienced a decline in government effectiveness – of the 20 countries currently ranked highest for this, the UK has deteriorated most since 2017. This is deeply worrying, as good governance and decisive and effective leadership will be crucial to guide the UK through the pandemic and create a more prosperous society in the future.

As we go through this moment of change, we need to take a holistic approach to protecting prosperity. We need to protect the public from the harms of Covid, but also from the harms of restrictions. We need to suppress the virus without suppressing our freedoms or the potential for economic growth.

The UK’s current Covid response may be saving lives from the virus itself but it is putting them at risk in a variety of other ways. The cost of lockdown is high, in terms of deaths from cancer, heart disease and other illnesses, mental health challenges, loneliness, reduced economic growth, financial struggles, and educational decline, and it is being paid by the most vulnerable in society.

China was the first country to be impacted by Covid, and its response framed the context for the UK and much of the rest of the world. Its approach was one that moved to restrict the freedoms of its people and lock down its economic engine. Such actions are consistent with China’s ranking of 90th in the Index for governance and 159th for personal freedom but they are not the actions that build prosperity, they are ones that weaken it.

As a democratic nation built on the principles of good governance and personal freedom, the UK needs to be finding ways through this crisis that speak to the power and strength of who we are and the values of our democracy.

This is a time for mature citizenry, a moment for the UK Government to trust its people, and for people to respond by taking responsibility for their actions. Decisions should be made in a transparent way, sharing the evidence and explaining the rationale.

The public needs to be let into the decision-making process as much as possible, through reliable, accurate and timely information. We should be trusted to understand the conflicting demands placed on leaders and to reflect sensibly on the likely consequences of different approaches, not just presented with a few selected indicators.

This moment, as we battle with Covid and the transition period comes to an end, is an opportunity to re-establish a clear, bold vision for the country’s future and its character. For developed nations like the UK there are no well-worn paths for the journey ahead – we need to create them. But the Prosperity Index shows us what we need to protect and develop in order to build well for the future.

We must work together to continue building an inclusive society, with a strong social contract that protects the fundamental liberties and security of every individual. We must innovate together to continue developing an open economy, that harnesses ideas and talent to create sustainable pathways out of poverty. And we must all play our part to continue creating an enabling environment, so the contributions of each person can increase the quality of life and standard of living for everyone.

Although the world has changed, how prosperity is generated and perpetuated in a nation has not. The UK has overcome significant challenges in the past, and by working together and focusing on the core principles that build prosperity, we can be confident that we can do it again.