By Nick Mann | 11 March 2013
The UK government plans to help developing countries end their ‘aid dependency’ by focusing on boosting their business environments and encouraging more investment by UK firms.
Speaking at the London Stock Exchange this morning, International Development Secretary Justine Greening said this approach would create growth and jobs. ‘We can’t just see business as a risk to developing countries. We must also see it as an opportunity. I want the Department for International Development to help build up strong and investable business environments,’ she said today.
‘That means helping countries build their own tax base, squeezing out corruption and providing the technical advice that means when economic growth does happen, countries are well placed to reap and then reinvest the gains.’
Under the initiative, an in-house team of tax experts, known as the Tax Capability Building Unit, will be set up within the UK Revenue and Customs to work with DFID teams based in developing countries where there is a high prospect of developing the tax base.
Providing this kind of support and advice had helped the Afghan government to increase its tax base from $250m in 2004 to $2bn in 2012, Greening noted.
The DFID’s International Growth Centre will benefit from a £51m investment to expand its work to Burma, Malawi, Liberia and Nigeria. The centre provides independent advice and expertise on growth policy to governments in developing countries.
A three-year, £4.8m Commercial Law and Justice Programme will also be established to identify and remove legal constraints that currently add to the costs and risks faced by businesses investing in up to eight partner countries.
The department will also establish a joint work programme with the CBI business association, industry bodies and non-governmental organisations to identify barriers to working in developing countries and how the UK government can help to address these.
Greening added: ‘I want to see the DFID become a hub for knowledge-sharing, advice and support for projects which have a clear development gain. We do developing countries no favours by leaving the economic coast clear for those with corporate governance standards that are far lower than our own. My objective for developing countries is an end to aid dependency through jobs.
‘Every time Britain has been at its most successful, it’s been when we’ve been out in the world, trading, doing business. We've never stood on the sidelines. And we can't afford to start now.’
Greening’s speech came as the chief executives of 28 major UK businesses today highlighted the economic benefits of the government’s decision to stick to its target of increasing aid spending to 0.7% of gross national income.
In a letter sent to the Financial Times, the firms, which include GlaxoSmithKline, Waitrose and BT Group, said the commitment was ‘not only the right thing to do’, but also a ‘smart investment’.
‘Increasingly, the prospects of the world’s poorest people are being defined by what businesses do alongside the established work of governments and civil society,’ they wrote.
