This week the UK government has been accused of undermining its own commitment to transparency on aid spending in light of the news that DfID will increase funding that is channeled through the private sector arm of the UK’s aid programme.
With a renewed focus on aid for trade a new draft bill has proposed DfID increase the limit of official support given to the CDC from £1.5 billion to £6 billion with further scope for the cap to be double if they see fit.
However, critics of Patel’s new trade focus who fear it is a gateway for tied aid are outraged that the CDC will be receiving more funding. Many are concerned about their history of channeling investments through secretive offshore locations. In addition, they have been known to pour funding into unpopular projects such as gated communities, shopping centers and luxury property in some of the world’s poorest countries.
The Labour MP Stephen Doughty and member of the international development committee said; “It is extraordinary that the government is seeking to massively increase its funding via an organisation that has previously been subject to allegations about the use of tax havens, and which continues to provide excessive pay packets for some of its directors, in excess of the salary of the prime minister. “Priti Patel claims she wants more transparency and efficiency in our aid spending – yet appears content to shove massive chunks of taxpayers’ cash to unaccountable investors and other government departments that have fewer safeguards and checks than her very own department.”
However, DfID have been quick to defend their decision and a spokesperson, “This bill is an essential step that will ensure CDC can continue to make pioneering investments and, as the secretary of state has said, this will help to create more jobs and boost economic growth in Africa and south Asia so that people can lift themselves out of poverty and leave aid dependency behind.
“The level of financial support that can be provided to CDC was set 17 years ago and has now been reached. The limits set in the bill do not commit us to increases in financial support. We will only invest in CDC when it is needed to meet demand, achieve value for money, and continue delivering life-changing results and clear development impact.”
DfID have branded the criticism as ‘baseless scaremongering,’ and with a recent report on the Africa Free Trade Initiative clearly outlining the positives of trade focused aid and private sector development, there is clearly an argument for increased investment in this sector and CDC may well be best placed to do this.