Cross-government Prosperity Fund: Whose prosperity?

ICAI’s Prosperity Fund review suggests poverty reduction and trade opportunities make awkward bedfellows

Today saw the publication of the first independent review of the Prosperity Fund – a new cross-government aid fund intended to promote economic growth in developing countries. The review was conducted by the Independent Commission for Aid Impact (ICAI), the public body responsible for scrutinising UK aid effectiveness and value for money.

Ignoring the world’s poorest children

While sustainable and inclusive economic development is critical for poverty reduction in the long term, the diversion of funds and expertise away from health and education services for some of the world’s poorest children is concerning. And while aid spending through government departments other than the Department for International Development (DFID) is fine when there is a clear case for it, the deep body of expertise and capacity that DFID has built up over the years is a genuine asset that should be recognised and utilised.

Addressing concerns

Today, ICAI’s rapid review of the Prosperity Fund justifies these concerns. While poverty reduction is specified as the main criterion for successful bids to the Fund, the review highlights that the concept notes for proposed projects that it has received so far give limited detail about how this will be achieved. Nor does the Fund define a required threshold in this area.

The concept notes also struggle to define how the projects would meet the fund’s secondary criterion relating to strengthening UK trade and investment opportunities, calling into question the desirability of attempting to combine these objectives. Aid is at its best when it is targeted at people living in poverty, without being muddied by a desire to further UK commercial interests. There are other channels for achieving that goal, and the experience of the Fund so far questions whether we run the risk of not achieving either objective if we try to bring the two so explicitly together.

A lack of focus

At Save the Children, we’re particularly concerned by the apparent lack of focus on inequality and assurances that growth promoted by the Fund is truly sustainable and inclusive, in line with the international Global Goals commitment to leave no one behind. This is especially important in the middle-income countries that the Fund focuses on, where structural inequalities are keeping vast numbers of people in poverty, despite economic growth.

The review also highlights concerns over the ability of bidding government departments to implement the proposed projects, given their lack of experience and delivery capacity, particularly at the scale and speed envisaged. There are also concerns that the design of the Fund around competitive bids across a spread of issues undermines its capacity to build a strategic, coherent portfolio. The governance of the Fund is also called into question, together with its poor adherence to transparency standards and limited engagement with NGOs and other external stakeholders who could lend expertise and contribute to improved ways of working.

A welcome review

ICAI’s review of the Prosperity Fund in its relatively early days of operation is very welcome, giving the Fund time to address the critical concerns that it raises. Moreover, the review should sound a warning bell for the UK aid strategy more broadly. The fundamental principles that underpinned the establishment of DFID were put in place for a reason, allowing the UK to become a recognised world leader in delivering quality, impactful aid. We cannot afford to lose these principles – aid that is focused on poverty reduction; that is untied from UK commercial interests; and that is delivered by a dedicated department with the expertise, governance, and delivery capacity to achieve maximum impact.

Keeping up important work

Over its 20-year history, DFID has built a sound reputation for poverty reduction programmes that help the world’s poorest people, particularly in improving access to education and life-saving healthcare. While there is always scope to do better and improve impact, it would be a travesty if this work was to suffer at the hands of an approach that prioritised British commercial interests over the needs of the world’s most desperate people. British aid saves lives and helps the world’s poorest countries to stand on their own two feet. Let’s keep it that way.