Government Overseas Aid Commitment: Private Investment

Part of the debate – in the House of Commons at 4:39 pm on 9 October 2018.

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Photo of Penny Mordaunt Penny Mordaunt The Secretary of State for International Development, Minister for Women and Equalities 4:39, 9 October 2018

Combined global investment flows into developing nations are currently $1.4 trillion, leaving a funding gap of over $2.5 trillion to deliver the global goals. With 12 years left on those goals, we are currently 80 years adrift on nutrition, 100 years adrift on education and 200 years adrift on ending extreme poverty. If we want to deliver those goals, we have to let others help, including the private sector.

We know that we have had good returns from our investments in developing nations—CDC manages an average annual return in sterling of 7%—so investing in developing nations could offer investors and pension holders a greater return on savings. We have £8 trillion under investment in the City of London. If 1% of that were redirected to Africa, that would lever $110 billion. Compare that with the total aid spend of $50 billion currently going into Africa. I believe that the public would be interested in their savings and pension funds helping this agenda to deliver the global goals. Imagine an app that allowed someone to select which particular goals they wanted their savings or pension fund to help.

We have the tools to do this. At the United Nations General Assembly a few weeks ago, we unveiled the World Benchmarking Alliance, which will grade companies’ performance against the global goals. We have the expertise to do this, in the City of London, in the Department for International Development, with our partners, and also through our world-beating impact investment organisations. We therefore want to explore doing this.

Today, I have announced a national conversation with financial institutions, with savers, with pensioners and with the wider public. We will announce the results at a UK-Africa investment conference next year. This is the only way we will deliver the global goals. Over the past two years, we have also worked with our partners to shift the dial on international aid rules, allowing our aid budget to help the private sector invest in sustainable development more than ever before. I will continue to work with our partners at the Organisation for Economic Co-operation and Development to ensure that the aid rules incentivise donors to lever in private sector investment where it is needed.

In future years, as the amount of funding coming back into our own development financial instruments—publicly owned financial instruments—increases, we should be open to using the profits to count towards the 0.7%. I am exploring the scope to reinvest those funds with the Development Assistance Committee to maximise the value of our investments. We remain committed to 0.7%—it was this Government who introduced it—but as we do so, we should ensure that the British public get a triple return on their generosity and compassion; a stronger personal return to them, a stronger Britain, and a more prosperous and secure world.