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DFID and FCO merger: our experts' views

Written by Nilima Gulrajani, Annalisa Prizzon, Marcus Manuel, Dirk Willem te Velde, Barnaby Willitts-King, Nicola Jones, Jonathan Tanner

Plans to merge the UK’s Department for International Development (DFID) with the Foreign and Commonwealth Office (FCO) could not have come at a worse time. Ministers and civil servants will be looking inwards just as the world is facing the gravest health and economic crisis in a generation.

But the merger itself does not come as a surprise. The Prime Minister has made no secret of his desire to see the foreign aid budget spent more in line with the UK’s “political and commercial interests”.

What then might this mean in the longer-term for the UK’s role in influencing international development? Where are hard-fought gains at risk of being lost? And what opportunities might arise? Read our experts’ reactions and share your views in the comments below.

Nilima Gulrajani: development diplomacy – a match of unequals

A week is a long time in politics. Even before the ink was dry on the International Development Committee’s (IDC) report (PDF) concluding that DFID should remain independent, Boris Johnson announced its merger with the FCO. Aid and foreign policy are ‘one and the same endeavour’, Johnson rationalised, lamenting the ‘dividing line’ that ‘runs through our whole system’.

Foreign policy prioritises a nation’s immediate economic and geopolitical interests through the negotiation of international relations. Development policy is meant to advance long-term shared collective interests by investing in activities overseas where the primary beneficiaries are not British voters. While development and diplomacy intermingle extensively, their means and ends are fundamentally distinct.

The UK intentionally created a dividing wall between these two policy areas after the discovery in 1988 of a secret defence agreement linking aid to Malaysia with a major arms export deal. Since the 2015 UK Aid Strategy (PDF), British development and diplomacy institutions have been brought progressively closer. Just as love doesn't need marriage to solemnise what is both tender and true, the integration of development and diplomacy did not require an untimely and ill-advised merger to realise the benefits of coherence and coordination.

As the walls tumble to unite these lost lovers in a common enterprise, we need greater mutual respect. The wholesale swallowing of development into the new Foreign and Commonwealth Development Office (FCDO) is more akin to a hostile takeover than a union of equals, and this radical form of integration needs rethinking. Maintaining principled commitments to development aims, endeavours and ways of working within core spheres of diplomatic statecraft may, only just, make for a happy marriage.

Annalisa Prizzon: leadership matters for development effectiveness

In the new Foreign, Commonwealth and Development Office (FCDO), the Foreign Secretary is expected to have the final say on aid policy and allocation. But our empirical evidence shows that the leadership of a dedicated minister for international cooperation at cabinet level matters for development effectiveness. The governance model chosen for aid policy and management simply isn’t sufficient (such as policy responsibility with the Ministry of Foreign Affairs or a Ministry for International Development, and/or a separate implementing agency).

Across those countries that are members of the Development Assistance Committee (DAC), governments with a cabinet-rank minister for development cooperation outperformed those where the Foreign Ministry was solely responsible for this portfolio.

Leadership at the cabinet level is associated with better-quality aid, closer alignment with recipient country priorities, stronger selectivity based on poverty needs, more robust policy performance, and less fragmented and more transparent aid flows. For these reasons, a minister for international development should continue to sit in cabinet.

Dirk Willem te Velde: an opportunity to reset UK–Africa relations

The FCO/DFID merger is an opportunity to implement the ODI and All-Party Parliamentary Group – Trade Out of Poverty (APPG-TOP) proposal for a UK–Africa prosperity commission. This would help reset UK–Africa economic relations, support Africa in overcoming the Covid-19 crisis and chart a better course for the next 10 years.

Unlike the US, Japan, China and the European Union (EU), the UK does not have a published, comprehensive framework for economic cooperation with Africa. While Africa is facing major challenges in supporting trade and finance as a result of the pandemic, it is a key market, with some of the world’s fastest growing economies. By 2050 it will be home to one in four of the world’s consumers.

Yet, trade and investment between the UK and Africa has stagnated over the past decade. The stock of UK foreign direct investment (FDI) in Africa was £38 billion in 2018, approximately the same as in 2008. The level of exports and imports also has not changed in a decade, standing at around £17.5 billion in 2018. Other countries including China have begun to trade and invest much more with the continent, suggesting there is ample opportunity.

A reset is needed in UK policy towards Africa to:

A merged FCO and DFID, in collaboration with the Department for International Trade (DIT), is ideally placed to support a coherent UK strategy for Africa. A UK-Africa prosperity commission with African and UK leaders as partners can support the reset of UK policy towards Africa.

Marcus Manuel: efficient poverty reduction is different to combatting ‘Russian meddling’

As three former Prime Ministers have said, the merger is a bad decision. Given the cross-party agreement, history suggests it will be reversed. Having one institution with two goals is a recipe for costly muddle and mess. Checks and balances have also been removed. It will therefore be left to the Treasury to decide how UK taxpayers can receive value for money. In particular, the Treasury will want to ensure:

  1. Efficient balance of resources. In the past, DFID was required to spend 90% of its resources in low-income countries as this is where global poverty is concentrated. If the new Secretary of State decides that, for geopolitical reasons, more should go to middle-income countries, the Treasury will need to decide if that provides value for money given that the Foreign, Commonwealth and Development Office (FCDO) also has a global poverty-reduction objective.
  2. Efficient aid projects. While all aid projects must reduce poverty, some are more efficient than others. Domestically, the National Institute for Health and Care Excellence (NICE) has helped to keep costs down in the National Health Service (NHS). The Treasury should look for an equivalent for aid spending. ODI research suggests a benchmark of £150 a year per person to lift someone out of extreme poverty. Projects costing more than £1,000 per person are too inefficient and should be redesigned.
  3. Efficient staffing structures. DFID staff are experts in combating poverty in low-income countries, not in responding to ‘Russian meddling‘ in middle-income countries. It is inefficient to redeploy them or make them redundant. The Treasury should demand that staffing structures are cost-effective and motivational.

Ensuring value for money matters if the UK is to punch above its weight globally. ODI ranks Ireland as the most efficient aid donor at targeting poverty. Ireland’s approach to aid is appreciated and brings global influence: the country has just secured a seat on the UN Security Council.

Barnaby Willitts-King: humanitarian issues must be prioritised

We’ve long argued a separate DFID championing humanitarian values should provide a counterweight to the UK's other interests. In DFID’s heyday, its Secretary of State provided a challenge in cabinet to security and trade priorities, for example. However, this has steadily been eroded, and humanitarian funding has increasingly drifted away from the crises in greatest need. The FCO/DFID merger risks continuing this trend and further marginalising humanitarian aid at the expense of political and security objectives.

There is also a risk that continued drive for profile means that 'bigger, better and faster' UK-branded humanitarian responses are still prioritised over the careful spade work of reform, including working towards local humanitarian action. In fragile states, shrinking aid budgets risk humanitarian action becoming the main form of aid, just when we are making progress on joined up humanitarian-development responses to fragility.

However, the merged department also offers the potential to bring more joined up and consistent approaches across the UK's diplomatic, development and humanitarian objectives, rather than separate decision-making lines in the two ministries. At its best, this would mean mutually supportive UK positions across what it gives in humanitarian aid, what is says in the UN Security Council and what its diplomats say in foreign capitals about respecting international humanitarian law.

To achieve this, it will be critical to retain and reinforce DFID's humanitarian capacity as both a central and geographical function that meaningfully feeds into discussions. As a signatory and key shaper of both the Good Humanitarian Donorship initiative and the Grand Bargain, the UK has committed to supporting needs-based humanitarian action. Whether this commitment survives the ever more complex soup of issues from post-Brexit trade, national security and diplomatic relations is another matter on which many will be pessimistic.

Annalisa Prizzon: aid instruments must be diversified

There is no one-size-fits-all: in the new Foreign, Commonwealth and Development Office (FCDO), the set of aid instruments should be diversified and tailored to countries’ demands and circumstances.

Our work across regions clearly shows that senior government officials from (loosely described) upper-middle income countries are asking for far less financial assistance as, while still stretched, their own tax revenues can support national development plans. And the share of external assistance in the overall budget is usually very close to zero. Instead, cooperation with development partners was mainly sought for knowledge sharing and peer learning, and to help attract finance from private investors.

Knowledge sharing and peer learning are complex and demanding, but in principle far less expensive than project and programme implementation. Financial transfers should mainly be channelled to countries that cannot entirely rely on their own tax revenues or cannot borrow from capital markets at reasonable rates.

We cannot equate the type of development cooperation for low-income or lower-middle income countries with economies higher up the income per capita spectrum. Policy influence in a country like Ukraine does not require the same level of financial transfers as it would in Zambia, for example. Less expensive instruments like knowledge-sharing, peer learning and policy dialogue should be scaled up in upper-middle income countries.

In response to an Independent Commission for Aid Impact (ICAI) review in 2016, for the past couple of years DFID staff have been working on a set of ‘transition principles’, yet to be released, to guide how bilateral aid programmes should be wound down when a country is no longer on the priority list. This merger could be an opportunity to reconsider the overall approach of UK development cooperation. It’s a chance to deploy different resources, instruments and approaches across countries to reflect their demands and preferences, and to maximise impact and influence. One size does not fit all.

Nicola Jones: protect UK commitments to leave no one behind

The new Foreign, Commonwealth and Development Office (FCDO) must take measures to ensure UK commitments to the 2030 Sustainable Development Agenda and leaving no one behind are not jeopardised by the DFID-FCO merger.

As reflected in the 2018 Strategic Vision for Gender Equality, 2016 Youth Agenda and 2018 Strategy for Disability Inclusive Development, DFID has sought to play a catalytic role in tackling inequality, and promoting the empowerment of girls and women, adolescents and youth, and persons with disabilities.

Through investments in programming and better evidence, it has raised the international profile and supported the wellbeing of the world’s most marginalised. This includes girls at risk of child marriage and female genital mutilation/cutting (FGM/C), people without access to sexual and reproductive healthcare, children out of school and in exploitative forms of labour, and girls and women with disabilities.

While there is robust evidence that investing in girls and women and in disability-inclusive infrastructure and services can be smart business propositions, too many disadvantaged groups risk further marginalisation if UK aid becomes narrowly focused on trade and security interests.

This was underscored by the recent National Audit Office review of DFID’s Gender Strategy, which lauded its ambition but cautioned against an overly optimistic view on the proportion of UK aid invested to advance gender equity across the life-course and to shift harmful social norms.

Before Covid-19 there was already a consensus – supported by UK’s Independent Commission for Aid Impact (ICAI) – that accelerated progress is essential to support the 'hardest to reach’ and deliver the Sustainable Development Goals. The pandemic has made these efforts exponentially more challenging. We must therefore collectively hold this government accountable to its commitments to tackling inequities and prevent a myopic ‘Britain first’ approach to 0.7% investments.

Jonathan Tanner: new opportunities for digital development

It’s not impossible that, when it comes to gripping the increasingly digital aspects of development, this merger could herald important new areas of focus.

For states aspiring to digital development, one of the first challenges is putting in place the basic infrastructure required to tap the benefits of new technologies. This starts with access to electricity and ends (for now) with high-speed internet connectivity. Countries will face difficult decisions, especially as each investment will influence the range of future choices. Who to trust when it comes to establishing critical infrastructure like broadband? How much liberty (if any) should citizens exchange for digitally enabled public services? What rules should govern the use of algorithms? How to protect information ecosystems from misinformation? What taxes work best in a digital economy?

Questions like these will be weighed against a new generation of geostrategic risks. On issues of national security, corruption, modern slavery and climate preparedness, DFID and FCO expertise can play an important role in fostering the multilateral cooperation needed at a time of fragmenting commitments. These are, after all, wicked political problems that aid alone cannot solve.

As time passes there will be a much clearer digital connection between development and poverty reduction, the protection of democracy and the need for diplomacy. That’s why, in the digital realm at least, it could yet make sense to bring the three together.