During Professor Alex Edmans’ recent interview with Elias Papaioannou, co-Director of the Wheeler Institute, he stressed that ‘responsible firms have to go further than ‘doing no harm’, it is not enough to just pay a fair wage, reduce pollution and pay taxes… firms have to proactively remedy social problems’. To this extent, at London Business School, there is a proactive effort to ensure that all members of the community become agents of positive change in the world and use business solutions to tackle development challenges, whether it be through core lectures on ethics and compulsory modules that challenge us to consider how our business understanding can reduce inequality and promote economic growth, such as offerings within the ‘Global Experience’ portfolio.
The force of social responsibility should also drive Governments and political leaders worldwide. The UK’s commitment to spending 0.7% of national income on aid, enshrined in law, contributes to Britain’s reputation as a development superpower and crystallises our national commitment to addressing global challenges. This £15 billion, annually devoted to aid, has made a massive contribution to the fight against aids and malaria, as well as provided food aid and medical care for victims of conflict and disaster throughout the world and promoted stability and security in the world’s most troubled regions.
Similar to the Wheeler Institute’s founding mission, British aid helps support market economies, especially when it comes to training government officials and the judiciary and helping pay for and observe free elections. Moreover, expertise from DFID officials means British aid helps fragile countries build efficient systems of taxation, with the result that these governments can raise revenue to spend on the welfare of their people.
However, Prime Minister Boris Johnson’s announcement that the Department for International Development (DFID) would be merged with the Foreign and Commonwealth Office has caused much concern about his Government’s priorities and how aid spending will change as a result of the merged department. While the commitment to aid spending remains, this decision brings into question whether social responsibility will continue to be at the heart of aid spending.
DFID is not, to cite Johnson, a ‘giant cashpoint in the sky’. It is poverty focussed, has stringent governance standards and transparency, a world leading track record for delivering and implementing, and unparalleled development skills and expertise. While the Foreign Office is adept at promoting British interests abroad, aid and foreign policy are not the same thing. While we should commit to spending more in countries that support our national security, we also have to support the poorest countries in the world, whether they be on our doorstep or not. It is clear that the commercial rationale for sustainability is being increasingly validated; international development, as with sustainability, creates significant positive externalities that benefit the UK. For the government to potentially be rowing back on responsibility when the private sector is pushing forward, with proven commercial reasons to be doing so, suggests the government has not fully considered the long-term benefit.
The curious timing, in the midst of a global pandemic and during fraught negotiations with the EU over our trading relationship, hints that there will be a change of emphasis. The fear is the government will attach more strings and require a ‘quid-pro-quo’ in return for our support, undermining the effectiveness of the 0.7% aid budget.
There will be plenty, especially during the current crisis, who say that ‘charity must start at home’. This is undoubtedly true and we must look at the structure of our economy and assess whether it effectively rewards NHS staff and key workers across the country for their contribution to society during the pandemic. But this is not an either-or argument. Poverty reduction and the promotion of stability and security ultimately supports the British economy. International aid should not be relegated to an internal division within Whitehall; there needs to be clear leadership, with authority at Cabinet discussions to advocate for the needs of the world’s most vulnerable communities and to fight for resources from the Treasury. Rightly, the Foreign Office has to focus on short-term diplomatic goals and political priorities and will have a role to play during future trade negotiations; this is why it is even more important that our long-term commitment to combating poverty is safeguarded by having independent political and structural leadership.
The Wheeler Institute’s founding purpose was to encourage business to support countries by promoting economic growth through developing, sharing and implementing business expertise to solve development challenges. The Government could take heed of this approach and ensure its core responsibility continues to include a role eradicating global poverty. There are skills and expertise throughout DFID that are sorely needed to support vulnerable people across the world right now, especially during a global humanitarian emergency caused by COVID-19. Bureaucratic distractions will lead to uncertainty over governance and objectives, leading to projects being paused or delayed. Prevaricating during the midst of a global pandemic could be at the cost of countless lives around the world.
As a nation, we have to have the eradication of global poverty as a core purpose. To cite Edmans again, this will ‘grow the pie’ for all; it’s not in our economic interests to let poverty pervade and allow failed states to exist, as this undoubtedly leads to economic cost. The UK Government needs to maintain its commitment to development and use purpose to drive investment and prosperity across the world, and at home.
George Looker is a MBA Student, Project Officer at the Wheeler Institute at London Business School and a former Special Adviser in the UK Government.
The Wheeler Institute is seeking to understand, illuminate and offer solutions to the challenges faced by the developing world, with an aim to identify the role of business in addressing these challenges and a focus on the implications and actions for those in developing countries. In support of our students, we approach this blog section as a reflective platform and a space where individuals can generate debate as long term agents of positive change.