Saturday, February 1, 2014

Minister: UK investment in developing states to double

British Prime Minister David Cameron (right) speaks with  French President Francois Hollande as they arrive at the officers' mess on January 31, 2014, at the Royal Air Force base of Brize-Norton. The UK government is set to double its economic investment in some developing countries, including Kenya and Tanzania, in a key policy shift in its £9 billion (about Sh1.3 trillion) aid. PHOTO | AFP

British Prime Minister David Cameron (right) speaks with French President Francois Hollande as they arrive at the officers' mess on January 31, 2014, at the Royal Air Force base of Brize-Norton. The UK government is set to double its economic investment in some developing countries, including Kenya and Tanzania, in a key policy shift in its £9 billion (about Sh1.3 trillion) aid. PHOTO | AFP  AFP
By Paul Redfern
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The UK government is set to double its economic investment in some developing countries, including Kenya and Tanzania, in a key policy shift in its £9 billion (about Sh1.3 trillion) aid.
The move announced by Britain’s secretary of state for international development Justine Greening in London this week is aimed at ending emerging economies’ dependence on aid and marks a change from traditional priorities, fighting hunger and disease.

The British plan comes as other countries, Japan and US, rush to link the aid they provide to poor countries with business opportunities.
A key aspect of the UK policy is the appointment of Novastar, a venture capital fund based in East Africa. It will be the first beneficiary of a CDC-run fund that will provide capital to businesses in the region.

The fund will invest up to £9 million in Novastar to allow it to support businesses which provide low-cost schooling, healthcare, energy, housing and safe water in East Africa.
The Department for International Development (DFID) has already signed its first memorandum of cooperation with the London Stock Exchange Group (LSEG) to support emerging capital markets in Africa.

This will allow the LSEG Academy expand its training in Tanzania and, in time, across East Africa.

IMPROVE BUSINESS CLIMATE
The UK government will also agree on a series of new deals with leading British and global firms to improve business climate in Africa and South Asia, kick-start embryonic capital markets and drive more investment into frontier economies.

In a keynote speech at the London bourse, Ms Greening set out the DIFD’s new approach to supporting growth and creating jobs in developing countries.
“Economic development is, without question, the only way countries can leave behind enduring and chronic poverty for good,” Ms Greening said.

“I’ve restructured my department to focus on jobs and growth and commit to more than double the amount we will invest in this crucial area.


“Working with world-class businesses ensures frontier developing economies get the best support, advice and expertise they need to grow and Britain is well placed to benefit from this growth.”
In May the International Monetary Fund will hold its first pan-African economic conference in five years to discuss business in Africa.

Ms Greening said the shift towards economic development was a “radical” departure in the way the UK has spent its aid budget.

MARKET TRAINING
The initiative is controversial amongst some aid agencies, as some fear that it will reduce the funding available for more traditional areas.

Ms Greening also met the first delegation of East African businessmen, civil servants and regulators to be trained in managing capital markets through the DFID-backed London Stock Exchange Group Academy.

In 2015/16, DFID will plan to target £1.8 billion of its budget on economic development, more than doubling the amount spent in 2012/13.

DFID’s policy will also involve a partnership with 12, UK high-street names to improve working conditions and job opportunities for over 700,000 workers and smallholder farmers in Kenya, South Africa and Bangladesh.

This will include working with Sainsbury’s to help workers gain qualifications as well as Marks and Spencer to develop leadership and management skills for farm workers.
A DFID statement also noted that a lack of adequate and affordable insurance prevents promising business investment in fragile states.

A £20 million investment in the Multilateral Investment Guarantee Agency will enable it to support up to £270 million of new private investment in fragile countries.

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