Mary Creagh

Labour’s paradigm shift in international aid

by / Comments Off / 231 View / 5th May 2015

Labour’s paradigm shift in international aid, by Abdul Suhood Komeh

If Africans need a reason to vote on Thursday’s elections, this is it; a Labour government would usher a new agenda in International development based on merging the British government’s financial and diplomatic power to bring about structures of accountability, rights and justice.

The new policies will not be solely concentrated in making-up financial shortfalls in services in Africa, for instance. They will ensure value for money by putting a real effort in supporting regulatory structures, alongside giving civil society a relevant role in providing proper services that are far-reaching in terms of beneficiaries.

This could well be the beginning, the hoped for paradigm shift in how the west engages Africa. The next Labour government is set to depart from the old route of just lumping funds into Africa in hope of success.

In an interview with New African Analysis at her Westminster office, the Shadow International Development Secretary, Mary Creagh, outlined the next Labour government’s commitment to financing and developing national institutions to foster good governance and transparency in the developing world.

For quite some time now, many Western-based Africans have been disillusioned by the West’s strategy to aid dispersal in Africa. Not that they are in principle opposed to aid – they fully recognise that aid is still of vital importance in filling gaps in funding infrastructural developments and social services. But over the years, due to the lack of tangible evidence of an end game to Western-aid dependency, some have come to support the view that aid is merely reactionary, and does not address the core issues around Africa’s failings; for example, the lack of credible anti-corruption and fiscal auditing institutions.

The long held suspicion is that Western governments, for an understandable fear of being labelled ‘neo-Colonialists’, have not brought much pressure to bear on governments to ensure accountability, let alone empower civil society with the backing needed to build a culture of independence. There is a growing belief that because aid is not seriously contingent on rigid criteria being met, it has failed to achieve a transformative effect. In reverse, quite often, aid funds are susceptible to misappropriation and corruption by unscrupulous governments. The view is that the continuation of this blatantly erroneous approach has undermined economic growth and to an extent, failed to impact politics for the better.

While the policy shift may have been influenced by other factors like the austerity measures in the wake of the 2008 financial downturn, they could just provide a much needed fillip to Africans in Europe, particularly in the United Kingdom. Traditionally, even though socially conservative around some issues, most Africans have gravitated to the Labour party with regards voting decisions. Hugely significant on this occasion is that the Labour party is shaping policies that justify African allegiance away from immigrant issues within U.K. borders. Of pivotal importance in this new thinking is that it gives Africans, especially those disenfranchised by bad politics as result of their Western dispersion – for reasons of economic, education, professional and so on – a chance to influence change from abroad, at least to a degree.

Of course these are just proposals for now and might not necessarily yield the desired effects for Western governments, and well-meaning Africans. But nonetheless, from an African perspective, the proposals are worth celebrating.

Due largely to poor governance at home, it is only fair that Western-domiciled Africans are able to have a say in the aid provided by their tax contributions. This rethinking by a possible Labour government might represent a massive recompense for years of subsidising the burden of unemployment and low salaries back home.  The fact is the time for change, if intended for the better, is always now. A new policy trajectory in aid might just produce the solution to the endless routine of sending money and other forms of remittances – monthly, weekly and however convenient – to friends and relatives. Such a prospect has to be exciting indeed for many Africans.

Over the years, African governments have depended on aid for at least 50% of government spending. In fact according to figures from the World Bank, from 1970 to at least 2002, Sierra Leone, Chad, Mali, Mauritania and few other governments in Africa, needed aid to finance over 70% of spending. It would be fallacious to imagine the same is not true in today’s Africa with so many post-conflict and conflict-embedded economies.

No doubt, Africans, fatigued by perpetual announcements of false dawns around the continent’s economic renaissance would want to see such proposals brought to a speedy fruition. And there are good reasons for some optimism in the sense that this new pathway is gaining traction and could be adopted by other Western donors and well-wishers elsewhere.

It is important to note that the Obama administration was the first to announce a similar shift in policy. In its 2012 document, Strategy Toward Sub-Saharan Africa, the United States government promised to ‘empower key reformers and institutions of government at every level to promote the rule of law, strengthen checks on executive power, and incorporate responsive governance practices’.

While Creagh ruled out any intervention into the parliamentary or constitutional politics in the developing world, she made clear that ‘empowering citizens and civil society are the bedrock for the development of any democracy’, and therefore a central plank of a Labour government’s international development policy. A Labour government she insisted, will be mostly aligned with governments that are committed to reforming and  crafting legislations that are inclusive, distributive of power to citizens, civil entities and importantly, allow ‘the media to work effectively to discharge its independent democratic duties’.

Africans long for a politically stable continent with the ability to plan a route to economic sustainability to improve the lives of its citizens. Continent-wide, it is apparent that Africa’s Achilles’ heel remains the lack of vital organs of effective governance. Without them, the cyclical aid-without-an-end and the reality of poverty will continue.

New African Analysis also drew the Shadow International Development Secretary’s attention to the very important recent study that found that annually, Africa is losing £60 billion in tax evasion involving Western companies, against the £134 billion it receives in aid and loans.

On that, Creagh emphasised Labours commitment to strengthening already existing policies on tax evasion. As recommended by the African Progress Panel at the 2013 G8 summit, she said that a Labour government would adopt a system similar to the United States’ Frank Dodd Frank Act which came into existence in 2010 in response to the global financial crisis. The Frank Dodd Frank Act makes it a requirement for extractive industry companies to make comprehensive disclosures of any payments made to foreign governments. That way, investor groups can be monitored to ensure governments and citizens can access information on finances of not only their resources, but also taxes collected on their behalf.

No doubt, the possibility of a Labour government that will prioritise regulatory frameworks that monitor British-based companies on tax evasion and practices that encourage corruption and the abuse of local workers’ rights is good news. Creagh’s view is that ‘only when countries have a tax base that enables them to provide basic public goods – health, education and the rule of law – will the private sector thrive’. Reaffirming a possible Labour governments’ emphasis on structures, she added that ‘states need the capacity to enact and enforce modern tax laws and to collect tax revenues’.

Like the United States, a Labour government, will put the necessary modalities in place for the United Kingdom to lead by example by closing loopholes and increase transparency. She promised tough deterrents through changes to tax rules that are shaped in consideration to their effects on the poor. She is confident the business-as-usual line of leaving developing countries out of the discussion on tax evasion will be brought to an end by a Labour government. ‘We will work to secure a multilateral agreement to force companies to publish what tax they pay, and where. Ed Miliband has put them on notice: they have six months to open their books or face being placed on an OECD blacklist,’ she concluded.

Photo:  Mary Creagh