Developing Countries: Jobs and Livelihoods

(Limited Text - Ministerial Extracts only)

Wednesday 15th June 2016 Westminster Hall

[The Minister of State, Department for International Development (Sir Desmond Swayne)]

It is a pleasure to follow the hon. Member for Bradford East (Imran Hussain), and I thank him for his kind words. He referred to my passion, but it is clear that his passion equals, if not exceeds, mine, as does that of the hon. Member for Hackney North and Stoke Newington (Ms Abbott). I sometimes imagine that we disagree less than we think, but what is clear is that we all share the same objective and the same passion.

Today we have debated a very important, game-changing report. Since that report, we have been pushed in a direction that we were very keen to head in in the first place. We have created a new directorate for economic development by combining five separate departments. We have created a new youth and education department to focus on the transition from school to work, and to drive that focus through all the bilateral relationships and all our programmes. We have implemented a new growth diagnostic. This is the focus that my hon. Friend the Member for Stafford (Jeremy Lefroy) demanded there be in every bilateral relationship and every programme. The diagnostic informs every team of the barriers to growth in the countries in which they are working, so that they can devise programmes with the greatest impact on growth. My hon. Friend referred to the new agricultural strategy; it is, as he demanded, focused on smallholder agriculture. We will shortly publish—after we have disposed of that business on 23 June—our new economic development strategy.

The delivery of this agenda is vital to all the global sustainable development goals across the entire piece, and not just to the most obvious ones—1, 8 and 9. We will not see a reduction in world poverty of the order that we want unless we get a great increase in inclusive growth. In the past, we have had growth that has not generated inclusivity or sufficient jobs. It is vital that we get inclusive growth, because as we have heard so often this morning, we need 600 million new jobs in the next decade; otherwise, we will have a growing army of underemployed, frustrated and increasingly angry young people. As we have heard again this morning, lack of economic opportunity, a job and a livelihood is the principal driver of migration. That has been going on for decades. Millions of people have dropped everything that they have known and moved from their homes to the unknown in pursuit of economic activity. We are beginning to notice it as we see that tide of humanity coming up from south-Saharan Africa. Nevertheless, that driver has existed for decades, and we have to address it by providing those jobs.

I accept that not any job will do. It is no good having jobs that enslave. That is why we are still concentrating our programmes on work and freedom. There is what we are doing with the International Labour Organisation in Bangladesh, and there is the ethical trading initiative and the responsible, accountable and transparent enterprise initiative. Those are vital, but in the end it all comes down to jobs. The Government have an important role in that regard. My hon. Friend referred to the importance of public services. Yes, public services are important; there are important jobs and roles in public services. It is precisely for that reason that we take—and manage—the very considerable risks of working through Government-provided services in places such as Nepal, where our healthcare programme is channelled through Government provision, although it is a corrupt environment.

I share the passion of the hon. Member for Islwyn (Chris Evans) for tackling corruption. He is absolutely right, and that is why our programme on governance under SDG 16 is so important to our economic development programme. It is precisely for that reason that we held the anti-corruption summit and, the day before, the summit to engage with civil society on how it deals with that. As I say, the hon. Gentleman is absolutely right: where elites hijack the lucrative parts of the economy and wreck it, that impoverishes everyone. When a person gets an important job in the Government or the civil service because they are someone’s cousin, rather than capable of carrying out that function, that leads to complete inefficiency.

Over and over again, we find Governments getting in the way of the creation of jobs, through unwillingness or lack of capacity to raise revenue to invest in the necessary infrastructure; a lack of regulation, or over-regulation; or a lack of contract law or any other law, or of the rule of law. All those things drive away investment.

The real engine of job creation is private sector-led investment. One of the principal barriers to that investment thriving is the lack of necessary infrastructure. A reduction in productivity of some 40% throughout Africa and Asia is accounted for by the lack of necessary infrastructure, and it is estimated that Africa suffers a vital reduction of 2.1% in its annual growth rate as a consequence of the lack of necessary infrastructure.

Some 1 billion people have no access to electricity, and 1.3 billion live nowhere near a road. We must address those infrastructure problems. There is an annual deficit of some $3 trillion a year, in terms of the infrastructure that we need to invest in. Most of that must be provided by Governments. Grant aid will remain important for filling about half of that infrastructure gap, but all investors will need to increase their ability to invest massively if we are to do that. That is why we are working with the World Bank and the regional development banks.

We are working on projects on hydroelectricity in Nepal and power sector reform and roads in Nigeria. We have launched Energy Africa, working in 14 sub-Saharan African countries to address the needs of 600 million people who are without electricity. Although we only launched the campaign last year, we have proved the root; we kick-started the campaign with the work that we did with M-KOPA, which has put in place some 300,000 solar panels that serve 1 million people. It has also used highly innovative methods, so that power can be paid for using pay-as-you-go mobile phones.

[Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)]

Where we have been relatively slow in moving to meet the infrastructure needs of Africa, the Chinese have moved relatively rapidly. Does he agree that that is not entirely unproblematic, because the Chinese do not share our commitment to human rights?

--- Later in debate ---

[Sir Desmond Swayne]

The quality of our investment and the fact that we do not tie our aid certainly make our aid of a higher standard. I accept the hon. Lady’s challenge: we need to raise our game, and that is why we use the Private Investment Development Group to leverage more investment. Through an investment of $1.2 billion, we have secured $20 billion from the private sector and $9 billion from international financial organisations to provide early equity, long-term debt and guarantees to meet vital infrastructure needs. Equally, we use CDC, our development capital arm, to blaze a trail and show other investors that there are profitable opportunities even in the most difficult markets. We recapitalised that with some £730 million last year, and we are driving that into the infrastructure sector. CDC has backed some 40,000 GWh of production as a consequence of the move into the power market.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

On the point about opportunities, does the Minister agree that we need policy coherence between the climate change goals and economic development policies?

[Sir Desmond Swayne]

My hon. Friend is right. Climate-smart development must be integral to everything we do. It has to be a part of it. It is not a box to be ticked; it must be designed into the programme from the start.

My hon. Friend the Member for Henley (John Howell) mentioned the prosperity fund in his intervention on my hon. Friend the Member for Stafford. I take a slightly different view of the prosperity fund. We are spending all this taxpayers’ money creating opportunities and opening markets, and my breath is taken away when other countries simply move in and take the opportunities that have been created by that investment. The prosperity fund’s primary objective must be to reduce poverty. However, it is right that that fund should make British companies alive to the opportunities available to them. We will not tie our aid.

As an aside, I point out that 80% of our procurement is with British companies simply because they are the most competitive we can find, but my hon. Friend the Member for Henley drew attention to an important point in the piece. This is, of course, an enormous agenda. It is a whole trade facilitation agenda, and my hon. Friend mentioned the importance of trade envoys. We spend about £1 billion a year on trade facilitation and improving the ability of the least developed countries to enter our markets and to trade effectively. Trade dwarfs aid. It is a vital part of the agenda. The hon. Member for Bradford East raised the vital issue of urban planning. It is precisely for the reasons that he gave that we launched the new programme for economic development in cities, and that will be driven forward with a will.

The whole piece, including TradeMark East Africa and the trade facilitation agenda, is part of the drive for economic development that is at the centre of everything that we do regarding the provision of jobs. I come back to a point that has been made several times this morning: it is all about jobs. We need 600 million high-quality new jobs that will not impoverish and enslave people. That is what we have to deliver. I defer to my hon. Friend the Member for Stafford to sum up the debate.