Madam Deputy Speaker (Dame Rosie Winterton)
I understand that it is the will of the House that motions 1 to 5 on international development be debated together. The debate will last up to 90 minutes. When the first motion has been decided, I will call the Minister to move the other motions formally. If a Member objects, the motions will be taken separately. I now call the Minister to move the first motion and speak to all five motions.
The Parliamentary Under-Secretary of State for International Development (James Duddridge)
I beg to move,
That the draft African Development Bank (Fifteenth Replenishment of the African Development Fund) Order 2020, which was laid before this House on 19 May, be approved.
Madam Deputy Speaker
With this it will be convenient to discuss the following motions:
That the draft African Development Bank (Further Payments to Capital Stock) Order 2020, which was laid before this House on 19 May, be approved.
That the draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2020, which was laid before this House on 19 May, be approved.
That the draft International Development Association (Nineteenth Replenishment) Order 2020, which was laid before this House on 19 May, be approved.
That the draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2020, which was laid before this House on 19 May, be approved.
James Duddridge
Thank you, Madam Deputy Speaker. It is good to see you in your place. The orders will permit the UK Government to make financial contributions to the African Development Bank and the African Development Fund, in addition to the World Bank International Development Association, up to the stated values on the orders. I propose to start with the three statutory instruments on the African Development Bank, then move on to the two SIs on the World Bank IDA before concluding.
As the House knows, Africa remains the poorest continent on the planet, and 24 of 30 poorest countries are on that continent. Sadly, by 2030, 90% of extreme poverty is likely to be concentrated on that continent, and instability remains a persistent challenge. Until last year, Africa was growing fast, and in 2019 it experienced 3.4% growth in gross domestic product. Covid has had a significant negative impact, however, and recent World Bank estimates suggest that GDP in Africa will shrink by just under 3%. Sadly, 26 million more people will be pushed into extreme poverty. The African Development Bank is a key regional partner for the UK in delivering development, prosperity and our security objectives in Africa. It has significant financial clout, a strong regional identity and deep knowledge, and it is very much a trusted partner across the continent, which allows it to tackle sensitive issues.
Sir Desmond Swayne (New Forest West) (Con)
That is very reassuring. Does my hon. Friend acknowledge that of those scandals that have driven the readers of the Daily Mail into a state of apoplexy over the past decade, 99% of them, I will wager, were administered not by the Department for International Development, but by other Departments? Will he ensure that this reorganisation is a genuine merger and not a hostile takeover?
James Duddridge
I assure my right hon. Friend that it is a genuine merger. As he knows, I am not a betting man, but it is important that official development assistance is used well not only by the Foreign Office but across all Departments. This merger is about taking a step up, not levelling down to the lowest common denominator. There is an opportunity to put development at the heart of everything we are doing more generally, but I will not stray into comments that were made earlier today about the merger, and with the House’s permission, I will focus specifically on the African Development Bank, and later on the World Bank.
The ADB’s five key areas are to light up and power up Africa, to integrate, to industrialise, to feed, and to improve the quality of life across the continent. Those are closely aligned with the UK’s priorities. The majority of the bank’s lending is targeted at addressing the large infrastructure gap across the continent, and it is focusing very much on transport, energy, water and sanitation issues.
Jim Shannon (Strangford) (DUP)
I had a chat to the Minister prior to this debate. In my constituency of Strangford, many churches are involved in work across Africa, particularly the Eden Mission in Newtownards, which does significant work in Eswatini, which those of us from further back know as Swaziland. The Minister referred to infrastructure investment, and there is a real need for investment in the electricity market. South African supplies have a sharply inflated price, which is holding back technology, and even learning for children, who have been provided with shared computers from Northern Ireland as learning tools. Will the Minister consider some help for Swaziland, to ensure that it can run those sites with the electricity it needs?
James Duddridge
I know my Big Bend from my Piggs Peak, having lived in Mbabane for a year, a number of years ago, and I knew the problems of flickering lights and power stability. I am saddened to hear that it is still a problem with Eskom and South Africa, but power distribution across the continent is a key issue. I am not absolutely sure whether such funds are the right mechanism, but I would be more than happy to commit to talking to the hon. Gentleman about that, alongside our high commissioner in Eswatini—that is one of the new posts that opened up relatively recently—and to discuss what more we can do in Eswatini on electricity and a number of other issues. I thank the hon. Gentleman for his helpful contribution.
The African Development Fund is also supporting the continent to respond to covid, providing $10 billion of financing and technical assistance to help to mitigate the economic and social impacts, and to support recovery beyond health and humanitarian issues.
Turning to the specifics of the order, the first order permits the Government to purchase new ADB bank shares. This will maintain our 1.7% shareholding, and to do so we would need to pay £95 million over eight years. This order also makes provision to put in another £50 million of capital provisionally to allow the additional purchase of shares in the future should the situation and budgets allow. The bank provides non-concessional yet inexpensive loans to middle-income and to credit-worthy low-income countries, and also critically, to the private sector in Africa.
Last October, governors agreed to a 125% increase in their general capital to boost the capital stock, enabling it to lend annually from £5 billion currently to more than £13 billion in 2030. The bank has made strong policy commitments in UK priority areas, expanding its climate facility and private sector operations.
The second order permits the UK Government to provide a contribution of up to £633 million to the African Development Fund’s 15th replenishment. The fund provides grants, low-interest loans and technical assistance to Africa’s poorest countries, and it is replenished normally every three years. The negotiations for replenishments concluded last November and an overall envelope of £6 billion was agreed, financed by repayments of existing loans and new donor pledges of £3.8 billion over the three-year period. Our pledge would maintain the UK’s position, providing significant influence over the fund’s operation. Over the next three years, the fund is expected to provide 6 million people with electricity connections. Six million people will benefit from improvements to agriculture and more than 20 million will benefit from improvements to transport. The fund will support 1 million jobs.
The third and final order on the African Development Bank is to amend an existing order and to permit the Government to provide an additional contribution of £66 million to support the African Development Fund’s participation in the multilateral debt relief initiative, which is very similar to the final order for a different institution. The multilateral debt relief initiative supports debt relief and enables countries to release resources, or to have released resources, to spend on poverty reduction and development that would otherwise be spent on unserviceable debt. The African Development Bank remains an important strategic partner across the board, particularly on climate change.
Let me turn now to the final two remaining orders relating to the World Bank and the International Development Association. This is the institution that provides grant finance, low interest rates and technical assistance to the world’s 76th poorest countries—countries that are not credit-worthy. Many of the most fragile countries at risk of instability and conflict are covered within this number. In recent months, these countries have been particularly hard hit by the covid-19 crisis, making the case for these orders even more poignant. IDA has responded to the covid crisis by making rapidly available additional support. It has a strong record of delivering results—for example, on supporting vaccines to millions of children and supporting childbirth.
IDA combines donor contributions with repayments from previous lending operations and market borrowing to provide more than three times the amount of leverage to get new financial commitments. IDA replenishments have taken place every three years since its establishment in 1960 and discussions took place last December and were concluded in this replenishment round, which includes 50 donors, including the UK, with pledges of more than $23 billion. The World Bank expects that to be leveraged up to around $82 billion of financing over the next three years.
The fourth order permits the UK Government to provide a core contribution of up to an average of £1 billion a year to IDA’s 19th replenishment over three years. This will help to vaccinate 140 million children and to provide safe childbirth for 80 million women, electricity for 50 million people, and a social safety net for 40 million beneficiaries.
The final order, as I said earlier, is similar to an existing order that permits the UK Government to provide an additional contribution of £562 million to support IDA’s participation, alongside the ADB, in relation to the multilateral debt relief initiative.
In conclusion, these five orders are in the UK’s national interests and also serve our development equities and interests, not only in Africa but around the rest of the world, through the World Bank.
James Duddridge
Glancing down at my notes, I think I have about 50 things to come back on. To assist the House, I will keep my comments to five minutes and then look through the report of the debate forensically and come back with some of the more technical detail where individuals have asked me questions, but I will try to cover everything.
I assure the House that we are completely committed to development. We are completely committed in the longer term to funding through these two long-standing mechanisms. This is not just something for today; it is something for the future. We are committed to the African continent specifically and to our Commonwealth partners, including Tanzania and Zambia, which were mentioned. Sadly, because growth in Asia is in excess of growth in Africa, it is probably inevitable that over the next 25 years there will be more poor people and people in extreme poverty in Africa than elsewhere. If anything, that will mean that we have to refocus more, not less, assistance on that area, separate from the broader debate that is being had.
A number of points were made about the ADB and how we leverage our shareholding. We leverage our shareholding in many ways, but at a very high level we have helped leverage 40% of investment into climate. There were concerns about money being focused on the poorest; 90% is focused on fragile states, partly because of how we have leveraged our shareholding.
I listened carefully to my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell). I do not quite know why he ate the sandwich of my right hon. Friend the Member for New Forest West (Sir Desmond Swayne), but that is perhaps due to a lack of familiarity with the terminology. My right hon. Friend the Member for Sutton Coldfield is incredibly well-informed.
As I go round Africa more generally, his name often comes up not only in obvious places such as Abidjan and Kigali, but across the continent. He is hugely respected. I look forward to working with him. I have already had an initial chat with the previous president, Donald, and look forward to working with the current president and other individuals.
On the important point about the constituency of which we are a member alongside Italy and the Netherlands, we are proud that we have someone from DFID representing that constituency at the moment. I am interested to see how we can build on that and I particularly welcome my right hon. Friend’s highlighting of solar energy across the Sahel, which is a really important issue and a really important region. It is the only region that was explicitly mentioned as part of the five shifts in NSC strategy.
There were various contributions from Scotland. I am a little confused because I thought that the Conservative party was moving towards the SNP position of having a single Department, which I agreed with rather than the position that was suggested today. I understand the points that were made. On a more consensual point, let me say that, as well as being the Minister for Africa, I am the Minister for Abercrombie House, and I look forward to visiting it, talking to employees and assuring them of their job security during this transition. I know that it is a concern for individuals, particularly for those who are away from Whitehall.
My right hon. Friend the Member for New Forest West (Sir Desmond Swayne) raised a number of issues, including the inter-relationship between trade and migration, which is important. I remember fondly our meetings at airports around the world. Sometimes I knew that he was going to be there, and sometimes it was a surprise that he was there, thus demonstrating that we need to be a little more co-ordinated across Whitehall.
My right hon. Friend the Member for Epsom and Ewell (Chris Grayling) went into a little more detail, eloquently, on forestation. I was particularly interested to hear about the work in the Congo Basin and would like to speak to him more about that. On the reforestation of palm oil areas, we are very aware of the problems of palm oil more generally.
My hon. Friend the Member for Aylesbury (Rob Butler) talked about effective performance, which was also raised by the Opposition. Let me report back on some of those figures: we held back 25% of £152 million sterling—£38 million sterling—in June 2018, £30 million of which was released in October, based on progress and a performance plan. In 2019, we did not withhold any further—
Stephen Doughty
Given that these orders are made under the International Development Act 2002, does the Government have any plans to change or amend that Act given the importance of all these orders being focused on poverty eradication?
James Duddridge
That is a legitimate point, but I am not sure how it relates directly to the SI. I am not aware of any changes, which might perhaps give the hon. Gentleman some reassurance. There is some additional information about the other fund, which I will write to him about.
I thank my hon. Friend the Member for Aylesbury for his points on foreign direct investment in Africa, which is incredibly important, whether it is through some of these funds or completely independent of Government institutions.
My right hon. Friend the Member for Sutton Coldfield raised the issue of trust funds. We have very few trust funds at the African Development Bank, but we are supporting initiatives on sustainable energy, climate risk finance and women’s economic empowerment and very much welcome a discussion around how we can use trust funds more effectively through that fund. Having lived in Abidjan as a 20 year-old, I am keen to get back there and talk to him more—[Interruption.] He is looking shocked. I am not sure whether that is because I was once young, or that I was once in Abidjan. Perhaps it is both. I was aware of the African Development Bank back in my time at Barclays in Abidjan and I look forward to getting back as alternate governor. I was asked who would be representing the bank. I suspect, given the changes, that as deputy governor or alternate governor, I will be spending a bit more time with all the regional development banks. Even prior to the changes, I was going to be the primary person dealing with the African Development Bank.
I welcome the consensual nature of this debate, particularly given the context. I can reassure the House that, in my heart and the heart of Government, we are trying to do the right thing by development. This merger is very much about trying to bring the full force of HMG together, not shifting from one foot to an entirely different foot.
Question put and agreed to.
Resolved,
That the draft African Development Bank (Fifteenth Replenishment of the African Development Fund) Order 2020, which was laid before this House on 19 May, be approved.
Resolved,
That the draft African Development Bank (Further Payments to Capital Stock) Order 2020, which was laid before this House on 19 May, be approved.
Resolved,
That the draft African Development Fund (Multilateral Debt Relief Initiative) (Amendment) Order 2020, which was laid before this House on 19 May, be approved.
Resolved,
That the draft International Development Association (Nineteenth Replenishment) Order 2020, which was laid before this House on 19 May, be approved.
Resolved,
That the draft International Development Association (Multilateral Debt Relief Initiative) (Amendment) Order 2020, which was laid before this House on 19 May, be approved.
Liz Twist (Blaydon) (Lab)
On a point of order, Madam Deputy Speaker. At the end of this month, production of the British passport will cease at the De La Rue plant in my constituency, following the Government’s decision some years ago to award the contract to Gemalto. Yesterday, De La Rue announced that the production of bank notes on the site will also stop, with the loss of a further 255 jobs. It is devastating to see this reduction. Are you aware of any statement to be made to the House by a Minister about that issue in the forthcoming business?