Food Security and Famine Prevention (Africa)

Jeremy Lefroy Excerpts

Thursday 15th September 2011 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

I draw attention to my entry in the Register of Members’ Financial Interests.

I also thank the hon. Member for Lewisham East (Heidi Alexander) and my hon. Friend the Member for Hastings and Rye (Amber Rudd) for calling for the debate. I pay tribute to the outstanding work of the all-party group, which has provided so much information to so many of us. In addition, I thank all those in the country and, in particular, in my constituency, who have contributed to the Disasters Emergency Committee appeal, and the UK Government for their most generous response. In particular, I pay tribute to the Government of Kenya, who have hosted the refugees in a tremendously welcoming way, which should not be forgotten.

So many right hon. and hon. Members have spoken eloquently and with great learning about this matter that I want to touch on only a few points in the hope of allowing others to speak. The motion states that food aid

“must always be the last resort and that improving the productivity and resilience of domestic agricultural systems in Africa must by a priority for the UK and the international donor community”.

I absolutely agree. Agriculture, as many hon. Members have said, has been given insufficient attention over many years. It was seen either as something of the past or as a cash cow that could be taken for granted. Instead, much Government and aid money was ploughed into factories, which in many cases are now out of production, sitting there idly. But the farmers are still there, and what more they could have done with that investment themselves. It has not been ignored by NGOs, such as Oxfam, Tearfund, Christian Aid, the Catholic Fund for Overseas Development, Islamic Relief and many others, which have ploughed a perhaps lonely furrow over the last couple of decades, but I am glad to say that the tide is turning.

There has often been stirring rhetoric about the importance of agriculture, but in reality it has been heavily taxed, budgets for support have been low, and investment in infrastructure has been lacking—roads, storage capacity, power, irrigation, and many other things, including, as my hon. Friend the Member for Brecon and Radnorshire (Roger Williams) mentioned, research.

I recall calculating in the 1990s that the marginal tax rate for a smallholder coffee farmer in Tanzania was far higher than the highest income tax rate then prevailing in that country due to the crop levies that were being imposed locally and nationally at a time of low prices. I am glad to say that the Tanzanian Government listened and took action.

What can be done? First, agriculture must be at the heart of any developing country’s plan for economic growth. I draw particular attention to the many comments that have been made about the centrality of women who do most of the work in this area and their importance to development. Agriculture provides food security, exports, employment, and, most importantly, cash direct to ordinary people. This priority has to be reflected both in the national budgets and in the taxation systems of those countries.

It follows that agriculture must also be at the heart of international development. I join colleagues who have called on the Government to put more money into supporting agriculture in the coming years. The Government are moving in the right direction, but they are not going far enough at the moment. I am delighted that the CDC will be looking to invest more in agriculture, and I urge it to live up to those words. I also welcome DFID’s increased interest and support through programmes such as the Africa Enterprise Challenge Fund, where it is investing directly in smallholder agricultural products.

Productivity has to be taken seriously. It is not just a matter of improving yields, although that is essential. It is also a question of proper logistics, warehousing, cold storage, transport, packaging and marketing. As many have said, too much has been wasted.

Thirdly, the technology that is available to large-scale agriculture must be available to smaller farms. I have seen excellent examples of very small-scale farms with drip irrigation, which can improve yields dramatically, but much more could be done. Measures could be introduced to check and maintain soil fertility, ensuring the availability and affordability of fertilisers, training and extension.

I would like to make one further point, on the impact of neglected tropical diseases such as worms and schistosomiasis. The Minister knows all about this. In fact, he rightly introduced the topic to the all-party group on malaria, which published a report on neglected tropical diseases this week. It is absolutely vital that these diseases are tackled, which can be done at very low cost. They have a significant impact on productivity, as people suffering from them have a downgraded ability to work, particularly in the fields. If we can tackle these neglected tropical diseases, we will also be tackling problems of productivity and agriculture.

Finally, as has already been mentioned, borders must be opened up to trade. We have seen recently that countries in an area affected by drought are tempted to ban the export of cereals to needy neighbours because of fears for their own food security in the medium term. Although their caution is understandable, it should surely be possible to take a regional approach. I urge bodies such as the East African Community to deal with food security on a regional basis and co-operate as fully as possible. I am grateful for the opportunity to speak today and welcome the contributions from all Members who have spoken on this important subject.

Future of CDC

Jeremy Lefroy Excerpts

Thursday 14th July 2011 Westminster Hall

[Mr Charles Walker (in the Chair)]

I call Miss Ali. [Interruption.] Sorry, Mr Lefroy—it would be helpful if Members could stand so that I can see that they want to speak.

[Jeremy Lefroy (Stafford) (Con)]

I was standing.

[Mr Charles Walker (in the Chair)]

You were? Very funny.

[Jeremy Lefroy (Stafford) (Con)]

I am grateful to you, Mr Walker. I was not sure whether I would be allowed to speak, not having notified you. I was in a Bill Committee and I was not sure whether I could leave it.

I would like to follow my right hon. and hon. Friends and other hon. Members on the Committee by raising a few points, and I apologise if I repeat some of what they have said. I want to stress two or three issues that have come out of the report. I very much welcome the Government’s positive response and the way in which they have set about dealing with CDC—a body that has, let us not forget, been extremely successful. Its investments have gone up by something like £1.5 billion over six or seven years, and any organisation would be proud of that performance. CDC has received no taxpayer’s money since 1995, and it is something of which the British people and the British Government—the previous Conservative and Labour Governments and the current coalition Government—can be proud. We need to set all our remarks in that context.

As I said, I welcome the Secretary of State’s engagement with CDC right from the start, as well as his support for the Committee’s work and the Government’s reaction to our recommendations. He did not necessarily accept that CDC should be split into two separate legal entities, and perhaps there could be two separate parts to the same legal entity. I understand his position, and we do not want to create more complexity than is absolutely necessary, but we must aim to achieve what we want to achieve.

What do we want to achieve? There are two or three things that we need to do with this new-model CDC. The first point to note, as my right hon. Friend the Member for Gordon (Malcolm Bruce) and my hon. Friend the Member for East Surrey (Mr Gyimah) stressed, is the importance of agriculture. It is vital that private investment goes into agriculture. There has been news in the past two or three years of major investments in agriculture in sub-Saharan Africa. Those consist quite often of sovereign funds taking large chunks of land on a lease or perhaps a freehold basis to promote their own domestic food security. I see some dangers in that. First, the food security that we need to be most concerned about is in the countries in which the investments are made. We do not want food to be exported from countries that are already suffering deficits to other parts of the world. We need to encourage local production for local markets. Of course we need to encourage trade and exports. However, I have had personal experience of how there can be a surplus in one part of a country, which is traded overseas, while there is a deficit—indeed, semi-famine—in other parts of the country. The problem is the logistics and infrastructure. We need to be a little wary about such investments.

I see CDC as having a tremendous role to play in encouraging a sustainable investment in agriculture, of two kinds. That might, first, be in direct investments in socially responsible agribusinesses, and in businesses that perhaps work with smallholders at one remove. The future of increased productivity in agriculture in sub-Saharan Africa, and other parts of the world, is often in the hands of smallholders, who know their land best and are able to get fantastic results. Sometimes it is said that smallholder production is not up to the standard of that of large estates, but I dispute that. Where smallholders have access to training, inputs, fertiliser, up-to-date seeds, research and modern plants, they can produce at the same level as estates, and perhaps surpass it. The cocoa crop is an example; it is produced almost entirely by smallholders, not estates, for the simple reason that the smallholders generally do a much better job than estates have, where they have existed. It is clear that CDC in its new guise, either through CDC Frontier or the existing CDC, could improve or increase its investments, and go from what I believe is currently 6% in agriculture to a much higher level.

Secondly, I believe that CDC has an important role to play in the support and development of small and medium-sized enterprises. Our report showed that the average size of a company in which CDC had made an investment was quite substantial. If I remember rightly, it would have an average of more than 1,000 employees. Clearly, within that there were successful smaller companies. However, I believe that CDC could be one of the major sources of funding in the spheres where it operates—perhaps not directly for SMEs, because it might be too much to ask that it would invest in them directly, but certainly in funds such as GroFin, in which I believe it already invests, and ManoCap in Sierra Leone—funds that invest in SMEs. CDC already has expertise in that area, and I would like it to expand that.

Finally, I believe that CDC needs to consider infrastructure. It already invests quite a lot in that. I have referred to the importance of infrastructure in agriculture and getting crops around the country. I think that DFID has a tremendous role through the Private Infrastructure Development Group in supporting infrastructure in sub-Saharan Africa and elsewhere. However, CDC could look at more local and smaller scale investments in infrastructure, which would help not only the SMEs I have spoken about but the agricultural sector.

I welcome the Government’s response to the report. I believe that CDC is poised to set off in new areas without losing its expertise and performance in existing areas. It is extremely important that the Government should continue to support CDC. The report pointed out that DFID should perhaps take greater interest than it has in the past, when CDC has almost been left to get on alone. It has done a good job, but if the Secretary of State continues to show the kind of engagement and involvement with CDC that he has done, both in his public pronouncements and the response to the report, it will have an excellent future.

--- Later in debate ---

[Rushanara Ali]

I welcome that comment. As we have seen recently, in many middle-income countries, economic inequality coupled with injustice are a devastating combination and can lead to conflict. Economic development is vital. Growth is vital, but it must go hand in hand with tackling global inequality. We must be mindful of that responsibility in our investments through CDC and in our other investments.

The right hon. Member for Gordon also discussed the linked matter of ethical investment and the need for social outcomes and sustainable economic growth, and other hon. Members have reinforced those points. Historically, while CDC’s role has been important and has often been positive, it has had a mixed history. This is a great opportunity for us to look ahead at how it can play a bigger and more significant role.

My hon. Friend the Member for Birmingham, Northfield (Richard Burden) raised the important question of about 50% of the international development budget to India being channelled through private sector investments. He sought clarification from the Secretary of State whether that figure is accurate and whether that investment will be channelled through CDC or some other route. I will appreciate that being clarified in the Secretary of State’s response.

The hon. Member for Brighton, Pavilion (Caroline Lucas) raised some important issues about compliance with the spirit and letter of international law and about tax, transparency and money laundering laws, among others. She reiterated the role of ethical investment and the need to be mindful of human rights, in particular when investing in mining companies and others. Many organisations have expressed concern about the impact that particular kinds of investment can have and the need for greater care to ensure that such investments are ethical and that human rights violations do not take place.

[Jeremy Lefroy]

Does the hon. Lady agree that we have the opportunity not only to be careful about bad practice, rooting it out wherever it occurs, but to promote good practice with investments made by CDC, whether through funds or perhaps in future directly?

[Rushanara Ali]

CDC has an important opportunity to lead by example, and we must require it to set that example and to implement the focus on human rights, given the interest in human rights in those countries. I very much accept the hon. Gentleman’s point.

I also want to mention what the hon. Member for Brighton, Pavilion said about CDC acting as a fund of funds as well as a poverty alleviator. It is important to consider compatibility. There are many examples of incompatibility and, as she rightly stated, some bring into sharp focus the tensions between the two objectives. The two are welcome, but greater monitoring is needed to ensure that the objectives do not contradict each other.

The hon. Member for East Surrey (Mr Gyimah) discussed returns on investment. His insights included recognising the importance of creating the appropriate investment horizons and environments. He raised two key issues on skills: first, on skills and the knowledge base, he pointed out the importance of ensuring that that capacity and technical expertise is available as the investment takes place in developing countries; and, secondly, he indicated the importance of sector focus, in particular in agriculture. Several hon. Members mentioned accountability and transparency.

I will wrap up, because I am conscious that I do not have a huge amount of time.

Zimbabwe

Jeremy Lefroy Excerpts

Wednesday 8th December 2010 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

It is a great honour to follow the contribution of the hon. Member for York Central (Hugh Bayley), who knows so much about this subject, and indeed the many other distinguished contributions from right hon. and hon. Members today.

I wish to speak briefly about agricultural development in Zimbabwe. Many speakers have outlined the political situation, which is obviously critical and indeed is pertinent to agricultural development. However, although agriculture might not have the profile of mining or tourism, it has always been vital, as hon. Members have said, to Zimbabwe’s economy, as a food producer, exporter and employer. I have some personal experience of the very fine quality of Zimbabwean coffee through my employment in the coffee trade over the past 25 years.

I firmly believe that as the political situation is resolved—as it must be—Zimbabwe will begin to resume its place as an agricultural powerhouse of sub-Saharan Africa. That it was a powerhouse is beyond doubt. The hon. Member for York Central mentioned the 1980s, throughout which a newly independent Zimbabwe provided food security for the region, regularly exporting its surplus maize to Malawi, Mozambique and Zambia. Zimbabwe also supplied countries further afield, such as Ethiopia. Indeed, it was the place from which donor agencies bought food supplies to send elsewhere as aid. In 1986, the country had a maize reserve of nearly 2 million tonnes after a record harvest of about 3 million tonnes. To put that into context, as the hon. Gentleman did, the production level in 2008 was about 470,000 tonnes. This year, there has been an improvement and the figure is expected to be 1.3 million tonnes, but that is still less than half the level of production in 1986. So, this year, Zimbabwe will still be dependent on grain imports, although to a lesser extent than in the recent past. The welcome deregulation of the market will make it easier to meet the deficit.

I shall leave it to others to trace the history of that decline—the changes in marketing, an increase in land devoted to cash crops, serious falls in productivity and, in particular, land seizures—as I would like briefly to address the way forward for agriculture. The Select Committee’s report states:

“Land reform in Zimbabwe is a complex issue. It is also a highly-charged political issue between Zimbabwe and the UK. However, resolution is essential for political stability and continued economic”

growth. I certainly do not intend to wade into those deep waters—that is for others with far more specific knowledge of the situation. All I would say is that although I have followed events in Zimbabwe from afar, I have spoken with those who were very closely involved on more than one occasion. They filled me with great sadness about what has happened. Reform was desperately needed, but it could have been achieved in a very different way.

I will offer my personal experience from Tanzania, which might show a way forward for Zimbabwe in certain circumstances. In 1973, many commercial coffee farms in Tanzania that belonged to British, Greek, German and other nationals in the Kilimanjaro region were nationalised. For more than two decades, they were then owned and run by local villages and co-operatives, which were generally unable to invest. Production and quality declined so that by the mid 1990s, production was about 10% of what it had been in the early 1970s.

The Tanzanian Government wanted to see a revival of the farms but were conscious of the vital issue of land ownership. They considered two models: joint ventures and long-term leases. I was somewhat involved in the discussions in my capacity as secretary and then chairman of the Tanzania Coffee Association. We advocated leases and the Tanzanian Government, to their great credit, chose that route. We felt that that was the best way forward because, unlike with joint ventures, ownership of the land remained firmly in the hands of the local people, villages and co-operatives. The lease allowed the investor to develop the farm for the long term, paying a rent to the village or co-operative and employing local people while remaining the tenant.

The leases—I declare an interest, as I am involved in one—have so far worked reasonably well. Previously, the land brought almost no income to the community and little employment, and now it brings a healthy rent that has been used by the local communities to build school classrooms and much else. Many smallholder farmers in the surrounding area can supplement their income through employment.

I do not claim that such a model would work perfectly or that it would work in every situation. I am very much aware that there is justifiable anger over the leasing to new tenants of farms that were seized violently from those who had built them up over decades. By contrast, in Tanzania former owners were often encouraged to lease back their former properties and the ownership was in the hands of community groups, not powerful individuals. Such leasing arrangements are a way to put land ownership and its use to work for the benefit of the whole community while attracting investment and skilled management.

One objective of the Zimbabwean Government in recent years has been to transfer land to small-scale farmers. I welcome the objective, although not the manner in which it has often been carried out. My experience of smallholder agriculture, however, is that without good infrastructure to support it, it will be at best subsistence farming and certainly will not fulfil its potential. The infrastructure needed is physical—rural roads, storage, equipment, seeds and fertilizers—and, just as importantly, it involves training.

[Jim Shannon]

The hon. Gentleman has not at any stage indicated that out of the 4,000 farms that were seized from white farmers, 2,000 are lying destitute and in ruins. Does he see a role for those white farmers who have had their land seized in perhaps looking after that land again or does he see that land being reinstated to them? I would like to hear his ideas, because their expertise and energy could rejuvenate those farms.

[Jeremy Lefroy]

I entirely agree with the hon. Gentleman; in fact, in the example in Tanzania that I gave, two or three of the farms were taken back on long leases by the farmers who had developed them in the first place.

[Fiona Bruce (Congleton) (Con)]

The need to improve the ailing infrastructure for water and sanitation is referred to frequently, as it has been in this debate, in relation to the need to provide clean water to prevent disease. My hon. Friend makes a good point about infrastructure: we need to invest in it to support the nation’s agriculture. I hope that DFID will consider how to promote the development of infrastructure in a way that involves good governance and accountability, thereby instilling confidence in the partners who need to involve themselves in such large infrastructure projects.

[Jeremy Lefroy]

I entirely agree. DFID and aid agencies that give bilateral and multilateral support can play an important role in supporting infrastructure. I have discussed infrastructure in relation to agriculture, and I would add irrigation to that, but infrastructure for sanitation, health and education is also important.

[David Simpson (Upper Bann) (DUP)]

Does the hon. Gentleman agree that although it is good to get land into small farms and perhaps to start up the co-operatives again, it is vital to have an incentive on pricing? The prices of products must be right so that those people can make a living and so that things do not fall apart again. DFID needs to consider that aspect and to ensure that there are returns on products, many of which, as he will know from his experience, are excellent.

[Jeremy Lefroy]

That is why I welcome the opening up of agricultural markets in Zimbabwe, which has been one of the most important Government reforms.

The need for rural infrastructure is shown by the figures on maize yields. The area planted to maize in Zimbabwe this year is 1.8 million hectares, which compares with 1.37 million hectares in 2000, but 300,000 fewer tonnes of maize will be produced as yields decline from 1.18 tonnes to 0.74 tonnes per hectare. How can yields be improved? The Select Committee report discusses conservation agriculture, which is supported by the protracted relief programme that the hon. Member for Birmingham, Northfield (Richard Burden) mentioned. As the report states, Christian Aid recognises that

“DFID’s consistent support to this area despite initial reluctance by other key stakeholders”

has been vital, highlighting that it

“had been particularly beneficial to vulnerable communities”

and that it was

“proven to lift households out of subsistence poverty”.

I congratulate DFID on its support for that programme under both the previous and current Governments and on taking the lead on it.

Conservation agriculture teaches people how better to manage their land and how to get a profitable harvest. According to Christian Aid, it enables households to get at least two, three, five or, in many cases—I could hardly believe this—10 tonnes of maize per hectare. That is quite incredible and I welcome the Select Committee’s recommendation that DFID should explore how conservation agriculture could be extended to other parts of sub-Saharan Africa where it could be used. I also welcome the Government’s positive response to that suggestion and I ask the Minister to ensure that that support continues.

The ordinary people of Zimbabwe have suffered grievously over the years, but they have shown, as many speakers have said, extraordinary resilience and courage. There is no doubt that the country can once again become the agricultural powerhouse that it should be. Proper land reform, not arbitrary seizure and settlement, is an essential part of that, as is effective support to the growing number of smallholder farmers. I welcome the Committee’s report, DFID’s response and the Government’s continuing commitment to the people of Zimbabwe.

[Several hon. Members]

rose—

Food Security (Africa)

Jeremy Lefroy Excerpts

Tuesday 9th November 2010 Westminster Hall

[The Parliamentary Under-Secretary of State for International Development (Mr Stephen O'Brien)]

I want to start by congratulating the hon. Member for Lewisham East (Heidi Alexander) on securing this debate on a very important subject, and on the powerful and passionate way in which she presented her argument. She also presented the context for any debate on food security, recognising the enormous range of challenges, of which food security is one. The question is how we achieve the critical balance between determining what will be most effective, and what will have most impact in assisting Britain to partner countries to help them graduate away from aid over time, simultaneously meeting the needs of the very poorest people in those countries.

I was delighted that both the hon. Lady and my hon. Friend the Member for Calder Valley (Craig Whittaker) had an opportunity to travel to Kenya with the all-party group on agriculture and food for development—there is no substitute for seeing things for oneself in order to bring these issues to life. To some degree, I have seen these things for myself, as I was born in Tanzania and partly raised and educated in Kenya. The scale of this issue is immense. More than 200 million people in Africa—more than one in four of the continent’s population—suffer chronic hunger. Although Nigeria, Ghana, Rwanda and Ethiopia have all made significant progress in reducing hunger, many countries have made little or no progress and, frankly, some are going backwards. Levels of hunger in the Democratic Republic of the Congo have nearly trebled since 1990, and the levels in Burundi, Botswana, Swaziland, Zambia and Gambia have also increased due to conflict, rapid population growth, economic stagnation or HIV/AIDS. In the years to come, climate change and the scarcity of natural resources will add to the challenge.

The Government are determined to make faster progress in helping to reduce hunger. That is why, at the millennium development goals summit in September, we reaffirmed our determination to tackle malnutrition and to focus our efforts on “the first 1,000 days”—the period from conception until a child’s second birthday—after which intellectual and physical damage from chronic under-nutrition is irreversible.

In doing so, we agreed to work with six major donors to co-ordinate and accelerate our work in countries with high levels of malnutrition. Ghana, Malawi and Uganda are among the first countries to request assistance to reduce under-nutrition rates, which will please the hon. Lady as she referred to a very good example of this type of work in Malawi. It is also why, soon after taking office, the Government reaffirmed our commitment to the L’Aquila food security initiative, which was agreed at the G8 summit in 2009. The agreement aims to increase food production in developing countries, make food more affordable for the poorest and most vulnerable, create wealth and lift the poor out of poverty.

The hon. Lady asked how much of the £1.1 billion in L’Aquila commitments have been spent so far. Although that figure is not yet available, we will certainly write to her as soon as it is. However, I can tell her with confidence that the UK will have met its commitments, which I hope reassures her. Within the G20, we have committed to improving food security by making agricultural trade and markets function more effectively and reducing food price volatility in order to protect those most vulnerable to food price increases.

[Jeremy Lefroy (Stafford) (Con)]

I am grateful to the Minister for giving way, and I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing this debate. Does the Minister agree that one of the most important things that can be done for food security is to improve food storage facilities? On the ground, I have seen food go to waste many times simply because appropriate food storage was lacking.

[Mr O'Brien]

I defer to my hon. Friend’s experience and expertise in such matters, as he has shown great commitment to them over the years. He is right. No supply chain can be managed without the ability to store foodstuffs and distribution points that make it accessible, particularly to the hardest to reach. He is right to emphasise that we should consider a well-designed, holistic approach to solving the big challenge.

Pakistan Floods

Jeremy Lefroy Excerpts

Tuesday 7th September 2010 Commons Chamber

[Mr Mitchell]

On that final point, the hon. Lady must wait for the outcome of the spending review, which will be announced on 20 October, but I assure her that the points she made so eloquently are being actively considered. This morning, I discussed with the Foreign Secretary the point she made about ensuring that we work closely with EU members to take forward our common endeavours. Her comment about closer EU co-ordination is very well made.

[Jeremy Lefroy (Stafford) (Con)]

I thank the Secretary of State for his statement and join him in thanking all those across the country who have given so generously. This weekend, Staffordshire county council will host a dinner involving members of the local community to raise funds for disaster relief.

The Secretary of State will be aware that there are great concerns about the effect of the floods on agricultural land. Will he keep under review the long-term effect on agriculture, particularly the effect on upcoming planting, and how the UK can assist in relieving the problems that Pakistan is likely to suffer?

[Mr Mitchell]

My hon. Friend is absolutely right about the devastation that has struck both livestock and crops, upon which people in Pakistan are absolutely reliant. I set out in my statement the scale and extent of that devastation. We are already providing funding for seeds for the forthcoming planting season and we will keep under close review the important aspect my hon. Friend highlights, which will directly affect the extent of food security in Pakistan in the forthcoming year.

Global Poverty

Jeremy Lefroy Excerpts

Thursday 1st July 2010 Commons Chamber

[Jeremy Lefroy (Stafford) (Con)]

I congratulate those hon. Members who have made their maiden speeches today, including my hon. Friends the Members for Wirral West (Esther McVey) and for Stevenage (Stephen McPartland), and the hon. Member for Rochdale (Simon Danczuk).

Last year, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), whom I welcome to his position as Secretary of State, wrote:

“In a globalised world, we are all bound together, our destinies linked.”

I fully agree with that. He has made a compelling case for the importance of the UK’s international development programme. That case is a moral case, and we have heard the reasons behind it, including the fact that 25,000 children die of preventable diseases every day. However, there is also a case to be made for our national interest, and I would go beyond saying that it lies simply in ensuring that people no longer wish to flee the conditions in their own countries to seek a better life elsewhere. That is part of it, but I would echo the words of Sir Terry Leahy this week. He said that

“we need to think more about how we can engage in the world as it is and will be.”

He went on to say:

“I think it is a wonderful thing that already a billion, and potentially billions, are going to be taken out of poverty”

leading to

“an incredible business opportunity where Britain is well positioned.”

I pay credit here to the work of the previous Government on international aid.

For much of my working life, I have worked in developing countries in business and I therefore declare an interest. I remember that in the late 1980s there was always a lot of tension between those involved in business and those involved in development. These days, it is very different. It is accepted that the best way to tackle poverty is through economic development and that the private sector will play the leading role in that. Indeed, the private sector has come a long way in recognising that it, too, has social responsibilities. It recognises that Government and development organisations are its partners. If there is no functioning health system, its staff and customers will suffer. If schools are inadequate, where will it recruit the staff that it needs? I have the good fortune of being married to a doctor who ran a health education programme for 11 years in Tanzania, and she always reminded me of the importance of that sector.

There are three areas in which aid has an important role to play in economic development. The first is agriculture, which has been so eloquently described by my hon. Friend the Member for Oxford West and Abingdon (Nicola Blackwood). There was a tendency in some parts of the developing world to see agriculture, and in particular smallholder agriculture, as a business of the past, to be superseded by the brave new world of state-owned industry. Many of those factories have long ceased to function while the smallholders continue to earn their living from the land.

Agriculture is a business of the future, certainly in Britain, in my constituency and around the world. Any country, including ours, that ignores the potential of agriculture does so to its cost. The OECD’s report on sustainable agriculture states that in 2005 to 2030, food demand is expected to increase by 50% across the world. That is a huge opportunity for farmers in developing countries. Agriculture, especially on small farms, is an excellent way to promote economic development. The International Fund for Agricultural Development has found that a healthy agricultural sector acts as a multiplier in local economies, spurring higher incomes and increasing access to markets. That is why I am delighted that the Secretary of State has highlighted agriculture as an essential building block of wealth creation.

The second area in which aid is important is small businesses, which have been mentioned. I might as well say “other small businesses”, as smallholder farmers are business men and business women. In the UK, we recognise small and medium-sized enterprises as the engine of the economy, and it should be no different in developing countries. Employment and unemployment are critical, as the hon. Member for Glasgow North (Ann McKechin) said, yet anyone wishing to set up a business in many developing countries faces great problems: the cost of registration, tax authorities that often want taxes to be paid before the business has started trading, and, above all, lack of finance. That was mentioned by my hon. Friend the Member for East Hampshire (Damian Hinds), who talked about microfinance.

Of course, the growth of microfinance has been a great success story in the past 15 years, but there is a gap between microfinance and the level at which private risk capital will lend—typically, $50,000 or $100,000 and above. Banks do not fill the gap and they usually require security, which the entrepreneur cannot provide. I urge the Secretary of State to consider how the UK can work to overcome that financing gap. It is not straightforward, as I know from being involved over the past six years in helping to finance small businesses in Tanzania through a charity, but it can be done. Well-managed revolving equity or quasi-equity funds enable a pound of aid to be used several times over. The Secretary of State rightly emphasises the importance of the effectiveness of aid, and that is an opportunity.

The third area in which aid is important is infrastructure. It is of little use to produce crops only for them to rot in the field because they cannot reach the market. Transport costs in Africa have been estimated to be on average double those in Asia. Infrastructure projects in the past have been riddled with corruption and beset by special interests, but if countries come forward with serious business cases for not only building but maintaining the necessary infrastructure, we should look at them. As the Conservative party’s Green Paper states

“we are convinced that effective support for infrastructure has a central role to play in boosting growth and development around the world, particularly in Africa.”

I have spoken about agriculture and infrastructure, and to some this might seem a throwback to the early days of international development. People might point out that many countries have not yet thrown off the shackles of poverty, but it was precisely because agriculture was ignored for 20 years and infrastructure was built and not maintained that the benefits of that investment were often not realised. What is, perhaps, new is the appreciation at last that no country will develop economically without allowing its small businesses, including smallholder farmers, to flourish. Give them firm property rights, fair taxation, access to affordable finance that will not take the shirt off their back if things go wrong, and a good basic infrastructure, and they will create the jobs that are so desperately needed. They will also create the tax revenues that will pay for the health, education and other services on which they depend, as well as the stability without which no real development is possible.