International Development

Jim Shannon Excerpts

Thursday 18th June 2020 Commons Chamber

[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.