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1. A new cross-government Prosperity Fund
Launched in April 2016 to help promote economic growth in developing countries, the Prosperity Fund is worth £1.2 billion over 6 years. Its priorities include improving the business climate, competitiveness and operation of markets, energy and financial sector reform, and increasing tackling corruption. These reforms will drive sustainable development in partner countries, and create opportunities for international business, including UK companies.
Many developing countries, including middle income countries where around 70% of the world’s poor live, still face considerable challenges such as rapid urbanisation, climate change and high and persistent inequality (including gender inequality) which can lower long-term growth prospects. The Prosperity Fund supports the broad-based and inclusive growth needed for poverty reduction.
The Prosperity Fund forms a strategic proportion of the UK’s total Official Development Assistance (ODA) commitment of 0.7% of Gross National Income (GNI). It represents a step-change in the ODA resources spent on assisting countries to grow and develop, which will help to make the world a more prosperous place. The Fund will provide expertise and technical assistance in areas of UK strength to:
- promote economic reforms and remove barriers to trade
- strengthen policy capacity and build strong institutions
- develop sectors which support growth such as infrastructure, energy, finance, education and healthcare
As well as providing development assistance which is likely to contribute to a reduction in poverty in recipient countries, these reforms are set to create opportunities for international business, including UK companies.
All projects and programmes comply with the International Development Act including the International Development (Gender Equality) Act 2014, meet the OECD Development Assistance Committee (DAC)’s criteria, are untied, and meet UK government transparency commitments on ODA spend.
There is also a small non-ODA allocation through the Fund in order to support the government’s wider prosperity goals.
2. Why global prosperity matters to the UK
Boosting global prosperity is both the right thing to do and is in the UK’s national interest. The Strategic Defence and Security Review (SDSR) recognises the importance of a fast-growing, open and resilient economy to our national security, and the benefits to the UK of economic development overseas. It sets out the government’s broad approach to building the UK’s prosperity.
The UK Aid Strategy (2015) sets out how promoting economic development and prosperity in developing countries will reduce poverty and also strengthen UK trade and investment opportunities around the world.
The UK government can help promote global prosperity by encouraging and supporting overseas governments to adopt policies which drive sustainable and inclusive growth. Global economic growth, development and openness benefits the UK by:
- increasing opportunities for UK business
- enabling inward investment into the UK
- allowing imports that make UK exports more competitive and benefit consumers
3. Ensuring value for money
Under the guidance of a cross-government ministerial board, thematic, country and regional priorities are determined by a careful economic diagnostic and design process, assessing the constraints to and opportunities for growth faced by our partners overseas. Project design, management and evaluation ensure a focus on results and strong value for money. The approach focuses efforts in areas with the highest potential for inclusive growth, strengthening the golden thread of robust institutions, good governance and reduced corruption.
All proposed programmes and projects are assessed against:
- impact: how the programme supports the economic development and welfare of developing countries (ODA projects only) and how it creates opportunities for business, including UK business
- strategic fit: does it meet the needs and priorities of the partner country and the steer from the ministerial board
- value for money
The Fund is accountable to a cross-government ministerial board and the National Security Council (NSC) and overseen by a cross-government ministerial board. The National Security Adviser is the Senior Responsible Owner, the Ministerial Board sets the strategic direction, reviews and endorses strategic allocations against sector and country priorities and reviews and endorses the potential programmes.
Spending departments receive delegated responsibility for programme are accountable impact and value for money for the UK taxpayer, and for to ensuring that spending meets ODA eligibility requirements and the legal requirements of the International Development Act and the International Development (Gender Equality) 2014.
5. Priority countries and sectors
The ministerial board have agreed that ODA activity of the Fund should focus on countries and sectors where development potential and the interest to the UK are the highest. The ministerial board has asked UK government departments to consider multi-year work in sectors including: financial services, insurance, business services, infrastructure, energy (to include extractives, renewable, low carbon and climate), environmental industries, healthcare, education and other potential high impact sectors.
Sectors and countries will continue to be kept under regular review over the duration of the Fund.
6. Our partners
We will continue to work with a range of existing partners in the UK and in-country, including business, NGOs and international organisations, such as the World Bank, WTO and OECD, and new partners who have particular technical or sector expertise. We will maintain and develop partnerships with expert organisations as well as partnering the private sector, directly in accordance with government procurement rules, where this will help harness specialist expertise, extend reach and influence complementary financing.
The government will maintain in-depth dialogue with UK business and civil society and will ensure that UK business and institutions are informed and ready to compete for new opportunities.