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1. The Fund
The Fund was announced as part of the 2015 Strategic Defence and Security Review. It supports the United Nations Sustainable Development Goals (SDGs) as well as the 2015 UK Aid Strategy by promoting growth and prosperity in developing countries.
Many of the developing middle income countries it focuses on 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 Fund’s primary purpose, to remove barriers to economic growth in order to reduce poverty, supports the UN Sustainable Development Goals and their delivery is an important aim of the Prosperity Fund. The Fund is particularly focused on SDG 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all.
As well as contributing to a reduction in poverty in recipient countries, we expect the reforms brought about by the programmes to create opportunities for international business including UK companies. At the direction of a ministerial board, UK government departments are developing multi-year programmes in potential high impact sectors and countries.
2. Why global prosperity matters to the UK
Inclusive economic growth is the only way to sustainably lift countries out of poverty. The UK Aid Strategy (2015) sets out how promoting growth and prosperity in developing countries not only contributes to poverty reduction, but also strengthens economic opportunities for the rest of the world, including the UK. The Strategic Defence and Security Review 2015 also recognises that enabling and stabilising fast-growing, open and resilient economies is essential to our national security.
The countries in which the Fund operates present huge untapped potential; opportunities for sharing expertise, creating mutually beneficial partnerships and for businesses and trade to thrive. By breaking down barriers to growth, and supporting vital economic development and reform, the UK is helping countries build well regulated, competitive markets sector by sector, and make our new trading partners of the future:
increasing opportunities for UK business
enabling inward investment into the UK
allowing imports that make UK exports more competitive and benefit consumers
3. How we ensure value for money
A cross-government ministerial board, supported by a cross-government portfolio board gives strategic direction and manages the overall portfolio. Programmes under the Fund are approved and closely scrutinised by government departments in order to ensure they deliver impact and value for money.
Value for money is ensured through a highly competitive bidding process, rigorous contracting processes, regular assessment through annual reviews and Fund level monitoring and evaluation. 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
4. How we measure Impact
The Fund has developed a ‘Theory of Change’ (see the 2016 to 2017 Prosperity Fund annual report) to identify the key drivers of poverty reduction and ways in which the Prosperity Fund can help to address these. Five types of intervention have been identified:
- investment in infrastructure and human capital
- innovation and knowledge transfer, including low-carbon technology
- trade, financial and economic reform
- policy and regulatory capacity
- ease of doing business
The Theory of Change explains the journey from near-term inputs through to long-term poverty reduction. In-depth evaluations will review how programme activities have fed directly into intermediate outcomes. Beyond intermediate outcomes, economic theory will demonstrate that the Fund contributes positively to the UN Sustainable Development Goals (SDGs). At impact level the Fund is particularly focused on SDG 8: promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all, but supports others, including but not limited to SDG 5: achieve gender equality and empower all women and girls.
5. The Fund’s accountability
The cross-government Fund is accountable to the National Security Council and overseen by a ministerial board. Their responsibilities include: setting the strategic direction of the Fund; endorsing programme proposals; reviewing impacts; and ensuring value for money. The Fund’s Senior Responsible Owner is the National Security Adviser, Mark Sedwill. Delivery departments are responsible for: designing credible programmes; ensuring effective spend and delivery; financial accountability and reporting on progress. The Fund is periodically reviewed by the Independent Commission for Aid Impact (ICAI) and answers to Parliament through the cross-party International Development Committee Select Committee.
Spending departments receive delegated responsibility for programmes and are accountable impact and value for money for the UK taxpayer, and for to ensuring that spending meets Official Development Assistance (ODA) eligibility requirements and the legal requirements of the International Development Act and the International Development (Gender Equality) 2014.
6. Prosperity Fund non-ODA spend
The Prosperity Fund includes a component of non-ODA (Official Development Assistance) funding worth £33 million from 2016 to 2022. Ministers have agreed that the Fund’s non-ODA spend should be used alongside Prosperity Fund ODA programmes and in support of the government’s post-EU exit trade policy ambition. Ministers have further agreed that any activity must be strategic and impactful, provide value for money, and complement the Department for International Trade and wider government policies.