Jillian Lilico: 'Local procurement' could help maximise the effectiveness of UK aid spending

Jillian Lilico is Managing Director of Demeter Development.

Using Local Procurement Programmes to Maximise the Impact of Overseas Development Assistance

The Department for International Development is scheduled to allocate 0.7% of UK GNP to development assistance by 2013.  Achieving and proving maximum impact for this expenditure, especially given the challenge of justifying expenditure abroad at a time when spending is being cut at home, is an important political imperative.

DiFID identifies the promotion of economic growth and the private sector as being amongst the key issues that it seeks to address.  Its goals in this area are, by 2015, to

• Provide more than 50 million people with the means to help work their way out of poverty
• Help up to half of the countries in Africa benefit from freer trade
• Secure the right to land and property for more than six million people

Traditional economic development policies involve strengthening of property rights, enhancing the civil service and the judiciary, reducing corruption, developing infrastructure, and promoting private sector development. An important challenge is how to achieve this without either (a) undermining free trade by being protectionist or biased in procurement decisions; or (b) seeing large amounts of development assistance leak outside the target area to well-established international businesses. Another issue is that donor nations have often sought politically to justify the provision of assistance by claiming that it promotes trade, with the obverse of this policy being a tendency for aid assistance to be criticised as simply a subsidy for engineering firms and consultancies from donor nations.