Better data can help the UK deliver on its ambitions to be a global force for good

The UK’s Integrated Review of Security, Defence, Development and Foreign Policy has set out a renewed commitment to the UK as a force for good in the world, and stresses the importance of an integrated, cross-government approach to realising its aims. Measuring what Matters for Global Britain sets out why success also depends on having access to the right data.

Better data, more coherent policy

The UK can be more effective in implementing a coherent foreign and development policy if it understands the effect of existing policies, and not just those owned and delivered by the FCDO, on its international objectives. Making this data available openly will also support accountability by allowing Parliament, the media and the public to understand what government is doing, recognise progress and hold it accountable for its actions. 

Conversely, data gaps mean that poor policies and poor policy implementation can go unnoticed. As a result, opportunities for advancing the UK’s global aims may be missed, or worse, policies may work against the UK’s interests. 

There are examples of good data on the UK’s international interactions – such statistics on international trade in goods and aid spending. The Government has also stated its intention to collect data in other areas, for example to monitor implementation of a new law to prevent illegal deforestation in the supply chains of UK businesses. More generally it has committed to improving the quality and use of data across government in its National Data Strategy. But there are also many data gaps which could be addressed. 

Six example gaps

Development Monitor’s briefing outlines six examples of data deficiencies that are relevant to the UK’s global ambitions, outlines how these could be fixed and what the benefits would be of doing so. These examples cover:

  • Arms exports: Collecting and publishing data on arms exported under open licences.
  • Export finance: Publication of loans and loan guarantees to other governments, with interest rates and repayment schedules.
  • Commercial loans to governments: Ensuring that UK companies implement IFF principles on debt transparency.
  • Money laundering: Improved statistical information on Suspicious Activity Reporting, broken down by country
  • Stolen asset recovery: Regular reporting on progress in returning stolen assets, broken down by country.
  • Foreign direct investment: Earlier publication of statistics providing a breakdown of UK investment in Africa.

Policies in these areas can have a significant impact on the global challenges, including countries (such as those in Sub-Saharan Africa) on which the UK wishes to focus.

The practical steps to fix these gaps vary. However, the costs of doing so are likely to be small compared to the benefits of more effective and coherent foreign and development policy. Better policies, beyond aid spending, would also enable the UK to more effectively tackle global poverty and advance the Sustainable Development Goals. 

Audit the gaps, measure performance

These examples are just a starting point. There are opportunities to improve data in support of the UK’s global ambitions in many other areas, including better data on the economic, social and environmental impact of UK companies overseas.

To realise these opportunities, the Government could start by auditing the data necessary to support its international objectives and defining an appropriate framework for measuring performance. This would provide a consolidated, cross-government view of the UK’s global impact. A similar approach is used for the UK’s environmental performance, another area where a coherent cross-government approach is needed to realise the UK’s ambitions. Such a framework is not enough on its own. It would need to be complemented by effective use of data across government, and cross-departmental accountability mechanisms, but it is an important first step towards success.

Read the full briefing on Measuring what Matters for Global Britain

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FCDO launch offers opportunity for more coherent policy

The launch of the Foreign, Commonwealth & Development Office (FCDO) “charged with using all the tools of British influence” creates an opportunity for more coherent policies towards developing countries, but realising this opportunity depends on better data collection and use across government .

Bond, the UK network for organisations working in international development, has outlined 15 principles for the new department to support greater policy coherence. UK tax payers would also benefit from more coherent policies, as effective non-aid policies can be worth much more than aid spending. 

Just look at Nigeria – the UK spent an average of £240m on aid a year over the last 10 years, but improvements in non-aid policies could have been worth much more. For example:

  • Two corrupt payments out of Nigeria facilitated by a UK bank, alerted to but not acted on, by the National Crime Agency’s predecessor, were worth 2 years of aid spending.
  • Nigeria has asked for the return of stolen assets – it suspected at least $37 billion was routed through the UK in 2014-15. Returning a fraction of this would be worth many years aid spending. 
  • Cleaning up oil spills by the Nigerian subsidiary of UK-listed Shell has been estimated to cost at least $1bn, around 3 years’ worth of aid spending. The UK promotes awareness of voluntary guidelines on responsible business conduct but campaign groups argue that stronger rules are needed.

A huge range of UK policies affect developing countries beyond aid spending. They include anti-money laundering controls, return of stolen assets, investment and trade promotion, arms exports, trade agreements, tax treaties, policies on the environmental and human rights performance of UK multinationals, and transparency requirements for natural resource payments.

The UK has taken a leading role on several of these (e.g. transparency of payments for natural resources; tackling secret company ownership, modern slavery) and has world renown expertise in international development. But there is much more that could be done. The creation of new department with a new remit and approach is an opportunity to do so. 

A first step towards more coherent policy is to collect and publish relevant data: data that makes it possible to review and improve the performance of departments and public bodies with regard to the impact of their policies on developing countries, going beyond aid spending.

The good news is that there are a range of existing data sets, which are sufficiently complete and disaggregated to country level, that can already be drawn upon. These include trade in goods and services, CDC investments, business supported by UK export finance, and arms export licences. More data is emerging from transparency obligations imposed on UK companies, notably the publication of extractives payments to governments for natural resources.

However, in many other other areas data is published without a country level disaggregation, datasets are incomplete, or data is not collected at all. For example, the UK’s work on returning stolen assets and anti-money laundering controls aren’t reported by country, making it hard to know how much anti-corruption efforts are benefiting developing countries. UK direct investment data is missing for around half of African countries, making it hard to measure the effectiveness of African investment promotion activities. A small unit in DIT promotes the OECD’s guidelines for responsible business conduct to UK multinational enterprises, including those operating in developing countries, but awareness and implementation of the guidelines isn’t measured, making it hard to assess the effectiveness of its work.

Measuring and reviewing government performance using relevant data is already widely recognised as best practice, including by the NAO and Institute for Government, and necessary for government accountability. In practice the challenges of collecting and disaggregating data will vary considerably. In some cases, data already exists but needs collating and publishing. In others the design of new metrics will need to be carefully considered and systems upgraded. In addition, responsibility for collecting data lies across multiple departments and agencies. 

But improvements are achievable. Measuring the UK’s environmental performance is also complex with responsibilities across Whitehall, but government has defined and has started reporting on a wide ranging set of environmental metrics. Given the global challenges now being faced, the effort to collect better data on the UK’s international interactions must surely be worth it.

Photo by Foreign and Commonwealth Office – Flickr, CC BY 2.0

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Transparency can help get the Sustainable Development Goals back on track

Countries need to provide reliable data about their impact on global challenges

The Sustainable Development Goals (SDGs), or Global Goals, which promise to end extreme poverty and inequality by 2030, were already “seriously off-track” in November last year, according to the UN secretary general António Guterres. The UN’s latest report shows that with Covid-19 reaching these goals is an even greater challenge, with least developed countries (LDCs) amongst those that “stand to be hit hardest”.

Achieving the goals depends on international cooperation

The Covid-19 pandemic has, like climate change, reminded us that national actions can have consequences for people around the world. So whilst the SDGs are national targets, many cannot be achieved through national efforts alone – they depend on international action and collaboration.

For example: 

  • Goals on reducing modern slavery and child labour (target 8.7) depend on multinational­ corporations undertaking effective due diligence to reduce risks in their supply chains and operations. 
  • Goals on increasing government revenues (target 17.1) depend on global companies paying their fair share of taxes and not being able to shift profits to tax havens.
  • Goals on reducing illicit financial flows (target 16.4) depend on effective anti-money laundering controls in international financial centres around the world.

The impact of actions taken elsewhere is particularly significant for countries who face the greatest challenges in meeting the SDGs and are disproportionately affected by global problems, including the world’s least developed countries. In an interconnected world, progress in these countries benefits everyone.

Measure the actions which impact the goals

However, without accurate data on actions that impact the SDGs, we cannot really know where progress is being made on the wide range of targets that depend on international collaboration. These include targets relating to migration, debt, remittances, environmental impact, human rights, illicit financial flows, aid, trade, and tax. 

Example data gaps include transparency of loans to governments, progress on returning stolen assets, multinational corporation tax payments and environmental performance. This type of data complements, but goes beyond, measuring progress on the goals within a country, which most SDG indicators and current SDG data efforts focus on.

In addition, governments that spend their citizens’ taxes on aid to developing countries owe it to their citizens to be transparent about the others ways they impact those countries. There are plenty of examples of donor countries exacerbating, or not doing enough to mitigate, problems in countries which are recipients of their aid (see some UK-Nigeria examples).

Donor countries like the UK could get much better value for their tax payers if they looked at their performance on international development in the round, by measuring the impact of their non-aid actions towards developing countries. 

Disaggregated data is powerful data

There are many initiatives to campaign for improved transparency on specific issues included in the SDGs – including illicit flows, tax, debt and corporate transparency. But even where data has started to be reported, there’s often more to do to make it more powerful in progressing the SDGs. Here are three common challenges:

First, the most basic problem is that governments and companies often default to aggregate information, such as the total amount of stolen assets returned by the UK, or companies reporting polluting discharges[1] without a country breakdown. These figures aren’t good enough to understand the implications for SDG progress because they hide whether the people and countries have furthest to go in achieving the SDGs, are being disproportionately affected. They also don’t help the people and countries affected hold those responsible for their actions.  All data should be disaggregated, at least to a country level, so that the impact on low income and least developed countries is clear.

Second, for transparency data to be powerful it needs something to compare it to. For example, the value of stolen assets returned to Nigeria by the UK has greater meaning when provided beside an estimate of the total value of stolen Nigerian assets in the UK. Payments to governments for natural resources are more meaningful if you also know the value of resources extracted.

Third, users of the data should know what they are getting.  International data is rarely perfect or complete so it should be complemented by data on its quality and comprehensiveness. This can then be used to track progress in the quality of reporting. A good example are the data quality checks undertaken in compiling the Aid Transparency Index.

Better data is possible

Despite these challenges, powerful international data to support the SDGs is not out of reach. People have shown they care about the accuracy and reliability of nationally reported data pertinent to global crisis (carbon emissions and the spread of Covid-19). Progress in opening up government data and strengthening government accountability for domestic policies shows what is possible. The importance of measuring national progress on the SDGs has been grasped. Another step in the sustainable development data revolution will help that progress to be realised.

[1] Alliance for Corporate Transparency 2019 Research Report An analysis of the sustainability reports of 1000 companies pursuant to the EU Non-Financial Reporting Directive. E.g. 20.9% of companies surveyed provided an aggregate KPI on polluting discharges to water, 1.5% disaggregated this by country.(page 56) 

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What more could UK government tell us about its impact on developing countries beyond aid spending?

The Department for International Development (DFID) publishes an Annual Report which sets out what it has achieved over the year, providing statistics on everything from the number of people reached with humanitarian assistance, lives saved through immunisation and people supported to access clean water. But the UK has a much wider impact on developing countries than its aid spending, and is committed to a range of other policies that affect those countries.

Under the International Development (Reporting and Transparency) Act 2006) DFID needs to report the effect of these policies. It should report the ‘“effects of policies… pursued by government departments on sustainable development … and reduction of poverty”. Whatever the policy priorities of a new government, reporting this information is important to support coherent policy making. DFID’s annual reports do provide some information but could tell us more about the progress being made on policies beyond aid.

Four policies which could be worth billions of pounds to developing countries

To illustrate what DFID’s report could say more about, consider the impact of policies beyond aid spending on one country, Nigeria.

Nigeria is Africa’s biggest country by population and its second largest economy. Despite significant natural resources, about 94 million people – roughly half Nigeria’s population – live in extreme poverty, according to estimates from the World Data Lab’s Poverty ClockDFID recognises that Nigeria faces a number of challenges to its future growth and development and says that the UK is focused on helping Nigeria overcome its challenges. 

The examples below illustrate the relevance of policies beyond aid spending for Nigeria:

  • Anti-money laundering. Over $800 million of Nigerian government funds were transferred by JP Morgan from a London account to a company controlled by a former Nigerian oil minister convicted of money laundering.
  • Stolen asset recovery. Nigeria’s anti-corruption chief has said they suspect at least $37bn (£25.6bn) in stolen money from Nigeria was routed through London during 2014-2015.
  • Promoting responsible environmental management by UK based multinationals. Oil spills in the Niger Delta by the Nigerian subsidiary of UK-list Shell have had a disastrous environmental impact, with clean-up costs of at least $1bn, according a UN report.
  • Reducing migrant remittance costs. Reducing the average cost of sending remittances from the UK to Nigeria, to the SDG target of 3% could save nearly £100m a year.

These examples suggests that, in total, implementation of effective policies (beyond aid spending) could be worth many billions of pounds to developing countries.

Anti-money laundering 

DFID’s report sets out the actions it is taking to deliver its UK Anti-Corruption Strategy 2017 commitments, including “supporting the National Crime Agency (NCA) and Crown Prosecution Service to reduce incentives for corrupt individuals in developing countries to use the UK to launder money or for UK business and UK nationals to use bribes in developing countries.” 

Why UK policies are important for Nigeria

In its country profile on Nigeria, DFID recognises that the Nigerian government struggles with corruption and says it will support it in tackling corruption.

Corrupt money is sometimes laundered via the UK, so one way the UK can help tackle corruption is in ensuring it has an effective anti-money laundering regime.

For example, documents filed in a major corruption case show that JP Morgan Chase Bank transferred over $800 million of Nigerian government funds from a London account to a company controlled by a former Nigerian oil minister who had been convicted of money laundering. The bank says that it ‘received consent’ from the Serious Organised Crime Agency (SOCA, now part of NCA) before making the payments.

What more could DFID’s report tell us

The transfers in the above case were made in 2011 and 2013. Then in 2017 the Government committed to reform the Suspicious Activity Reports (SARs) regime, which banks and other organisations use to alert the NCA of potential cases of money laundering. A group of anti-corruption NGOs have called for greater transparency and accountability on the impact of modifications to the SARs regime.  

So, as well as telling us that DFID is supporting the National Crime Agency (NCA) and Crown Prosecution Service, the report could also tell us what progress has been made in improving the UK’s anti money laundering regime and reducing incentives for corrupt individuals in developing countries to use the UK to launder money. 

Stolen asset recovery 

In relation to assets stolen from developing countries, DFID says “From 2006 to the end of 2018, £783.2 million of assets were restrained, confiscated or returned to developing countries, including £57.3 million returned to the Government of Nigeria through our support”.

Why UK policies are important for Nigeria

At the 2016 anti-corruption corruption conference hosted in London, Nigeria’s president called for the return of assetswhich had been taken out of Nigeria via London. His anti-corruption chief said they suspected at least $37bn (£25.6bn) in stolen money from Nigeria was routed through London during 2014-2015.  Following the summit, in September 2016, the UK signed an agreement with Nigeria on returning stolen criminal assets to Nigeria.

The World Bank’s Stolen Asset recovery initiative estimated in 2007 that developing countries lose between $20 billion and $40 billion each year to bribery, embezzlement, and other corrupt practices.

What more could DFID’s report tell us

The figures quoted by DFID are total values for a 12 year period. The report could tell us what has been achieved over the last year and how significant these amounts are compared to estimates of the overall level of stolen criminal assets from developing countries. For example, it could clarify how much has been returned to Nigeria since the September 2016 agreement on asset recovery. 

A number of anti-corruption NGOs called for improved transparency and accountability in the asset recovery process in their 2018 report on UK compliance with the UN Convention against Corruption. The UK co-hosted Global Forum on Asset Recovery (GFAR) has established principles on transparency and accountability in asset return process, including that ‘information on the transfer and administration of returned assets should be made public and be available to the people in both the transferring and receiving country.’

Data on asset recovery cases is available on the Stolen Asset Recovery Initiative database. As at November 2019, the most recent UK asset recovery on this database was started in 2014.

Promoting responsible environmental management by UK based multinationals

DFID’s report tells us about many environmental programmes that the government invested in to mitigate and adapt to climate change and prevent environmental degradation. 

For example, DFID and Defra pledged up to £250 million to the Global Environment Facility (GEF), a mechanism for developing countries to address environmental challenges such as biodiversity loss, land degradation, international waters and chemicals and waste. 

Why UK policies are important for Nigeria

Oil spills by the Nigerian subsidiary of UK-listed Shell have had a disastrous environmental impact on the Niger Delta, according a United Nations report. The UN estimated that cleaning up the area will cost at least $1bn and take up to 30 years.  Shell’s subsidiary, which produces 39% of the country’s oilhas accepted that oil spills in 2008 resulted from the failure of old and poorly maintained pipelines. Other spills continue which Shell says are mostly caused by sabotage. Communities affected by oil spills have for years sought legal redress in UK courts. One community received an out of court settlement of £55m in 2015. Shell has sought to block another claim.

What more could DFID’s report tell us

DFID’s report could tell us about the effect of current policies towards companies listed and headquartered in the UK whose operations risk impacting the environment in developing countries.

For example, the report could tell us about the effectiveness of the UK’s ‘National Contact Point’ for the OECD’s guidelines for multinational enterprises. This aims to raise awareness of voluntary guidelines for responsible business conduct, which include environmental and human rights issues. Complaints can be lodged against businesses for breaching the guidelines and investigated by a ‘national contact point’ within the Department for International Trade, which can result in non-binding recommendations for the company.

The effectiveness of voluntary guidelines has been challenged by a group of civil society organisations who are calling for a law requiring UK companies to take action to prevent environmental harm, human rights and other abuses in their global operations and supply chains.

Reducing migrant remittance costs 

Remittances from migrants in the UK to Africa have been conservatively estimated at £4.1 billion in 2015, similar to the value of UK aid to Africa. However, the high costs of sending money to developing countries remains a challenge and the UK has committed to reduce the cost of sending remittances. The Sustainable Development Goals (SDGs) have a target (10c) to the reduce transaction costs for migrant remittances to less than 3% by 2030 and to eliminate remittance corridors with costs higher than 5%. As at September 2019, the global average for remittance costs is around 7%.

DFID last provided an update on remittance costs in its 2016/17 annual report. That report stated the UK’s commitment to reduce costs and actions taken during the year, although it did not provide information on the level of remittance costs between the UK and developing countries. DFID’s 2018/19 annual report did not provide information on remittance transaction costs.

Why UK policies are important for Nigeria

World Bank estimates show that Nigeria was the biggest destination for UK remittances, worth around £2.9bn in 2018, and ten times larger than UK bilateral aid to Nigeria (£297m). The UK was the second largest source of remittances to Nigeria, after the USA. In 2018, the average cost of sending remittances from the UK to Nigeria was 6.3%, so reducing costs to the SDG target of 3% could save around £95m a year.

What more could DFID’s report tell us

The report could provide an update on implementation of The UK National Remittance Plan and the impact of this, specifically changes in the cost of sending remittances form the UK to developing countries, including major destinations like Nigeria.

DFID has provided funding for the World Bank’s Remittance Prices Worldwide database to include additional UK remittance corridors, and data from this could be used to show what progress is being made on reducing remittance costs. 

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What are the biggest reported flows between the UK and developing countries?

Development Monitor has crunched public data on trade, aid, remittances and investment to investigate which developing countries send and receive the most from the UK.  

Here is a taste of what our new dashboard can tell us about the UK’s interactions with low-income countries in 2017.

The World Bank classified 34 countries as ‘low-income’ in 2017.[i]  They are around 50 times poorer than the UK, with per capita incomes averaging around £1.60 per day in 2017. [ii] Many low-income countries are in sub Saharan Africa but also include Afghanistan, Nepal and Yemen.

For these low-income countries:

  • Their biggest reported outflows to the UK are payments for UK services. Seven low income countries spend 1-2% of their GDP on services from the UK, such as management consulting, financial services, engineering services. They are: Zimbabwe, Sierra Leone, Afghanistan, Liberia, Senegal, Mozambique, The Gambia. As noted in our earlier article, these payments are sometimes worth much more than the bilateral aid they receive from the UK, e.g. Zimbabwe (£279m versus £93m), Senegal (£160m v £1.4m).
  • Remittances are more significant than aid for some countries. UK remittances are estimated to be a bigger inflow than UK bilateral aid to Uganda (£289m v £140m), The Gambia (£28m v £15m) and Nepal (£111m v £100m). UK remittances to Uganda are estimated to be larger than bilateral aid flows to any low-income country other than Ethiopia.
  • Ethiopia has top spot (though it depends how you look at it). UK bilateral aid to Ethiopia was £326m, exports to the UK were worth £350m, bigger than other reported flows between the UK and low-income countries. Ethiopia was also the largest importer of goods from the UK (£220m). But Ethiopia is the biggest low-income country, by population and by GDP, so we get a different picture taking that into account. UK bilateral aid as a percentage of GDP is lower for Ethiopia (0.5%) than for many other low-income countries, for example UK bilateral aid to Somalia is worth 4.9% of its GDP.

Top reported financial flows between the UK and Low-income countries (2017)

Ranked by % of developing country GDP

Try out the dashboard to see all the data and investigate trends for other income groups, Least Developed Countries and Commonwealth countries.

[i] World Bank threshold for low income countries was $995 or less GNI per capita  (Atlas method) in 2017 Comoros, Senegal and Zimbabwe were classified as low income in 2017, but moved to low-middle income in 2018.

[ii] Average GNI per capita in low income countries in 2017 was $752; UK $40,580 GNI per capita; Atlas method (current US$)  USD-GBP exchange rate in 2017 = 1.29

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World’s poorest countries spent £2.5 billion on UK services in 2017

Analysis by Development Monitor shows that the UK exported £2.5 billion of services – such as management consulting and financial services – to Least Developed Countries (LDCs) in 2017, up from £2.0 billion in 2016. The UN defines LDCs as low-income countries that face severe impediments to sustainable development. The UK also imported £0.7bn worth of services from these countries in 2017, unchanged from 2016.

The value of UK services provided to LDCs was almost as much as the UK’s bilateral, country-specific aid spending on those countries, which amounted to £2.6bn in 2017.

Several LDCs spent more on UK services in 2017 than they received in UK bilateral aid, including:

  • Afghanistan: UK service exports £241m, UK bilateral aid £227m
  • Bangladesh: UK service exports £352m, UK bilateral aid £176m
  • Mozambique: UK service exports £114m, UK bilateral aid £58m
  • Zambia: UK service exports £72m, UK bilateral aid £53m.

The Solomon Islands spent the highest proportion of its income on UK services, worth 4.74% of their GDP in 2017, and equivalent to around half their spending on education.

On average LDCs spent a greater proportion of their national income on UK services than richer developing countries. In 2017, imports of UK services exports were on average worth:

  • 0.31% of GDP for Least Developed Countries
  • 0.12% of GDP for Upper Middle Income countries (such as Brazil and China)

More trends and analysis can be found on Development Monitor’s financial flows dashboard.

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