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Careful with that private finance.

By Lorna Gold.

It was the vision of Garret FitzGerald, as Minister for Foreign Affairs, which led to the establishment of an official Irish aid programme for Africa and the developing world 40 years ago, in the early years of our membership of the EEC. For a generation it generally increased – until this recession. 2014 was the first time in six years that there was no reduction at all in Ireland’s Overseas Development Aid (ODA). This year the budget will be €600m, 80% of it to be spent in sub-Saharan Africa. 20% of the overall budget goes on fighting hunger. In 2014 Ireland also spent €68 million on humanitarian support to crises, especially in West Africa, Syria, South Sudan; and ebola-ravaged Sierra Leone. Although, worldwide, extreme poverty has been cut in half since 1990 and 17,000 fewer children die each day, one in nine people remains hungry.

Recently a voguish blending of public and private finance has become a key trend in international development and its aid. A side effect of the global financial crisis – as the availability of, and ideological commitment to, the provision of international public finance has decreased – is dramatic growth in the portion of aid being delivered via private or semi-private profit-making entities. Official Development Aid (ODA) now makes up only 27% of financial flows to developing countries (down from 44% in 2008). Private finance now make up 65% of external resources going to developing countries, worldwide.

In practice formerly ‘like-minded’ donors, mainly the Nordic countries, have been moving away from the principles of poverty-focused aid. These countries have gradually gone in a pro-business direction for aid systems and delivery.

Ireland, until now, has bucked this trend with an exemplary focus on the very poorest. The recent OECD Development Assistance Committee (DAC) Peer Review of Irish Aid commends the country on its high-quality, poverty-focused, 100% grant-based aid programme.

However, Development minister, Seán Sherlock, says the focus of the programme is on “inclusive economic growth”.  Perhaps reflecting the focus on economy, there are escalating pressures on Irish Aid, from within Government and externally, to modify its attitude to the private sector, and to engage the private sector more pro-actively in the development aid effort. In the space of a few years we have seen the publication of the Africa Strategy by the Government and the rollout of a new approach to the engagement of Irish business in Africa. The trade promotion portfolio has been shifted into the Department of Foreign Affairs and this is now strongly reflected in the new foreign policy statement. The Minister of State for International Development and Human Rights has become the Minister for ‘International Development and Trade’.

There are potential merits in the combining of these portfolios, particularly when it comes to promoting integration of policy. However, the DAC Peer Review finds the approach deficient. It specifically points to the dangers of an unclarified focus on ‘synergies’  when there may be policy conflicts.

If it is accepted that the trend of private engagement in international development will continue, then it is critical that there is an overriding ‘do no harm’ policy. A key test is what role will be afforded business entities in the realisation of human rights.

The consultation on a National Action Plan (NAP) for Ireland on the implementation of the Ruggie Principles on Business and Human Rights (a UN Framework) was launched at last year’s NGO Human Rights Forum. The Human Rights Unit of the Department of Foreign Affairs is leading this and has started consultations.

The NAP, if it is to meaningful and effective, needs to address a broad range of policies relating to business and human rights focusing on Government as a whole, not isolated departments. Trócaire’s submission to the NAP sets out seventeen measures which need to be taken for the NAP to be comprehensive and in line with international best practice (www.trocaire.org). It needs, for example, to embed the principle of ‘extra-territoriality’, giving the state the power to protect against human rights abuses committed by their companies abroad.

Furthermore, building on the incipient reality of a state-business nexus, the Government needs to focus on those businesses where it has most influence. Companies that are looking to get stuck into our foreign, trade and particularly our overseas-aid policy provide a good initial focus for the implementation of the NAP. As the UN framework says, “The closer a business enterprise is to the State…The stronger the State’s policy rationale becomes for ensuring that the enterprise respects human rights”. Human-rights due-diligence procedures should be required within these companies – if we are to stay focused on the end, rather than the means. •

Lorna Gold is Head of Policy and Advocacy for Trócaire.