The British Government plans to leverage the wealth and expertise of the City of London to help disaster-hit third world nations, Theresa May has announced.
At the G20 conference in Hamburg, the Prime Minister unveiled the establishment of a new London Centre for Global Disaster Protection, which will help the governments of developing countries plan for disasters such as droughts and famines.
But crucially the centre will also aim to develop insurance markets in poorer countries, which the Government says will be a “more cost-effective, rapid and reliable” way of raising finance than disaster aid.
The Government says the centre’s activities will “reduce the need for expensive humanitarian aid, reassure private investors and help people rebuild their lives” and could provide around £2bn in support to countries affected by disasters.
A senior government official at the conference said that in the long-term the centre could boost the profits of the insurance industry in Britain.
NGOs cautiously welcomed the “untested” approach to disaster relief but said the centre should primarily serve the needs of developing countries rather than those of City financiers.
The centre will come with £60m of new government spending to help African countries integrate into global financial markets, which the Government says will encourage economic development and reduce dependence on aid.
The Government has also highlighted £60m in cash to rebuild port facilities in Tanzania, £30m to build a functioning civil service in Somalia, £35m for transport infrastructure in Ethiopia and £11.8m to attract private investment in Rwanda.
The parade of foreign aid projects briefed by officials at the G20 in Hamburg suggests that Ms May is refusing to bow to pressure from elements in the Conservative Party to cut aid spending. A week ago former minister Robert Halfon said aid spending should be cut to raise funds to lift the public sector pay cap.
The investment in African nations is part of a wider approach that aims to build up the continent’s economy, which the British Government hopes will reduce the need for aid in the long term.
Speaking at the margins of the G20 summit Ms May told journalists: “We must not forget that progress in Africa benefits the UK at home.
“Our international aid work is helping to build Britain’s trading partners of the future, creating real alternatives to mass migration and enhancing our security, while simultaneously ensuring we abide by our moral responsibility to meet the immediate humanitarian needs of some of the poorest people on earth.
“This is the future of aid, delivering value for money for the taxpayer.”
Max Lawson, a senior policy adviser at the charity Oxfam, welcomed the new policy but warned that economic growth did not automatically lead to disaster relief.
“We welcome the Prime Minister’s commitment to helping African countries strengthen their economies – stimulating growth has the potential to make a big difference in the fight against poverty,” he said.
“But it is important to recognise that growing economies will not automatically provide people with enough food to eat or lifesaving medicines – especially as Africa is home to some of the most unequal countries on earth. We urge the Government to set out in practical terms how it will ensure those who most need our help will reap the benefits of this initiative.
“The new centre to help poor countries reduce the impact of future disasters is also welcome, too often the world waits until disaster strikes before offering help. Harnessing the resources of the insurance industry is an interesting idea but is so far untested and must be judged on the benefits it provides for poor countries rather than the City of London.
“Action to tackle climate change remains critical to reducing the threat of future disasters, and it is crucial that rich countries increase finance to poor countries in line with the Paris agreement.”
The PM also used the G20 to call for a crackdown on modern slavery, taking advantage of cross-border cooperation. She described the practice as “the great human rights issue of our time” and called for a “radically new, global and coordinated approach to defeat this vile crime”.