Thinking Beyond The Bubble

bubble-burst

If we want to get a handle on the immigration situation, the UK government will need to work to foster conditions that promote economic prosperity and political stability around the world. Poverty and war are two of the primary drivers of migration across Africa, Latin America, Asia and the Middle East. This is a global problem which requires global solutions.

As an EU Member State, many of the policy tools that would be at the disposal of the UK government are presently wielded by EU institutions. Trade policy is an exclusive EU competency and a large proportion of British aid—second only to the United States in terms of absolute expenditure—is administered at an EU level.

What happens with that money from there is less than clear, although, by way of an example, one of the recipients of EU aid money is an organisation called BBC Media Action, which, in 2013, received nearly seven million euros from the Directorate-General for Development and Cooperation for EuropeAid in order to promote media activity across the Middle East and North Africa.

Whether that is an appropriate use of tax-payer resources is difficult to determine without going into detail, but, certainly, the decision was not one that was made with any serious democratic oversight.

In contrast, the other day, I happened upon this tweet from the body in charge of supervising the EEA and Norway Grants—Iceland, Liechtenstein and Norway’s contribution to “reducing disparities and strengthening cooperation in Europe”. This is an important activity in which the UK would undoubteldy be involved post-exit. Outside of the EU, however, there would be a greater degree of transparency and accountability with respect to where that money gets spent.

Indeed, the idea of an accountable aid system could be applied in Whitehall as well. As the only country with a legal commitment to spend 0.7 percent of GDP on foreign aid, the UK government should be taking how and where we spend that money much more seriously. The policies that we promote through our aid programme are important in terms of acting in the common good and advancing British interests by means of soft power.

Mobile Money and the Department for International Development

The International Telecommunications Union (ITU) estimates that the mobile-cellular penetration rate stands at 96 percent globally; 128 percent in developed countries; and 89 percent in developing countries. The liberalisation of basic telecommunications services, following a World Trade Organisation (WTO) agreement that came into force on 1st January 1998, has enabled mobile markets that are more open and better regulated than their fixed-line equivalents to flourish. Whereas land-line services are still mainly provided by formerly state-owned incumbents—especially in the developing world—the mobile space is characterised by its diversity. Competition between network operators, equipment suppliers and high-street retailers has resulted in lower prices and better quality of service for millions of telecommunications customers.

The unprecedented speed of cell-phone adoption in the developing world has transformed the mobile phone from a simple communications tool to a service delivery platform, enabling millions of African, Asian and Latin American consumers to ‘leap-frog’ fixed-line telecommunications in favour of cheaper and more adaptable cellular alternatives. In 1999, only 10 percent of people living in Africa had access to mobile phone coverage, today that figure is in excess of 80 percent, with more than 10 times as many mobile phones as landlines in sub-Saharan Africa.

To that end, one of the most successful foreign aid initiatives funded by the UK government over recent years was the M-Pesa mobile money service—developed by Vodafone subsidiary, Safaricom, in co-operation with the Department for International Development. Mobile money provides a means for people who do not have access to traditional bank accounts to transfer and store cash. Approximately 25 percent of Kenya’s gross domestic product (GDP) now flows through M-Pesa, which is used by over 17 million people—more than two-thirds of Kenya’s adult population.

Initially marketed as a way to send and receive remittance payments, mobile money is now being thought about much more broadly. There are currently 228 live deployments of mobile money services in 85 countries, as well as 115 planned deployments, mostly in developing countries.

With a View to the Future

I offer this as only one example of a worthwhile initiative, alongside the recognition that far too much foreign aid money is wasted on frivolous, pointless and sometimes harmful and regressive projects—the EU policy of not supporting coal-powered power projects in the developing world, where the demand for electricity still far outstrips supply, is both harmful and regressive.

An integrated trade and aid policy under democratic control of the British people could become a tool for removing technical barriers to trade, through support of the rules-based multilateral institutions empowered by the WTO Agreement on Technical Barriers to Trade, and by removing physical barriers to trade by investing in and supporting the building of modern roads and ports, while also providing training to authorities to improve surveillance and enforcement systems. Rather than providing a means for politicians and others to burnish their own virtue at tax payer expense, an independent trade and aid policy would become a tool to advance British policy aims, such as opening new markets for exports (including our world-class service expertise) and reducing the “push factors” that drive much immigration while also benefiting the internal and intra-market trade between developing economies.

Providing expertise and assistance to help emerging economies grow their human capital is the only long-term approach that will address the migrant crisis which EU institutions and the UK government (as part of the EU) have allowed to fester. If we want to solve global problems we have to start thinking globally and I would suggest that abandoning EU parochialism, which prioritises political integration regardless of the costs, and taking responsibility for governing our own affairs, holding elected officials within our own administration to account is the first practical and pragmatic step towards a political settlement that is better for everybody.

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2 thoughts on “Thinking Beyond The Bubble

  1. There is a tremendous opportunity to be unleashed by Britain being an independent free trading nation allowing Britain to do what it does best.

    Like

  2. Since this subject is even more relevant now that Britain is hopefully on the path to leaving the EU, this is well worth a second read.

    Like

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