Written Submission to the International Development Committee inquiry on the UK’s strategy towards development finance institutions

Evidence submitted by ActionAid UK, February 2023

Summary of evidence

-          The UK Government is right to focus on the rights of women and girls in its International Development Strategy (IDS) and women’s economic rights are central to achieving gender equality more broadly.

-          We are concerned, however, that the Government’s approach to ‘women’s economic empowerment’ is based on narrow, mainstream economic thinking, relying on an assumption that economic growth – particularly through private sector investment and the expansion of trade - will automatically result in poverty reduction and the realisation of human rights and gender equality. The UK Government’s current approach does not recognise the numerous ways women do, can and want to participate in the economy and how they are affected by its investment decisions.

-          This narrow approach is embedded in British International Investment (BII), which is one means of achieving the UK Government’s IDS. BII takes a largely instrumentalist approach to women’s economic rights, which seeks to deploy women’s labour as tools for economic growth and returns on investment, rather than the importance of achieving gender equality and women’s rights as ends in themselves.

-          Universal access to quality gender-responsive public services are human rights and essential to the achievement of gender equality. ActionAid is concerned, however, that UK ODA, through BII, is contributing towards the privatisation of critical public services, including health and education.

-          Whilst we welcome BII’s focus on creating ‘quality jobs for women’ and note the progress it reports in this regard in terms of numbers of jobs created, it remains unclear how many of these are accessible to the most marginalised women and under what circumstances. Similarly, there is lack of readily available data on the quality of these jobs as well as safety, or how this concept is defined.

-          It is also vital that the UK Government ensures human rights due diligence requirements are gendered and are met by all companies and financial intermediaries in which BII invests, with clearly established mechanisms to ensure access to remedy.

-          More generally we are concerned that a shrinking ODA budget is being channelled to BII ostensibly to support gender equality at a time when there is a desperate need for scaled up funding for women’s rights through traditional ODA channels, including the need to dramatically step-up resourcing to feminist movements, women’s rights organisations and girl-led groups in the ‘global south’.

BII’s strategy and the FCDO development agenda

This submission will focus on the Committee’s question above.

Instrumentalisation of women and reliance on ‘trickle-down’ economics

In the Government’s IDS, ‘women and girls’ is a key focus, alongside ‘honest and reliable investment’. The IDS places a strong emphasis on ‘economic development’ with BII noted as a way of helping “low and middle-income countries access the investment they need”. This aligns with BII’s strategy which prioritises ‘inclusive development’ for “poorer and more fragile countries” and investing in a way that “has a positive impact on women, marginalised groups, the environment and the growth of small and medium-sized enterprises (SMEs)”. BII pledges to use ‘gender lens finance’ and has set a target for 25 per cent of all new investments to qualify under the 2X Challenge (the G7 initiative to “boost financing for women”)[1]. It also commits to promoting and increasing representation of black African-owned and led businesses in its sub-Saharan Africa portfolio.

The focus on women and girls' rights in the UK Government’s IDS and BII’s strategy is important, and welcome. However, without tackling gender inequality, the UK Government cannot meet its international commitments and obligations on gender equality and human rights, including meeting the Sustainable Development Goals (SDGs). Realising women’s economic rights in particular is central to achieving gender equality more broadly.

We are concerned by the approach taken by the IDS and in turn by BII. Of course, economic development is crucial to eliminating poverty and injustice. However, the IDS and BII’s approach are based on mainstream economic thinking, which has long instrumentalised and harmed women and girls in the interests of corporate profits, returns on investment, and economic growth, rather than prioritising redistribution, sustainability, human rights and the rights of women and girls as intrinsically invaluable. Such market-orientated, private-sector-led approaches also serve to detract from the fundamental duty of states to protect and advance human rights, including the rights of women and girls, as established under numerous human rights conventions.

The IDS and BII seem to assume that economic growth and job creation will automatically lead to gender equality and the elimination of poverty. The effectiveness of such a ‘trickle-down’ economic approach has been widely challenged. In addition, the language of “unleashing the potential of people in low- and middle-income countries to improve their lives”[2] and on “unleashing the potential of women” puts the onus on women and girls to ‘pull themselves out of poverty’ and uses ‘women’s economic empowerment’ as an instrument to achieving other (economic) goals. The importance of realising women’s human rights as a fundamental goal in itself is not adequately acknowledged in either strategy. There is no recognition in either the IDS or BII’s strategy of the need to address the significant structural causes of poverty and inequality (including those rooted in colonialism, racism and patriarchy) and the role the UK currently plays in perpetuating these including through its harmful trade, investment and tax policies[3].

In 2019, the Independent Commission for Aid Impact (ICAI) said there is, in general, “a relative lack of rigorous evidence of DFIs’ impact on poverty.” A DFID-commissioned review in 2019 also found that DFI’s impact on poverty reduction is often indirect and not automatic. It is important then that the UK Government and BII systematically evaluate how its economic policies and approaches are impacting on the achievement of women and girls’ rights. In this respect, we are pleased to see that BII’s strategy intends to measure the impact score of an investment, including how far the investment reaches poor and marginalised people. This must include in relation to access to and quality of jobs, and how their investments impact on access to quality public services for women and girls facing poverty and exclusion (both discussed further below). All evaluations of impact must be communicated in a timely and transparent way.

Driving the privatisation of public services

ActionAid is extremely concerned that UK ODA is being channelled through BII to further drive the privatisation of public services, including health and education, in countries in the ‘global south’ where the vast majority of the population continue to live in poverty and will struggle to access such services when fees are introduced. This is particularly alarming in the context of ongoing austerity and associated cuts to public services in countries in the ‘global south’, many of which are linked to the policy advice and loan conditionalities of international finance institutions, such as the IMF and World Bank.[4] This is the case even as many countries continue to struggle to recover from the impacts of the Covid pandemic, which disproportionately impacted women and girls.

Ensuring public services are widely available, accessible, adaptable, and acceptable is a key way in which states can progressively realise the rights of citizens, and they are especially vital to the realisation of gender equality and women’s rights. For instance, as recognised in SDG target 5.4, the provision of gender responsive public services is vital for women’s unequal care load to be reduced and redistributed to the state. To be gender-responsive, public services – including health systems, water and sanitation, early childcare and education – should be universally accessible, available, appropriate and adaptable[5]. This means they should be designed and delivered in consultation with women, recognising they are not a homogenous group and have both distinct needs and face multiple forms of discrimination.

Privatisation can also lead to job losses and potentially worsen the working conditions for public sector workers – the majority of whom are women in sectors such as health and education – as well as fragmentation and low-quality services. The Covid-19 pandemic exposed the disastrous consequences of public health systems that have systematically lacked public investment and the problems with fragmented, exclusionary privatised healthcare, as well as women’s role as the main givers of unpaid care and domestic work. Women undertake over 76 per cent of all unpaid care work globally – with the burden greatest in contexts of poverty, where public services are lacking or inadequate[6][7]. This constrains the time that women have to secure work, engage in education, training, or community decision-making. 

The Association for Women’s Rights in Development (AWID), in their recent report on the shortcomings of gender impact investing for women’s rights, quote the concerns raised by UN Independent Experts in this regard: “vital public goods and services have been steadily outsourced to private companies” and this “has often resulted in inefficiency, corruption, dwindling quality, increasing costs, and subsequent household debt. They further marginalised poorer people and undermine the social value of basic needs like housing and water.” The Independent Experts pointed out that by continually “contracting out public goods and services, governments are paying lip service to their human rights obligations” and “rights holders are transformed into the clients of private companies dedicated to profit maximisation and accountable not to the public, but to shareholders.”[8] Furthermore, extensive evidence[9] show that public-private-partnerships come at “a high cost for the public purse, an excessive level of risk for the public sector and, therefore, a heavy burden for citizens”,[10] taking/ siphoning funds away from already scarcely financed public services.

While unpaid care is mentioned in the Government’s IDS, the centrality of women’s unpaid care work to the economy and the significance of public services to reducing and redistributing care work through public investment appears to be overlooked. BII states a commitment to “Work with key stakeholders, local partners and non-governmental organisations (NGOs) where necessary to unlock the wider enabling environment that would help women’s job quality, such as access to safe transportation, childcare and essential services like water and clean cooking fuel.”[11] However, it fails to make the connection as to how its investments – notably those driving privatisation of key sectors such as health and education - will impact on women and girls in this regard.

Questionable impacts on decent work

BII states a commitment to ensuring its investments create improved access to quality jobs for women. However, less than a third (28%) of the jobs created through BII investments have gone to women. Furthermore, it is not clear how BII is defining ‘quality jobs’ and the specific commitments it refers to in its gender strategy in this regard seem to fall short of the four pillars of decent work as defined by the International Labour Organisation (ILO), which encompass opportunities for work and job creation; protection and promotion of rights at work; access to social protection; and freedom of association and social dialogue, with gender equality as a cross-cutting issue. In particular, BII’s gender strategy makes no mention of supporting the rights of women workers to engage in collective bargaining, which is foundational to the protection and advancements of their rights and to corporate accountability.

It is essential that a requirement to align with the decent work framework applies to all the companies and financial intermediaries in which BII invests, including those operating or investing in digital labour platforms. BII notes that, given the rapid growth of the sector, which is estimated to employ up to 40 million workers in the ‘global south’, “we have a growing focus on platform work. Our activity includes direct investments in digital labour platforms and companies developing and/or using platforms, as well as indirect investments through venture capital (VC) and other funds in our portfolio.”[23] 

It is also important that BII undertakes sound due diligence to ensure BII is not investing in financial intermediaries which have in turn invested in companies linked to rights violations. For instance, as documented by AWID, whilst still known as CDC, the UK’s DFI was one of several such institutions that invested in a company called Phatisa. Phatisa takes a gender lens investing approach that focuses on increasing the rate of female participation in its portfolio companies. However, two of its past and current portfolio companies, Feronia and Golden Lay, have been accused of human rights violations and land grabbing[24]. This also points to the importance of ensuring strong mechanisms for corporate accountability, including mandatory human rights due diligence requirements that are gendered on all companies in which BII invests.

Demands and strategies promoting feminist economic alternatives to advance decent work put forth by feminist groups and trade unions, which the UK Government should prioritise in their strategies to achieve women’s economic rights, include: the redistribution of women’s unpaid care work; full implementation of relevant ILO Conventions and labour standards, including for women working in the informal economy and those working in the care economy; ambitious gender-transformative industrial strategies that foster decent jobs for women; no trade-offs between job creation and job quality, including with respect to trade deals and expansion of global value chains; robust social protection systems; and effective regulation of the corporate sector to end rights violations and ensure accountability.

It is important to note that many countries in the ‘global south’ have vast informal sectors. Women are overrepresented in these sectors; holding the majority of the lowest paid, most insecure, informal and vulnerable jobs[25]. Given this, it is vital that the UK Government considers the informal sector in its economic approach. This means the FCDO should conduct a gender-responsive analysis of the needs in the communities in which it is operating, including the prevalence of informal work, the fiscal policy space of the respective government to enact social protection measures or bolster public services, and the existence of social protection measures, so that UK policy-making addresses the diversified needs of a country’s whole population.

Displacing funding for women and girls’ rights and gender equality

Feminist movements, women’s rights organisations and girl-led groups are recognised as being the most effective agents for securing long lasting transformative change on gender equality, including by leading to policy changes and shifting cultural norms[26]. These feminist movements and organisations are grounded in communities with longstanding and trusting relationships and without them it would be impossible to identify and deliver the life-saving services women and girls need, including in crises. At the same time, these movements and organisations play a vital role in advocating for change. Yet, the leadership of women and girls is consistently undervalued - lacking political and financial support. In the context of a shrinking ODA budget, is it vital that the resources we do have are used as effectively and transparently as possible. In recognising the importance of women and girls’ rights, the former Prime Minister, Liz Truss, promised to reinstate funding previously cut from gender equality programmes. This promise must be kept by the Government.

Centring economies around care and wellbeing

For the UK Government and BII to meet its aims to achieve ‘women’s economic empowerment’ and create ‘inclusive development’, there needs to be a significant shift in economic thinking. ActionAid recommends  a feminist economic alternative approach, which would centre economies around care, ensuring that fiscal, monetary, trade and investment policies prioritise the wellbeing of people and planet. This, of course, would include prioritising the realisation of women and girls’ rights as a goal in itself (as opposed to a means of growing the economy); and understanding the multiple and overlapping ways women and girls engage in the economy. Currently there is a significant lack of policy coherence in the UK’s economic and international development strategies and aims. For instance, UK tax havens result in significant lost revenue for countries in the ‘global south’, the inclusion of Investor-State Dispute Settlements (ISDS) in its trade and investment deals also potentially cost countries millions and arguably lead to ‘policy chill’ in key areas of policy, including on environment, trade deals and corporate accountability.

Recommendations for UK Government

The UK Government, including its development finance institution BII, must ensure that all of its efforts to eradicate poverty are aligned with the realisation of human rights and the achievement of gender equality. To this end, the UK Government should help to create an environment for feminist economic alternatives to flourish by:

-          Ending BII’s investments that support the privatisation of public services including health and education

-          Ensuring that all BII, investments, loans, grants and other arrangements undergo a human rights assessment that is gendered, prior to and periodically throughout the investment, which should include meaningful and accessible consultations with feminist movements, women and girl’s rights organisations, women workers and women from potentially impacted communities. BII must also ensure details of its investments are fully shared and that there are clearly established mechanisms to ensure access to remedy.

-          Ensuring BII’s definition of good ‘quality jobs’ aligns with the ILO pillars of decent work and that development of indicators for this can be independently assessed.

-          Ensuring BII makes a concerted effort to ensure job creation is accessible to the most marginalised women

-          Resourcing feminist movements, women’s rights organisations and girl-led groups as critical long-term leaders and partners in advancing gender equality; providing long-term, flexible funding for their self-determined priorities

-          Centering economies around care, ensuring that fiscal, monetary, trade and investment policies prioritise the wellbeing of people and planet.  This will include dropping GDP and growth as sole measures of progress and developing additional transformative indicators based on well-being, human rights and tackling intersectional inequalities.  It will also require enshrining the right to full and universal access to gender responsive public services (GRPS) and decent work standards.

-          Ensuring that all businesses in the UK undertaking transnational activities carry out mandatory gender-responsive human rights and environmental due diligence and can be held legally accountable for rights violations in their supply chains. The UK should also support and make the case for a binding UN treaty on business and human rights.

-          Using its place in global forums to advocate for an end to loan conditionalities and policy advice that promote austerity, funding cuts and greater liberalization of vital public services and social protection, and instead avoid limiting fiscal space for states to build up and sustain robust public health and wider public services systems that will ensure global commitments to gender equality, women’s rights and wider development are met.

-          Tackling tax abuse and corruption and ensuring that the UK’s fiscal policies and arrangements do not impede on other governments abilities to raise domestic revenue.

-          Effectively implementing ILO Convention 190 on Violence and Harassment in the world of work and encouraging other governments to ratify the convention.

-          Developing a pro-women, pro-human-rights trade policy which puts sustainability and respect for human rights as a primary objective, and which references international obligations on human rights, gender, the climate and sustainable development. 

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