Brexit- unintended consequesences for international development

Over a month ago now, Britain voted to leave the European Union and the unintended consequences  are gradually becoming apparent

We now have a new government in place whose biggest challenge is to follow through the will of the people by taking the country out of the EU , whilst the Labour Party, the main opposition political party in the UK is tearing itself apart as it seeks to replace its leader.

The impact of the vote to leave the EU on the economy is still unraveling and it has been reported that some amongst those who voted to leave will be impacted the most.

This is because such voters used the vote to protest against globalisation, specifically the fact that globalisation is not working for for them. As far as such voters are concerned globalisation has had negative outcomes for their  communities in the form of increased immigration, reduced wages, loss of jobs etc.

The vote to leave has had unintended consequences for those of us involved in poverty alleviation with implications for the livelihoods of the communities in which we work;

 The value of the pound

According to this report from the Overseas Development Institute  (ODI) the pound suffered a 10% devaluation post BREXIT with unintended consequences for projects budgets that had been set and agreed before the vote.

Let Them Help Themselves operates in Uganda and when we set our operational budget for 2016, the British pound was worth 4890 Ugandan shillings (UGX).

Post BREXIT the pound is currently worth 4326 UGX meaning a loss of 11.53% per pound.  This is a huge loss and has implications as to whether we can see a project through or not.

In one example, we applied for a grant November with a view to rolling out a poultry program for 31 women in Itojo Sub-county. That grant was eventually awarded at the end of June. Due to the devaluation of the pound, the budget we submitted in our proposal is no longer enough. We have lost a quarter of the value of the grant

As this is a program we have previously run, we now know that without further funds, we have to reduce the number of participants.

The devaluation of the pound has implications for remittances too. This is the money that Africans in the Diaspora send home to support day-to-day needs of those family members that stayed behind.

The value of those remittances is greater than Official Development Aid (ODA) and in the absence of social security protections, remittances provide a lifeline to millions of families in Africa.

International cooperation on Development

In my opinion, Britain is a leading authority on international development within the European Union (EU) and has been instrumental in the socialising  of good practice with respect to the EU’s Development Policy.

I am however concerned as to whether Britain will continue to influence the EU’s development policy whilst outside of the EU. This matters because the enlargement of the EU into Central and Eastern Europe brought with it countries that had no experience of Africa or development cooperation.

This situation has been compounded by the choice of Priti Patel as the new Secretary of State for International Development in the new government.

Priti Patel was one of the leading politicians to advocate for Britain to leave the EU and advocated for the scrapping  of the Department of International Development (DIFD). She is now calling Britain’s aid budget should be used to leverage trade deals with Third countries

Whilst I do not believe that aid should be simply handed out, if what Mrs Patel is proposing is implemented will not not produce the best outcomes for the poor.  In my opinion, this amounts to tying aid, a practice that Britain has fought to end.

With Britain out of the way, Central and Eastern European countries who have always advocated for tying aid to trade may well push for such  a change.

If you are involved in community development or poverty alleviation work please share your experience

 

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