Cross-Government Prosperity Fund: further information
Updated 17 March 2020
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1. The Fund
The Fund was announced as part of the 2015 Strategic Defence and Security Review. It supports the United Nations Sustainable Development Goals (SDGs) as well as the 2015 UK Aid Strategy by promoting growth and prosperity in developing countries.
Many of the developing middle-income countries on which the Fund focuses still face considerable challenges such as rapid urbanisation, climate change and high and persistent inequality (including gender inequality) which can lower long-term growth prospects. The Prosperity Fund supports the broad-based and inclusive growth needed for poverty reduction.
The Fund works to achieve its primary purpose. It does this through improving the global business environment, strengthening institutions, and encouraging greater global private investment. The Fund is particularly relevant to SDG 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all. They are also highly relevant to the delivery of many other SDGs, to see a breakdown of which SDGs programmes work towards see the 2018 to 2019 Annual Report.
As well as contributing to inclusive growth in recipient countries, we expect the reforms brought about by the programmes to create opportunities for international business including UK companies. At the direction of ministers throughout 2016, 2017 and 2018, UK government departments have developed 27 multi-year programmes in sectors and countries with potentially high impact.
2. Why global prosperity matters to the UK
Inclusive economic growth is the only way to sustainably lift countries out of poverty; there has been much progress over the last 25 years to end poverty, yet 10% of the world’s population of 7.3 billion still survive on less than $1.90 a day World Bank The UK Aid Strategy (2015) sets out how promoting growth and prosperity in developing countries not only contributes to poverty reduction, but also strengthens economic opportunities for the rest of the world, including the UK. The Strategic Defence and Security Review 2015 also recognises that enabling and stabilising fast-growing, open and resilient economies is essential to our national security. Helping develop more transparent and predictable trade and investment in countries such as India and China also helps bring stability to the economies of their less developed neighbours.
The countries in which the Fund operates present huge untapped potential; opportunities for sharing expertise, creating mutually beneficial partnerships and for businesses and trade to thrive. They also contribute to vital economic development beyond their borders and are key markets for global goods and services. By breaking down barriers to growth, and supporting vital economic development and reform, the UK is helping countries build well regulated, competitive markets, and making our new trading partners of the future. Helping develop more transparent and predictable trade and investment in countries such as India and China also helps bring stability to the economies of their less developed neighbours.
For more on how the Fund and its programmes fits with these priorities, see the transparency page and programme page.
3. Assessment processes and ensuring Value for Money
Programmes under the Fund were allocated following a rigorous and highly competitive process and are approved and closely scrutinised by government departments in order to ensure they deliver impact and value for money.
All proposed programmes and projects are assessed against seven headline criteria:
3.1 Impact
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primary purpose - how the programme supports the economic development and welfare of developing countries (ODA projects only)
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Secondary Benefit - how it creates opportunities for business, including UK business
3.2 Strategic fit
- Strategic intent - does it meet the needs and priorities of the partner country and the steer from the NSC, align with the Fund’s vision and Theory of Change (see the 2018 to 2019 Annual Report)
- Thematic/sector focus - activities should ensure it meets the needs and priorities of the partner country
3.3 Value for money
- Additionality - ensure programmes add value over and above existing efforts
- Sustainability - impact should be sustainable, across environmental, self-financing and inclusive considerations
- Delivery - set out how programmes will achieve value for money through possible delivery mechanisms
Value for money is considered throughout the programme cycle with rigorous contracting processes, regular assessment through annual reviews and Fund level monitoring and evaluation.
4. How we measure impact
The Fund has developed a ‘Theory of Change’ (see the 2018 to 2019 Annual Report) to identify the key drivers of poverty reduction and ways in which the Prosperity Fund can help to address these. Five types of intervention have been identified:
- investment in infrastructure and human capital
- innovation and knowledge transfer, including low-carbon technology
- trade, financial and economic reform
- policy and regulatory capacity
- ease of doing business
The Theory of Change explains the journey from near-term inputs through to long-term poverty reduction. In-depth evaluations will review how programme activities have fed directly into intermediate outcomes. Beyond intermediate outcomes, economic theory will demonstrate that the Fund contributes positively to the UN Sustainable Development Goals (SDGs). At impact level the Fund is particularly focused on SDG 8: promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all, but supports others, including SDG 5: achieve gender equality and empower all women and girls.
The Theory of Change is reviewed periodically. For the current update please see the 2018 to 2019 Annual Report
5. Gender and Inclusion
The UK Aid Strategy commits that throughout all its development spending the government will continue to prioritise the needs of girls and women and the most excluded people. A strong focus on gender and inclusion is essential for achieving the Prosperity Fund’s primary purpose of delivering inclusive growth and poverty reduction. Gender equality and women’s economic empowerment are key drivers of inclusive growth. It is estimated that $12 trillion could be added to the world economy by 2025 through greater female economic empowerment.
Prosperity Fund programmes tackle barriers to prosperity for women and excluded groups, taking opportunities for addressing gender and other inequalities by:
- ensuring compliance with the International Development (Gender Equality) Act: programmes must consider gender issues in their interventions. As a minimum, they must not exacerbate gender inequality, and are required to report annually on their performance
- identifying poor and excluded groups, such as rural women, youth, people with disabilities, and aspiring to be ambitious by promoting empowerment (building assets, capabilities and opportunities) and transformation (addressing systemic barriers to economic empowerment)
6. Climate Change
Climate change is an existential, urgent and crosscutting development challenge. It poses a substantial risk that development gains, including those supported by UK aid spending, could be reversed with potentially devastating consequences.
The Prosperity Fund’s goal is to support inclusive growth that is sustainable and equitable and Climate Change represents a key risk. Environmental considerations including low carbon sustainability and climate resilience formed part of programmes’ assessment and design. Many programmes specifically seek to promote increased resilience to, or mitigation of, climate change as part of sustainable economic development.
For more information on the programmes that report climate change objectives, see the 2018-2019 Annual Report.
7. The Fund’s governance and accountability
The cross-government Fund is accountable to the National Security Council (NSC) and overseen by a Cabinet Office Minister at portfolio level. The cross-government Portfolio Board helps set the strategic direction and manages the overall Fund portfolio to ensure the Fund meets NSC objectives. The Fund’s Senior Responsible Owner is John Mahon (Director General, Exports for the Department for International Trade). The Fund answers to Parliament through the Paymaster General, Minister for the Cabinet Office.
Responsibility for delivering programmes and impact lies with individual HMG Departments. They are also accountable for ensuring that spending meets the legal requirements of the International Development Act, the International Development (Gender Equality) Act 2014 and Official Development Assistance (ODA) eligibility requirements. Departments are accountable to the cross-government Portfolio Board for delivery and impact against NSC priorities when delivering Prosperity Fund programmes.
8. Prosperity Fund non-ODA spend
The Prosperity Fund includes a component of non-ODA (Official Development Assistance) funding worth £33 million from 2016 to 2020. Ministers have agreed that the Fund’s non-ODA spend should be used alongside Prosperity Fund ODA programmes and in support of the government’s post-Brexit trade policy ambition. Ministers have also agreed that any activity must be strategic and impactful, provide value for money, and complement the Department for International Trade’s work and wider government policies.