Britain's aid watchdog has raised concerns over the UK's decision to cut funding by two thirds for its water and hygiene initiatives in deprived nations.
It comes as the UK has been at the forefront of championing the washing of hands to combat the spread of Covid-19.
In an assessment of the UK’s water, sanitation and hygiene (WASH) programme, the Independent Commission for Aid Impact (ICAI) has raised concerns over the initiative's budget being cut from £206.5m to an estimated £70 million in 2021.
The ICAI says the "full effects of these reductions on programming are still emerging”.
This reduction in expenditure pre-dates the Covid-19 pandemic and has continued as a result of reductions in the UK aid budget in 2020 and 2021.
“Despite the UK moving quickly to support a global drive on hand hygiene early in the Covid-19 pandemic, and continuing to view this as central in the response, overall, UK bilateral aid for WASH has continued to fall," ICAI Lead Commissioner Dr Tamsyn Barton, who oversaw the report, said.
"It is not yet clear if the Foreign Commonwealth Development Office’s (FCDO) renewed focus on women and girls will lead to increased WASH programming.
“After a steep decline in UK bilateral aid for WASH since 2018, new programmes are in preparation, but the UK’s level of commitment to the sector remains to be seen."
The ICAI says the programmes are imperative for girls and women across the world, who are disproportionately impacted by inadequate WASH access.
"Given the UK government has committed to making women and girls central to its approach to international development, it is significant that the UK’s approach to WASH, announced in 2018, recognised the role that WASH can play in supporting gender equity, reducing violence against women and girls and improving health outcomes for women and children," it said.
The ICAI says the UK's target, under its Sustainable Development Goal (SDG), to ensure availability and sustainable management of water and sanitation for all by 2030 is falling far short from being met.
"So far, progress is lagging well behind these ambitions," the report says.
"Recent assessments suggest that the rate of progress needs to increase fourfold if the 2030 targets are to be met, and even more in fragile and conflict-affected states.
As well as the financing gap, the SDG is threatened by unsustainable water usage, pollution of water sources and the accelerating impacts of climate change, with more frequent and more severe droughts and flooding undermining sustainable WASH services."
Since 2011 the UK has provided more than 125m people with access to clean water, basic sanitation and hygiene promotion through its programmes.
It has developed programmes in a number of countries, including the Democratic Republic of Congo, Ethiopia, Malawi, Mozambique, Nigeria, Tanzania, Zambia and Zimbabwe.
"The UK’s WASH research portfolio has been curtailed by the pandemic and UK aid budget reductions, and some research programmes have seen substantial budget reductions," the report says.
"Across the WASH portfolio, many programmes were affected: some faced budget reductions or delays, while others were brought to an early end. The pipeline of new programmes was also frozen.
"There were reductions and cancellations of grants to non-governmental organisations through central funds, as well as cutbacks to WASH-related research programmes. According to implementing partners consulted for this note, the challenge was not just the loss of funds, but the short notice.
"Some of the stakeholders we interviewed were concerned that the UK’s traditional strengths in the area may have been eroded."
In April 2020, the World Bank advised that investing in water, sanitation and hygiene was “one of the most cost-effective strategies for increasing pandemic preparedness, especially in resource constrained settings”.
"Early in the Covid-19 pandemic, hand hygiene was identified by global health experts as a first line of defence against the virus, and that the UK moved quickly to support a global drive on hand hygiene," it said.
"The UK also contributed to the formation of the Hygiene and Behaviour Change Coalition, which succeeded in reaching 1.2 billion people with its Covid-19 and hygiene messaging in the first year."
During the evidence gathering for its report, the ICAI was told by FCDO that new WASH programmes are in preparation under its current three-year spending review.
However, the ICAI said the UK now needs to further scrutinise a number of areas surrounding the programme, including the "adequacy" of its investment and whether WASH objectives integrated into other programmes will be given priority.
In 2020, the UK government announced it would cut spending on foreign aid from 0.7 per cent of gross national income to 0.5 per cent because of pressure caused by the coronavirus pandemic.
Last month, the National Audit Office, in its review of the decision, said the move “disproportionately affected” bilateral programmes.
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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The Al Ghaf tree is a local desert tree which bears the harsh summers with drought and high temperatures. From the rich flowers, bees that pollinate this tree can produce delicious red colour honey in June and July each year
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Will the pound fall to parity with the dollar?
The idea of pound parity now seems less far-fetched as the risk grows that Britain may split away from the European Union without a deal.
Rupert Harrison, a fund manager at BlackRock, sees the risk of it falling to trade level with the dollar on a no-deal Brexit. The view echoes Morgan Stanley’s recent forecast that the currency can plunge toward $1 (Dh3.67) on such an outcome. That isn’t the majority view yet – a Bloomberg survey this month estimated the pound will slide to $1.10 should the UK exit the bloc without an agreement.
New Prime Minister Boris Johnson has repeatedly said that Britain will leave the EU on the October 31 deadline with or without an agreement, fuelling concern the nation is headed for a disorderly departure and fanning pessimism toward the pound. Sterling has fallen more than 7 per cent in the past three months, the worst performance among major developed-market currencies.
“The pound is at a much lower level now but I still think a no-deal exit would lead to significant volatility and we could be testing parity on a really bad outcome,” said Mr Harrison, who manages more than $10 billion in assets at BlackRock. “We will see this game of chicken continue through August and that’s likely negative for sterling,” he said about the deadlocked Brexit talks.
The pound fell 0.8 per cent to $1.2033 on Friday, its weakest closing level since the 1980s, after a report on the second quarter showed the UK economy shrank for the first time in six years. The data means it is likely the Bank of England will cut interest rates, according to Mizuho Bank.
The BOE said in November that the currency could fall even below $1 in an analysis on possible worst-case Brexit scenarios. Options-based calculations showed around a 6.4 per cent chance of pound-dollar parity in the next one year, markedly higher than 0.2 per cent in early March when prospects of a no-deal outcome were seemingly off the table.
Bloomberg
