On Thursday 18 April the Independent Commission for Aid Impact (ICAI) has released its follow-up review on UK aid to India. ICAI’s review raises questions over some investments made by the UK’s development finance institution British International Investment (BII), including in social media sites and a cosmetics company.
UK aid: financing a cosmetics company in India
As the Canary previously reported, BII was originally set up in 1948. Now, as the IDC report said:
BII invests capital in businesses either directly (by investing equity or providing loans and other debt finance) or indirectly (by investing through financial intermediaries such as private equity funds, banks or micro-financing entities).
That is, it invests in the private sectors of other countries. Predictably, BII gets much of its funding from foreign ODA – with the FCDO ploughing hundreds of millions into it every year.
However, the IDC found all was not well. It noted that BII:
- Holds fossil fuel investments.
- Has investments via an intermediary in an education company which is alleged to have violated workers’ rights, with staff were accused of child sexual abuse, and had a child die on its watch.
- Has 28% of its entire investment portfolio concentrated in India – which is classed as a middle-income country, not a poor one.
- Does not have control over where its investments go, including putting money into a food and beverage outlets and a cosmetic surgery centre.
Overall, the IDC report found that BII’s investments sometimes conflict with the Paris Climate Change Agreement and the UK’s Sustainable Development Goals (SDGs).
UK aid not serving its purpose
The report comes after BII pledged in 2023 to the International Development Committee that it would improve its investments’ links to poverty reduction.
The watchdog found recent taxpayer-UK aid funding from BII going to an Indian fund that invested in social media platforms and dating apps – as well as the cosmetics company.
In reaction to the review, Gideon Rabinowitz, director of policy and advocacy at Bond, the UK network for NGOs, said:
It is concerning that BII, which has received over £4 billion from the UK aid budget in recent years, thinks women’s economic empowerment and poverty reduction can be achieved by spending a huge amount of UK aid on questionable cosmetics, dating apps and social media businesses.
The UK government needs to hold BII to account and ensure that British taxpayers’ money is invested in local businesses that support local development and prioritise the needs of local communities, both in India and other countries where BII operates.
Featured image via the Canary
By The Canary
This post was originally published on Canary.
