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House of Commons

Wednesday 6 March 2002

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]


London Development Agency Bill (By Order)

Order for Second Reading read.

To be read a Second time on 13 March 2002.

Oral Answers to Questions


The Secretary of State was asked—

Micro-credit Agencies

1. Paddy Tipping (Sherwood): What support her Department gives to micro-credit agencies in south-east Asia. [37315]

The Parliamentary Under-Secretary of State for International Development (Hilary Benn): Micro- finance services play an important role in enabling families to earn a living and reduce their vulnerability to poverty. In south-east Asia, working through the Women's World Banking programme and the Consultative Group to Assist the Poorest, we are supporting micro-credit programmes in the Philippines, Cambodia, Laos, Indonesia and Thailand. We are also directly funding a project in Vietnam working with a number of non-governmental organisations.

Paddy Tipping: I am grateful for that reply. Will my hon. Friend confirm the importance of micro-credit agencies in helping to create sustainable infrastructure, especially when resources are focused on women and the poorest members of the community?

Hilary Benn: My hon. Friend is entirely right. Micro-finance is all about spreading the risk and helping people to earn income from a variety of activities. The average loan is very small—the smallest is about $30, the largest about $300—and between 70 and 80 per cent. of users of micro-finance are women, so it plays an additional role in improving their position in society.

Mrs. Caroline Spelman (Meriden): I agree with the Minister that micro-credit agencies are an excellent way in which to spur economic development in poor countries. There is no doubt that Afghanistan is one Asian country in dire need of economic development. Given that that country is faced with starvation, does he share my

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exasperation at reports of poppy growing increasing again and our apparent impotence in the face of that problem? What ideas other than micro-credit to get farmers to diversify production has the Department come up with to tackle that pernicious trade?

Hilary Benn: The hon. Lady is right to draw attention to the problem of the recurrence of poppy growing in Afghanistan. The whole House knows that the ultimate solution to that problem is to enable farmers for whom that is a source of income—for some, the only source—to find an alternative livelihood. Micro-finance and other methods of support offer ways in the long term to enable farmers to depart that trade and earn a living, as the whole House wants.


2. Mr. David Chaytor (Bury, North): What plans she has to assist poverty reduction programmes in Cameroon. [37316]

The Secretary of State for International Development (Clare Short): In Cameroon our development efforts are focused on the forestry sector, which is crucial to Cameroon's overall economy and the livelihoods of a majority of poor people. We have worked in this sector for a considerable period and hope to provide support for a long-term forestry and environmental programme that is part of a strong poverty reduction strategy. That will require a greater effort by the Government to combat corruption.

Mr. Chaytor: I thank my right hon. Friend for that reply, but is it not the case that 40 per cent. of Cameroon's population live below the poverty line and 29 per cent. are malnourished; and only 1 per cent. of gross domestic product is spent on health care, whereas 6 per cent. of GDP is spent on debt repayment? Will she argue the case for greater help from the international community for debt relief for Cameroon at the Monterrey conference later this month?

Clare Short: Cameroon has been grossly misgoverned. Although there has been a lot of improvement recently, there was terrible corruption and misuse of own resources resulting in extremely poor health and education programmes for poor people. Such is the history of the country. Recent improvements include a better election, better management of the economy and better economic growth.

Cameroon has qualified for considerable debt relief. I do not understand why those who lead the campaign for debt relief for heavily indebted poor countries do not celebrate the fact that 25 countries have now qualified and more than $50 billion of debt has been written off. That is a considerable achievement which in all the countries involved has leveraged much better economic management and social expenditure. That is what is happening in Cameroon. Things are improving, but there is a long way to go.

Mr. John Baron (Billericay): Given that Poland receives twice as much aid from the European Union overseas aid package as Latin America and Asia combined, and that the top 10 beneficiaries are all countries that border the EU, I put it to the Secretary of

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State that the Government could do far more to support the poor people of Cameroon by stopping the EU playing petty politics with the poor of the world, and by redirecting the £800 million a year we send to the EU to those countries that really need it, such as Cameroon.

Clare Short: The hon. Gentleman is absolutely right. European Community total aid spending keeps turning further and further away from prioritising the poor: 70 per cent. went to the poorest countries a few years ago; that fell to 50 per cent., and it will be 38 per cent. this year. That is a disgrace and an outrage. That failure was not attended to in the past, before 1997. I have made it an absolute priority to expose how bad the position is and to secure a commitment to a reform agenda that is rolling through the EC, but we need stronger support from Foreign Ministers who like to use aid money for immediate political priorities, which is not the best use of the money. It should be invested in creating systems of government that improve countries' economies and provide services to their people. The hon. Gentleman is right: we still have a considerable problem.

Ms Julia Drown (South Swindon): May I say that I think that there is agreement between my right hon. Friend and people campaigning for more debt relief? There is a celebration of everything that this and other Governments have achieved but, like her, those people believe that more has to be done.

On Cameroon, does my right hon. Friend agree that in the time between decision point and completion point for heavily indebted poor countries there are particular problems which even the International Monetary Fund and World Bank have recognised? Changes in commodity prices mean that the help that Cameroon was to get has been reduced. At Monterrey will she push for flexibility to be built in for HIPC so that countries such as Cameroon benefit more and real poverty can be addressed?

Clare Short: I certainly agree that the continuing fall in commodity prices is a serious problem for many heavily indebted poor countries, as was the rise in oil prices, although they are now going down. Long before Monterrey, we agreed at previous World Bank and IMF meetings that when countries complete their reform process and get their debts written off, we need to re-examine the formula for debt sustainability. If they have had a problem with falling commodity prices, they will need extra help to exit from their debt burden.

Many people are saying that debt relief has failed, but it has not. The next tranche of countries that need assistance are largely in conflict—Sudan, Burma and the Democratic Republic of the Congo. The capacity to deliver that relief might help to incentivise the making of peace. We must drive on with that, not start calling for debt relief for middle-income countries that do not need it.


3. Mr. Stephen O'Brien (Eddisbury): If she will make a statement on the steps her Department is taking to help reduce poverty in Tanzania. [37317]

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The Secretary of State for International Development (Clare Short): The UK is one of the major development partners of Tanzania, which has made significant advances in recent years. For example, the Tanzanian economy is growing at 5 per cent. annually and primary school enrolment is set to double this year.

Mr. O'Brien: I join the Secretary of State in celebrating the qualification of a number of countries to the HIPC community. I think that the right hon. Lady would agree with me that Tanzania is one of the best examples of good governance and a commitment to democratic institutions, thus justifying our aid and trade incentives and debt relief to help health and education programmes. If we look nearby in Africa at the appalling example of Zimbabwe, how can we justify continuing to give aid to countries ruled by tyrants and dictators? The aid does not get to the people through their health and education programmes and is given at the cost of being able to continue to support countries such as Tanzania which have done what is required to justify that aid.

Clare Short: I am afraid that the hon. Gentleman has not been concentrating; Tanzania is making considerable progress but has had problems of governance and democracy in Zanzibar. As well as its serious corruption problems, its public financial management systems need strengthening, and we are trying to help in that regard. It is moving forward, but I do not agree that it is an example of perfect governance—it is an example of progress where more needs to be done.

Zimbabwe is, of course, a total tragedy for all its people, with negative economic growth and terrible brutality in attempts to distort the election outcome. We have modified the way in which we provide aid to make sure that nothing is provided to the Government—we give help to the people of Zimbabwe. There is hunger in that agriculturally rich country and through the World Food Programme and other organisations we are helping to provide food aid to stop people going hungry.

Zimbabwe also has a terribly high HIV/AIDS infection rate, affecting one in three adults. Zimbabwe's Government have not taken action, but we have a fairly big HIV/AIDS programme operating there. I do not think that the people of Zimbabwe should be sentenced to infection by HIV/AIDS because of their Government's neglect, or that the international community should do nothing.

Mr. Andy Reed (Loughborough): I am sure that my right hon. Friend is aware that in Uganda, for example, the programmes referred to by the hon. Member for Eddisbury (Mr. O'Brien) are in place and there is a direct link between debt relief and improving primary education. In meeting those millennium goals, is it possible to tie together more closely future debt relief programmes so that they link directly to the appalling state of public services such as health and education? We are leading by example, so will my right hon. Friend play a key role in ensuring that world partners meet the fantastic goals that we have managed to achieve? What steps can she take to encourage them to match our targets and bring their targets up to the same speed?

Clare Short: My hon. Friend is right. Uganda set up a fund for its debt relief to make sure that it was spent on

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the poor. We have done better than that in the enhanced HIPC initiative. In order to qualify for debt relief, it is now an absolute requirement on every country that it puts in place a poverty reduction strategy on which it consults all its people. That will combine the management of the macro-economy to make the economy grow and reduce poverty, and all the country's aid revenues and debt relief spent on bringing proper public services to the poor. The debt relief is thus leveraging massively better economic management and public sector programmes to help the poor, and doing that extremely well.

It is true that the UK's programme is focused on helping countries to meet the international development goals. The Scandinavian countries are with us in that. We could increase by 50 per cent. the value of the $50 billion of aid that there is in the international system if everyone would focus it on the poor and back reformers. There is a lot to do.

Dr. Vincent Cable (Twickenham): Does the Secretary of State feel vindicated by the World Bank report on the air traffic control project in Tanzania, as that report suggests that she was right and her Cabinet colleagues were wrong, and suggests that the project was poor value for money and bad for Tanzania's development? Will she now try to re-open that issue in order to get the contract cancelled?

Clare Short: The UK Government decided not to refuse a licence for the British Aerospace air traffic control system on the grounds that buying it would affect the sustainable development of Tanzania. There was a difference of view within the Government about that, but that is not the end of the matter. Before that, the Tanzanian Government had given a written undertaking to the World Bank board to review the contract in the light of an International Civil Aviation Organisation report which stated that the technology was extremely expensive and old, and that Tanzania does not have any military aircraft and could get a much cheaper modern civilian air traffic control system. The Government of Tanzania are still committed to that review, so the fact that the UK has issued a licence does not mean that Tanzania will necessarily buy the system. The contract is at present frozen and Tanzania must honour its commitment to the World Bank board. That was a condition of it completing its debt relief programme.

Mr. Piara S. Khabra (Ealing, Southall): Will my right hon. Friend tell the House what contact she has had with EU member states in order to tackle world poverty?

Clare Short: I have frequent contact with EU member states about how we might better tackle world poverty. We have discussed how we might combine to improve the use of EC aid resources. Of course, the EU took a leading position at Doha on improving trading rights for developing countries. All of that is important. The money that we put through the Commission and the member states in development aid is 60 per cent. of worldwide overseas development aid, and the EU is the biggest market destination for the exports of developing countries.

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By doing better, the EU could transform the prospects of developing countries. We are making progress but there is a lot left to do.

Mrs. Caroline Spelman (Meriden): It was brave of the Secretary of State to say publicly that if it were up to her, she would not have issued a licence for the sale of the air defence system to Tanzania. Does she agree that such a dispute at the heart of Government will discourage further private investment in places such as Africa? Does she also agree that it has undermined the credibility of the Government's policy of relieving debt in order to refocus those resources on health and education?

Clare Short: One person's bravery is another person's recklessness, but I am grateful for the hon. Lady's comments. Disputes at the heart of Government are entirely healthy. Ministers holding different views and arguing them out is what Cabinet Government is all about, and long may it continue.

I took a certain view on whether the licence should have been issued, but the hon. Lady might want to note that the power to refuse a licence because an arms contract might affect the sustainable development of a poor country was not in place under the Government whom she supported. It is a new provision introduced by our Government. I took the view that I did; Tanzania will make its decision in its own interests, but I do not believe that that argument in our Government undermines the prospects of investment in Africa.

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