by John Brian Shannon | October 27, 2016
The World Bank, the International Monetary Fund, the Kuwait Fund, the African Development Bank Group, the Grameen Bank, and more recently, the Asian Infrastructure Investment Bank are all highly respected development banking institutions — but not one of them are dedicated to the improvement and well-being of the nation states that make up The Commonwealth of Nations.
And that’s a shame. The Commonwealth of Nations spans the globe, it encompasses nation states with tiny populations measured in thousands, to India with 2.2 billion citizens (consumers) by 2025, and nations that range from the 5th-largest economy in the world (Britain) to the tiniest economies in the world — and everything in between. Huge resource wealth, almost boundless agricultural opportunity, ocean access, tourism, and many other benefits await for development banks, corporate financial institutions, and private investors.
Wealthy Commonwealth nations can find much to like about investing in other nations that lie within the Commonwealth organization, in resources, in agriculture, in reasonable labour costs, in tourism, and more.
Such an institution could pool funds, create a bank, get some immediate projects rolling, and quickly generate some bank profits — profits that will simply be re-invested in the next project somewhere within the Commonwealth.
For a relatively small investment relative to the total Commonwealth GDP, come outsized gains in involvement by other members of that organization, a greater level of economic success among and between member nations, and much gain to offer banks, infrastructure construction companies and their supplier corporations.
Each development loan between Commonwealth nations further strengthens the Commonwealth and thereby, all of the nations in the group are strengthened.
If ever there were a textbook case upon which to base a successful development bank, The Commonwealth nations are it.
Whether in the energy sector, agriculture, tourism, and in other segments of the developing economy, having a Commonwealth-only development bank distinctly geared towards financing and providing design and engineering expertise will benefit investor nations, commercial banks, and private investors — and provide a double benefit for those developing nations growing their economies while trying to provide better services for citizens.
How can Britain Afford This?
Britain is one of the most generous donor nations in the world, paying out some .71% of GDP in foreign aid annually. Few countries surpass this (Norway pays out 1% of GDP to foreign aid) but most fall well-short of Britain’s foreign aid commitment.
Canada, for instance pays .20% of GDP (and its total GDP is much smaller than the UK) and EU foreign aid spending averages .45% of GDP.
Instead of directing .71% of it’s GDP to non-Commonwealth nations, Britain should continue to pay .71% of GDP towards development aid, but spend it within the Commonwealth bloc exclusively.
In that way, billions of pounds sterling can immediately begin to strengthen Commonwealth economies, with two-way trade becoming dramatically enhanced between Britain and member nations.
Building a new hydro-electric dam, a major bridge, or a superhighway system in a Commonwealth nation?
Please source as much steel, hardware, and expertise, etc. as you can from the UK. And for developing nations without major construction firms large enough to take on megaprojects, please allow British firms to bid on your construction project.
Seems reasonable, doesn’t it?
By redirecting all of Britain’s foreign aid to Commonwealth of Nations countries exclusively, the UK will strengthen ties between Britain and all of those nations.
It will also serve to increase GDP of those nations, while British construction firms and their infrastructure hardware suppliers would get a welcome boost. As GDP growth leaps forward in member nations, demand for goods, skilled labour, and interim project financing from Britain will increase at a linear pace.
For developing nations within the Commonwealth, it’s the fast-track to developed nation status, higher GDP growth, better and sooner services for citizens, and (typically) a more stable economic and political situation.
And that’s better for everyone in this world, Commonwealth citizen, or not.