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.
Hydro-electric dams in developing nations are highly valued by government, corporations, and citizens alike — and represent low risk and steady income for development banks and private investors. Image courtesy of pluginindia.com
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?
Summary
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.
Letter to Britain 
Those are extremely interesting statistics. Although Britain is/was 6th wealthiest countries it is very small and overcrowded. It is much better that we spend money on helping people in their own countries rather than just saying “come on over” (I am not talking about refugees but Commonwealth Citizens). However there has become a great divide in Britain between the haves and have nots – it is normally (and obviously) the ‘have nots’ who are complaining about the amount of foreign aid instead of trying to get a fairer deal sorted out within the UK.
Hi Southamptonoldlady,
Thank you for your comment!
I double-checked my assertion that the UK is the 5th largest economy in the world (by nominal GDP) and found that the International Monetary Fund, the World Bank, and the United Nations — all agree with me.
Here is a useful link which shows the nominal GDP of all nations, and it has links to the relevant sources: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)
I agree with you that the total land available in Britain is small in comparison to its large-ish population, but note that the land could be better utilized — perhaps by one whole order of magnitude, or more. The density of some nations is many times that of Britain, and yet, their societies work just fine.
I strongly agree with you that it is better to assist people while they are still in their own countries (the present EU/Iraq/Syria moment is testament to that) and developed Commonwealth nations should be spending their foreign aid on developing Commonwealth nations, first — before there is any thought about spending foreign aid in non-Commonwealth countries.
This is exactly the point that I made in my blog post. Britain should no longer spend their very generous foreign aid in non-Commonwealth nations. Britain should spend all of their foreign aid (howevermany pounds sterling that totals, in any given year) in Commonwealth nations, only.
In my post, I suggest that Britain continue to pay the very generous .71% of GDP as foreign aid, but to spend it only in Commonwealth nations.
This would have the net effect of boosting British exports to those Commonwealth countries, forestalling refugee claims to Britain from developing Commonwealth countries, and slowing or stopping economic migrants attempting to emigrate to Britain and leaving their developing Commonwealth nation.
If Britain is going to spend .71% of its GDP on foreign aid anyway, why not spend it in the way that does the most amount of good and causes the least amount of harm, for Britain?
The present system of helping non-Commonwealth nations, while allowing the developing Commonwealth nations to regress, is completely backward, and lacks foresight and vision, IMHO.
Regarding your excellent comment and analysis on “the great divide between the haves and have nots” — It is the lack of proper UK government policy that has allowed this to occur over the past 3 decades. Both political parties are to blame for this sorry state of affairs.
However, ‘Blame’ is a false god. It only serves to focus energy on the problem, instead of the solutions.
Even if all foreign aid was stopped, the .71% of GDP would not make any difference in regards to solving the ‘have’s/have not’s’ problem. The scale of the ‘have’s/have-not’s’ problem is much bigger than .71% of GDP.
A wholescale change needs to occur in Britain, in regards to the ‘have’s/have not’s’ and suspending all foreign aid won’t cut it. (As you probably know)
A simple and effective 1% Tobin Tax (a tax on every financial transaction) would cure ALL of Britain’s economic woes — as long as the government doesn’t then embark on completely lunatic spending programmes, over and above cutting the deficit to zero, adding 350 million pounds sterling to NHS, and topping-up welfare payments to 1088 pounds sterling (a standard measure) per month.
Spending Tobin Tax money on national infrastructure programmes, and by employing the suggestions that I’ve made above, would allow the bottom-two quintiles to move upwards by one quintile, from where they are now.
By doing so, the bottom-three quintiles will pay more income tax (because they’ll be making more money) which is better for government revenues, they will have much more disposable income which is much better for the overall economy, and their own health situation will improve (as poor people tend to have poorer health) which will save NHS billions of pounds annually.
In a previous post, I also outlined my plan to institute a ‘One Free College Degree via a One Year (their gap year) Compulsory Military Service’ (at the ‘cadet’ level) plan. It would be an optional plan, for those unable to afford a college-level degree.
An educated society is a better, healthier, and more economically sound society.
If the government would institute all of these suggestions;
Britain would be;
1. Deficit-free
2. The government would be running a surplus instead of a 7% deficit
3. Tax revenues would rise sufficiently to pay for all national infrastructure programmes
4. The NHS would get an additional 350 million per year AND see falling healthcare costs
5. The bottom-two quintiles would make massive progress, be healthier, cost society less, and have happier lives
6. Britain’s citizens would be better educated.
That’s how you Build a Better Britain!
Always lovely to talk with you!
Thank you again, for posting your comment on Letter to Britain. — JBS
Thanks for taking the time to write back such an informative piece and for the interesting link. If you ever stand in government I would vote for you!
I pretty much agree with your assertions. America’s focus on aiding countries that would do us harm seems to me to have backfired and caused the opposite results. That is why I am also an advocate of supporting only mostly our friends with trade deals. The world banks are not in that class.
Thank you for your comments, Randyjw.
I agree that the Anglo countries (the U.S.A., Canada, Australia, New Zealand, the UK and Ireland) all have much to offer each other, and should work together much more closely.
Great to get your thoughts on this!
Cheers, JBS