UK Development Finance beyond ODA: Mapping and Assessing the UK’s Non-grant Development Finance

Significant attention and analysis are given to the UK’s aid budget—as measured by official development assistance (ODA)—but much less attention has been given to the other ways that the government can provide or catalyse finance to lower-income countries. This finance includes some that does not usually count at all as aid—in particular, export credits to enable overseas governments or companies to buy from UK firms, as well as guarantees that give banks the confidence to make additional loans to developing countries. The government has also placed a new emphasis on the full range of finance tools through so-called British Investment Partnerships (BIPs) in its recent (2022) development strategy, which sets a goal to “mobilise” up to £8 billion (bn) of private and public finance by the end of 2025.

This paper looks across the UK government’s finance instruments, collating data on the levels of finance each contributes. We consider four main questions: What is the relative scale and importance of the new suite of instruments and institutions? What are the options that mobilise the greatest volume of finance? How are the instruments driven by, and how do they contribute to, targets, including those on climate finance? To what extent are these flows effective and going to the poorest countries?

This paper was updated in October 2023 in response to helpful comments from the UK’s Foreign, Commonwealth and Development Office.

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