Mark Lowcock – 2013 Speech on Ethiopia

Below is the text of the speech made by Mark Lowcock, the Permanent Secretary at the Department for International Development, on 12th December 2013.

Introduction

Justine Greening, my Secretary of State, has made economic development –especially creating jobs to reduce dependency and improve the opportunities of the poor – 1 of the very top priorities for Britain’s international development programme.

I am delighted to be able to discuss with you here today what that means in Ethiopia, and how Britain and Ethiopia can work together on this issue. And to be returning to a country I have visited regularly for nearly thirty years. My first visit was as a fresh-faced twenty-something in 1986 – I hope the economists amongst you can do the maths!

Like my boss (and all good people!), I am an accountant who studied economics and went to business school.

So I’m particularly pleased to be talking about these issues with an audience of economics and business students from the Economics and Political Science and International Relations Department, as well as policy makers and business people. I know this proud faculty can rightly consider itself 1 of the places of strength in teaching economics and business studies in Africa. Students from this faculty have become the bedrock of both the civil service and the private sector in Ethiopia. I know that when I speak today I am speaking to Ethiopia’s future movers and shakers.

I am also delighted to be speaking to you in this new Eshetu Chole Building. I am sure you all know that Eshetu Chole was an esteemed Ethiopian economist whose knowledge, capacity and skill were of enormous pride to Ethiopians, and respected by other Africans.

As well as looking at economic development, I am here in Ethiopia to discuss higher education and understand better how the UK might support your academic institutions. Both DFID and the British Council have supported linkages and knowledge transfer partnerships between Ethiopian and UK Higher Education Institutions. We are looking to do more, and I have just had the pleasure of meeting your State Minister for Higher Education, Dr Kaba, where we discussed this issue.

And I know higher education matters greatly to Ethiopians. Indeed, your late Prime Minister, Meles Zenawi, somehow found the time to study for an MBA at the UK’s Open University, while also running your country. He earned 1 of the best business degrees the Open University has ever awarded. No pressure on you then!

But back to economic development.

It’s always a source of wonder for me how much the country has changed. I know how frustrating it is for Ethiopians that views of your country are still shaped by the terrible famines of the 1980s. Too many people wrongly think that Ethiopia is still suffering in the same way.

Yours is a country of incredible achievements and diversity. From the green and fertile plains of the highland regions. To the dry camel-filled Somali Regional State. From the almost supernatural landscape of the Danakil. To the jaw-dropping vistas of the Simien Mountains. Ethiopia as a country could not be more diverse. Its people could not be more diverse. And their needs could not be more diverse.

But 1 of the things that has brought this most diverse of nations together has been the singularity of vision. Ethiopia’s success, over the past decade in particular, has been to maintain that vision. And turn it from a dream into a living, breathing, and forward looking reality.

In the last 30 years life expectancy here has increased by 50%. Ethiopia is on track to meet most of the Millennium Development Goals. You have achieved the infant mortality goal 2 years early. Economic growth, in double digits, has been impressive. All the more so because, unlike other parts of the continent, it hasn’t been driven by commodities alone. Per capita income has doubled.

On my last visit to Ethiopia, 2 years ago, I was privileged enough to spend a day alongside a young woman called Eyerusalem. She has a job breaking rocks for road building, but I was not very good at that. She earns money washing clothes for her neighbour, and I was even worse at that. And she collects water from the river, which I could not do at all – the container was too heavy and the rocks too slippery. Today Eyerusalem has a job in local government, earning 700 Birr a month – money which helps her to support both herself and her family. Her story illustrates how far – and how fast – Ethiopia has changed.

On this visit I’ve had a very different but equally fascinating time. I spent yesterday looking at how economic development is changing Ethiopia. I spoke to farmers whose land tenure is being made more secure, to small shopkeepers benefiting from micro-finance in Addis’s outskirts and to workers at a state-of-the-art leather factory.

I have heard first hand from a range of Ethiopian firms and foreign investors about the increasing attraction of Ethiopia as a place to do business. Drawn by Ethiopia’s sustained economic success, the size of its growing market, and its potential as a location for production, a range of industries are emerging that barely existed when I first visited.

I have seen, for example, a successful vegetable producer, who exports produce to the EU. And I’ve met with a host of UK firms who are being drawn here, from leather glove makers, to clothes retailers to drinks manufacturers. This is both to their benefit, and that of Ethiopia, which stands to gain from their financial investment, creation of jobs and sharing of best practice.

I think that that the strides that you have made away from poverty and famine, towards development and shared prosperity, make Ethiopia 1 of the world’s great development success stories of the last twenty years.

Theme of inclusive growth and managing transitions

The theme of my talk today is what drives inclusive growth and how to best manage the transitions that growth may bring over the next 10 years.

Why? Firstly, because Ethiopia is already booming. But Ethiopians know there is still much to do. I hope the keen young economists and business students among you, not to mention policy makers and business people, will be asking yourselves these questions. How can Ethiopia sustain its success? How can you adapt to the changes which will come in its wake? There may be useful lessons to learn from other countries. And others can learn from you too.

Adjusting to the challenges that transformation brings is just as important as sustaining growth. I believe there is a saying in Ethiopia, ‘siroTu yetatekut siroTu YeFetale’. Just in case my attempt at Amharic is less than perfect, I’d better add the English version: ‘a belt fastened while running will come undone while running’.

Secondly, because the UK’s partnership with Ethiopia needs to adapt and change too. This is our largest development programme in the world. We’re incredibly proud of the things we’ve helped Ethiopia achieve to date. We want to be here for the long-haul. But we would like our relationship to change over time from a donor-recipient one to one of import-export and equal partnership on the world stage, on issues that affect us all, like climate change, world trade and counter-terrorism.

As part of this, we want to expand our work on economic development here. Mindful that in the long run it will be the private sector development that will lead the process of job creation and provide the tax base for social spending and public investment by future generations.

We’re starting with new support on land certification, access to finance and helping make the leather, textile and horticulture sectors in Ethiopia truly world class. But we want to go beyond this. We want to help Ethiopia attract the private capital, technology and know-how it needs to achieve its ambitious growth targets. And end reliance on external support, potentially within a generation. I hope in the discussion after my talk, you’ll give me some ideas on where we can best help.

Inclusive growth

So, back to my first theme. What drives inclusive growth?

Ethiopia has very clear ideas about where it wants to be by 2025, and the best way to get there. Now, every country grows differently, and finds its own path. But it’s worth reflecting on some of the common features of countries that have successfully transformed themselves.

The Commission for Growth and Development, set up by the World Bank in 2008, did a good job of setting out some of these features. They looked at 13 success stories of sustained and transformational growth to see what feature they shared. They came up with 5 ‘ingredients’. With 9 of these 13 countries being east Asian, I think the ingredients have particular resonance for a country like Ethiopia.

The first of these features highlighted by the Commission was integration into the global economy. Two aspects of this are particularly important. First is the willingness and ability to import ideas, technology, and know-how from the rest of the world. Second, these countries exploited global demand. They encouraged a specialisation that allowed them to excel in world markets. The 4 east Asian Tigers, for instance, saw their manufacturing exports grow from under $5bn in 1962 to $715bn in 2004.

Ethiopia is moving towards this kind of integration. It has publicly set a target of joining the WTO. It has a rising export base, including diversifying from traditional crops like coffee into new areas like cut flowers. There’s a booming services sector, to which energy exports could soon become a major contributor. And foreign direct investment is being actively courted. This is an incredibly effective carrier of ideas and know-how, as well as bringing in capital resources. However, inward FDI flows have not yet matched the levels of other parts of Africa. Nor the levels associated with take-off in many of the Asian examples of dramatic transformation. More on this later.

The second common feature of these high performing economies has been macroeconomic stability. Whilst some may have experienced periods of high inflation – Korea in the 70s, for instance, or China in the mid-90s – it’s clear that the countries of east Asia took action in the face of these episodes, even though this may have been unpopular at the time. They knew that inflation would deter savers and threaten long term goals. Equally, fiscal deficits rose and fell but were contained to ensure they did not pose a risk to savers and deter investors.

Again, this reminds me of what I see in Ethiopia. The Government has recently taken action to get inflation back under single digits and there is not the history of macroeconomic instability we see in much of Africa. I admire the way my friend Ato Sufian, your Finance Minister, and others in your Government approach macroeconomic stability

The third feature is a focus on the future and high saving and investment rates. A key pillar of the success of the east Asian tigers was their farsighted decision to forgo consumption today in order to pursue higher levels of income in the future. China, for instance, is famous for having saved more than a third of its income for over a generation. These savings rates are what facilitated the high levels of investment, both public and private, that characterised these countries’ development paths.

Whilst savings rates have increased in Ethiopia in the last couple of years, they remain lower. Definitions vary but over the last 5 years they have averaged less than 10% of GDP. Whilst investment spending has passed a quarter of all economic activity. In some ways this appears to be an enigma. Ethiopia is 1 of the few countries in the world to have successfully raised incomes but seen private savings rates drop. This is possibly the biggest difference between Ethiopia and the east Asian tigers.

Learning from Asia, a 2 pronged approach seems sensible. First, expanding financial services and new savings products. Great strides have been made here with the number of bank branches doubling in less than 2 years. Secondly, linked to my earlier point on macroeconomic stability, savers will need to be reassured that their deposits are safe through positive real interest rates. Savers might not want to defer spending today if inflation means those savings are actually worth less tomorrow.

The fourth common feature of these 13 successful economies was the importance of property rights and letting markets allocate resources. Whilst they varied in the strength and clarity of property rights, in all of them businesses and investors could be confident their investments were secure.

There was variation in the degree of state intervention. Hong Kong is as famous for its laissez faire approach as China has been for a more hands on role. But even with this hands-on approach, China knew that you can’t just celebrate and foster success. You have to allow failure when sectors and firms are not viable. To avoid wasting precious resources that could be better used elsewhere. And send important signals about what works and what doesn’t. All successful economies have examples of things they have tried but no longer do, for instance even Singapore experimented with import substitution before looking outwards.

Looking east has already yielded results for Ethiopia. Whilst land remains the property of the state, improving the security of poor farmers’ land tenure through better certification helps give them the incentives to invest in that land.

The Commission’s final observation was the importance of committed, credible and capable governments. For these high-growth economies, growth and poverty reduction is the overarching political priority. A long term vision that is well communicated is a common feature. Just as important is pragmatism about how this plan will be delivered, learning from mistakes and adjusting course as necessary. The Chinese premier, Deng Xiaoping, described it as ‘crossing the river by feeling for the stones’. A common theme in all 13 countries is a technocratic administration, a focus on delivery and an approach to policymaking that is driven by evidence and learns from mistakes.

Your late – and widely admired – Prime Minister, Meles Zenawi, with whom I had the privilege of several discussions on these issues – set out a clear vision for the country with the PASDEP and subsequently the Growth and Transformation Plan (GTP). This, in turn, is about to enter a new phase as the Government charts its course from 2015 with a second GTP.

These 5 ingredients are a useful way of looking at Ethiopia’s progress and future choices. I would add 1 more, related to the investment climate.

Whilst the Growth Commission’s observations on prioritising future incomes through investment and the role of property rights are right, they only take us so far. It is also important to think about the way the world looks to those making those important decisions on whether to consume or invest – or often whether to invest in Ethiopia, or somewhere else.

A key factor here is the investment climate: the rules, procedures and norms that underpin how business is done. For instance, how much it costs to register a business, how long it takes to pay tax and the likelihood of being asked to pay a bribe when you do.

In many respects the world has changed profoundly since the east Asian ‘miracle’. The increasingly mobile nature of global capital flows and the proliferation of countries competing for the same investors have changed the landscape. Investors (both international and domestic) have more choice in where and how to invest. The process of offshoring labour intensive manufacturing from advanced countries to the Asian Tigers is winding down and competition in these sectors is fierce. We know about that in Europe!

The complexity of managing and attracting investors to a modern and diversified economy also presents challenges. Trying to tailor arrangements for individual firms and granting them high level political access to help overcome obstacles is only manageable when you have just a few investors. There is a risk that the incentives and tailored measures set up for these first few investors eventually lead to a level of complexity and unpredictability that puts off others. Many east Asian countries found that special deals sooner or later had to be replaced with broad based reforms providing clarity and equity, as well as flexibility.

Listening to the grumbles of your key investors is always revealing. I am told that the top constraints reported by Chinese investors in Ethiopia are access to finance, access to land, electricity and the time taken and unpredictability in paying taxes. Do customs and trade regulations also rate highly, and does it takes longer to clear customs here than in other places?

Managing transitions

And finally, let me say a word about managing the transitions that growth and development will entail.

Some changes countries face are inherent to the process of growth and rising incomes. Some are external, driven by global factors or environmental change. I want to mention 4 ‘transition issues’, which Ethiopia might want to turn into advantages rather than risks.

Demographic change is my first example. As with much of Africa, Ethiopia has a young population: 85 million today, set to rise to 150 million by 2050. And the median age of Ethiopians is already only just over 16. This youth bulge has often been called a ‘demographic dividend’, with the majority of the population in work, rather than needing looking after.

But it also creates pressures for service delivery and pressures on the labour force tomorrow. At some 2 million new entrants to Ethiopia’s labour force every year, that’s more than the total number of people currently employed in the formal private sector.

I guess I don’t need to tell all you students studying hard and trying to pick up marketable skills what this means. The private sector must take off, particularly in the manufacturing sector. And more people like you need to develop skills in manufacturing and services. To ensure it’s really a ‘demographic dividend’ rather than a problem.

Second, and linked to both structural change in the economy and demographics, is urbanisation. Ethiopia’s population remains overwhelmingly rural. But urban centres are growing quickly. This great city has more than doubled in size since I first visited. Some smaller cities are growing even faster. Again, no country has advanced to middle income status without significant urbanisation.

Cities are crucibles for innovation and specialisation. Clusters of similar businesses can emerge, driving competition and creating demand for workers with key skills. Over the last 5 years almost half the fall in poverty in Ethiopia has come in towns and cities or through rural-urban migration.

But urbanisation also causes upheaval and change. Social networks, service delivery, transport links and issues of environmental sustainability need thinking through. I see signs of this foresight here in Addis Ababa in the construction of the light railway. I am hoping to visit it myself tomorrow. But is infrastructure being developed fast enough?

There are significant opportunities in infrastructure for Ethiopia to draw on the finance and skills of the private sector. Public Private Partnerships, for example, have proved successful elsewhere in harnessing the private sector to help deliver objectives once the preserve of the public sector. Through the “Private Infrastructure Development Group”, DFID has helped stimulate such investment in other developing countries, using a mix of financial, practical and strategic support. We stand ready to do the same here.

The third transition I want to highlight is perhaps the most sensitive, but 1 which I know is on people’s minds. As a country grows, and its population gets more educated, wealthy and urbanized, history suggests that ways for that population to express their views openly and freely get ever more important if stability is to be maintained.

The final transition I want to highlight is increased reliance on domestic revenues and other sources of finance. This will also mean a reduced dependence on aid. Increasing revenues will be essential for protecting the delivery of basic services like education and health care. It will also help Ethiopia build a more comprehensive social safety net. Something which all middle and high income countries committed to social equality need.

Conclusion

Ethiopia has come a long way over the past 30 years. I hope to live to see equal – if not greater – levels of progress over the next 30. There will undoubtedly be bumps in the road and new challenges. The flexibility and creativity with which Ethiopia meets these challenges will be a sign of its true strength. Some– like the shift in demographics – can be foreseen and planned for. Others, like global volatility in food markets or oil prices, can’t. Hence the need to build in buffers now through social safety nets and strong macroeconomic policy.

I want to finish by saying that the UK is in this partnership for the long haul. And as Ethiopia’s development accelerates, our support needs to evolve too. As I said earlier, we have begun our shift towards economic development already. As we get into discussion on what I’ve said today about Ethiopia’s growth and transitions, I hope you will tell me how you think the UK can best support you in this.

Thank you.

Mark Lowcock – 2012 Speech on The Future of International Development

Below is the text of a speech made on the 16th October 2012 by the senior civil servant, Mark Lowcock, who works at the British Council in New Delhi.

Mahatma Gandhi once said: “the future depends on what you do today.”

So in looking at the future of international development, I want to start by looking at where we are today.

I turned 50 this year. My 16 year old son asked me which 50 years in human history I thought to be the best in terms of the quality of human lives. I said, why, the last 50 years of course.

Then I thought for a bit and said no, actually, it is the next 50 years that are going to be the best. Which made him feel a lot better but also led me to thinking about the pace of development in the last 5 decades, and how different our lives now are from those of earlier generations. There is no getting away from the fact that there has never been a luckier, healthier or more prosperous cohort than us.

Human beings have been on the planet for roughly 150,000 years. Until very recently, almost everyone’s human experience was concentrated solely in obtaining enough food, heat and light simply to sustain an existence.

100 years ago, there was only one country – it was Sweden actually – that had achieved an infant mortality rate below 10%. 175 countries have now brought their infant mortality rates below 10%, and 130 below 5%.

In the last 50 years, global life expectancy on average has risen from 47 years to 67 years.

The 3G smartphones on sale for less than 5000 rupees in Nairobi today enable a Kenyan to access more information than was in any library in the world 20 years ago – and to do so 24/7.

I enjoyed reading this summer a book by Mark Tully – (I believe one of the more successful UK exports to India!). It was called India: The Road Ahead or Non–Stop India, as it is called here. It brought home to me just how far India has travelled in my lifetime.

Mark Tully presents a range of compelling stories from all across this diverse country – not just illustrating the well-known economic miracle, but also the pace of change on social issues such as caste. The numbers speak for themselves.

India has progressed from a literacy rate of 28% in late 1961 to 74% in 2011

India’s share of global GDP has doubled – from 2.5% in 1980 to 5.5% in 2010

India has increased life expectancy from 26 to 72 years in 60 years: 1950 to 2010

India has raised the rate of growth from below 1% in the 1940s to around 3% in the early 70’s to over 6% in 2010’s.

And India has reduced poverty – from nearly 90% living in absolute poverty in 1940s to 51% in 1977-78 to just over 30% at present.

The Millennium Development Goals (MDGs)

And both here in India and across the rest of the world changes have been happening faster than seemed possible even 20 years ago. In the mid-1990s in the Overseas Development Administration, I was periodically tasked with writing briefing papers for John Vereker, then the Permanent Secretary, for meetings he attended with his counterparts in the OECD on the state of global development. These meetings ultimately led to the agreement of the International Development Targets. The IDTs then became one of the key building blocks for the Millennium Development Goals.

When they were first proposed in the 1990s, the MDGs were widely thought too ambitious and aspirational to be taken seriously. The pundits thought that halving the proportion of people living under a dollar a day, sending every child to school, reducing under-5 mortality by two thirds and maternal mortality by three quarters, all by 2015, was pie in the sky.

As we now know, the sceptics have been confounded. The halving poverty target was achieved 5 years early. And not just because of progress in China or other parts of Asia. Even in Africa, by 2008 most people in Africa, for the first time since measurement began, were judged to be living above the extreme poverty line. The clean water target was also met 5 years early. Access to basic education has improved dramatically. Infant mortality has plummeted.

So when my Prime Minister said in New York last month that the international community should aim to abolish extreme poverty within this generation, our generation, these were not just aspirational words. Abolishing extreme poverty within our lifetimes is absolutely within our grasp.

Future challenges

I’m not saying this will be easy. The figures speak for themselves:

2.5 billion people still lack access to improved sanitation facilities

1.2 billion people still live in extreme poverty

Every fourth child under 5 is underweight

Over a quarter of a million women still die in pregnancy and childbirth each year from completely avoidable causes.

Globally, we in the OECD at least, face the most difficult financial and economic outlook since the 1930s. We have lost momentum, sadly, in dealing with climate change and environmental challenges. We need to get that momentum back. We have seen major changes in many parts of Middle East and North Africa. We need to make sure those changes lead to real improvements in people’s lives. And we continue to face extensive challenges in preventing and dealing with the aftermath of conflicts.

Beyond 2015

So I am not saying that all the problems are solved. That is why I feel so passionately that the process that has now started in the United Nations to work out a new set of global development goals should have the same level of aspiration and ambition. The MDGs have provided a powerful focus for shared international action for the last 15 years. But after 2015 we will need a new framework, building on and taking forward the MDGs.

The UN has set up a very thorough consultative process to help shape this framework. The different UN agencies will lead consultations on different themes. There are country-based consultations in 50 countries with a leading role for civil society. And the Secretary General has established a High Level Panel co-chaired by the British Prime Minister, the Indonesian President and the Liberian President.

The panel has some of the top thinkers of our time – including Abhijit Banerjee – a very distinguished Indian economist who is very familiar to this audience. This panel had its first meeting in New York in September; its second meeting will be in London next month. And its task is to report back to the UN General Assembly next year.

Britain doesn’t yet have a fixed position on what these new goals should be. We want to hear what other countries have to say. We have listened to those who say that the formation of the Millennium Development Goals was driven too much by the Global North – with not enough input from the Global South.

But British Ministers have articulated some ideas as a contribution to the debate. At the end of the first panel meeting last month, David Cameron said five things:

The objective of the new framework should be the ending of global absolute poverty.

We should not get rid of the Millennium Development Goals. We should urge countries to complete and achieve the MDGs

We must look at the causes of poverty, not just the symptoms of poverty

We should consult the poorest in the world and ask what it is that they want

We must be bold and ambitious. If we write a complicated report we won’t be held to account for the conclusions that we reach. We want something simple and straight forward, with time-bound targets that everyone can understand, that can unite the world and that the politicians of the world and the leaders of the world can be held to account over.

The third of those points I’d like to dwell on – about looking at the causes not just the symptoms. Some people say that the current Millennium Development Goals framework – with its strong focus on access of poor people to basic services – has not focused enough on the underlying causes of poverty, the underlying enablers of progress.

For some people that means a need to pursue the human development agenda in greater depth – to look at education quality as well as access. For others it means focusing more on environmental sustainability, resource scarcity and climate issues. We agree with all that.

But when our own Government talks about the underlying enablers of development, they also increasingly talk about the importance of open economies and open societies, what David Cameron sometimes refers to as the “golden thread of development”.

The idea of open economies goes a lot wider than free trade. It includes the idea that citizens should be free to provide for their livelihoods; to access goods and services, as well as infrastructure connecting them to markets; to trade their skills and capital and pursue investment opportunities; and to contribute to a thriving private sector.

That economic governance should be transparent, credible, and stable – and include effective taxation as well as appropriate regulation.

That the costs of doing business should be reduced and the risks of investing minimised, including through legal protection of property rights and contract enforcement. There is strong evidence behind the idea that open economies support progress – not least the impact in India that Nandan Nilekani talked about of the economic liberalisation here in the 1990s. The idea that open societies are good for development is perhaps less frequently articulated – but it is easy to believe when visiting the capital of the world’s largest democracy.

The idea is about societies where all people have the same rights and responsibilities, regardless of their gender or their identity.

Where they are free to exercise choice, to express their voice, to challenge, and to secure change in how they are governed.

Where there is stability and absence of war, where people feel safe and have access to justice.

Where states have capable institutions, deliver responsive public services, are accountable to the public and tackle corruption and manage resources effectively.

And where the rule of law is respected, transparency promoted and an independent media protected.

While some of this may be controversial in some quarters, one thing which is very clear from the last decade is that the countries getting left behind in the pace of progress are those enmeshed in conflict or suffering from chronically poor governance. Organisations like my own see an increasing proportion of our resources and efforts spent in such countries. The new post-2015 framework has to reflect the reality of that in some way.

Ideas and visionaries

The history of human progress is built upon ideas. From the time that the first human (my guess is that it was a woman) had the idea of rubbing flints together to light a fire – development has been driven forward by ideas and innovation.

Nandan Nilekani of course is someone who personifies the big idea. As he says in his book – it is ideas that lead economic and social policy, rather than the other way round.

As one of the visionaries behind India’s IT revolution – he has of course demonstrated this in practice. One of the books I read this summer was a pacy page-turner called One Night in a Call Centre by Chetan Bhagat. Ah – I can see that many of you have read it too. As I was musing about the idea of young Indians just outside Delhi would be sorting out refrigerator problems for Americans in the Mid-West – it struck me that this was the stuff of science fiction when Nandan, Sam and I were all little boys!

Most of these magnificent ideas come from private individuals in the private sector. Another of the most inspirational books I have read this year (I must be giving the impression that all I do is read books – I don’t – or at least not as much as I’d like to!) was called Infinite Vision – about an idea that one man in South India had.

I am sure most of you are familiar with Dr Govindappa Venkataswamy, or Dr. V as he is called. He defied all business logic when he founded a small clinic with a big aim of curing blindness. Today the Aravind Hospital is the largest single provider of eye-care anywhere in the world. Every day it sees 1,200 patients and the doctors perform over 200 operations. It has grown into a network of eye hospitals that has seen 32 million patients over 36 years and performed more than 4 million eye surgeries, most of them ultra-subsidised or absolutely free. For about 50 Rupees (about one US Dollar), a patient can get three eye tests in three months. The business still defies logic – and yet it is going strong and amazingly self-reliant.

In my quarter century of work working on international development, I have come across other such inspirational stories – of big ideas that started small and have improved the lives of some of the poorest people in the world.

Mo Ibrahim – who has helped a whole generation of Africans leapfrog into the mobile age – joining them up and also expanding access to banking and finance in a way that the formal banking system never could.

Mohammad Yunus – who demonstrated that the poor are as credit-worthy as anybody else.

And India’s very own Verghese Kurien – who died a few weeks ago – who used the cooperatives model to engineer India’s White Revolution – taking India from being a milk-deficient nation to the largest milk producer in the world.

These people are the heroes – the architects of the new age of global development.

The new architecture of development

And that new global age brings with it a new global order. An order which no longer follows the tired old rules of the rich and the poor; the donor and the recipient; the first world and the third. It is a world in which countries like India, China and Brazil are reasserting their presence at the forefront of global progress.

One of the snippets I picked up from Nandan’s book was that at one time India and China accounted for over half the global GDP. As Jim O’Neill – who came up with the term BRICS – observed recently: “In 2011, China’s nominal $GDP rose by 1.3 trillion, equivalent to creating an economy the size of Greece every 11½ weeks and an economy the size of Spain in not much more than a year. The BRIC countries collectively contributed around $2.2 trillion, not too far off the equivalent of another Italy.”

To conclude then, I would like to offer a few reflections about what this changing world means for development organisations like mine:

First we need to clarify that business we are in.

I see three major business lines:

First, a focus on faster progress on the MDGs in those Low-Income fragile and conflict-affected states in which none of the MDGs have yet been met. There is a few dozen countries for which this is true.

Second, tackling global public bads: finally eradicating polio, tackling pandemics, and dealing with problems created by ungoverned spaces – terrorism, organised crime and the like. All countries in the world suffer the effects of these “bads” and official development assistance and organisations like DFID can help deal with them.

And third, more tentatively, there is the issue of what we can do as development agencies to help tackle poverty in Middle Income Countries.

Second, we need to do in agencies like mine is to change our offer.

And improve it. 20 years ago, aid was a key element in the external financing and public expenditure plans of many countries. Thankfully, that is less and less so now. Trade flows, remittances, and foreign direct investment have all over the last decade grown much faster than aid. So have domestic tax revenues in virtually every country. The role of donors now is not so much to fill financing gaps across the developing world:

We need to focus on the toughest problems (like the continuing challenge of child nutrition).

We need to concentrate on promoting science, technology, innovation and ideas and building the evidence on whether they work.

We need to help build the skills, capabilities, and institutions which help countries succeed.

Third, in improving our offer, we need to keep our eyes firmly on the big development challenges.

Just to pick two – we must retain our focus on girls & women – and increase our focus on climate change.

I am sure you know that last week (October 11th) was the first International Day of the Girl. DFID has staked a lot (reputation, money, and also hope) in the belief that the benefits of investing in girls and women are transformational – for their own lives and for their families, communities, societies and countries. India also has a vision – as seen in the raft of new and innovative investments to get girls into secondary school, and the impressive development impacts now becoming apparent from India’s reservations for women in local government.

Climate change. I know that there is a suspicion that the UK and Europe want countries like India to constrain their growth to tackle climate change.

That is entirely wrong. Yes, tackling climate change is important, but so is India’s growth and development.

Not only will India’s growth continue to underpin impressive reductions in poverty, it is also a driver of global prosperity.

The issue is not constraining growth but how we accelerate growth, in a greener and cleaner way.

Fourth, we need to sustain and increase aid volumes.

Official aid globally has increased from $60 billion a year a decade ago to $120 billion now. Which is part of the reason, incidentally, why development progress has accelerated over the last 10 years. But aid budgets in some countries are under pressure. In Britain, the Coalition Government has decided that despite the global downturn we will press ahead with plans to spend 0.7% of our national income on development. And next year we will reach this longstanding UN target, the first G8 country to do so.

Fifth, we need to focus more rigorously on the results we are delivering and the costs we are incurring in doing so – to make sure that we are spending aid to maximum effect. When I talk about results, I mean not just the longer term policy and system changes we aim to promote, but the hard facts of what immediate outputs we are buying through our aid programmes. We in DFID published our annual report last month, which set out the contribution we made in 2011/12:

We distributed 12 million bed nets to protect people against malaria

Gave 12 million people access to financial services so they can work their way out of poverty

Vaccinated over 12 million children against preventable diseases

Supported 5.3 million children to go to primary school – more than the total number of children in the UK primary school system

Reached 6 million people with emergency food assistance

Improved hygiene conditions for 7 million people.

It’s absolutely right that we should tell our taxpayers in this specific way what their aid is buying.

And sixth, we need to become more transparent and accountable

to our stakeholders – both the taxpayers who pay our bills, and the clients for whose benefit we work. Publishing our results is a key part of this.

But so is using all the resources of modern technology to ensure that people can check what we plan to do, whether it offers value for money, whether we achieve it, and whether what we are doing to put things back on course when they go wrong. It is the right thing to do.

“Publish What You Fund”– an international NGO – has just published its annual international aid transparency rankings – and I am happy to report that DFID is at the top of the 72 organisations covered in rankings.

My theme this evening has been the future of international development. I started by quoting Mahatma Gandhi saying how we build the future by what we do today. Let me end by quoting another great Indian – Mother Teresa – with a similar insight: “Yesterday is gone. Tomorrow has not yet come. We have only today. Let us begin.”