Theresa May is planning to spend tens of millions of pounds of aid funding on buying premiums with British insurance companies to help cover the costs of natural disasters in African countries, such as severe drought.



The prime minister believes that buying up private insurance policies in the UK, in a break from more traditional forms of aid spending, could reduce the need for expensive direct humanitarian support in the future.

A senior Downing Street official said the plan was to spend £30m over four years on the initiative, after which the companies would be able to continue working directly with African countries, opening up the opportunity to make a profit.

Oxfam’s senior policy adviser, Max Lawson, said that “harnessing the resources of the insurance industry is an interesting idea”, but said it must be judged on any benefits for poor countries and not the City of London.

The prime minister could face a backlash from critics of Britain’s aid budget in the UK, who believe that more should be done to help uninsured people at home facing flooding or other crises.

May laid out the plans at the G20 summit in Hamburg as part of a £200m package that aims to boost economic growth within African countries in order to make them less dependent on aid.

“We must not forget that progress in Africa benefits the UK at home. Our international aid work is helping to build Britain’s trading partners of the future, creating real alternatives to mass migration, and enhancing our security,” she said.

May added that it was also about a “moral responsibility” to meet the humanitarian needs of the poorest people on the planet, adding: “This is the future of aid, delivering value for money for the taxpayer.”

The prime minister was trying to echo Angela Merkel, the German chancellor, who has made her Compact with Africa the centrepiece of the two-day summit, rivalling Tony Blair’s drop the debt theme at the G8 in Gleaneagles, Scotland in 2005.

The aim is to boost private investment in a select group of African countries in the hope that they can act as the pioneers of a wider growth drive across the continent.

The German initiative warns: “By 2050 an estimated 2.5 billion people will live on the continent, almost twice as many as there are now. By 2030, approximately 440 million people will be looking for work.” Yet African economic growth has been slowing, partly due to a fall in commodity prices.

The German government argued: “Only $130bn (£100bn) a year would be enough to expand African infrastructure – roughly equivalent to the total amount of public aid for the continent.”

The Merkel plan has a self-serving element, since Germany is concerned that unless Africa, with its fast-growing youthful population, finds new jobs, many of the new generation will follow the path of hundreds of thousands of Africans struggling across the Mediterranean into Italy.

May also warned that 20m jobs needed to be created in Africa every year until 2035 to absorb new entrants into the labour force, arguing that failure to provide work meant “destabilising migratory patterns will persist – with extremist causes and criminality more likely to thrive”.

The package includes the new London Centre for Global Disaster Protection, which will aim to “use world-leading UK expertise and innovation to help developing countries strengthen disaster planning and use insurance to provide more cost-effective, rapid and reliable finance in emergencies, such as the severe drought in east Africa”.

Downing Street added: “This will reduce the need for expensive humanitarian aid, reassure private investors and help people rebuild their lives. Insurance protection built through this centre could provide £2bn when crises hit to ensure that the high costs of disasters aren’t borne by people or businesses, trapping them in cycles of poverty.”

The government said a further £60m was about building up a “robust and transparent financial sector” to attract more investment. “This paves the way for a strong partnership with the City of London, creating more opportunities for London to become the finance hub for Africa.”

Max Lawson of Oxfam said stimulating growth could help the fight against poverty. “But it is important to recognise that growing economies will not automatically provide people with enough food to eat or life-saving medicines – especially as Africa is home to some of the most unequal countries on Earth. We urge the government to set out in practical terms how it will ensure those who most need our help will reap the benefits of this initiative.”

He also stressed the need to tackle climate change.

Labour MP Stephen Doughty agreed that global warming threatened the lives of millions, but called the prime minister weak in the face of Donald Trump’s withdrawal from the Paris agreement. “She has no intention to stand up to the US president’s selfish agenda on climate change and global poverty,” he said.

Doughty welcomed support for development in African economies, but said it must not be at the expense of investment in strong public health and education systems.