UK Foreign Aid Utilized in Social Media Platforms and Cosmetics Company
An independent report found that a foreign office-owned investment group gave millions to an Indian fund, which then invested in social media sites and a cosmetics company.
Criticism arose when the government’s foreign aid investment body provided £6.4 million in taxpayers’ money, intended to reduce poverty, to a fund in India that invested in three social media platforms, a cosmetics company, and a debt collector. The Independent Commission for Aid Impact’s (ACAI) report raised concerns about the questionable links to poverty reduction in these investments. Tamsyn Barton, the chief commissioner of ACAI, questioned the justification of using capital from UK taxpayers for investments in social media sites.
The British International Investment (BII), owned by the Foreign, Commonwealth, and Development Office (FCDO), allocated the aid to India Quotient Fund IV, which then invested in social media platforms like ShareChat, a debt collection agency, and Sugar Cosmetics. The report highlighted concerns about the governance of BII and its responsiveness to oversight bodies like the International Development Committee (IDC) and ICAI.
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IDC chairwoman Sarah Champion questioned the focus on poverty reduction and responsible investment, urging for due process in governance at BII. ICAI recommended that the UK should concentrate its aid to India on specific areas to enhance the country’s economic growth in a pro-poor direction.
ShareChat
The report highlighted ShareChat’s problematic content, including videos of physical abuse, sexual services, and glorification of violent attacks. Investing in such a social media platform posed reputational risks for BII due to its association with the British government.
Concerns were raised about the inability to moderate harmful content on large social media platforms, prompting questions about why BII chose to invest in the India Quotient Fund without considering the reputational risk.
Ms. Champion vowed to seek clarification from BII and the foreign secretary regarding these issues.
Investments Tackle ‘Digital Exclusion’ and ‘Gender Equality’
BII defended its investments, stating that supporting local entrepreneurs is crucial for addressing international development challenges. The investments were aimed at addressing digital exclusion and economic barriers to gender equality, according to BII.
The company justified its investment in ShareChat by highlighting the platform’s robust content moderation processes. Similarly, the investment in Sugar Cosmetics was defended as supporting a woman-led manufacturing business that promotes gender equality in a region where female labor force participation is low.
The FCDO pledged to work with BII to address the issues and recommendations raised by ICAI to align investments with UK government policy.
Trade, Not Aid
Dr. Gilbert Greenall emphasized the importance of trade over aid in lifting people out of poverty. He criticized the government’s support for the “degrowth” strategy proposed by the United Nations, advocating for a focus on trade to support economic development in developing countries.
Foreign aid, when not carefully considered, can have negative consequences, according to Dr. Greenall’s viewpoint.
PA Media and Owen Evans contributed to this report.
