Impact & Influence: Maximising A Smaller ODA Budget

PERSPECTIVES FROM A UK DELIVERY PARTNER

The UK is navigating a development landscape that looks markedly different from the one that shaped the world since the end of the Cold War. Geopolitical instability, fiscal pressure, and a more transactional international order are reshaping how countries engage. Multilateralism is strained, traditional donor–recipient models appear outdated, and development is increasingly expected to deliver not just impact, but influence. Meanwhile, the private sector is under growing pressure to act—particularly on climate and nature—but often lacks the tools, confidence, or enabling conditions to invest at scale in the places that need it most. In this context, the UK’s credibility as a development leader will hinge on its ability to use limited public funds to unlock private capital, to build strategic partnerships, and to deploy its soft power with precision.

As one of the UK government’s longest-standing delivery partners, ASI brings a distinct vantage point to inform this debate. For more than 30 years, we’ve worked on behalf of the British government to shape and implement reform in over 120 countries—spanning economic growth, climate transitions, governance, security, humanitarian and gender equality. We’ve worked on transformations such as securing debt relief in Somalia, catalysing green investment in Nigeria, and reforming investment laws in Pakistan. Our strength lies in handling complexity—especially in fragile and conflict-affected states where others find it hard to operate. We work side-by-side with Foreign, Commonwealth and Development Office (FCDO) country posts, national governments, and local stakeholders to deliver change that lasts. This proximity gives us a front-row seat to what works—and where smarter, more strategic use of Overseas Development Assistance (ODA) can unlock greater impact and British influence.

We believe it is time to reclaim the narrative around UK development. Public trust in aid has held remarkably firm over time [1]—but the UK government’s own leadership and communication play a decisive role in shaping how the public sees aid. A bold, strategic approach to ODA—grounded in global cooperation, modern partnerships and shared prosperity—can strengthen public support as well as global impact. In the words of Stefan Dercon, “foreign aid is what great nations do” [2].

WE BELIEVE THE GOVERNMENT CAN CONFIDENTLY MAKE THE CASE THAT SUPPORTING GLOBAL DEVELOPMENT IS NOT ONLY IN OUR INTEREST—IT IS ALSO THE RIGHT THING TO DO.

In this note, we offer three reflections from our experience delivering technical assistance (TA), private sector development and institutional reform for the FCDO in some of the world’s most challenging contexts.

First, that ODA must increasingly be catalytic as we move from ‘donor’ to ‘investor’— used to unlock, de-risk, and accelerate private finance in service of global goals.
Second, that TA remains one of the UK’s sharpest tools for influence—a low-cost, high-trust instrument for delivering soft power objectives and achieving durable, transformational change.
And third, that bilateral delivery complements, rather than competes with, multilateral reform—helping to prepare pipelines, showcase what works, and unlock capital.

1. ODA must be catalytic: unlocking private capital at scale

The scale of the development challenge is growing—and public finance alone cannot meet it. Africa faces an annual infrastructure investment gap of over $100 billion, and climate finance needs across the continent are projected

to exceed $250 billion a year to 20303. Yet current capital flows remain far below these targets. Despite growing interest from institutional and climate-focused investors, many promising deals never close—falling into the so-called “valley of death” between concept and bankability. Global blended finance volumes reached just $18.3 billion in 2024—nowhere near the $1.3 trillion needed annually for climate investments in emerging markets4. What’s missing isn’t just money, but investment-ready propositions with a realistic risk-return profile. This is where UK ODA can be catalytic: by strategically deploying blended finance instruments—such as guarantees, concessional capital, and TA —it can unlock private finance at scale and drive sustainable development in the world’s most challenging markets.

Investment cannot flow where there is no pipeline. In frontier markets, many promising businesses and projects can fall at the first hurdle—not because capital isn’t available, but because of risk perceptions, concerns about bankability and growth potential, and enabling conditions. The UK can play a critical role in building the pipeline: supporting entrepreneurs, investing in business models, aggregating investable opportunities, and linking them to patient capital. In the Democratic Republic of Congo (DRC), FCDO’s Élan RDC programme formed over 140 partnerships with firms to test and scale business models in clean energy, agri-enterprise, and inclusive finance—creating the ecosystem for investment to follow. In Malawi, FCDO is helping small and medium-sized businesses export mangoes and macadamia nuts, connect with UK buyers, and unlock investment into rare earth mining essential to the green transition. These types of early-stage efforts demonstrate how modest public investment can shift the risk-reward balance and crowd in private investors, leading sustainable, market-driven outcomes.

Even bankable infrastructure projects won’t attract capital unless they’re well-prepared and investment-ready. Projects in power, water, transport, or urban development may be commercially sound, but face the “valley of death” at a different scale. High capital costs, regulatory uncertainty, and fragile institutions often deter long-term investors. Here, the role of ODA is to work upstream: aligning policy, strengthening governance, and preparing projects to a standard that meets investor expectations. TA can be the difference between a concept that gathers dust and a project that reaches financial close. In Nepal, the UK-financed Centre for Inclusive Growth helped the government advance a pipeline of six hydropower megaprojects, culminating in two deals reaching close—together worth $2.5 billion, the two largest inward investments in Nepal’s history. In Ukraine, FCDO’s Green Cities, Energy and Infrastructure Programme (GCIEP) is strengthening infrastructure planning capabilities through adoption of the UK’s ‘5 Case Model’—improving project preparation to unlock blended finance from development finance institutions and private investors.

Capital follows confidence—and that means fixing the rules and norms, not just funding the projects. Even with capital and well-prepared projects, investors won’t engage unless they have confidence in the broader environment. Policy uncertainty, opaque processes, and bureaucratic hurdles often make frontier markets appear too risky. This is where ODA-funded TA plays a quiet but critical role—strengthening public institutions, improving regulatory quality, and lowering transaction costs. In Pakistan, FCDO’s Revenue Management, Investment and Trade (REMIT) programme supported the launch of the country’s first-ever Regulatory Guillotine Initiative—streamlining outdated regulations with estimated economic gains of over £550 million. Reforms like this aren’t just good governance—they are prerequisites for investment. When regulation aligns with investor expectations and market rules are predictable, blended finance and private capital are far more likely to follow.

WITH LESS TO SPEND, WE MUST MAKE IT COUNT—BY UNLOCKING LARGER FLOWS AND DRIVING SYSTEM CHANGE

2. Technical assistance is a strategic instrument of modern British power

The UK’s global influence doesn’t come from spending alone. It comes from the ability to shape the systems and rules of the game. In a world where soft power increasingly matters, TA is one of the most effective tools the UK has. It blends policy and delivery, diplomacy and development, values and interest. TA enables the UK to build deep, trusted relationships with governments and institutions—supporting reforms that align local priorities with UK strategic objectives.

“THE LESS YOU SPEND ON AID, THE MORE I SPEND ON BULLETS.”

GENERAL JIM MATTIS

TA is one of the UK’s most effective soft power tools. In a world where geopolitical competition is intensifying, the UK’s ability to deploy high-quality technical expertise into the heart of partner governments—whether in Prime Ministers’ Offices, Ministries of Finance, or Defence—is a strategic advantage. Unlike traditional diplomacy or large-scale aid, TA builds influence through trust, responsiveness, and relevance. It enables the UK to shape policy environments, foster long-term relationships, and align reforms with shared values. In many contexts, this access is unmatched— offering the UK a seat at the table where others, including rival powers, are absent. As one adviser put it, “we are literally deploying people into the governments of some of the most important rising powers of the 21st century.” This is what soft power looks like: deliberate, strategic, and built to last.

Aid scepticism is real, but the answer is not retreat—it is smarter, sharper engagement. As former US Defence Secretary General Jim Mattis has put it: “The less you spend on aid, the more I spend on bullets”. This captures the essence of soft power: It prevents. While hard power protects, soft power stabilises, builds trust, creates domestic growth opportunities and shapes the systems that underpin long-term peace and prosperity. Bilateral TA is arguably the UK’s most effective tool for advancing mutual prosperity and security and long-term partnership. It delivers not only development outcomes but also strategic access, influence, and resilience amidst growing geopolitical competition.

Spotlight on the ISF: The International Security Fund (ISF) is one of the UK’s most effective tools for advancing international security and building strategic partnerships. By working closely with governments and local partners in priority countries, the ISF helps address key UK national security concerns while supporting system-building in some of the most strategically important developing and buffer states of the 21st century. These investments—though modest in size—deliver outsized returns by shaping institutions, strengthening relationships, and helping to prevent future conflict. As one senior ASI adviser put it, this is “diplomacy in action.”

Across the spectrum of programmes we deliver for FCDO, we see TA delivering the following.

Prosperity and growth: TA delivers prosperity by helping governments strengthen investment, trade, and competitiveness. In Pakistan, ASI’s embedded team under the Sustainable Energy and Economic Development (SEED) programme helped reform investment laws that are predicted to unlock over £1 billion in pharmaceutical Foreign Direct Investment—creating opportunities for UK firms and advancing Pakistan’s position in global markets. In Nigeria, we are working hand-in-hand with the FCDO country team to unlock investment in the waste-to-energy sector, accelerate subnational electricity development, and build project pipelines to attract green finance. When Government of Iraq needed help setting up its sovereign wealth fund, it was the UK they turned to: Public Finance Resource Centre advisers are now supporting the Iraq Fund for Development with governance and operational systems—contributing to over $7 billion in signed memoranda of understanding with foreign investors.
Strategic influence and UK brand: When UK-funded advisers support ministries to digitise tax systems, reform financial oversight, or expand energy access, the result isn’t just a better policy—it’s a stronger relationship. Under GCIEP, we are combining ASI’s delivery expertise with the institutional strength of UK bodies like Crossrail International, Transport for London, Ordnance Survey, and the British Geological Survey. In Zimbabwe, the Ministry of Energy has requested GCIEP support to develop its mini-grid policy using British expertise. This is aid—but it’s also strategic positioning.
Shared security: Where the UK’s position as a globally connected power creates opportunities, it also brings exposure to shared security threats. The UK-Pakistan Serious Crime and Law Enforcement (UPSCALE) programme works across the FCDO and Home Office to deliver system improvements that help Pakistan be a more effective partner in addressing criminality, particularly serious and organised crime. UPSCALE’s work on illegal migration, sex offender management, and online child sexual exploitation strengthens the foundations for operational UK agencies such as the National Crime Agency to act with greater impact and confidence.

For a relatively modest investment, TA delivers exceptional value. In South Africa, £9 million of UK-funded TA has supported urban resilience planning and helped unlock an estimated £1.4 billion through the Just Energy Transition Partnership (JET-P). In Somalia, a similarly modest investment helped secure debt relief under the Heavily Indebted Poor Countries initiative and catalysed $2.3 billion in concessional finance. In Ghana, the UK Government’s £4.5m in TA is unlocking over €200 million in investment from the European Investment Bank and Invest International into water, drainage and road infrastructure. These are strategic wins—achieved with minimal spend—by embedding expertise inside institutions and backing reforms that drive long-term change.

For this model to succeed, UK posts must be empowered to lead. Embassies and high commissions are best placed to shape trusted partnerships with host governments—but recent uncertainty, short funding cycles, and shifting strategies have limited their ability to do so. This is a moment to reset. With clearer mandates and more predictable support, posts can lead politically grounded partnerships—with TA deployed flexibly to deliver shared priorities.

3. Bilateral delivery complements, not competes with, multilateral development bank reform

The multilateral development bank (MDB) system is perhaps more important than ever in a multipolar world, with systemic shifts required across sectors alongside large capital investments. The UK’s leadership on initiatives like the Triple Agenda and the Bridgetown Initiative has rightly championed reform of MDBs—calling for institutions that are more ambitious, agile, and equipped to crowd in private capital at scale. We fully support this direction. But in our experience, multilateral reform alone is not enough. Without complementary bilateral tools, the UK will struggle to translate global ambition into locally owned, politically viable reform.

Multilaterals remain indispensable for large-scale finance—particularly for infrastructure, global health, and climate. But they are rarely agile or politically attuned enough to deliver in fast-moving, fragile or post-conflict contexts. Governance transitions, fiscal shocks, and contested reforms often demand a level of responsiveness that only bilateral delivery can provide. Strategic UK programmes—especially those built on flexible TA—are a critical enabler of both multilateral and private finance. For example, in South Africa the International Partners Group (led by the UK working in partnership with other countries and MDBs) has committed $8.5 billion in concessional capital to help catalyse the estimated $80 billion required for South Africa’s energy transition. But while multilateral actors bring scale, ambition, and financial muscle, implementation has been slow. The FCDO’s South Africa JET-P Programme complements this effort on the ground—working closely with South African institutions to design investable infrastructure projects and guide government decision-making. By aligning closely with local priorities and unblocking delivery bottlenecks, bilateral TA is playing a vital role in turning multilateral ambition into tangible, investable outcomes.

This approach is not just effective—it’s catalytic, even with small sums of money. In Tanzania, FCDO’s GCIEP programme has provided data, assessments and proof of concept to municipal governments in Dar es Salaam. These interventions directly shaped the design of a $110 million World Bank waste management investment. UK bilateral aid is often laying the groundwork for multilateral finance to flow.

Bilateral tools also enable the UK to act as a trusted leader and convenor. Mechanisms like the Somalia Stability Fund (SSF) and the Aid Fund for Syria (AFS) pool donor funding, deploy political intelligence, and deliver high-trust, high-impact results in fragile states. Between 2023 and 2026, SSF has a committed budget of $64 million—with only $22 million from the UK. The rest has come from Germany, Denmark, the EU, the Netherlands and the USA. Likewise, over 60% of AFS funding has come from Germany, the USA, France, Jersey and Qatar. These are not just programmes—they are platforms for international cooperation, led by the UK.

British partnerships work best when rooted in local expertise and trusted relationships. At ASI, over 80% of our staff are nationals of the countries in which we operate—serving not just as technical experts, but as trusted counterparts to reform-minded leaders in government and business. In Iraq, the Technical Assistance Facility for Iraq put the British Embassy in the lead—embedding technical advisers across high-priority ministries. The team supported Iraq’s first national cyber security operations centre, helped design a digital strategy, and increased financial crime detection by 2,000%. In Somalia, the SSF is delivered almost entirely through Somali-led organisations like the Somalia Dialogue Platform and PUNSAA. These kinds of partnerships—flexible, politically aware, and locally led—cannot be achieved through multilaterals alone. They are a hallmark of UK bilateral delivery at its best.

THE UK’S EDGE ISN’T JUST CAPITAL—IT’S THE CAPABILITY TO MAKE CAPITAL WORK LOCALLY.