Multilateral action for sustainable development: How to build on the strength of ODA?

By Jorge Moreira da Silva, Director, Development Co-operation Directorate and Charlotte Petri Gornitzka, Chair, Development Assistance Committee

Multilateral wheelIn the backlash against globalisation and multilateralism and despite tightening national budgets, OECD countries’ combined Official Development Assistance (ODA) remains strong. While some criticise recently-released ODA figures for stagnating, steady commitment has been undeniable.

Indeed, ODA has remained politically resilient, steadily increasing since the turn of the century and doubling since 2000. In 2017, net ODA stood at USD 146.6 billion or 0.31% of gross national income (GNI). While this aggregate figure reflects a slight drop of 0.6% compared to 2016, previous figures were artificially high due to the refugee crisis that increased donor spending within their own borders. That spending subsided this year, and when in-country refugee costs are excluded, ODA increased by 1.1% from 2016 in real terms.

Against a backdrop of sceptical national narratives about foreign aid, even steady total ODA is a clear collective acknowledgement that development co-operation must remain at the core of efforts to strengthen universal security, alleviate human suffering and grow inclusive development. Despite what headlines suggest, this year we celebrated a reversal in a downward trend of ODA for least developed countries seen in previous years. Also, OECD Development Assistance Committee (DAC) countries’ aid to African partners rose by 3% to USD 29 billion and, within that, aid to sub-Saharan Africa was also up 3% to USD 25 billion. Total contributions to multilateral organisations represented around 30% of ODA in recent years, and OECD members account for around 80% of the funding for the multilateral system. This is a significant, steady investment in multilateral organisations – including the United Nations – that have also recently increased concessional financing to sub-Saharan Africa.

To support the effective gains from these positive trends and to further strengthen multilateral action on development, we need a fuller picture of development finance — from ODA and beyond. ODA only tells part of the story: an OECD estimate of total assistance from emerging providers in 2014 amounted to nearly USD 300 billion. Around 96% of this related to finance from the Chinese EXIM-Bank and the China Development Bank. China’s development aid to Africa totalled 47% of its total foreign assistance in 2009, and it funded 1,666 official assistance projects in 51 African countries from 2000-12, according to the Brookings Institution. But these reports remain disparate, unchecked and irregular.

While the OECD already collects aid flows from many important development co-operation providers beyond the DAC who choose to report their data – including Turkey and the United Arab Emirates that both exceeded 0.7% ODA/GNI in 2017 – we need a better mapping of untracked development assistance. Doing this means applying the long-lasting strength of the ODA system, based on multilateral credibility and standard-setting, to create new measurement tools across all multilateral providers.

The OECD is working with an international taskforce that includes developing countries to design a new international measure of total official support for sustainable development (TOSSD). This measure would provide the first-ever global picture of finance for development from all donors. Initial estimates show that this could be upwards of USD 500-600 billion annually. This new standard will allow for transparency, accountability and comparability that will strengthen collective multilateral development finance and decision-making. At the same time, ODA will remain distinct in its policy standard-setting and its target-setting measurement of 0.7% ODA/GNI for foreign aid spending.

We know that serious multilateral muscle exists, as ODA proves. When we have a complete picture of what is beyond ODA, we will know not only the full force of our collective impact, but also the conditions for success. Building-up multilateral co-operation on development finance requires more than ever greater accountability of the multilateral system towards its shareholders, with the capacity to transform as a key condition for effectiveness moving ahead.