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.

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With great data comes great responsibility

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


This article is featured in the Development Co-operation Report 2017: Data for Development released today. Read the report and find out more about data for development.


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If USD 142.6 billion falls in the forest of development and no one hears it, does it matter?

That depends on who you are. While mothers in Afghanistan or South Sudan can tell you how their families’ lives have been transformed by effective development programmes every single day, strong data are needed to communicate how these billions of dollars improve the human condition and create more stable societies for all.

In 2016 official development assistance (ODA) to support development goals represented 0.32% of donor countries’ gross national income, an all-time high. However, aid to those who need it most, including least developed countries (LDCs), is declining. The June 2017 report card on the 2030 Development Agenda – the world’s roadmap to end poverty, inequality and injustice for all by 2030 through a set of 17 goals and 232 indicators – tells us progress is slow and data are incomplete.

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Making aid RANDy

By Simon Scott, Counsellor, OECD Statistics Directorate

rand
Entrance to the RAND headquarters in Santa Monica in 1968 (photo courtesy of the RAND Corporation)

It was the go-to think tank for the US Department of Defense during the Cold War. It was where Nathan Leites deciphered The Operational Code of the Politburo and Paul Baran conceived the “hot potato routing” system that would lead to the Internet.

But the RAND Corporation, spun off from an Air Force project with the Douglas Aircraft company to do Research ANd Development on intercontinental warfare, was active across the whole field of international relations. And at the height of East-West tensions during the 1962 Cuban missile crisis, DoD contract number ARPA/SD-79 had it investigating … a better way to measure foreign aid.

Up until that time, all official flows from rich to poor countries had been summed up indiscriminately, whether they were grants or loans, and whether or not they targeted development. John Pincus of RAND came up with a new idea – get rid of the non-developmental aspects and “reformulate the definition of aid [so that] all forms of aid are reduced to their value as grant or subsidy.”

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Aid rising in 2016: No room for complacency

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

oda generic 22015 was a year of big promises: eradication of global poverty, delivery of more effective development finance and calls for resolute action against climate change, all for a better world by 2030. But with growing concerns about inequalities at home, and rising protectionism and unilateralism abroad, the last few months cast some doubts about whether OECD countries still firmly stand behind their commitments.

The latest OECD figures on international aid are reassuring: 2016 preliminary data on Official Development Assistance (ODA) provided by OECD Development Assistance Committee (DAC) countries reveals yet another increase in aid volumes, reaching the highest levels on record. This is an 8.9% increase in real terms. Indeed, since the adoption of the Millennium Development Goals in 2000, ODA volumes have more than doubled. It is also positive to note that support to multilateral agencies has increased, reflecting the vital role played by multilateral aid in responding to the global challenges that require collective responsibility.

Yet, there is no room for complacency. A closer scrutiny of the increases reveals that humanitarian appeals and response plans remain consistently underfunded, with only 60% of global humanitarian appeals funded in 2016. Inadequate resources are being over-stretched to cover a larger diversity of needs and greater instances of crisis. Continue reading

Maximising bang for the buck: Risks, returns, and what it really means to use ODA to leverage private funds

By Paddy Carter, Research Fellow, Overseas Development Institute

shutterstock_249974521The idea of using official development assistance (ODA) to leverage private finance is a staple of the financing for development circuit and features heavily in most donors’ strategies. Experienced financiers both from official sector development finance institutions (DFIs) and private investors are, however, still feeling their way into this field’s unfamiliar territory. DFIs for the most part emphasise the importance of providing finance on non-concessional terms to avoid distorting markets and crowding-out other sources of finance. Though some standard elements of their business could fall under the rubric of blended finance, such as grant-funded technical assistance, for the most part DFIs and development banks have treated explicit subsidies to private enterprises as dangerous medicine to be prescribed rarely. Now the pressure is mounting to find more creative ways to leverage private finance using ODA. But how?

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Reaching the last mile: The role of innovative finance in meeting the SDGs

By Judith Karl, Executive Secretary of UNCDF, and Samuel Choritz, Policy Adviser at UNCDF

financesdgsTo meet the SDGs with their emphasis on leaving no one behind, we need solutions that tackle persistent exclusions and inequalities in the local economies and communities where the poor live and work. Targeting the last mile means adapting solutions to the households, localities and small enterprises that are underserved, where development needs are greatest and where resources are scarcest.

Addressing market failures by making finance work for the poor is a critical catalyser to this end. Official Development Assistance (ODA) can be the largest source of external finance in least-developed countries, where private investment often favours commodity and real estate sectors. Disparities in incomes and living standards show that location matters more for living standards in developing countries than it does in developed ones [1]. “Last mile finance” models can use public resources — such as ODA — to de-risk and crowd-in public and private finance, especially from domestic sources, to create virtuous dynamics of inclusion, local growth, resilience, and productive investment. Continue reading

Setting the Record Straight on ODA

By Doug Frantz, Deputy Secretary-General, OECD 

Doug FrantzThere will never be enough development aid to solve all the problems in the poorest countries. If we are to lift the last 800 million people out of extreme poverty we will need to find new ways to mobilize resources beyond the traditional assistance from wealthy governments in the form of loans, grants and other concessions.

Government assistance remains vital. The billions of dollars donor countries pour into developing countries every year are critical both in terms of actual aid and as a catalyst for mobilizing private sector funds and underpinning the efforts of developing country governments and civil society. Yet there is a consensus that the role of development aid must adapt to changes in the geography of poverty and to the new lens of the Sustainable Development Goals.

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