By Andy Sumner, King’s College London
This blog is part of an ongoing series evaluating various facets
of Development in Transition
The 2019 Perspectives on Global Development
on Rethinking Development Strategies adds to this discussion
Yesterday’s blog listed five areas of change related to global poverty and economic development in developing countries. What do these changes mean for development co-operation?
First, development co-operation needs to adapt to the new polarisation within the developing world. More precisely, the old model of supporting ‘stuck’ and ‘ODA-dependent’ developing countries needs to be complemented with a new model of collaborating with ‘moving’ and ‘post-ODA’ developing countries.
Second, development co-operation to support expanding social welfare regimes and social protection systems focused particularly on children is important to disrupt the inter-generational transmission of poverty, especially given that under 18-year olds make up half of global poverty.
Over 100 developing countries have already established cash transfer schemes, which indicates that these systems are already being built, and systematic reviews concur on poverty reduction impacts. A global knowledge bank on building social welfare and social protection systems is thus one potential area for post-ODA development co-operation. Continue reading
In 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.
2015 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 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?
To 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.