If you follow development issues, you’ll know that a major effort is under way to agree a successor to the Millennium Development Goals (MDGs) before they expire at the end of 2015. This month should bring another milestone on that road with the completion of a report by an international panel of 27 political leaders and experts outlining the possible shape of the post-2015 goals.
When that report lands on the desk of the United Nations’ secretary-general, it will no doubt join a large pile of other submissions and recommendations on how best to follow up on the MDGs. Already this year, the UN has published findings from an ongoing “global conversation” about the MDGs. The organisation is also inviting people to share their views in its MY World survey – more than a third of a million people have already done so. Civil society has been busy, too, holding meetings and launching Beyond2015 , as have independent think-tanks like the UK’s Overseas Development Institute (ODI).
It all adds up to a lot of activity. It’s also all very different from the process that led up to the creation of the original MDGs at the turn of the century. Back then, the draft MDGs were written in a basement office at the UN in New York. The then-head of the UNDP, Mark Malloch-Brown, later admitted that his team almost forgot to include any reference to environmental sustainability: “I was walking along the corridor, relieved at job done,” he told journalist Mark Tran last year, “when I ran into the beaming head of the UN environment programme and a terrible swearword crossed my mind when I realised we’d forgotten an environmental goal … we raced back to put in the sustainable development goal.”
Of course, the Millennium Development Goals weren’t just the product of chance encounters in the bowels of the UN. In reality, many of the ideas and targets they embody had bubbled up through international conferences in the 1980s and ’90s. And the idea of bringing all this work together in a set of headline international goals that – crucially – could be monitored had its roots in OECD work in the mid-1990s. (Richard Manning’s account of the MDG’s history is here.)
Still, when you contrast the level of interest in the MDGs today with their relatively informal origins (and the oft-forgotten fact that they were never formally endorsed by the UN General Assembly), it’s clear that – unlike many international agreements – they’ve only grown in stature. Critics might argue that much of this esteem is unwarranted – after all, it’s unlikely as of now that most of the goals will be met by the 2015 deadline. But, as even The Economist has noted, the MDGs have played a key role in how we think of development, shifting the debate away from “how much is being spent on development towards how much is being achieved”.
So how will all this attention shape the next round of MDGs? Views differ: One risk, as the ODI’s Claire Melamed has warned, is that the post-2015 process will become like a Christmas tree, “handing out baubles to single issue groups without thinking hard about how it all fits together”. On the other hand, the breadth of consultation in the post-2015 process should go some way to redressing a criticism of the original MDGs, namely that they were driven by the perspective of Western donors and not that of the developing world.
Indeed, one idea that’s already emerging in the post-2015 debate is that the next set of goals could be truly global, applying to developing and developed countries. The idea is that the post-2015 process would produce a small set of global goals, which would be translated at the national level into a set of specific targets reflecting each country’s particular needs and capabilities. Or, as a new paper from the OECD expresses it, “A post-2015 goals framework needs to be relevant to all countries and should propose truly global goals with shared – but not equal – responsibilities for all countries.”
The post-2015 process is already far more inclusive than its predecessor; over the next few months, we should get a sense of how far that’s reflected in the next set of goals themselves.
ODA – official development assistance – is an important concept and an important measure. It is, to date, the only systematic means we have of assessing the efforts the ‘traditional’ donors make to support development. But the world is changing, and development finance is changing. In this light, do we need to look at the ODA concept again? I think we agree that the answer is yes.
There are several criticisms of the ODA concept.
Some say that it includes too much – that it counts much more than the money that actually flows into developing country budgets (donor administrative costs, refugee costs, etc.) This is why the OECD has introduced the concept of ‘country programmable aid’, which enables us to identify just how much is directly usable by countries to fund their priorities and programmes.
On the other hand, some feel that ODA cash-flow-based measurement includes too little. Countries make efforts that are not counted as ODA – guarantees, callable capital etc. – that could mobilise significant investment for development by mitigating risk. This is of particular concern today when an increasing number of developing countries need loans, guarantees and equity – rather than grant funding – to boost infrastructure and finance economic growth.
Finally, the ODA concept does not capture the complex and continually evolving interaction between public efforts and the use of market mechanisms.
All this gives rise to tensions between ODA as a measure of development effort by donors, and flows available to developing countries to reduce poverty and promote growth. This is why the Ministers of our DAC member development agencies – when they met in London in December 2012 – gave the OECD-DAC the mandate to take a fresh look at the broader financing concept, as well the concept and role of ODA per se.
This includes, of course, the issue of loans, which is the subject of much debate at the moment – both within the DAC and in the public arena. Loans have always been an important part of development financing – both concessional loans, such as the ones provided by the World Bank’s International Development Association (IDA), and non-concessional loans provided by many bi-lateral and multi-lateral donors, for instance the World Bank’s International Bank for Reconstruction and Development (IBRD).
Today, there is a growing demand for loans from the developing countries. The good news is that countries are growing – and this means they need and can afford to borrow money to fuel their continuing economic growth. This is one reason why this debate has risen to the top of the agenda.
Recently it has also become evident that our members follow different approaches in determining what makes a loan concessional. Some members follow the approach of the multilateral development banks – where only loans that have been subsidized are reported as concessional. Others emphasize the recipients’ perspective, arguing that loans given on more beneficial terms than developing countries could otherwise attain on the market could be considered concessional. As former OECD-DAC Chair Richard Manning pointed out in his 9 April letter to the Financial Times, there is a need to revisit these calculations to ensure that they reflect the current markets terms. It is also important to keep in mind the importance of the public guarantees for institutions providing loans, which address the high-risk factor of some development investments.
As the discussions continue, it is important that these differences – and the data behind them – continue to be publicly known and available for scrutiny. This will stimulate – as we already can see – a welcome and healthy debate. It is fundamental that we continue and deepen these discussions if we’re going to get in place an effective strategy for how to finance the new set of international development goals that will take over from the Millennium Development Goals after 2015.
But with the increasing complexity of development financing, the broadening of the development agenda and the growing diversity among developing countries, that debate needs to be about aid and other sources of financing for development. It is not – and cannot be – a question of either/or. That said, we need to be able to discuss other sources of financing without that discussion being used as – or perceived as – an excuse for donors to walk away from their aid commitments.
There is full agreement among DAC members that as we move towards 2015, we need to settle this debate, prioritizing innovative means to measure and promote development finance. At OECD, we will continue to work with our members and with other key stakeholders – including developing countries, as well as the United Nations, the World Bank, the International Monetary Fund (IMF) and other international financial institutions – to ensure that we have a robust measurement system for development finance in place by 2015.
In this way, we will also ensure that the OECD DAC continues to be a key source of reliable and transparent data on development financing.